ITO, WARD - 3(2), THANE V. RAMMANGAL S.GUPTA, MUMBAI

ITA 6576/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3065 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Bogus purchase; Wrong claim
• Section: 271(1)(c); 143(3); 274; 147; 148; 2

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. 6 576 /MUM./2019 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 3(2), MUMBAI . APPELLANT V/S RAMMANGAL S. GUPTA 9, KEDAR BUNGLOW, SHIVAJI NAGAR WAGLE INDUSTRIAL ESTATE, THANE 400 604 PAN AAVPG3060H . RESPONDENT REVENUE BY : SHRI GURBINDER SINGH ASSESSEE BY : NONE DATE OF HEARING 1 3 . 0 5 .202 1 DATE OF ORDER 10.06.2021 O R D E R PER S. RIFAUR RAHMAN, A.M. THE PRESENT APPEAL PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 14 TH AUGUST 2019 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2, THANE, DIRECTING THE ASSESSING OFFICER TO DELET ING THE PENALTY OF ` 2, 19 , 719 , 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 RAMMANGAL S. GUPTA 2. BRIEF FACTS ARE, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME ON 1 0 TH SEPTEMBER 200 9 , DECLARING TOTAL INCOME OF ` 2,55,220 . THEREAFTER, SCRUTINY ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT ASSESSING INCOME AT ` 6,18,610. SUBSEQUENTLY, THE CASE WAS RE OPENED UNDER SECTION 148 OF THE ACT AND THE ASSESSME NT WAS COMPLETED UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT COMPUTING ASSESSED INCOME AT ` 68,08,234, AFTER MAKING AD HOC ADDITION OF ` 63,53,010 ON ACCOUNT OF BOGUS PURCHASES MADE FROM SIX PARTIES. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE BEING AGGRIEVED BY THE QUANTUM ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN THE LEARNED COMMISS IONER (APPEALS) CONFIRMED THE ADDITION OF ` 6,19,007, OUT OF THE TOTAL HAWALA PURCHASES OF ` 61,90,074, AND DELETED THE ADDITION OF ` 55,71,067. ACCORDINGLY, ASSESSEES INCOME WAS REVISED TO ` 12,37,173. THE REVENUE BEING AGGRIEVED BY THIS ORDER OF THE LEA RNED COMMISSIONER (APPEALS), FILED APPEAL BEFORE THE TRIBUNAL, WHEREIN THE CO ORDINATE BENCH UPHOLDING THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) DISMISSED THE REVENUES APPEAL . 3. NOW, DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER CALLED SOUGHT EXPLANATION FROM THE ASSESSEE AS TO WHY PENALTY SHOULD NOT BE 3 RAMMANGAL S. GUPTA IMPOSED UNDER SECTION 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOME. IN RESPONSE, THE ASSESSEE FILED SUBMISSIONS VIDE HER LETTER DATED 31 ST MAY 2018, AND ALSO IN SUPPORT OF H ER SUBMISSIONS RELIED UPON VARIOUS CASE LAWS. THE ASSESSING OFFICER CAREFULLY PERUSED THE SUBMISSIONS AND CASE LAWS RELIED UPON BY THE ASSESSEE AND FOUND THAT THE SAME IS UNACCEPTABLE AS THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE IN NATU RE. FROM THE SUBMISSIONS FILED BY THE ASSESSEE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASS HAS FILED IN ACCURATE PARTICULARS OF INCOME BY MAKING A WRONG CLAIM. THE ASSESSING OFFICER ACCORDINGLY RELYING UPON THE DECISION OF THE HONBLE ORRISA HIGH C OURT IN CIT V/S INDIAN METALS & FERRO ALLOYS LTD., [2994] 117 CTR (ORI.) 378, IMPOSED PENALTY TO THE EXTENT OF ` 6,19,007, UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE BEING AGGRIEVED, IS IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY . 4. THE LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY SO IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT . THE RELEVANT OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) DELETING THE PENALTY ARE AS FOLLOWS: 5 . I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , FINDINGS OF THE A.O. SUBMISSIONS OF THE AR OF THE APPELLANT AND MATERIAL PLACED ON RECORD. IN THE QUANTUM APPEAL, THE THEN CIT(A) - 2, NASHIK H AS RESTRICTED THE DISALLOWANCE @ 10% OF BOGUS PURCHASES OF RS. 61,90,074/ - . 4 RAMMANGAL S. GUPTA AGAINST THE ORDER OF THE CIT - (A) - 2, NASHIK, APPEAL FILED BY THE REVENUE WAS DISMISSED BY THE HON'BLE ITAT 'L' BENCH, MUMBAI; VIDE ITA NO. 2504/MUM/2017, DATED 29.09.2017. HENCE THE ADDITION TO INCOME HAS BEEN SUSTAINED ON ESTIMATION BASIS. 6. THE SUPREM E COURT HAS RECENTLY REITERATED THE LAW IN CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDING IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MATTE R AFRESH FROM DIFFERENT ANGLE. MOREOVER, IN THE CASE OF AJAY LOKNATH LOHIA, ORDER DATED 5.10.2018, MUMBAI ITAT HAS ADDRESSED THAT WHEN AO HAD ESTIMATED COST GP ON ALLEGED PURCHASES, SUCH DISALLOWANCE DOES NOT TANTAMOUNT TO WILLFUL FURNISHING . 7. IN THE CASE OF ETCO PROFILES PVT. LTD. VS. ACIT, IN ITA NO. 5351/MUM/2012, HON'BLE MUMBAI ITAT HAD HELD THAT: 'THE AO HAS DISALLOWED 20% OF PURCHASES ONLY ON PRESUMPTIONS WITHOUT ESTABLISHING FULLY THAT THE ASSESSEE HAS MADE PURCHASES FROM GREY MARKET. EVEN, IF IT IS ASSUMED FOR A MOMENT THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET, IT WAS NOT ESTABLISHED THAT THE AMOUNT OF PURCHASES WAS LESS THAN THAT RECORDED IN THE BOOKS OF ACCOUNT. UNDER THESE SET OF FACTS, IT HAS TO BE HELD THAT THE IMPUG NED ADDITION HAS BEEN MADE ONLY ON ESTIMATED BASIS THAT TOO ON PRESUMPTIONS ONLY. HENCE, BY FOLLOWING THE DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEE'S SISTER CONCERN'S CASE (SUPRA), WE HOLD THAT THE IMPUGNED PENALTY IS LIABLE TO DELETED. 8. IN T HE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) IT WAS HELD AS UNDER: - ''WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION O F THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE C LAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASS WILL INVITE PENALTY U/S 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 9. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE OF A PERCENTAGE OF PURCHASES AND NOT FINDING OF CONCEALMEN T TO REDUCE TAXABLE 5 RAMMANGAL S. GUPTA INCOME. ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF A PERCENTAGE OF PURCHASES AS BOGUS AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY OF RS. 2,19,719/ - , IMPOSED U/S 271(1)(C) OF THE I. T. ACT, BY THE AO, IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALLOWED. DECISION ON GROUND NO.1 IS DIRECTED AGAINST THE ISSUED U/S 274 R.W.S. 271(1)(C) IS BAD IN LAW : 10. THE NOTICE WAS ISSUED ON THE ADDITION MADE ON ACCOUNT OF AC COMMODATION ENTRIES SHOWN IN ASSESSEE'S BOOKS OF ACCOUNTS. DURING THE APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS NOT FURNISHED ANY WRITTEN SUBMISSION WITH REGARD TO THIS GROUND OF APPEAL. MOREOVER, THE PENALTY IMPOSED BY THE AO ON ALLEGED BOGUS PUR CHASES IS DELETED AS GIVEN IN THE AFOREMENTIONED PARAGRAPHS. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED IN ABSENCE OF ANY ARGUMENT/WRITTEN SUBMISSION FROM APPELLANT. 5. THE REVENUE BEING AGGRIEVED BY THE AFORESAID ORDER OF THE LEARNED COMMISSIONER (APPEALS) FILED APPEAL BEFORE THE TRIBUNAL . 6. CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL AUTHORITIES AND PERUSED THE MATERIAL ON RECORD. WE FIND T HE 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 AKING 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 6 RAMMANGAL S. GUPTA SUPPORT FROM THE SERIES OF DECISIONS BY DIFFERENT HIGH COURTS AS WELL THE DECISION OF THE CO ORDINATE BENCHES OF THE TRIBUNAL, WHEREIN IT WAS HELD THAT WHEN ADDITION IS MADE ON ESTIMATE BASIS, PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW . IN SUPPORT OF TH IS 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). 7. 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 PE NALTY. CONSEQUENTLY, WE UPHOLD THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 7 RAMMANGAL S. GUPTA 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 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