INCOME TAX OFFICER-12(3) (3), MUMBAI , MUMBAI V. MAHALAXMI DYES AND CHEMICALS LIMITED, MUMBAI

ITA 6183/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9385 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect
• Section: 271(1)(c); 143(3)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI JUSTICE SHRI P.P. BHATT (PRESIDENT) & SHRI SHAMIM YAHYA (AM) I.T.A. NO. 6183/MUM/2019 (ASSESSMENT YEAR 2011-12) ITO-12(3)(3) ROOM NO. 224 2 ND FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S . MAHALAXMI DYES AND CHEMICALS LIMITED 3, GUJRAT INDUSTRIAL COMPUND, VISHVESHWAR NAGAR, OFF AAREY ROAD GOREGAON EAST MUMBAI-400 063. PAN : AACCM6056D (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ANIL THAKRAR DEPARTMENT BY SHRI BHARAT ANDHLE DATE OF HEARING 05.07.2021 DATE OF PRONOUNCEMENT 20.07.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS AN APPEALS BY THE REVENUE AGAINST ORDER OF LEARNED CIT(A) DATED 20.6.2019 WHEREIN PENALTY LEVIED AMOUNTING TO RS. 3 0,652/- UNDER 271(1)(C) OF THE I.T. ACT HAS BEEN DELETED FOR A.Y. 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR AY 2011-12 ON 27.09.2011 DECLARING TOTAL INCOME AT RS. 29,54,720/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 27.03.2014 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,28,85,420/-. IN TH E ASSESSMENT ORDER THE AO MADE DISALLOWANCES OF RS. 99,20,023/-. THE DISALLOW ANCE MADE BY THE AO INCLUDED DISALLOWANCE OF PURCHASES OF RS. 99,20,023 /- MADE ON THE GROUND THAT THE CLAIM OF PURCHASES WAS BOGUS. ON APPEAL FI LED BY THE ASSESSEE, THE CIT(A), BY HIS ORDER DATED 30.12.2015 RESTRICTED TH E DISALLOWANCE OF TO RS. 99,200/-, BEING 1% OF THE PURCHASES HELD TO BE BOGU S IN THE ASSESSMENT ORDER. THE ORDER OF THE CIT(A) WAS SUBSEQUENTLY CONFIRMED BY THE HON'BLE ITAT IN ITS ORDER DATED 07.07.2017 (ITA NO. 1792/MUM/2016). IN THE COURSE OF THE M/S. MAHALAXMI DYES AND CHEMICALS LIMITED 2 ASSESSMENT PROCEEDINGS, THE AO INITIATED PENALTY PR OCEEDINGS U/S. 271(L)(C) OF THE ACT. ACCORDINGLY, HE ISSUED NOTICE U/S. 271(1)( C) OF THE ACT CALLING UPON THE ASSESSEE TO SHOW CAUSE WHY PENALTY U/S. 271(1)(C) S HOULD NOT BE IMPOSED IN ITS CASE. EVENTUALLY, THE AO PASSED THE IMPUGNED OR DER U/S. 271(1)(C) OF THE ACT. IN THAT ORDER THE AO HELD THAT THE ASSESSEE HA D FILED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE SUM OF RS. 99,200/-. BASED ON HIS FINDINGS, THE ASSESSING OFFICER IMPOSED PENALTY OF RS. 30,652/-. AGGRIEVED THE ASSESSEE FILED APPEAL. 3. UPON ASSESSEES APPEAL LEARNED CIT(A) DELETED TH E PENALTY PLACING RELIANCE UPON SEVERAL CASE LAWS. 4. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE, TH E DISALLOWANCE HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NONPRO DUCTION OF SUPPLIERS BEFORE THE ASSESSING OFFICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BANKING CHANNEL. IN THESE BACKGROUNDS IN OUR CONSIDERED OPINION ASSESSEE CANNOT BE VISITED WITH THE RIGOURS OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS A MATTER OF FACT ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DI SALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSIDERED OPINION ON THE FACT S AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD WE DRAW SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONOURABLE SUPREM E COURT IN THE CASE OF THE HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (83 ITR 26 ) , WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE COND UCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 6. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HA S TRIED TO MAKE OUT A CASE M/S. MAHALAXMI DYES AND CHEMICALS LIMITED 3 THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORM ATION FROM SALES TAX DEPARTMENT, THIS PENALTY APPEAL FALLS IN THE EXCEPT ION CARVED OUT IN THE CBDT CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OP INION THAT THIS PLEA IS NOT TENABLE INASMUCH AS ONCE REVENUE ACCEPTS THAT PENAL TY IS LEVIED ON OUTSIDE AGENCY INFORMATION ,THE PENALTY LEVIED WILL HAVE NO LEGS TO STAND. 7. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE UPHOLD THE ORDER'S OF LD CITA AND DELETE THE LEVY OF PENALTY. 8. IN THE RESULT REVENUE'S APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20.7.2021. SD/- SD/- (JUSTICE PP BHATT) (SHAM IM YAHYA) PRESIDENT ACCOUN TANT MEMBER MUMBAI; DATED : 20/07/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI