ACIT CIRCLE-3, KALYAN V. VARNA GRAPHICS, THANE

ITA 6744/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2124 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries; Tax effect; Revised return; Set aside
• Section: 271(1)(c); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT ) F BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AN D SHRI MANOJ KUMAR AGGARWAL, HON'BLE ACCOUNTANT MEMBE R ITA.NOS.6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11& 2011-12) ACIT - CIRCLE 3 2ND FLOOR, RANI MANSION MURBAD ROAD, KALYAN WEST MUMBAI - 421301 V. M /S. VARNA GRAPHICS S-2, SHREE PARSHWA INDUSTRIAL PREMISES V.P. ROAD DOMBIVALI (E)- 421201 PAN: AAFFV0714K (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI RAJESH YADAV DATE OF HEARING : 24.06.2021 DATE OF PRONOUNCEMENT : 24.06.2021 O R D E R PER MANOJ KUMAR AGGARWAL (AM) 1. THESEAPPEALS ARE FILED BY THE REVENUE AGAINST DIFFE RENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-1, THANE [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 19.08.201 9 FOR THE A.YS.2009- 10 TO A.Y.2011-12IN DELETING THE PENALTY LEVIED U/S . 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER. 2 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE ENGAGED IN THE BUSINESS OF PRE-PRESS(SCANNING AND VISUALIZING)FILED ITS RET URN OF INCOME ON 29.09.2009, 29.09.2010 AND 30.09.2011DECLARING INCO ME OF .7,86,550/- .10,46,640/-AND .14,37,710/-FOR THE A.Y. 2009-10, A.Y. 2010-11 AND A.Y. 2011-12 RESPECTIVELY. THE RETURNS WERE PROCESS ED U/S. 143(1) OF THE ACT ACCEPTING THE INCOME RETURNED.SUBSEQUENTLY, ASSESSMENTS WEREREOPENED U/S. 147 OF THE ACT FOR THE REASON THA T THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM VARIOUS PARTIES AS PER THE INFORMATION PROVIDED BY SALES TAX DEPARTMENT, MUMBA I. IN THE COURSE OF THE RE-ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER REQUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES. ASSESSEE HOWEVER FILED REVISED RETURN OF INCOME OFFERING THE PURCHAS ES TO INCOME, TO PURCHASE PEACE OF MIND AND TO AVOID FURTHER UNNECES SARY LITIGATIONS AND ALSO PAID TAXES THEREON. THE REASSESSMENTS WERE COM PLETED U/S.143(3) R.W.S 147 OF THE ACT ON 10.02.2014 DETERMINING THE INCOME AT .26,94,410/-, .18,38,760/- AND .26,94,410/- FOR THE A.Y. 2009-10, A.Y.2010-11 AND A.Y. 2011-12 RESPECTIVELY, ACCEPTIN G THE REVISED RETURN OF INCOME FILED BY THE ASSESSEE. 3 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS 3. SUBSEQUENTLY, ASSESSING OFFICER INITIATED PENALTY P ROCEEDINGS AND LEVIED PENALTY OF .2,79,700/-, .2,00,358/- AND . 4,14,288/- U/S.271(1)(C) OF THE ACT FOR THE A.Y.2009-10, A.Y. 2010-11 AND A.Y.2011-12 RESPECTIVELY, STATING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND CONCEALED ITS INCOME WITHIN THE MEANING OF SECTION 271(1)(C) R.W. EXPLANATION 1 OF THE ACT. ON APPEAL THE LD.CIT(A) DELETED THE PENALTY LEVIED BY THE ASS ESSING OFFICER. AGAINST THIS ORDER OF THE LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THE REFORE, WE PROCEED TO DISPOSE OFF THESE APPEALS ON HEARING THE LD. DR ON MERITS. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSES SING OFFICER. 6. WE HAVE HEARD LD. DR, PERUSED THE ORDERS OF THE AUT HORITIES BELOW. ON A PERUSAL OF THE MATERIAL AVAILABLE ON R ECORD, WE FIND THAT THE TAX EFFECT IN THESE APPEALS IS .2,79,700/-, ,2,00 ,358/- AND .4,14,288/- FOR THE A.Y. 2009-10, A.Y. 2010-11 AND A.Y.2011-12 RESPECTIVELY, IS LESS THAN .50 LAKHS AND THEREFORE THE APPEALS OF THE RE VENUE ARE NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT IN VIEW O F THE CBDT CIRCULAR 4 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS NO. 17/2019 DATED 08.08.2019. WHEN THIS WAS POINTE D OUT LD. DR SUBMITTED THAT IT IS COVERED UNDER EXCEPTIONS PROVI DED UNDER CLAUSE 10(E) OF THE CIRCULAR WHICH PROVIDES THAT WHEN ADDI TIONS ARE MADE BASED ON THE INFORMATION RECEIVED FROM EXTERNAL SOURCES THE REVENUE APPEALS CANNOT BE DISMISSED ON MONETARY GROUNDS. LD. DR SUB MITTED THAT THIS IS A CASE WHERE INFORMATION HAS BEEN RECEIVED FROM DGI T (INV.)/SALES TAX DEPARTMENT BASED ON WHICH RE-ASSESSMENT WAS MADE U/ S. 147 OF THE ACT AND THUS FALLS UNDER THE EXCEPTION AS THE INFOR MATION WAS RECEIVED FROM EXTERNAL SOURCES. 7. ON A PERUSAL OF THE RE-ASSESSMENT ORDER, WE OBSERVE THAT THE RE-ASSESSMENT U/S. 143 R.W.S. 147 OF THE ACT WAS MA DE ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MUM BAI. WE HAVE NOTICED IN MANY CASES WHERE SALES TAX DEPARTMENT PR OVIDED INFORMATION TO DGIT(INV.,), MUMBAI AND THE DGIT(INV .,) MUMBAI IN TURN FORWARDED THE INFORMATION TO THE CONCERNED ASSESSIN G OFFICER. AS HELD BY THE COORDINATE BENCH IN THE CASE OF ITO V. LATE SHRI AMARCHAND P. SHAH (LEGAL HEIR SHRI NITIN A. SHAH) IN ITA.NO. 818 TO 820/MUM/2017 DATED 08.07.2019, DGIT (INV.,), MUMBAI IS NOT AN EX TERNAL AGENCY BUT IT IS ONLY AN INTERNAL AGENCY OF THE REVENUE DEPARTMEN T. IN ANY CASE THE 5 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS MODIFIED INSTRUCTIONS DATED 20.08.2018 APPLIES ONLY FOR THE ASSESSMENT PROCEEDINGS AND IT DOES NOT APPLY TO PENALTY PROCEE DINGS. PENALTY IS LEVIED BASED ON THE ADDITION/DISALLOWANCE MADE IN T HE QUANTUM ASSESSMENT PROCEEDINGS WHICH IS SEPARATE FROM THE P ENALTY PROCEEDINGS. IN THE CIRCUMSTANCES, SINCE THE REVENUE EFFECT IN A LL THESE APPEALS IS LESS THAN .50 LAKHS, WE HOLD THAT THESE APPEALS ARE NOT MAINTAINABLE. 8. ON MERITS THE PENALTY WAS DELETED BY THE LD.CIT(A) SINCE THE RETURN INCOME AND THE INCOME COMPUTED BY THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER ARE SAME, THERE IS NO DIFFERENCE, OBSERVING AS UNDER: - 5.2. FURTHER, THE HON'BLE ITAT 'A' BENCH, MUMBAI, IN THE CASE OF ARMOURY INTERNATIONAL VS ACIT, VIDE ITA NO. 3299, 3 300 & 3301/MUM/2017, DATED 01.01.2019, HAS HELD THAT: 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSMENT IN THIS C ASE HAS BEEN COMPLETED ON THE RETURNED INCOME. HENCE, WHEN THE RETURNED INCOME AND THE ASSESSES INCOME AR E SAME, THE MACHINERY PROVISION FOR LEVY OF PENALTY U /S 271(1)(C) FAILS, AS THE PENALTY U/S. 271(1)(C) IS L EVIED WITH REFERENCE TO THE TAX SOUGHT TO BE EVADED, WHIC H IS THE DIFFERENCE BETWEEN THE INCOME RETURNED AND THAT ASSESSED BY THE A.O. 7. IN THIS CASE, SINCE THE ASSESSED INCOME AND THE RETURNED INCOME ARE THE SAME THE MACHINERY PROVISIO N FOR LEVY OF PENALTY U/S 271(1)(C) FAILS. IN THIS RE GARD WE DRAW SUPPORT FROM THE DECISION OF HON'BLE DELHI HIG H COURT IN THE CASE OF CIT VS. SAS PHARMACEUTICAL [20 11]] 335 ITR 259 (DEL.). THE HON'BLE HIGH COURT HAS EXPOUNDED THAT PENALTY U/S. 271(1)(C) CAN ONLY BE L EVIED IF IN THE COURSE OF PROCEEDINGS, THE A.O. IS SATISF IED THAT 6 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS THERE IS AN CONCEALMENT OR FURNISHING INACCURATE PARTICULARS. THE WORDS 'IN THE COURSE OF ANY PROCEE DINGS UNDER THIS ACT MEAN THE ASSESSMENT PROCEEDINGS'. HOWEVER, THE QUESTION 'WHETHER THERE IS CONCEALMENT OR INACCURATE PARTICULARS' HAS TO BE DETERMINED WITH REFERENCE TO THE RETURNED INCOME. ACCORDINGLY, IN T HE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDEN T, WE SET ASIDE THE ORDER OF THE ID. CIT(A) AND DELETE THE LEVY OF PENALTY.' 5.3 CONSIDERING THE FACTS OF THE CASE AND DECISION OF THE HON'BLE ITATS (SUPRA) THE PENALTY OF RS. 2,79,700/-, LEVIED BY THE AO, U/S.271(1)(C) OF THE ACT IS DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALLOWED. 9. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONING GIVEN THEREIN WE DO NOT FIND ANY INFIRMITY IN THE ORDER P ASSED BY THE LD.CIT(A) IN DELETING THE PENALTY. 10. IN THE RESULT, APPEALS OF THE REVENUE AREDISMISSED. ORDER PRONOUNCED ON AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI / DATED 24/06/2021 GIRIDHAR, SR.PS/JAISY VARGHESE,SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// 7 ITA.NOS. 6743, 6744 & 6745/MUM/2019 (A.YS: 2009-10, 2010-11 & 2011-12) M/S. VARNA GRAPHICS BY ORDER (ASSTT.REGISTRAR) ITAT, MUM