PATERSON & WALTON PHARMA P. LTD, MUMBAI V. ITO 9(2)(4), MUMBAI

ITA 6670/MUM/2010

• Counselvise Citation: 667019914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2000-2001
• Appeal Filed On: 16-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Bogus purchase
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. 6668 TO 6671/MUM/2010 (ASSESSMENT YEARS: 1998-99, 1999-2000, 2000-01 & 2 002-03) M/S. PATERSON & WALTON PHARMA PVT. LTD. INCOME TAX OFFICER - 9(2)(4) MUMBAI 103, LAXMI MAHAL CHS LTD. DAULAT NAGAR ROAD NO. 8 VS. BORIVALI (E), MUMBAI 400066 PAN - AACCP 2795 A APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI P.K.B. MENON DATE OF HEARING: 02.02.2012 DATE OF PRONOUNCEMENT: 02.02.2012 O R D E R PER BENCH THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF TH E CIT(A)-20, MUMBAI DATED 06.07.2010 AND THEY PERTAIN TO A.Y. 1998-99, 1999-2000, 2000-01 & 2002-03 2. PENALTY OF ` 45,760/ ` 61,371/ ` 8,303/ ` 15,150/- WAS LEVIED BY THE A.O., RESPECTIVELY FOR THE ASSESSMENT YEARS 1998-99, 1999 -2000, 2000-01 AND 2002-03 UNDER SECTION 271(1)(C) OF THE ACT ON THE G ROUND THAT ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME REFERABLE TO AL LEGED BOGUS PURCHASES MADE BY THE ASSESSEE FROM YEAR TO YEAR. BEFORE THE CIT(A) IT WAS CONTENDED, ON BEHALF OF THE ASSESSEE COMPANY, THAT PENALTY LEV IED WAS REFERABLE TO THE ADDITION MADE ON ACCOUNT OF UNPROVED PURCHASES FROM 8 PARTIES. SINCE THE ASSESSEE COMPANY FURNISHED XEROX COPIES OF THE PURC HASE BILLS, ANALYTICAL REPORTS OF RAW MATERIAL, FORMULA SHEET FOR BATCH PR ODUCED, ETC. AND ESTABLISHED THAT RAW MATERIAL WAS ACTUALLY RECEIVED AND IT WAS CONSUMED FOR PRODUCTION, NO CASE WAS MADE OUT TO COME TO A CONCL USION THAT THE PURCHASES ARE BOGUS. IT MAY BE NOTICED THAT IN THE QUANTUM PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THERE WAS A SURVEY ACTI ON UNDER SECTION 133A ITA NO. 6668 TO 6671/MUM/2010 M/S. PATERSON & WALTON PHARMA PVT. LTD. 2 ON ONE SHRI KETAN OZA, WHOSE STATEMENT WAS RECORDED BY THE A.O. STATING THAT HE ISSUED CERTAIN BOGUS SALES BILLS TO VARIOUS PARTIES. BASED ON THAT STATEMENT ASSESSEE WAS CALLED UPON TO FURNISH THE P ROOF OF PURCHASES. ASSESSEE FILED CONFIRMATION LETTERS AND COPIES OF T HE BILLS OF THE ABOVE SAID PARTIES. SALES MADE DURING THE YEAR UNDER CONSIDERA TION WERE NOT DISPUTED BY THE A.O. THE BOOKS WERE DULY AUDITED AND THE RET URN WAS ACCOMPANIED WITH DIRECTORS REPORT, AUDITORS REPORT, BALANCE SH EET AND NO DEFECT WAS POINTED OUT BY THE A.O. UNDER THESE CIRCUMSTANCES, MERELY BECAUSE THE PARTIES COULD NOT BE PRODUCED DURING THE STAGE OF R EMAND PROCEEDINGS, ADVERSE INFERENCE COULD NOT BE DRAWN. IT IS NECESSA RY TO NOTICE THAT IDENTICAL FINDINGS WERE GIVEN BY THE CIT(A)-9, MUMBAI IN THE QUANTUM APPEALS IN THE APPELLATE ORDERS PASSED AGAINST THE ASSESSMENT MADE UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. IN THE ORDER DATED 03.12.200 7 FOR A.Y. 1998-99 THE LEARNED CIT(A) ADMITTED THAT CONFIRMATION LETTERS A ND COPIES OF THE BILLS FROM THE ABOVE SAID PARTIES WERE FURNISHED AND THE BOOKS OF ACCOUNTS WERE DULY AUDITED WHEREIN NO DEFECT COULD BE POINTED BY THE A .O. HE FURTHER NOTICED THAT THE A.O. HAD NOT FOUND ANY FAULT WITH THE SALE S MADE DURING THE YEAR UNDER CONSIDERATION AND WHEN SALES ARE NOT DISPUTED THERE IS NO REASON TO ASSUME THAT NO PURCHASES WERE AFFECTED AGAINST SUCH SALES. HAVING ADMITTED THE CLAIM OF THE ASSESSEE, THE LEARNED CIT (A) PROCEEDED TO MAKE AN ESTIMATE REFERABLE TO THE INFLATION OF PURCHASES VA LUE WHICH IN TURN IS NOT BASED ON ANY EVIDENCE ON RECORD. HIS OBSERVATIONS A RE EXTRACTED HERE FOR REFERENCE: - THERE CAN BE A POSSIBILITY OF SUCH MATERIAL MUST H AVE BEEN PURCHASED IN THE OPEN MARKET, FOR WHICH INVOICES WERE OBTAINED FROM THE ABOVE PARTIES. THERE IS EVERY POSSIBILITY OF INFLATION OF PURCHASES IN V ALUE. CONSIDERING ALL THESE FACTS, IN MY OPINION, IT WOULD BE FAIR TO EST IMATE THE PURCHASES @25% OF THE TOTAL PURCHASES .. IDENTICAL ORDERS WERE PASSED FOR OTHER ASSESSMENT Y EARS ALSO. 3. DESPITE THE ABOVE FACTUAL MATRIX THE A.O. LEVIED PE NALTY UNDER SECTION 271(1)(C) OF THE ACT WHICH WAS CONFIRMED BY CIT(A). THUS ASSESSEE COMPANY PREFERRED APPEAL BEFORE US. 4. WE HAVE HEARD THE LEARNED D.R. CAREFULLY AND PERUSE D THE RECORD. IN OUR CONSIDERED OPINION IT IS NOT A FIT CASE FOR LEV Y OF PENALTY. AS CAN BE NOTICED FROM THE ORDER OF THE CIT(A)-9, MUMBAI DATE D 03.12.2007 (QUANTUM ITA NO. 6668 TO 6671/MUM/2010 M/S. PATERSON & WALTON PHARMA PVT. LTD. 3 PROCEEDINGS) PURCHASES AND SALES WERE NOT DISPUTED. NO SPECIFIC DEFECT WAS POINTED OUT IN THE BOOKS OF ACCOUNT MAINTAINED BY T HE ASSESSEE, WHICH WERE DULY AUDITED. ADDITION WAS MADE ONLY ON THE PRESUMP TION THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS IN THE OPEN MARKET A ND WOULD HAVE PROBABLY INFLATED THE PURCHASE VALUE. SINCE THE ADD ITION ITSELF IS ON PRESUMPTION, IT IS NOT A FIT CASE FOR LEVY OF PENAL TY. THE PLEA OF THE ASSESSEE THAT IT HAD PURCHASED THE GOODS WAS DULY SUBSTANTIA TED BY FILING CONFIRMATION LETTERS AND COPIES OF THE BILLS FROM T HE PARTIES. AT NO STAGE THE PARTIES WERE EXAMINED BY THE A.O. TO DISPROVE THE C LAIM OF THE ASSESSEE. AT ANY RATE, THE EXPLANATION OFFERED BY THE ASSESSEE C AN BE SAID TO HAVE BEEN SUBSTANTIATED BY FILING THE CONFIRMATION LETTERS AN D ALSO OF FILING SALES BILLS. IT IS PERTINENT TO MENTION HERE THAT THE LEARNED D. R. SUBMITTED THAT THE ORDER PASSED BY LEARNED CIT(A) IN THE QUANTUM PROCE EDINGS WAS NOT ACCEPTED BY THE A.O. BUT AT THE SAME TIME THE ADDIT ION MADE BY THE CIT(A) WAS ACCEPTED BY THE ASSESSEE BY NOT PREFERRING AN A PPEAL. HOWEVER, NO PROOF IN THAT REGARD WAS FURNISHED BY THE LEARNED D.R. SI NCE NO RESPONSIBLE PERSON APPEARED ON BEHALF OF THE ASSESSEE, IT IS NO T POSSIBLE TO CROSS VERIFY THE STATEMENT WITHOUT ANY EVIDENCE ON RECORD. EVEN IN THE EVENT THAT NO APPEAL WAS FILED BY THE ASSESSEE OR ADDITION MADE B Y THE CIT(A) WAS CONFIRMED BY THE APPELLATE TRIBUNAL, THIS CANNOT BE A SOLE GROUND TO HIGHLIGHT THAT IT IS A FIT CASE FOR LEVY OF PENALTY IN VIEW OF THE FACT THAT THE ADDITION MADE BY THE CIT(A) WAS MERELY BASED ON EST IMATES, WHICH IN ITSELF IS NOT SUPPORTED BY ANY BASIS. MOREOVER PENALTY PRO CEEDINGS DESERVE TO BE CONSIDERED INDEPENDENT OF THE ASSESSMENT PROCEEDING S. UNDER THE CIRCUMSTANCES, AS MENTIONED IN THE OPEN COURT, PENA LTIES LEVIED BY THE A.O. ARE HEREBY DELETED. 5. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND FEBRUARY 2012. SD/- SD/- (D. MANMOHAN) (RAJENDRA SINGH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 2 ND FEBRUARY 2012 ITA NO. 6668 TO 6671/MUM/2010 M/S. PATERSON & WALTON PHARMA PVT. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 20, MUMBAI 4. THE CIT 9, MUMBAI CITY 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.