MESSRS CHAMPAK INDUSTRIES , MUMBAI V. DEPUTY COMMISIONER OF INCOME TAX CIRCLE 19(1), MUMBAI

ITA 6603/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4656 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase; Opportunity of being heard; Set aside
• Section: 271(1)(c); 201; 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) I.T.A. NO. 6603 /MUM/ 201 8 (ASSESSMENT YEAR 20 1 0 - 1 1 ) I.T.A. NO. 6604/MUM/2018 (ASSESSMENT YEAR 2012 - 13) M/S. CHAMPAK INDUSTRIES 390/392, SHANKAR MANSION, S.V.P. ROAD VANITA VISHRAM CHOWK MUMBAI - 400 004. PAN : AACFC7672E V S . DCIT CIRCLE - 19(1) MATRU MANDIR TARDEO ROAD MUMBAI - 40007. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI AKASH KUMAR DEPARTMENT BY SHRI R. BHOOPATHI DATE OF HEARING 09.12.2019 DAT E OF PRONOUNCEMENT 18 . 0 2 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THE S E ARE APPEAL S BY THE ASSESSEE IS DIRECTED AGAINST RESPECTIVE ORDER S OF LEARNED CIT(A) PERTAIN ING TO A.Y. 2010 - 11 & 2012 - 13 . A.Y. 2010 - 11 2. THE ISSUE RAISED IS LEARNED CIT(A) E RRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE I.T. ACT AMOUNTING TO RS. 69,240/ - . 3. BRIEF FACTS OF THE CASE ARE LEADING TO LEVY OF PENALTY ARE THAT THE ASSESSING OFFICER MADE THE ADDITION WITHOUT MAKING ANY ENQUIRY OF HIS OWN. HE DID NOT ISSUE AN Y NOTICE TO THE ALLEGED BOGUS SUPPLIERS . ADDITION IN THIS CASE WAS MADE ON ACCOUNT OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS ENGAGED INTO THE BOGUS PURCHASES AMOUNTING TO RS. 2 , 24 , 080/ - . ON THIS ADDITION PENALTY WAS LEVIED AND PENALTY WAS CONFIRMED BY LEARNED CIT(A). M/S. CHAMPAK INDUSTRIES 2 4. AGAINST THIS ORDER THE ASSESSEE HAS FILED THE APPEAL BEFORE THE ITAT. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 5. I FIND THAT THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT. ADDITION IN QUANTUM PROCEEDINGS ITSELF CANNOT EPSO FACTO WITH THE CONCLUSIVE PROOF FOR LEVY OF PENALTY IN THIS CASE. IT IS NOTED THAT IN THE ASSESSMENT ORDER ADDITION WAS MADE BY THE ASSESSING OFFICER WITHOUT ANY INQUIRY OF HIS OWN FROM THE ALLEGED BOGUS S UPPLIERS. IT IS ALSO NOTED THAT THE SALES WERE NOT DOUBTED. IN THIS VIEW OF THE MATTER THE ASSESSEE CAN NOT BE SAID TO BE GUILTY OF FUR NISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. AS A MATTER OF FACT IN CATENA OF CASES DEHORSE ANY INQU IRY BY THE ASSESSING OFFICER ADDITION HAVE BEEN SET ASIDE. BE AS IT MAY IN MY CONSIDERED OPINION CONDUCT OF THE ASSESSEE IS NOT CONTUMACIOUS TO WARRANT LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. ACCORDINGLY, DRAWING SUPPORT FROM THE DECISION OF HON'BLE AP EX COURT IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA VS. (83 ITR 26), I SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DELETE THE PENALTY. 6. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. A.Y. 2012 - 13 : - 7. IN THE GROUNDS OF APPEAL RAISED FO R ASSESSMENT YEAR 2012 - 13 THE ASSESSEE IS AGGRIEVED THAT LEARNED CIT ( APPEALS ) HAS ERRED IN SU STAINING DISALLOWANCE ON ACCOUNT OF BROKERAGE AND COMMISSION AMOUNTING TO RS. 878,315/ - AN ADHOC DISALLOWANCE OF RS. 1 , 00,000 OUT OF OTHER EXPENSES . 8. B RIEF FACT S LEADING TO THE ABOVE DISALLOWANCES ARE AS UNDER : - BROKERAGE AND COMMISSION : THE AO DURING THE ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO SUBSTANTIATE THE CLAIM WITH DOCUMENTARY EVIDENCES ALONG WITH DETAILS OF SERVICES PROVIDED BY THE PAYEES. T HE AO HAS NOTED IN THE ASSESSMENT ORDER THAT COPIES OF THE BILLS PRODUCED DID NOT CONTAIN ANY DETAILS OF SE RV ICES REN DERED AND NEITHER ANY DOCUMENTARY EVIDENCE WAS FILED SHOWING ANY M/S. CHAMPAK INDUSTRIES 3 UNDERSTANDING WITH THE ASSESSEE. HE THEREFORE DISALLOWED THE CLAIM MADE ON ACCOUNT OF COMMISSION AND BROKERAGE . 9. U PON ASSESSEE'S APPEAL LEARNED CIT ( APPEALS ) UPHELD THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT NO FURTHER DETAIL HAS BEEN SUBMITTED BY THE ASSESSEE BEFORE HIM . 10. A D HOC DISALLOWANCE : THE AO IN THE ASSESSMENT ORDER HAS MENTIONED THAT THE APPELLANT HAS CLAIMED EXPENSES UNDER VARIOUS HEADS SUCH AS TRAVELLING, CONVEYANCE, OFFICE EXPENSES AND DEVELOPMENT EXPENSES AMOUNTING TO RS. 4.34 LAKHS. ON PERUSAL OF THE DETAILS FURNISHED DURING THE ASSESSMENT PRO CEEDING S, THE AO NOTICED THAT PART OF THE EXPENSES WERE INCURRED IN CASH AND ALSO BY WAY OF SELF MADE VOUCHERS HAVING NO THIRD PARTY EVIDENCE. HE ACCORDINGLY MADE ADHOC DISALLOWANCE OF RS. 1,00,000/ - OUT OF TOTAL CLAIM. 11. U PON ASSESSEE'S APPEAL LEARNED CIT ( APPEALS ) UPHELD THE ASSESSING OFFICER'S ORDER 12. A GAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE ITAT. 13. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE PRAYED THAT ASSESSEE WAS NOT PROPERLY REPRESEN TED BEFORE THE LEARNED CIT APPEALS. HE PRAYED THAT AN OPPORTUNITY MAY BE GIVEN BEFORE THE ASSESSING OFFICER TO PROPERLY CANVASS THE CASE. 14. UPON CAREFUL CONSIDERATION I FIND THAT THE ADDITION S ON THE ABOVE ISSUES NEED PROPER CONSIDERATION AFRESH ON THE PART OF THE ASSESSING OFFICER. LEARNED COUNSEL OF THE ASSESSEE HAS UNDERTAKEN TO CO - O P E RATE BEFORE THE ASSESSING OFFICER. ACCORDINGLY THE ISSUE STANDS REMITTED TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CONSIDER THE ISSUE AFRESH AFTER GIV ING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. BEFORE PARTING I MAY ADD THAT THE ASSESSING M/S. CHAMPAK INDUSTRIES 4 OFFICER SHALL PASS APPROPRIATE COGENT ORDER NOT BASED UPON SURMISE AND CONJECTURE. 15. IN T HE RESULT ASSESSEE'S APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 18 . 2 . 20 20 . SD/ - (SH A MIM YAHYA ) ACCOUNTANT MEMBER MUMBAI ; DATED : 18 / 0 2 / 20 20 COPY OF THE ORDER F ORWARDED 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