Leeba Construction, Nashik V. Assistant Commissioner of Income tax, Ahmednagar

ITA 659/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9460 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRASHANT GADDEKAR
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 274; 147

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ( THROUGH VIRTUAL COURT) BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.659/PUN/2017 / ASSESSMENT YEAR : 2011-12 LEBBA CONSTRUCTION, PLOT NO.185/602, VRINDAWAN NAGAR, CHETANA NAGAR, CIDCO, NASHIK 422 010. PAN : AACFL3002D. APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR. ...RESPONDENT. ASSESSEE BY : SHRI SANKET JOSHI. REVENUE BY : SHRI PRASHANT GADDEKAR. / ORDER PER ANIL CHATURVEDI, AM: 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF T HE ORDER OF COMMISSIONER OF INCOME TAX (A) 2, PUNE, DT.30.06.2016 FOR THE ASSESSMENT YEAR 2011-12. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING : 20.08.2020 / DATE OF PRONOUNCEMENT: 20.08.2020 2 ITA NO.659/PUN/2017 ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRU CTION. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2011-12 ON 30.09 .2011 DECLARING TOTAL INCOME AT RS.22,46,184/-. IN THIS CASE ASS ESSMENT WAS RE-OPENED U/S 147 OF THE ACT. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143 (3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 10.12.2014 AND THE TOTAL INCOM E WAS DETERMINED AT RS.40,94,012/- INTER-ALIA BY MAKING ADDITION O F RS.18,47,828/- ON ACCOUNT OF BOGUS PURCHASES. ON THE AFORESAID ADDITION OF BOGUS PURCHASES, AO VIDE ORDER DT.28.07.2015 LEVIED PENALTY OF RS.5,71,000/- U/S 271(1)(C) OF THE ACT. AGGRIE VED BY THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.30.06.2016 (IN APPEAL NO.PN/CIT(A)-2/ACIT C IR/AN/2014- 15) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY TH E ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF RS.5,71,000/-. 2. THE ASSESSEE SUBMITS THAT THE LEVY OF PENALTY IS BAD IN LAW SINCE THE SPECIFIC CHARGE ON THE BASIS OF WHICH THE PENALTY P ROCEEDINGS U/S 271 (1)(C) HAVE BEEN INITIATED AGAINST THE ASSESSEE HAS NEITHER BEEN SPECIFIED IN THE NOTICE U/S 274 NOR IN THE ASST. ORDER AND HE NCE THE PENALTY OF RS.5,71,000/- LEVIED IN THE CASE OF THE ASSESSEE MA Y PLEASE BE DELETED. WITHOUT PREJUDICE TO THE ABOVE GROUND, IT IS SUBMIT TED AS UNDER : 3. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASS ESSEE HAD FURNISHED INACCURATE PARTICULARS BY DEBITING PURCHASES OF, RS .18,47,828/- MADE FROM ONE ALLEGED HAWALA PARTY, M/S. CEEPORT IRON & STEEL LTD. AND THEREBY LEVYING PENALTY U/S 271(1)(C) ON THE, GROUND THAT T HE ENTIRE AMOUNT OF SAID PURCHASES WERE OFFERED TO TAX BY THE ASSESSEE IN TH E COURSE OF ASST. PROCEEDINGS. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PURCHASES MADE FROM THE SAID PARTY I WERE DULY SUPPORTED BY INVOICES, D ELIVERY CHALLANS, WEIGH BRIDGE RECEIPTS AND BANK PAYMENTS AND BEFORE, THE A .O., IT WAS TIME AND AGAIN REITERATED THAT THE IMPUGNED PURCHASES WERE G ENUINE, HOWEVER, THE ENTIRE AMOUNT OF PURCHASES WAS SUO-MOTO OFFERED TO TAX SOLELY IN ORDER TO 3 ITA NO.659/PUN/2017 AVOID LITIGATION UNDER THE IMPLIED CONDITION THAT N O PENALTY U/S 271(1)(C) SHALL BE LEVIED AND HENCE, LEVY OF PENALTY WAS NOT JUSTIFIED MERELY BECAUSE THE ASSESSEE HAD AGREED FOR THE ADDITION. 5. THE LEANED CIT(A) ERRED IN NOT APPRECIATING THAT IN SPITE O SPECIFIC REQUEST, THE STATEMENT OF THE ALLEGED HAWALA SUPPLI ER WAS NOT FURNISHED TO THE ASSESSEE AND THE OPPORTUNITY TO CROSS EXAMINATI ON OF THE SAID PARTY WAS ALSO NOT GRANTED BY THE A.O. AND HENCE, THE DIS ALLOWANCE COULD NOT HAVE BEEN MADE SOLELY ON THE BASIS OF THE SAID STAT EMENT AND THEREFORE, MERELY BECAUSE THE SAID AMOUNT WAS SUO-MOTO OFFERED TO TAX BY THE ASSESSEE, THERE WAS NO REASON TO LEVY PENALTY U/S 2 71(1)(C) OF THE SAME. 6. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE CLAIM OF THE ASSESSEE WAS DULY SUBSTANTIATED BY DOCUMENTARY EVID ENCES WHICH WERE NOT CONTROVERTED BY THE AO AND IN THE ABSENCE OF OP PORTUNITY OF CROSS- EXAMINATION OF THE ALLEGED HAWALA SUPPLIER, THE CLA IM MADE BY THE ASSESSEE WAS NOT FOUND TO BE FALSE AND THEREFORE, T HE EXPLANATION 1 TO SECTION 271(1)(C) WAS NOT ATTRACTED IN THE INSTANT CASE AND HENCE, THE LEVY OF PENALTY WAS NOT JUSTIFIED. 7. THE LEARNED CIT(A) FURTHER ERRED IN NOT APPRECIA TING THAT ON SIMILAR FACTS, HONBLE ITAT MUMBAI HAS HELD THAT NO DISALLOWANCE O F PURCHASES CAN BE MADE AND THUS, THE ISSUE INVOLVED IS CERTAINLY A DE BATABLE ONE AND THEREFORE, MERELY BECAUSE THE ASSESSEE HAD SUO-MOTO OFFERED THE SAID AMOUNT TO TAX, THERE WAS NO REASON TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. 3. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH ASSESSEE HAS RAISED SEVERAL GROUNDS, BUT THE SOLE CONTROVERSY WH ICH REQUIRES ADJUDICATION IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4 . BEFORE US, LD.A.R SUBMITTED THAT WHILE PASSING THE ASSESSMENT ORDER, AO WITH RESPECT TO ADDITION ON ACCOUNT OF BOGUS PURCHASES HAS RECORDED THAT ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS OF INCOME TO THE EXTENT OF RS.18,47,828/-. BUT WHILE PASSING THE PENALTY ORDER U/S 271(1)(C) OF THE ACT, AO AT PARA 6 OF PAGE 3 HELD THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND MADE ITSELF LIABLE FOR PENALTY. THE AO AGAIN AT PARA 10 OF PAGE 7 HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THUS AO HAD LEVIED P ENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH 4 ITA NO.659/PUN/2017 COURT IN THE CASE OF CIT VS. SAMSON PERINCHERY REPORTE D IN (2017) 392 ITR 4 (BOM) SUBMITTED THAT IN THE ABSENCE OF PROPER S HOW CAUSE NOTICE TO ASSESSEE, PENALTY U/S 271(1)(C) CANNOT BE LEVIED AND THE REFORE URGED THAT PENALTY LEVIED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, PENALTY OF R S.5,71,000/- U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED ON AMOUNT OF RS.18 ,47,828/- BEING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES. THE P ERUSAL OF ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT REVEALS THAT IN THE ASSESSMENT ORDER AO HAD RECORDED SATISFACTION FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER, IN THE PE NALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO AT PARA 6 OF PAGE 3 H ELD THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND MA DE ITSELF LIABLE FOR PENALTY AND AGAIN AT PARA 10 OF PAGE 7 HELD THAT A SSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THUS AO HA D LEVIED PENALTY FOR CONCEALMENT OF INCOME AS WELL AS FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS A SETTLED LAW THAT WHILE LEVYING PENALTY, THE AO HAS TO RECORD CLEAR SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT OF ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COM PLETING THE ASSESSMENT AS TO WHETHER THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED HIS INCOME. THEREAFTER, NO TICE U/S 274 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO TH E ASSESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SEC TION 271(1)(C) OF 5 ITA NO.659/PUN/2017 THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE CO MPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO COME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCU RATE PARTICULARS OF INCOME. THE HONBLE BOMBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY (SUPRA) HELD THAT WHERE INITIATION OF PEN ALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE AB SENCE OF PROPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 6. CONSIDERING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINC HERY (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE BASIC C ONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POWER AND THEREFORE PENALTY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PA SSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 20 TH DAY OF AUGUST, 2020. SD/- SD/- ( PARTHA SARATHI CHAUDHURY), ( ANIL CHATURVEDI) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; DATED : 20 TH AUGUST, 2020. YAMINI 6 ITA NO.659/PUN/2017 '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A) - 2 , PUNE. PR. CIT-1, PUNE. !''#$ , % #$ , / DR, ITAT, B PUNE; !'()/ GUARD FILE. / BY ORDER // TRUE COPY // + ,-'.#/ / SR. 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