ACIT 13 (3)(1), MUMBAI V. ROYAL PLASTIC INDUSTRIES PVT. LTD., MUMBAI

ITA 6161/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0335 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS JYOTILAKSHMI NAYAK SR
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 271(1)(c); 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH M UMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBE R & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.6161/MUM/2018 ( ASSESSMENT YEAR: 2010-11 ) ACIT-13(3)(1) ROOM NO.229/219 2 ND FLOOR, AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 VS. ROYAL PLASTIC INDUSTRIES PVT.LTD. A-202 TANISHKA NOVELTY SILK MILL COMPOUND S.V.ROAD, DAHISAR(E) MUMBAI-400 068 PAN/GIR NO. AA ACR3209B APPELL ANT ) .. RESPONDENT ) REVENUE BY MRS. JYOTILAKSHMI NAYAK, SR.AR ( DR ) ASSESSEE BY NONE DATE OF HEARING 02/12 /2019 DATE OF PRONOUNCEME NT 02 /12 /2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)21, MUM BAI, DATED 26/06/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2010- 11. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED WITHOUT APPREC IATING THE FACT THAT THE ASSESEE HAS FAILED TO PROVE THE GENUINENESS OF TRAN SACTIONS OF THE PURCHASE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT (A) ON THE ABOVE GROUND BE SET ASIDE THE THAT OF THE ASSESSING OFFIC ER BE RESTORED. ITA NO.6161/MUM/2018 ROYAL PLASTIC INDUSTRIES PVT.LTD. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADI NG OF VARIUS TYPES OF RUBBER GOODS, FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 18/09/2010, DECLARING TOTAL INCOME OF RS. 1,63,24,2 25/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF TH E I.T.ACT, 1961 ON 21/10/2015, DETERMINING THE TOTAL INCOME OF RS.1 ,76,31,487/- AFTER MAKING ADDITION OF RS.13,07,262/- ON ACCOUNT OF UNVERIFIED PURCHASES. THEREAFTER, PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE I.T.ACT, 1961 WAS INITIATED AND CALLED UPON THE ASS ESSE TO EXPLAIN AS TO WHY PENALTY FOR CONCEALMENT OF PARTICULARS OF IN COME OR FURNISHING INACCURATE PARTICULARS OF INCOME SHALL NOT BE LEVIE D. IN RESPONSE, THE ASSESSEE SUBMITTED THAT ALTHOUGH, THE LD. AO HAS MA DE ADDITIONS TOWARDS 12.5% PROFIT ON ALLEGED BOGUS PURCHASES, BU T, FACT REMAINS THAT THE ASSESSEE HAS FILED COMPLETE DETAILS IN ORD ER TO PROVE GENUINENESS OF PURCHASES. THEREFORE, MERELY FOR THE REASONS THAT THERE IS AN ADDITION TOWARDS ESTIMATED PROFIT ON UN VERIFIED PURCHASES, THE SAME CANNOT BE CONSIDERED AS FURNISH ING INACCURATE PARTICULARS OF INCOME, WHICH WARRANTS PENALTY U/S 2 71(1)(C) OF THE I.T.ACT, 1961. THE LD.AO DID NOT CONVINCED WITH THE ARGUMENTS OF THE ASSESSEE AND HENCE, LEVIED PENALTY OF RS.4,03,9 44/-, WHICH IS 100% OF TAX OUGHT TO BE EVADED U/S 271(1) OF THE I .T.ACT, 1961, ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF INCOME BY MAKING A FALSE CASE OF DEDUCTION OF EXPEN DITURE. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD.CIT(A), FOR THE DETAILE D REASONS RECORDED IN HIS APPELLATE ORDER, DELETED PENALTY LEVIED U/S 271(1)( C) OF THE ACT, ON THE GROUND THAT WHEN ADDITION IS MADE ON AD HOC ESTIMATION OF PROFIT ON UNVERIFIED PURCHASE, IT CANNOT BE SAID THAT THE ASSESSEE ITA NO.6161/MUM/2018 ROYAL PLASTIC INDUSTRIES PVT.LTD. 3 HAS CONCEALED PARTICULARS OF INCOME WITHIN THE MEAN ING OF SECTION 271(1)( C) OF THE ACT. AGGRIEVED BY THE LD.CIT(A) O RDER, THE ASSESEE IS IN APPEAL BEFORE US. 5. NONE APPEARED FOR THE ASSESEE. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH ORDERS OF THE AUTHORITIES BELOW. THE LD. AO HAS LEVIED PENALT Y U/S 271(1)(C) OF THE I.T.ACT, 1961, IN RESPECT OF ADDITIONS MADE TOW ARDS 12.5% GROSS PROFIT ON ALLEGED BOGUS PURCHASES, ON THE GROUND TH AT THE ASSESSE COULD NOT ESTABLISH GENUINENESS OF PURCHASES MADE F ROM CERTAIN PARTIES, IN THE BACKDROP OF CLEAR FINDINGS FROM THE SALES TAX DEPARTMENT. IT IS THE CLAIM OF THE ASSESEE BEFORE THE LD. AO THAT IT HAS FURNISHED NECESSARY EVIDENCES IN SUPPORT OF PUR CHASES FROM THE PARTIES, BUT THE LD. AO DID NOT ACCEPT THE EXPLANAT IONS OF THE ASSESSEE, ONLY FOR THE REASONS THAT HE HAD DEFINITE INFORMATION FROM SALES TAX DEPARTMENT AS PER WHICH THE PARTIES WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS PURCHASE B ILLS. EXCEPT THIS, THE LD. AO NEITHER POINTED OUT ANY DISCREPANC IES IN BOOKS OF ACCOUNTS, NOR PROVED THAT THE PURCHASES WERE IN FAC T NON-GENUINE TO MAKE ADDITIONS TOWARDS 12.5% GP ON ALLEGED BOGUS PU RCHASES. THEREFORE, THE SAME CANNOT BE CONSIDERED AS FURNISH ING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)( C) OF THE I.T.ACT, 1961. 6. HAVING CONSIDERED ARGUMENTS OF THE LD.DR AND ALS O MATERIAL AVAILABLE ON RECORD, WE FIND THAT ALTHOUGH, THE LD. AO HAS MADE ADDITION TOWARDS 12.5% PROFIT ON ALLEGED BOGUS PURC HASES, BUT NEITHER, HE HAS PROVED FURNISHING OF INACCURATE PAR TICULARS OF INCOME, NOR EXPLAINED HOW THE RIGORS OF PENALTY PROVISIONS COULD BE INVOKED ITA NO.6161/MUM/2018 ROYAL PLASTIC INDUSTRIES PVT.LTD. 4 IN THE GIVEN FACTS OF THE CASE. WE, FURTHER, NOTED THAT THE ASSESSEE HAS FURNISHED ALL BASIC DETAILS IN SUPPORT OF PURCH ASES. THE ONLY REASON FOR MAKING ADDITIONS IS NON CO-OPERATION OF THE PARTIES IN RESPONSE TO 133(6) NOTICES ISSUED BY THE LD. AO. UN DER THESE FACTS, IT IS DIFFICULT TO ACCEPT, THE FINDINGS OF THE LD. AO THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, IN RESPECT OF PURCHASES FROM THOSE PARTIES. THEREFORE, WE ARE OF THE CONSIDERED VIEW UNSUBSTANTAITED CLAIM DOES NOT AMOUNT TO FURNI SHING INACCURATE PARTICULARS OF INCOME AND THEREFORE, THE PENALTY LEVIED U/S 271(1)(C) IS UNWARRENTED. THE LD. CIT(A) AFTER CONS IDERING RELEVANT FACTS HAS RIGHTLY DELETED PENALTY LEVIED U/S 271(1) ( C) OF THE ACT. WE DO NOT FIND ANY INFIRMITY IN FINDINGS OF LD. CIT(A) AND HENCE, WE ARE INCLINED TO UPHOLD ORDER OF THE LD. CIT(A) AND DIRE CT THE LD. AO TO DELETE PENALTY LEVIED U/S 271(1)( C) OF THE I.T.ACT 1961. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02 /12/ 2019 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 02 /12/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//