ACIT-12(3)(2), MUMBAI , MUMBAI V. MUDRIKA LABELS PRIVATE LIMITED MUMBIA , MUMBAI

ITA 6338/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3641 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDAR SINGH
• Keywords: Bogus purchase; Wrong claim; Revised return; Reason to believe; Reassessment proceedings; Set aside
• Section: 271(1)(c); 143(3); 142(1); 143(1); 250; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 6338/MUM/2019 (A.Y: 2009-10) ACIT 12(3)(2) ROOM NO. 128-H, 1 ST FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020. VS. MUDRIKA LABELS PVT LTD, GALA NO. 18, NIRAM IND ESTATES, CHINCHOLI BUNDER LINK ROAD, MALAD WEST, MUMBAI 400064 PAN/GIR NO. : AA BCM5217D APPELLANT .. RESPONDENT APPELLANT BY : SHRI GURBINDAR SINGH, DR RESPONDENT BY : NONE DATE OF HEARING 1 1 .0 5 .2021 DATE OF PRONOUNCEMENT 19 .0 5 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) -20 MUM BAI, PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT , 1961. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY T HE AO U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 OF RS.4,3 9,000/- ITA NO. 6338/MUM/2019 MUDRIKA LABELS PVT LTD., MUMBAI - 2 - WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE CL AIMED BOGUS PURCHASES IN ITS ORIGINAL RETURN OF INCOME AN D THUS FURNISHED PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE INCOME TAX ACT, 1961, OF RS.4, 39,000/- WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE WI THDRAWN ITS WRONG CLAIM IN THE RETURN FILED IN RESPONSE TO NOTI CE U/S.148 THEREFORE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961.' 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON 'BLE ITAT IS REQUESTED TO ENTERTAIN THIS APPEAL THOUGH THE TA X EFFECT IS BELOW THE MONETARY LIMIT PRESCRIBED IN THE CBDTS CI RCULAR NO. 17/2019 DATED 08.08.2019 READ WITH CIRCULAR NO.3120 18 DATED 11.07.2018 AS AMENDED ON 20.08.2018 AS THE CA SE FALLS IN THE EXCEPTION PROVIDED IN PARA 10(E) OF TH E SAID INSTRUCTION IN AS MUCH AS THE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES, NAMELY, SALES TAX AUTHORITIES . 4 THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORE. 5 THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL. 2.THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LABELS, STICKERS AND PACKING MATERIALS AND FILED TH E RETURN OF INCOME ON 26.09.2009 FOR THE A.Y 2009-10 WITH A TOTAL INCOME OF RS. 75,19558/-,THE RETURN OF INCOME WAS ITA NO. 6338/MUM/2019 MUDRIKA LABELS PVT LTD., MUMBAI - 3 - PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O HAS REASON TO BELIEVE THAT THE ASSESSEE HAS OBTAINE D BOGUS PURCHASES BILLS AS PER INFORMATION OF THE INVESTIGATION WING OF MUMBAI, INCOME TAX DEPARTMENT AND THEREFORE NOTICE U/S 148 OF THE ACT WAS ISSUED. TH E A.O FOUND THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE S BILLS FROM ONE PARTY OF RS. 14,77,528/-.WHEREAS, TH E ASSESSEE HAS FILED A LETTER STATING THAT FOR THE SA ID ASSESSMENT YEAR IN RESPONSE NOTICE ISSUED U/S 148 O F THE ACT, THE ASSESSEE HAS FILED A REVISED TOTAL INCOME OF RS.89,40,257/- BY DISALLOWING THE NET PURCHASES MAD E FROM THE PARTY. THE A.O. HAS ISSUED NOTICE U/S 143( 2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE. IN COM PLIANCE THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TI ME AND SUBMITTED THE DETAILS AND THE CASE WAS DISCUSSED. THE A.O FOUND THAT THE ASSESSEE HAS NO DOUBT HAS REDUCE D THE BOGUS PURCHASES AND FILED THE RETURN OF INCOME IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT AND ACCORDI NGLY DETERMINED THE TOTAL INCOME OF RS. 89,40,260/-AND PASSED ORDER U/S 143(3) R.W.S 147 OF THE ACT DATED 20.03.2015. SUBSEQUENTLY, THE A.O HAS INITIATED PENALTY PROCEED INGS U/S 271(1)(C) OF THE ACT. IN THE PENALTY PROCEEDING S, THE A.O RELIED ON THE FINDINGS OF THE REASSESSMENT PROCEEDINGS AND THE SUBMISSIONS OF THE ASSESSEE ON THE ITA NO. 6338/MUM/2019 MUDRIKA LABELS PVT LTD., MUMBAI - 4 - REVISED RETURN OF INCOME FILED. BUT THE A.O. WAS NO T SATISFIED WITH THE EXPLANATIONS AND DEALT WITH THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT AND OBSERVE D THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULA RS OF INCOME AND LEVIED A PENALTY OF RS.4,39,000/- AND PASSED ORDER U/S 271(1)(C) DATED 31.03.2018. 3. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A).THE LD.CIT(A) IN APPELL ATE PROCEEDINGS CONSIDERED THE GROUNDS OF APPEAL, SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE A.O IN THE PENALTY PROCEEDINGS AND OBSERVED THAT THE AS SESSEE IN THE REASSESSMENT PROCEEDINGS IN LIEU OF NOTICE I SSUED U/S 148 OF THE ACT HAS FILED A REVISED RETURN OF IN COME EXCLUDING THE BOGUS PURCHASES UNDER A BONAFIDE BELI EF AND TO BY PEACE WITH THE INCOME TAX DEPARTMENT. IN SUCH CIRCUMSTANCES, THE A.O. HAVING ACCEPTED THE FACT S THAT THE ASSESSEE HAS FILED A REVISED RETURN OF INCOME EXCLUDING THE BOGUS PURCHASES CANNOT DRAW A ADVERSE INFERENCES AND THE LD.CIT(A) DEALT AT PAGE 7 PARA 5 .3 OF THE ORDER AND DIRECTED THE A.O TO DELETE THE PENALT Y AND ALLOWED THE ASSESSEE APPEAL. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E HAS FILED AN APPEAL WITH THE HONBLE TRIBUNAL. AT THE TI ME OF HEARING NONE APPEARED ON BEHALF OF THE ASSESSEE .TH E LD. ITA NO. 6338/MUM/2019 MUDRIKA LABELS PVT LTD., MUMBAI - 5 - DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE PENALTY IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS ENTERED INTO OBTAINING BOGUS PURCHASE BILLS AND IN RESPONSE TO NOTICE U/S 148 OF THE ACT HAS REDUCED THE BOGUS PURCHASES FROM THE TOTAL PURCHASES AND FILED A REVISED RETURN OF INCOME WHICH CANNOT BE ACCEPTED A ND PRAYED FOR ALLOWING THE REVENUE APPEAL. 5. WE HEARD THE LD.DR SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.THE SOLE CRUX OF THE DISPUTED IS SUE THAT THE LD.CIT(A) HAS ERRED IN DELETING THE PENAL TY U/S 271(1)(C) OF THE ACT. WHERETHE ASSESSEE IN THE ASSE SSMENT PROCEEDINGS HAS FILED A REVISED COMPUTATION OF INCO ME IN COMPLIANCE TO NOTICE U/S 148 OF THE INCOME BY REDUC ING THE BOGUS PURCHASES. WE FIND THE LD.CIT(A) OBSERVED THAT THE RETURN OF INCOME FILED IN THE REASSESSMENT PROCEEDINGS IN RESPONSE TO NOTICE U/SEC148 OF THE A CT OVERRIDES THE ORIGINAL RETURN OF INCOME AND THAT, T HE A.O. HAVING ACCEPTED THE RETURN OF INCOME FILED IN RESPO NSE TO NOTICE ISSUED U/S 148 OF THE ACT CANNOT MAKE ADVERS E INFERENCES ON THE BASIS OF ORIGINAL RETURN OF INCOM E. THE LD. DR COULD NOT CONTROVERT THE OBSERVATIONS OF THE CIT(A) WITH ANY NEW COGENT INFORMATION OR EVIDENCE. WE FIN D THE LD.CIT(A) CONSIDERING THE PROVISIONS OF LAW AND FAC TS OF THE CASE HAS PASSED A REASONED ORDER. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) I N ITA NO. 6338/MUM/2019 MUDRIKA LABELS PVT LTD., MUMBAI - 6 - DELETING THE PENALTY AND UPHOLD THE SAME AND DISMIS S THE GROUNDS OF APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.05.2021 SD/- SD/- ( S RIFAUR RAHMAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 18.05.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. !!' , $ % , / DR, ITAT, MUMBAI 6. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I