ASST. CIT 23 (2), MUMBAI V. PURSHOTTAMDAS AGARWAL , MUMBAI

ITA 6777/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0901 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE JUSTICE P.P. BHATT (PRESIDENT) & SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) I.T.A. NO. 6777/MUM/2019 (ASSESSMENT YEAR 2010-11) I.T.A. NO. 6778/MUM/2019 (ASSESSMENT YEAR 2011-12) ACIT - 23(2) 1 ST FLOOR ROOM NO. 120 MATRU MANDIR TARDEO ROAD MUMBAI-400 07. VS. PURSHOTTAMDAS AGARWAL PROP. M/S. KANAHAIYA CHEMICALS, 307, SAI SADAN 76/78, MODI STREET, FORT MUMBAI-400 001. PAN : AACPA5232C ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. SHREEKALA PARDESHI DATE OF HEARING 05 .0 7 .2021 DATE OF PRONOUNCEMENT 13 .0 7 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE APPEALS BY THE REVENUE AGAINST A COMMON O RDER OF LEARNED CIT(A) DATED 26.8.2019 WHEREIN FOLLOWING PENALTY LE VIED UNDER 271(1)(C) OF THE I.T. ACT HAS BEEN DELETED :- ASSESSMENT YEAR AMOUNT OF PENALTY 2010-11 60287/- 2011-12 16,223/- 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF P ENALTY ARE THAT THE ASSESSING OFFICER IN THESE CASES MADE DISALLOWANCE OF 20% ON ACCOUNT OF BOGUS PURCHASES. ASSESSEE HAS SUPPLIED THE PURCHASE VOUCH ERS AND THE PAYMENT WHERE SHOWN TO HAVE BEEN MADE BY BANKING CHANNEL. H OWEVER DRAWING ADVERSE INFERENCE FOR THE NONPRODUCTION OF THE SUPP LIERS THE ASSESSING OFFICER DISALLOWED 20 % OF THE BOGUS PURCHASES. HOWEVER THE ASSESSING OFFIC ER DID NOT DOUBT THE SALES. PENALTY UNDER SECTION 271(1)(C) O F THE ACT WAS ALSO LEVIED. PURSHOTTAMDAS AGARWAL 2 3. LEARNED CIT(A) DELETED THE PENALTY HOLDING THAT THE AMOUNT INVOLVED WAS VERY LOW. 4. AGAINST THIS ORDER REVENUE IS IN APPEALS BEFORE US. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E PERUSED THE RECORDS. AS CLEAR FROM THE FACTS RECORDED ABOVE THE DISALLOWANCE HAS BEEN MADE ON AN ESTIMATED BASIS ON ACCOUNT OF THE NON-PR ODUCTION OF SUPPLIERS BEFORE THE ASSESSING OFFICER. THE PURCHASE VOUCHERS WERE DULY PRODUCED AND THE PAYMENTS WERE THROUGH BANKING CHANNEL. IN THESE BACKGROUNDS IN OUR CONSIDERED OPINION ASSESSEE CANNOT BE VISITED WITH THE RIGOURS OF PENALTY UNDER SECTION 271(1)(C)OF THE ACT. AS A MATTER OF F ACT ON MANY OCCASIONS ON SIMILAR CIRCUMSTANCES IN QUANTUM PROCEEDINGS THE DI SALLOWANCE ITSELF HAS BEEN DELETED. IN OUR CONSIDERED OPINION ON THE FACT S AND CIRCUMSTANCES OF THE CASE ASSESSEE CANNOT BE SAID TO HAVE BEEN GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THIS REGARD WE DRAW SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONOURABLE SUPREM E COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. THE STATE OF ORISSA (83 IT R 26), WHERE IN IT WAS HELD THAT THE AUTHORITY MAY NO T LEVY THE PENALTY IF THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 6. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HA S TRIED TO MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORM ATION FROM SALES TAX DEPARTMENT, THIS PENALTY APPEAL FALLS IN THE EXCEPT ION CARVED OUT IN THE CBDT CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATION FROM OUTSIDE AGENCIES. WE ARE OF THE OP INION THAT THIS PLEA IS NOT TENABLE INASMUCH AS ONCE REVENUE ACCEPTS THAT PENAL TY IS LEVIED ON OUTSIDE AGENCY INFORMATION ,THE PENALTY LEVIED WILL HAVE NO LEGS TO STAND. PURSHOTTAMDAS AGARWAL 3 7. IN THE BACKGROUND OF AFORESAID DISCUSSION WE ARE OF THE OPINION THAT THESE APPEALS BY THE REVENUE ARE LIABLE TO BE DISMI SSED. HENCE THESE APPEALS ARE DISMISSED AS SUCH. 8. IN THE RESULT REVENUES APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13.07.2021 SD/- SD/- (JUSTICE PP BHATT) (SHAM IM YAHYA) PRESIDENT ACCOUN TANT MEMBER MUMBAI; DATED : 13 /07/2021 COPY OF THE ORDER FORWARDED 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