ADDT. CIT 32 (1), MUMBAI V. SHRI. CHANDRAIAH BALANNA KALAL, MUMBAI

ITA 6287/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5237 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 6287/MUM/2019 (ASSESSMENT YEAR 2011-12) ACIT-32(1) ROOM NO. 702 7 TH FLOOOR, KAUTILYA BHAVAN BANDRA KURLA COMPLEX BANDRA EAST MUMBAI-400 051. VS. SHRI CHANDRAIAH BALANNA KALAL PLOT NO. 71, DIMANDAR CHSL RSC 21, GORAI-1 BORIVALI WEST MUMBAI-400 092. PAN : AABPK8755H (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SUMIT MANTRI DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 29.04.2021 DATE OF PRONOUNCEMENT 03.05.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS AGAINST ORDER'S OF LE ARNED CIT(A) DATED 26.7.2019 WHEREIN PENALTY OF RS. 2,14,383/- LEVIED UNDER 271(1)(C) OF THE I.T. ACT HAS BEEN DELETED. 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF P ENALTY ARE THAT THE ASSESSING OFFICER IN THESE CASES MADE DISALLOWANCE OF 100% ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS SUPPLIED THE PURCHASE VOUCHERS AND THE PAYMENT WHERE SHOWN TO HAVE BEEN MADE BY BANKING CH ANNEL. HOWEVER DRAWING ADVERSE INFERENCE FOR THE NONPRODUCTION OF THE SUPPLIERS THE ASSESSING OFFICER DISALLOWED 100% OF THE BOGUS PURCHASES. HOW EVER THE ASSESSING OFFICER DID NOT DOUBT THE SALES. THE LEARNED CIT(A) CONFIRM ED THE ADDITION ONLY @ 11.69% OF THE BOGUS PURCHASES. PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT WAS ALSO LEVIED. LD CIT(A) DELETED THE PENALTY HOLDING THAT IN SIMILAR BOGUS PURCHASES MATTER, PENALTY ON ESTIMATED DISALLOWANCE FOR BOGUS PURCHASE WAS DELETED BY THE ITAT IN ANOTHER CASE. SHRI CHANDRAIAH BALANNA KALAL 2 3. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE U S. 4. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE THE DISALLOWANCE SUSTAINED BY LEARNED CIT(A) HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NONPRODUCTION OF SUPPLIERS BEFORE THE ASSESSING OFF ICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BA NKING CHANNEL. IN THESE BACKGROUNDS IN OUR CONSIDERED OPINION ASSESSEE CANN OT BE VISITED WITH THE REGOURS OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. AS A MATTER OF FACT, ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DISALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSID ERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SA ID 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 SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V S. STATE OF ORISSA (83 ITR 26), WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMAC IOUS. 5. 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 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. 6. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PR ECEDENT WE UPHOLD THE ORDER'S OF LD CITA AND DELETE THE LEVY OF PENALTY. SHRI CHANDRAIAH BALANNA KALAL 3 7. IN THE RESULT, REVENUES 'S APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 3.5.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YA HYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 03/05/2021 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