ASST CIT CIRCLE-9 (3)(1), MUMBAI V. M/S FIRE FLOAT (I) PVT LTD., MUMBAI

ITA 7018/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8171 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 15-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) F BENCH, MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , HON'BLE ACCOUNTANT MEMBER IT A. NO. 7018 /MUM/201 9 (A.Y: 20 08 - 09) ACIT CIRCLE 9(3)( 1 ) ROOM NO. 215, 2 ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020 V. M/S. FIRE FLOAT (I) PVT. LTD., B - 304, SAMUNDAR DARSHAN N DUTTA MARG FOUR BUNGLOW, ANDHERI(W) MUMBAI - 400053 PAN: AAACF2439H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NONE DEPARTMENT BY : SHRI RAJESH YADAV DATE OF HEARING : 2 3 .06.2021 DATE OF PRONOUNCEMENT : 30 .07 .2021 O R D E R PER C.N. PRASAD (JM) 1. TH IS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF THE L EARNED COMMISSI ONER OF INCOME - TAX (APPEALS) - 16 , MUMBAI [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 30.08.2019 FOR THE A.Y. 2008 - 09 IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT MADE BY THE ASSESSING OFFICER . 2 ITA.NO. 7018/MUM/2019 (A.Y: 2008 - 09) M/S. FIRE FLOAT (I) PVT. LTD., 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE ENGAGED IN THE BUSINESS OF FIRE FIGHTING EQUIPMENT ERECTION - CONSULTANCY FILED RETURN OF INCOME ON 15.09.2008 DECLARING INCOME OF . 4,33,636 / - FOR THE A.Y: 2008 - 10 . THE RETURN WAS PROCESSED U/S. 143(1 ) OF THE ACT ACCEPTING THE RE TURN . SUBSEQUENTLY, A SSESSMENT WAS REOPENED U/S. 147 OF THE ACT AND RE - ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S 147 OF THE ACT ON 09.03.2015 DETERMINING THE INCOME AT . 37,42,560 / - . WHILE COMPLETING THE REASSESSMENT THE ASSESSING OFFICER TREATED PURCHASES OF . 33,08,928 / - MADE FROM VARIOUS DEALERS AS NON - GENUINE ON THE BASIS OF THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MUMBAI THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRI ES FROM VARIOUS DEALERS WITHOUT MAKING ANY PURCHASES BUT MADE PURCHASES ONLY IN GRAY MARKET. THE ASSESSING OFFICER TREATED SUCH PURCHASES AS NON - GENUINE AS THE ASSESSEE COULD NOT PRODUCE ANY DELIVERY CHALLAN TO PROVE THAT THE DELIVERY OF GOODS HAS BEEN AC TUALLY RECEIVED BY THE ASSESSEE FROM THE ALLEGED SUPPLIERS. HOWEVER, THE ASSESSING OFFICER TREATED ENTIRE ALLEGED BOGUS PURCHASES AS NON - GENUINE AND BROUGHT TO TAX AN AMOUNT OF . 33,08,928 / - FOR THE A.Y.20 08 - 09 . ON FURTHER APPEAL , LD.CIT(A) CONFIRMED THE ADDITION IN THE A.Y. 2008 - 09 AND GAVE RELIEF OF THE SAME AMOUNT IN THE A.Y: 2009 - 10, APPRECIATING THE FACT THAT ASSESSEE HAS SUOMOTO OFFERED THE 3 ITA.NO. 7018/MUM/2019 (A.Y: 2008 - 09) M/S. FIRE FLOAT (I) PVT. LTD., AMOUNTS AS ADDITIONAL INCOME CONSIDERING THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO 12.5% OF THE PURCHASES. SUBSEQUENTLY, ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY OF . 11,24,704 / - U/S. 271(1)(C) OF THE ACT FOR THE A.Y.20 08 - 09 , STATING THAT TH E 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 ASSESSING OFFICER. AGAINST THIS ORDER OF THE LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 3. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT. THEREFORE, WE PROCEED TO DISPOSE OF THISL ON HEARING LD.DR ON MERITS. 4. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. 5. WE HAVE HEARD LD. DR , PERUSED THE ORDERS OF THE AU THORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD. CIT (A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS IN THE ASSESSMENT ORDER 4 ITA.NO. 7018/MUM/2019 (A.Y: 2008 - 09) M/S. FIRE FLOAT (I) PVT. LTD., AND DELETED THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT MADE BY THE ASSESSING OFFICER OBSERVING AS UNDER : - 6.1.1. VIDE THESE GROUNDS, THE APPELLANT HAS AGITATED AGAINST LEVYING PENA LTY OF RS. 11,24,70 4/ - U/S. 271(1 )(C) OF THE IT ACT, 1961. THE LD. AO HAS INITIATED THE PENALTY ON THE BASIS OF INFORMATION RECEIVED FROM THE SALE TAX DEPARTMENT THAT APPELLANT HAS SHOWN BOGUS PURCHASES. 6.1.2. THE APPELLANT HAS CHALLENGED THE ADDITION MADE BY THE AO TOWARDS ESTIMATION OF GROSS PROFIT ON ALLEGED BOGUS PURCHASES AND CIT(A) HAS UPHOLD ADDITION MADE BY THE LD. AO IN THE ASSESSMENT ORDER. THE APPELLANT FURTHER CONTENDED THAT IN THE IMMEDIATE NEXT AY WHOLE AMOUNT OF PURCHASE WAS WRITTEN BACK OF BOTH THE DISPUTED P URCHASE PARTIES, AMOUNTING TO RS. 33,08,928/ - AS PER PROVISION OF SEC 41(1) OF THE ACT BY CREDITING THE SAME IN THE PROFIT AND LOSS ACCOUNT FOR PREVIOUS YEAR ENDING ON 31.03.2009. ACCORDING TO THE APPELLANT, THIS RESULTED IN DOUBLE ADDITION I.E. FIRST BY I TSELF AND SECOND BY THE LD. AO THROUGH REOPENING THE ASSESSMENT U/S. 148 OF THE I.T. ACT. AFTER CONSIDERING ALL THE ABOVE SCENARIO BY THE CIT(A) VIDE THEIR ORDER DATED 29.12.2016, CONFIRMED THE ADDITION IN THE A.Y. 2008 - 09 AND GAVE RELIEF OF THE SAME AMOU NT IN THE AY 2009 - 10, APPRECIATING THE FACT THAT APPELLANT HAS SUO - MOTO OFFERED THE IMPUGNED AMOUNT AS ADDITIONAL INCOME. ALSO, APPELLANT HAS STATED THAT FACT REMAINS THAT IT HAS FURNISHED COMPLETE EVIDENCES TO PROVE SUCH PURCHASES AND ALSO FILED QUANTITAT IVE DETAILS OF PURCHASE AND SALES. 6 .1.3. ALSO, IT IS SEEN THAT THE AO HAS LEVIED PENALTY U/S 271(L)(C) ON THE GROUND THAT THE APPELLANT FAILED TO OFFER ANY EXPLANATION TO THE SATISFACTION OF THE AO IN RESPECT OF ESTIMATION OF GROSS PROFIT ON ALLEGED BOGU S PURCHASES IN THE LIGHT OF FACTS GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS COUPLED WITH REPORT OF SALES - TAX DEPARTMENT. ACCORDING TO THE AO, THE PURCHASES FROM CERTAIN PARTIES WERE NOT GENUINE WHICH IS EVIDENT FROM THE FACT THAT THE APPELLANT F AILED TO FURNISH COMPLETE DETAILS OF PURCHASES FROM THE ABOVE PARTIES. THEREFORE, LD. AO OPINED THAT IT IS A CLEAR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WHICH WA RRANTS LEVY OF PENALTY U/S 271(1 )(C) AND ACCORDINGLY LEVIED PENALTY UNDER EXPL ANATION 1 TO SECTION 6.1.4. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS FILED RELEVANT DOCUMENTS. THE APPELLANT ALSO SUBMITTED THAT THERE IS NEITHER CONCEALMENT OF INCOME AS ALL THE DOCUMENTARY EVIDENCING THE GENUINENESS OF THE TRANSACTIONS WERE S UBMITTED TO THE LD. AO 5 ITA.NO. 7018/MUM/2019 (A.Y: 2008 - 09) M/S. FIRE FLOAT (I) PVT. LTD., NOT THE APPELLANT COMPANY HAS FURNISHED INACCURATE PARTICULARS OF INCOME AS THE APPELLANT COMPANY HAS TRULY DISCLOSE THE PURCHASE TRANSACTION BEFORE THE REVENUE AUTHORITIES. CONSIDERING THESE FACTS I TEND TO AGREE WITH THE APPELLANT' S CONTENTION. 6.1.5. IN THIS REGARD RELIANCE IS PLACED ON DECISION OF THE ITAT IN AY 2009 - 10 IN AJAY LOKNATH LOHIA, MUMBAI VS ITO ITA 2998/MUM/2017, MUMBAI WHEREIN IT WAS HELD THAT T HE AO NEVER DISBELIEVED INFORMATION FILED BY THE APPELLANT, BUT HE PROCEEDED ON THE BASIS OF INFORMATION RECEIVED FROM SALES - TAX DEPARTMENT TO MAKE ADDITIONS. THE AO HAS MADE SUCH ADDITION ON ADHOC BASIS BY ESTIMATING GROSS PROFIT ON ALLEGED BOGUS PURCHASES. THEREFORE, DISALLOWAN CE OF PURCHASES ON ADHOC BASIS DOES NOT TANTAMOUNT TO WILLFUL FURNISHING INACCURATE PARTICULARS OF INCOME WIT HIN THE MEANING OF SECTION 271(1 )(C) OF THE INCOME - TAX ACT, 1961. 6.1.6. RESPECTFULLY FOLLOWING THE ABOVE MENTIONED DECISION A ND KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE AS DISCUSSED ABOVE, IT IS HELD THAT THE LEVY OF PENALTY U/S. 271(1 )(C) IS NOT JUSTIFIED ON THE MERITS OF THE CASE. HENCE, THE APPEAL OF THE APPELLANT ON THIS GROUND IS ALLOWED AND PENAL TY OF RS. 11,24,704/ - . IMPOSED BY THE A.O. IS DELETED. 6. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). GROUNDS RAISED BY THE REVENUE ARE DISMISSED 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 30 .07.2021 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 30 / 07 / 2021 GIRIDHAR, SR.PS 6 ITA.NO. 7018/MUM/2019 (A.Y: 2008 - 09) M/S. FIRE FLOAT (I) PVT. LTD., 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// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM