DY CIT 6 (2)(1), MUMBAI V. M/S DELLA TECHNICA INTERIOR DESIGN PVT LTD , MUMBAI

ITA 6535/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3076 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Assessee Lawyers: FORUM MEHTA
• Keywords: Bogus purchase; Accommodation entries
• Section: 271(1)(c); 69C; 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S. RIFA UR RAHMAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT A NO. 6 5 35 /MUM./2019 ( ASSESSMENT YEAR : 20 10 1 1 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 6(2)(1), MUMBAI . APPELLANT V/S DELTA TECHNICA INTERIOR DESIGN P. LTD. RATI VILLA, GROUND FLOOR, MOTIBAL STREET OPP. BHATIA HOSPITAL TARDEO MUMBAI 400 007 PAN AABCD2765K . RESPONDENT REVENUE BY : SHRI GURBINDER SINGH ASSESSEE BY : MS. FORUM MEHTA DATE OF HEARING 13 . 0 5 .202 1 DATE OF ORDER 10.06.2021 O R D E R PER S. RIFAUR RAHMAN, A.M. THE APPEAL HA S BEEN FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 5 TH JUNE 2019 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) DELETING THE PENALTY OF ` 9,69,000 , IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 20 09 10. 2 DELTA TECHNICA INTERIOR DESIGN P. LTD. 2. FACTS IN BRIEF : IN THE PRESENT CASE, THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION COMPLETED THE ASSESSMENT VIDE HIS ORDER DATED 30 TH MARCH 2015, DETERMINING TOTAL INCOME AT ` 13,43,44,477, AS AGAINST THE RETURNED INCOME AT ` 9,87,27,550. IN THE ASSESSMENT SO MADE, THE ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE AMOUNTING TO ` 3,56,16,927, BEING 100% OF SUCH BOGUS PURCHASE MADE FROM 25 PARTIES WHO HAD INDULGED IN ISSUING THE BOGUS PURCHASE BILL. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ( FOR SHORT 'THE ACT' ). THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER SO PASSED BY THE ASSESSING OFFICER IN QUANTUM PROCEEDINGS, FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE LEARNED COMMISSIONER (APPEALS) ALLOWED THE GROUND IN FAVOUR OF THE ASSESSEE. AGAINST THIS ORDER OF THE LEARNED COMMISSIONER (APPEALS), THE REVENUE FILED APPEAL BEFORE THE TRIBUNAL, WHEREIN THE CO ORDINATE BENCH HAS RESTRICTED THE DISALLOWANCE @ 8% OF SUCH BOGUS PURCHASE WHICH QUANTIFIES TO ` 28,49,354, AND GIVEN P ARTIAL QUANTUM RELIEF OF ` 3,27,67,573, TO THE ASSESSEE. CONSEQUENT TO THE ORDER PASSED BY THE CO ORDINATE BENCH OF THE TRIBUNAL IN QUANTUM PROCEEDINGS GRANTING PARTIAL RELIEF TO THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOTICE DATED 14 TH SEPTEMBER 2018, UNDER SECTION 274 R/W SECTION 271(1)(C) OF THE ACT. IN RESPONSE, THE ASSESSEE FILED WRITTEN SUBMISSIONS VIDE LETTER DATED 14 TH 3 DELTA TECHNICA INTERIOR DESIGN P. LTD. SEPTEMBER 2018, AND THE SAME WAS TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER DURING THE PENALTY PROCEEDINGS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT HAD SHOWN PURCHASES WORTH ` 3,56,16,927, FROM 25 PARTIES. HE RECEIVED INFORMATION FROM THE DGIT (INV.), MUMBAI, AND SUBSEQUENTLY FROM THE SALES TAX DEPARTMENT, MUMBAI, REGARDING SUSPICIOUS PAR TIES WHO ARE ONLY PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ANY ACTUAL BUSINESS. THE SALES TAX DEPARTMENT HAS CONDUCTED INDEPENDENT ENQUIRIES IN EACH OF THE HAWALA PARTIES AND CONCLUSIVELY PROVED THAT THESE PARTIES ARE ENGAGED IN THE BUSINESS OF PROVID ING ACCOMMODATION ENTRIES ONLY. THESE ENQUIRIES ESTABLISHED BEYOND DOUBT THAT THE AFORESAID PARTIES DID NOT SUPPLY ANY GOODS TO THE ASSESSEE AND ISSUED ACCOMMODATION BILLS WITHOUT ACTUALLY DELIVERING THE GOODS OR SERVICE. THE ASSESSING OFFICER WAS CONVINCE D WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND HENCE, HE WAS SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, ON THE BASIS OF DISALLOWANCE ON BOGUS PURCHASE OF ` 28,94,354 (RESTRICTED THE DISALLOWANCE BY THE TRIBUNA L @ 8% OF THE TOTAL BOGUS PURCHASE AMOUNTING TO ` 3,56,16,827). IN THIS VIEW OF THE MATTER, THE PENALTY OF ` 9,69,000, UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED BY THE ASSESSING OFFICER. THE ASSESSEE BEING AGGRIEVED, FILED APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY. 4 DELTA TECHNICA INTERIOR DESIGN P. LTD. 3. THE LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY SO IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT BY FOLLOWING THE DECISIONS OF THE CO ORDINATE BENCH. THE RELEVANT OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) DELETING THE PENALTY ARE AS FOLLOWS: 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER , CIT(A) ORDER, THE ITAT ORDER , THE PENALTY ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. CONSIDERING THE FAILURE OF THE APPEL LANT TO FURNISH ADEQUATE EVIDENCES IN SUPPORT OF THE PURCHASES OF RS.3/56/16/927 CLAIMED TO HAVE BEEN MADE FROM THE ALLEGED 25 HAWALA SUPPLIERS AS WELL AS HAVING REGARD TO THE FACT THAT NO SPECIFIC ADVERSE MATERIAL WAS BROUGHT OUT BY THE AO TO SHOW THAT T HE SAID PURCHASES ARE BOGUS CONSIDERING ASSE SSEE S NATURE OF BUSINESS AND OVERALL FACTS OF THE CASE, THE HON'BLE TRIBUNAL DIREC T ED TO ASSESS 8% OF THE AMOUNT OF IMPUGNED PURCHASES AS INCOME. TH E HONBLE I T AT HELD THAT WHERE THE ASSESSEE COULD NOT PRODUCE A NY EVIDENCE TO S UBSTANTIAT E ACTUAL DELIVERY O F MATERIAL, THE ADDITION WHICH COULD BE MADE WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIO N TO FACTORIZE FOR PROFIT ELE M ENT EARNED BY THE ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN T H E GREY MAR KET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. 4.3 IT IS TH EREFORE , SEEN THAT THE FOUNDATION FOR SUSTAINING THE ADDITION TO THE EXTENT OF 8% OF THE B O GUS PURCHASES BY THE HON BLE TRIBUNAL IS THE IMPLICIT INFERENCE DR A WN BY IT T HA T THE ASSESSEE OBTAINED THE BILLS FROM HAWALA SUPPLIERS AT A HIGHER PRICE. IT IS S EE N THAT THIS FACTUAL INFERENCE HAS BEEN MADE ON THE BASIS OF THE SURROUNDING CIRCUMSTANCES ONLY AND THERE WAS NO POSITIVE EVIDENCE TO, SHOW THAT THE APPELLANT DID NOT MAKE P URCHASES FROM THE SAID HAWALA SUPPLIERS FROM WHOM THE BILLS W ERE OBTAINED AND HAD INSTEAD MADE TH E PURCHASES FROM GREY MARKET. THIS ASPECT IS EVIDENT FROM THE OBSERVATION OF THE HON'BLE TRIB U NAL THAT NO SPECIFIC ADVERSE MATERIAL HAS BEEN BROUGHT OUT BY TH E AO THAT THE IM PUGNED PURCHASES ARE BOGUS THOUGH SAID PURCHASES REMAINED UNVERIFIED. FURT H ER, THOUGH IT WAS STATED BY THE AO THAT THE CONCERNED HAWALA OPERATORS HAD MADE A STATEMENT ON OATH BEFORE THE SALES TAX AUTHORITIES, THE CONTENTS OF THE SAID STATE M ENTS HAVE NOT BEEN BROUGHT ON RECORD TO SHOW THAT ALL THE SALE BILLS ISS U ED BY THE S AID PARTIES 5 DELTA TECHNICA INTERIOR DESIGN P. LTD. ARE BOGUS INCLUDING THE SALE BILLS ISSUED TO THE APPELLANT. FURTHER, IT IS SEEN THAT THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES WAS SUSTAINED BY THE HON BLE TRIBUNAL BY ESTIMATING THE SAME AT 8% OF THE ALLEGED BOGUS PURCHASE BILLS AND THERE WAS NO EVIDENCE REGARDING THE ACTUAL BENEFIT DERIVED BY THE APPELLANT BY OBTAINING BOGUS BILLS. UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AS MENTIONED ABO V E, IT CANNOT BE CONSIDERED THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IT IS SEEN THAT IN THE CASE OF EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. ITO (SUPRA), THE HON'BLE ITAT , MU M BAI DELETED THE PENALTY LEVIED IN RESPECT OF BOGUS PURCHASES UNDER SIMILAR FACTS AND CIRCUMSTANCES. IT WAS HELD BY THE HON'BLE TRIBUNAL THAT MERELY BECAUSE THE SUPPLIERS COULD NOT BE TRACED AT THE GIVEN ADDRESS WOULD NOT AUTOMATICALLY LEAD TO A CONCLU SION THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. IT WAS HELD THAT THE ASSESSEE M ADE A CLAI M WHICH WAS BONA FIDE AND THE SAME WAS COUPLED WITH DOCUMENTARY EVIDENCES BUT THE SAME REMAINED INCONCLUSIVE FOR WAN T OF CONFIRMATION FROM THE SUPPLIERS. THE RELEVANT PART OF THE DECISION OF THE H ON'BLE TRIBUNAL IS REPRODUCED BELOW: - 7. ON MERITS, LD. AR HAS ASS AILED I M POSITION OF PEN A LTY ON VARIOUS GROUNDS AND PLACED RELIANCE ON VARIOU S JUDICI AL PRONO UNCEMENTS WHICH WE HAVE DULY CONSIDERED. WE FIND THAT FIRST OF ALL SECTION 69C COULD N O T B E APPLIED TO THE FACTS OF THE CASE AS THE PAYMENTS WERE THROUGH BANKING CHANNELS WHICH W ERE D U LY REFLECTED IN THE BOOKS OF ACCOUNTS AND THEREFORE, THERE WAS NO UNEXPLAINED EXPENDITUR 1 WITHIN THE MEANING OF SECTION 69C INCURRED BY THE ASSESSEE. FURTHER, W E FIND TH AT THE ASSESEE WAS IN POSSESSION OF PURCHASE INVOICES AN D VARIOUS OTHER DO CUMENTARY EVIDENCES QUA THESE PURCHASES. A BARE PERUSAL OF THE PURCHASE INVOICES REVEALS TH AT THE ASSESSEE HAS PURCHASED CONSUMABLES ETC. FROM THE ALLEGED BOGUS SUPPLIERS, WHICH ARE CONNECTED, AT LEAST TO SOME EXTENT, WITH TILE BUSINESS OF THE ASSESSEE. THE ASSESSEE, DURING QUANTUM PROCEEDINGS ITSELF FILED REVISED COMPUTATION OF INCOME AFTER DIS ALLOWING THE ALLEGED BOGUS PURCHASES BY CITING THE REASON THAT T H E SUPPLIERS WERE NOT TRACEABLE DURING ASSESSMENT PROCE EDINGS. NEVERTHELESS, T H E ASSESSEE WAS IN POSSESSION OF VITAL EVIDENCES IN HIS POSSESSION TO PRIMA FACIE SUBSTANTIATE HIS PUR CHASES TO SO ME EXTENT ARTICUL ARLY WHEN THE PAY MENTS WERE THOUGH BANKING CHANNELS. MERELY BECAUSE THE SUPPLIERS COULD NOT BE TRACED AT THE GIVEN ADDRESS WOULD NOT AUTOMATICALLY LEAD TO A CONCLUSION THAT THERE WAS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTIC ULARS BY THE ASSESSEE. THE ASSESSEE MADE A CLAIM WHICH WAS BONA FIDE AND THE SAME WAS COUPLED WITH DOCUM EN TA RY EVIDENCES 6 DELTA TECHNICA INTERIOR DESIGN P. LTD. BUT THE SAME REMAINED INCONCLUSIVE FOR WANT OF CONFIRMATION FROM THE SUPPLIERS. THEREFORE, OVERALL FACTS OF THE CASE DO NOT JUSTIF Y IMP OSITION OF PENALTY ON THE ASEESSEE A ND THEREFORE, THE SAME DESERVES TO BE DELETED ON MERITS OF TH E CASE. ALL THE CITED CASE LAWS SUPPORT THE VIEW TAKEN BY US IN THE MATTER. THEREFORE, BY DELETING THE IMPUGNED PENALTIES, WE ALLOW ASSESSEES APPEAL. 4.5 RESPECTFULLY FOLLOWING THE ABOVE MENTIONED DECISION OF THE HONBLE ITAT, MUMBAI AND KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AS DISCUSSED ABOVE, IT IS HELD THAT THE LEVY OF PENALTY U/S 271(1)(C) IS NOT JUSTIFIED ON THE MERITS OF THE CASE. HENCE, THE AO IS DIRECTED TO DELETE THE PENALTY OF ` 9,69,000 LEVIED U/S 271(1)(C) OF THE ACT. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 4. THE REVENUE BEING AGGRIEVED BY THE AFORESAID ORDER OF THE LEARNED COMMISSIONER (APPEALS) FILED APPEA L BEFORE THE TRIBUNAL 5. CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL AUTHORITIES AND PERUSED THE MATERIAL ON RECORD. AS IT APPEARS, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ESTIMATION BASIS WITHOUT ADDUCING ANY EVIDENCE ON RECORD FOR CONCEALMENT OF INCOME. P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LIABLE TO BE IMPOSED ONLY WHERE THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. ACTION OF M AKI NG ADDITION ON AD HOC BASIS DOES NOT RESULT INTO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND HENCE CANNOT BE TERMED AS EITHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND SUPPORT FROM THE SERIES OF DECISIONS BY DIFFERENT HI GH COURTS AS WELL THE DECISION OF THE CO ORDINATE BENCHES OF THE TRIBUNAL, WHEREIN IT 7 DELTA TECHNICA INTERIOR DESIGN P. LTD. WAS HELD THAT WHEN ADDITION IS MADE ON ESTIMATE BASIS, PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW . IN SUPPORT OF THIS CONTENTION, FOLLOWING CASE LAWS ARE RELIED UPON: - I) CIT V/S NORTO N ELECTRONICS SYSTEMS (P) LTD. [2014] 41 TAXMANN.COM 280 (ALLAHABAD HC); II) ACIT V/S VISION RESEARCH MANAGEMENT (P) LTD., [2015] 63 TAXMANN.COM 8 (LUCKNOW) (TRIB.); III) PREM CHAND V/S ACIT, [2014] 52 TAXMANN.COM 95 (CHANDIGARH) (TRIB.); IV) CIT V/S PHI SEEDS INDIA LTD., [2008] 301 ITR 0013 (DEL); AND V) DILIP N. SHROFF V/S JCIT [2007] 291 ITR 519 (SC). 6. EVEN T HE LEARNED DEPARTMENTAL AUTHORITIES HAS NOT BROUGHT ANY COGENT MATERIAL TO PROVE OTHERWISE WARRANTING INTERFERENCE AT THE INSTANCE OF THE REVENUE. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED COMMISSIONER (APPEALS) WAS INDEED JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DELET E THE PENALTY , AS THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE HAVE BEEN PROVED BY THE REVENUE AND ADDITIONS MADE ON ESTIMATION BY THE ASSESSING OFFICER DO NOT CALL FOR INITIATION OF PENALTY. CONSEQUENTLY, WE UPHOLD THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 8 DELTA TECHNICA INTERIOR DESIGN P. LTD. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COU RT ON 10.06.2021 SD/ - PAVAN KUMAR GADALE JUDICIAL MEMBER SD/ - S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 10.06.2021 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI