GURERA SYNTHETICS P.LTD, MUMBAI V. ACIT CIR 4(2), MUMBAI

ITA 683/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2150 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABANI KANTA NAYADR
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 683 /MUM/2012 ( / ASSESSMENT YEAR : 2003-04) M/S GURERA SYNTHETICS PVT. LTD., 33/37, DR. ATMARAM MERCHANT ROAD, DWARKESH MARKET, BHULESHWAR, MUMBAI 400 002. / V. ACIT, CIRCLE 4(2), AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN :AAACC2269G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY NONE RESPONDENT BY : SHRI ABANI KANTA NAYA,DR / DATE OF HEARING : 18-11-2015 / DATE OF PRONOUNCEMENT : 30-11-2015 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING I TA NO. 683/MUM/2012, IS DIRECTED AGAINST THE ORDER DATED 3 0-11-2011 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - 8 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2003- 04 WHEREBY THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE LEARNED ASSESSI NG OFFICER(HEREINAFTER CALLED THE AO) U/S 271(1)(C) OF THE INCOME TAX AC T, 1961(HEREINAFTER CALLED THE ACT). ITA 683/M/12 2 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT, THE A.O. OBSERVED THAT THE ASSESSEE COMPANY HAS DEBITED BOGUS PURCHAS ES TO THE TUNE OF RS. 7,54,274/- FROM M/S J.D. INDUSTRIES. THE A.O. ISSU ED NOTICES U/S 133(6) OF THE ACT TO SAID M/S J.D. INDUSTRIES WHICH RETURNED BACK UN-SERVED WHICH FACT WAS CONFRONTED TO THE ASSESSEE COMPANY AND THE ASSE SSEE COMPANY SUBMITTED THAT THE PARTY WAS NOT READILY TRACEABLE AND IT DOES NOT HAVE THE PRESENT ADDRESS OF THE SAID PARTY, HENCE, THE PURCH ASES TO THE TUNE OF RS. 7,54,274/- FROM THE ABOVE PARTY WAS TREATED AS BOGU S PURCHASES AND BROUGHT TO TAX IN QUANTUM PROCEEDINGS VIDE ASSESSMENT ORDER S DATED 31.01.2006 PASSED U/S 143(3) OF THE ACT BY THE AO. THE ASSESSE E COMPANY WENT IN QUANTUM APPEAL AGAINST THE ASSESSMENT ORDER DATED 3 1.01.2006 PASSED U/S 143(3) OF THE ACT BEFORE THE CIT(A) BUT FAILED TO S UCCEED ON THIS GROUND AS THE CIT(A) VIDE ORDERS DATED 02.05.2008 DISMISSED THE A PPEAL OF THE ASSESSEE COMPANY ON THIS GROUND OF APPEAL. IT WAS OBSERVED B Y THE CIT(A) IN QUANTUM PROCEEDINGS THAT THE ASSESSEE COMPANY STATED THAT I T HAS NO DEALING WITH SAID J D INDUSTRIES FOR LAST 3 YEARS BUT IT HAS MADE ALL THE PAYMENTS TO J D INDUSTRIES DURING THE ASSESSMENT YEAR VIDE ACCOUNT PAYEE CHEQUES AND THE ASSESSEE COMPANY SUBMITTED ITS BANK STATEMENT HIGHL IGHTING THE 27 BANK ENTRIES RELATED TO J.D. INDUSTRIES , HOWEVER IT WAS OBSERVED BY THE AUTHORITIES BELOW THAT ONLY EIGHT BANK ENTRIES CONTAINED THE NA ME OF J.D. INDUSTRIES AND THE REST DID NOT SHOW THE NAME OF J.D. INDUSTRIES A ND IT WAS OBSERVED BY AUTHORITIES BELOW THAT IT IS DIFFICULT TO BELIEVE T HAT THE ASSESSEE COMPANY DOES NOT HAVE THE ADDRESS OF J D INDUSTRIES FROM WHOM TH E ASSESSEE COMPANY HAS MADE PURCHASES AND ALSO THE COPIES OF 3-4 PURCHASE BILLS SUBMITTED BY THE ASSESSEE COMPANY, IT WAS OBSERVED THAT IT CONTAINED SIGNATURES OF ONE D.KUMAR AND BILLS ARE OF IDENTICAL AMOUNTS WHICH DO ES NOT INSPIRED CONFIDENCE OF BEING GENUINE BY THE AUTHORITIES BELO W . SINCE THE ASSESSEE COMPANY FAILED TO PROVE THE PURCHASES OF RS.7,54,27 4/- MADE FROM J D INDUSTRIES, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE A.O IN QUANTUM ITA 683/M/12 3 PROCEEDINGS WHICH ATTAINED FINALITY AS THE ASSESSEE COMPANY DID NOT CHALLENGE THIS ADDITION OF RS.7,54,274/- ON ACCOUNT OF THESE PURCHASES FROM J D INDUSTRIES BEFORE THE TRIBUNAL. BASED UPON THE ABOVE DECISION OF THE CIT(A) REJECTING THE APPEAL OF THE ASSESSEE COMPANY IN QUANTUM PROCEEDINGS, THE A.O. LEVIED PENALTY OF RS. 2,77,195/-ON THE ASS ESSEE COMPANY U/S 271(1)(C) OF THE ACT VIDE ORDERS DATED 29-03-2010 O N THE INCOME OF RS.7,54,274/- BEING BOGUS PURCHASES FROM J D INDUST RIES SOUGHT TO BE EVADED BY THE ASSESSEE COMPANY. 3. AGGRIEVED BY THE PENALTY ORDERS DATED 29-03-2010 PASSED BY THE AO U/S 271(1)(C) OF THE ACT, THE ASSESSEE COMPANY FILED AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY I.E. THE CIT(A). THE CIT(A) O BSERVED THAT THE A.O. MADE THE ADDITION WHICH WAS CONFIRMED BY THE CIT(A) IN T HE QUANTUM PROCEEDINGS AND THIS MATTER HAS ATTAINED FINALITY . THE CIT(A ) CONFIRMED THE PENALTY VIDE ORDERS DATED 30-11-2011 BY OBSERVING THAT THE ASSES SEE HAS NOT VOLUNTARILY OFFERED THE DISALLOWANCE OF RS. 7,54,274/- FOR TAXA TION ON ACCOUNT OF BOGUS PURCHASES FROM J D INDUSTRIES AND HAS OFFERED AN EX PLANATION WHICH IS BOTH FALSE AND NON-BONAFIDE ONE AND IT FITS DIRECTLY TO EXPLANATION 1 TO SECTION 271(1) OF THE ACT. 4.AGGRIEVED BY THE DECISION OF THE CIT(A) VIDE ORDE R DATED 30-11-2011, THE ASSESSEE COMPANY HAS PREFERRED THIS APPEAL BEFORE T HE TRIBUNAL. 5.AT THE TIME OF HEARING, NONE APPEARED ON BEHALF O F THE ASSESSEE COMPANY, THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL AFTE R HEARING THE LD. D.R. 6. THE LD. D.R. RELIED UPON THE ORDERS OF AUTHORITI ES BELOW AND SUBMITTED THAT THE ASSESSEE COMPANY HAS NOT GONE INTO APPEAL BEFOR E THE TRIBUNAL IN THE QUANTUM PROCEEDINGS WITH RESPECT TO THE BOGUS PURCH ASE OF RS.7,54,274/- FROM J D INDUSTRIES AND THE ASSESSEE COMPANY HAS AC CEPTED THE ADDITIONS AS ITA 683/M/12 4 THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE COM PANY AND THE MATTER HAS ATTAINED FINALITY AS FAR AS QUANTUM PROCEEDINGS ARE CONCERNED. THE LD. DR SUBMITTED THAT NOTICE U/S 133(6) WAS ISSUED TO M/S J D INDUSTRIES FROM WHOM THE ASSESSEE COMPANY MADE PURCHASES RETURNED U N-SERVED AND REMAINED UN-COMPLIED WITH. THE ASSESSEE COMPANY HA S NOT BEEN ABLE TO PRODUCE THE SAID PARTY M/S J D INDUSTRIES BEFORE TH E AUTHORITIES BELOW NOR FURNISH ANY PROPER PRESENT ADDRESS OF THE SAID PART Y, HENCE, THE ADDITION WAS RIGHTLY MADE BY THE A.O. AND CONFIRMED BY THE CIT(A ) WHICH HAS ATTAINED FINALITY AND HENCE PENALTY ORDERS BE ALSO CONFIRMED . THUS, THE LD. DR SUBMITTED THAT THE PENALTY HAS BEEN RIGHTLY LEVIED ON THE ASSESSEE COMPANY BY THE AO AND WHICH WAS RIGHTLY CONFIRMED BY THE CI T(A). 7. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE COMPANY HAS MADE PURCHASES OF RS.7,54,274/- FROM M/S J D INDUSTRIES WHICH WAS DI SBELIEVED BY REVENUE AS BEING ALLEGEDLY BOGUS PURCHASES. THE NOTICES U/S 13 3(6) OF THE ACT WAS SENT TO M/S J D INDUSTRIES BY THE AO WHICH REMAINED UN-S ERVED AND UN-COMPLIED WITH . THE ASSESSEE COMPANY HAS ALSO NOT SUBMITTED CURRENT ADDRESS OF M/S J D INDUSTRIES BEFORE THE AUTHORITIES BELOW AND THE S AID PARTY WAS ALSO NOT PRODUCED BY THE ASSESSEE COMPANY BEFORE THE AUTHORI TIES BELOW ALTHOUGH THE ALLEGED PURCHASES OF RS.7,54,274/- WERE MADE BY THE ASSESSEE COMPANY FROM M/S J D INDUSTRIES DURING THE ASSESSMENT YEAR AND T HE AMOUNT STAND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE C OMPANY. THE QUANTUM ADDITION OF RS.7,54,274/- WAS MADE BY THE AO ON ACC OUNT OF THESE ALLEGED BOGUS PURCHASES AGAINST WHICH THE FIRST APPEAL OF T HE ASSESSEE COMPANY WAS DISMISSED BY THE CIT(A) AND QUANTUM PROCEEDINGS ATT AINED FINALITY AS THE ASSESSEE COMPANY CHOSE NOT TO FILE SECOND APPEAL WI TH THE TRIBUNAL WITH RESPECT TO THIS ADDITION OF RS.7,54,274/- ALTHOUGH IT FILED APPEAL WITH THE MUMBAI TRIBUNAL WITH RESPECT TO OTHER ADDITIONS MAD E IN THE ABOVE STATED ASSESSMENT ORDER(REF ITA NO 5000/MUM/2008 DECIDED O N 31-08-2009) . ITA 683/M/12 5 HOWEVER, THE ASSESSEE COMPANY SUBMITTED BEFORE THE AUTHORITIES BELOW THAT IT HAS NO DEALING WITH J D INDUSTRIES FOR LAST 3 YE ARS AND THEIR PRESENT ADDRESS IS NOT AVAILABLE WITH THE ASSESSEE COMPANY . THE ASSESSEE COMPANY ALSO STATED BEFORE THE AUTHORITIES BELOW THAT THERE IS NO DIFFERENCE IN ACCOUNTS WITH M/S J D INDUSTRIES. THE ASSESSEE COMPANY SUBMI TTED BEFORE THE AUTHORITIES BELOW THAT ALL THE PAYMENTS TO SAID M/S J D INDUSTRIES WERE MADE BY THE ASSESSEE COMPANY THROUGH BANKING CHANNELS VI DE ACCOUNT PAYEE CHEQUES AND THERE IS NO DIFFERENCE IN THE PURCHASE S FROM M/S J D INDUSTRIES. THE ASSESSEE COMPANY SUBMITTED ITS BANK STATEMENT B EFORE THE AUTHORITIES BELOW HIGHLIGHTING 27 ENTRIES IN BANK STATEMENT REL ATING TO M/S J D INDUSTRIES ALONG WITH COPY OF ACCOUNT STATEMENT OF M/S J D INDUSTRIES IN THE BOOKS OF THE ASSESSEE COMPANY ALONG WITH COPIES OF THE PURCHASE BILLS (3-4 SAMPLE BILL COPIES). IT WAS OBSERVED BY THE AUTHOR ITIES BELOW FROM PERUSAL OF BANK STATEMENT OF THE ASSESSEE COMPANY THAT THE ASS ESSEE COMPANY SUBMITTED THAT 27 ENTRIES IN THE BANK STATEMENT PER TAINED TO SAID M/S J.D. INDUSTRIES AND OUT OF THESE 27 ENTRIES, ONLY 8 ENTR IES CONTAINED THE NAME OF M/S J.D. INDUSTRIES ON THE BANK STATEMENT AND ON AL L OTHER ENTRIES IN BANK STATEMENT, NO MENTION OF J.D. INDUSTRIES IS REFLECT ED IN THE BANK STATEMENT. THE AUTHORITIES BELOW HAVE ALSO DOUBTED THE PURCHAS E BILL SUBMITTED BY THE ASSESSEE COMPANY AS NON GENUINE ON THE GROUND THAT THESE 3-4 BILLS SUBMITTED ARE OF IDENTICAL AMOUNT AND ALSO CARRIED THE SIGNATURE OF ONE MR. D.KUMAR . WE ARE OF CONSIDERED VIEW THAT MERELY BEC AUSE THE ASSESSEE COMPANY IS NOT ABLE TO PRODUCE M/S J D INDUSTRIES B EFORE THE AUTHORITIES BELOW OR THE NOTICES U/S 133(6) OF THE ACT REMAININ G UN-SERVED/UN-COMPLIED WITH AND DISBELIEVING PURCHASE BILLS SUBMITTED BY T HE ASSESSEE COMPANY COULD BE REASONS FOR QUANTUM ADDITIONS BUT THESE A RE NOT SUFFICIENT FOR LEVYING PENALTY U/S 271(1)(C ) OF THE ACT AS THE P ROVISIONS OF SECTION 271(1)(C) OF THE ACT BEING PENALTY PROVISIONS ARE TO BE STRIC TLY CONSTRUED TO BRING THE TAXPAYER WITH IN THE FOUR CORNERS OF THE PENALTY OF HAVING CONCEALED PARTICULARS OF INCOME OR HAVING FURNISHED IN-ACCUR ATE PARTICULARS OF INCOME ITA 683/M/12 6 AS PER MANDATE OF SECTION 271(1)(C) OF THE ACT AND AS HELD BY HONBLE SUPREME COURT IN THE JUDGMENT OF (2010) CIT V. RELI ANCE PETROPRODUCTS PRIVATE LIMITED (2010) 322 ITR 158(SC). IN OUR CONS IDERED OPINION, THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL LEADING TO THE CONCLUSION THAT THE ASSESSEE COMPANY HAS CONCEALED ITS PARTICULARS OF I NCOME OR HAS FURNISHED IN-ACCURATE PARTICULARS OF INCOME AS PER MANDATE OF SECTION 271(1)(C ) OF THE ACT WHILE ON THE OTHER HAND THE ASSESSEE COMPANY H AS DULY PRODUCED ACCOUNT OF M/S J D INDUSTRY IN ITS BOOKS OF ACCOUNT S ALONG WITH ITS BANK STATEMENT AND CONTENDED THAT ALL PAYMENTS TO M/S J D INDUSTRIES WAS MADE THROUGH BANKING CHANNELS BY ACCOUNT PAYEE CHEQUES REFLECTING 27 ENTRIES IN ITS BANK STATEMENT AS RELATED TO M/S J D INDUSTRIES AND THERE IS NO DIFFERENCE IN THE ACCOUNT. THE REVENUE BY MERELY SAYING THAT OUT OF 27 ENTRIES HIGHLIGHTED IN THE BANK STATEMENT PERTAINING TO M/ S J.D. INDUSTRIES, ONLY EIGHT ENTRIES CONTAINED NAME OF M/S J.D. INDUSTRIES IN THE BANK STATEMENT WHILE REST DOES NOT HAVE NAME OF J D INDUSTRIES IN THE BANK STATEMENT IS NOT SUFFICIENT TO FASTEN LIABILITY FOR PENALTY U/S 271( 1)(C) OF THE ACT IN THE ABSENCE OF ANY POSITIVE FINDINGS AS TO THE CONCEALMENT OF P ARTICULARS OF INCOME OR FURNISHING OF IN-ACCURATE PARTICULARS OF INCOME AS THE RIGOURS OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE TO BE STRICTLY CON STRUED. THE ASSESSEE COMPANY HAS ALSO GIVEN PLAUSIBLE REASONS FOR NOT HA VING CURRENT ADDRESS OF THE SAID M/S J D INDUSTRIES THAT IT HAS NO DEALING WITH SAID M/S J D INDUSTRIES FOR LAST 3 YEARS AND HENCE IT CANNOT BE EXPECTED OF THE ASSESSEE COMPANY TO GIVE THE CURRENT ADDRESS OF THE SAID M/S J D INDUSTRIES MORE-SO WHEN PURCHASE BILLS ARE PRODUCED BEFORE THE AUTHORI TIES BELOW ALONG WITH STATEMENT OF ACCOUNT OF SAID M/S J D INDUSTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND THE PAYMENTS ARE STATED TO HAVE BEEN MADE THROUGH BANKING CHANNELS THROUGH ACCOUNT PAYEE CHEQ UES. SIMILARLY, REVENUE BY MERELY DISBELIEVING PURCHASE BILLS AS SU BMITTED BY THE ASSESSEE COMPANY ON THE GROUND THAT ALL THE BILLS SO SUBMITT ED CARRIES SIGNATURE OF ONE PERSON MR D.KUMAR OR ALL THE BILLS CARRIED IDENTICA L AMOUNT IS ALSO NOT ITA 683/M/12 7 SUFFICIENT FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT IN THE ABSENCE OF FINDING LEADING TO THE IRRESISTIBLE CONCLUSION OF CONCEALME NT OF PARTICULARS INCOME OR FURNISHING OF IN-ACCURATE PARTICULARS OF INCOME BY THE ASSESSE COMPANY WHICH THE REVENUE HAS NOT BROUGHT ON RECORD. IN OUR CONSI DERED VIEW, THE PENALTY OF RS.2,77,195/- AS LEVIED U/S 271(1)(C) OF THE ACT BY THE AO AND CONFIRMED BY THE CIT(A) CANNOT BE SUSTAINED KEEPING IN VIEW FACT S AND CIRCUMSTANCE OF THE CASE AND WE ORDER DELETION OF THE PENALTY OF RS.2, 77,195/- AS LEVIED U/S 271(1)(C) OF THE ACT BY THE A.O. AND AS CONFIRMED B Y THE CIT(A).WE ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. # $% &' 30-11-2015 ( ) SD/- SD/-- (AMIT SHUKLA) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 30-11-2015 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI