SHRI. RAJENDRA PRASAD MAURYA , MUMBAI V. ITO 26 -26 (2)(5), MUMBAI

ITA 7107/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3676 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH MISHRA
• Keywords: Bogus purchase; Set aside
• Section: 271(1)(c); 143(3); 143(1); 250; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 7107/MUM/2019 (A.Y: 2009-10) SHRI RAJENDRA PRASAD MAURYA, GAUR KHAN ESTATE, NEAR GHAMELA CO. LBS MARG OPP BEST DEPOT KURLA WEST, MUMBAI 400070 VS. ITA 26(2)(5) RNO. 319, 3 RD FLOOR KAUTILYA BHAVAN, BKC, BANDRA, MUBAI 400051. PAN/GIR NO. : AACPM4614L APPELLANT .. RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI RAJESH MISHRA, DR DATE OF HEARING 19 .0 5 .2021 DATE OF PRONOUNCEMENT 24 .0 5 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -38 MUM BAI, PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT , 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. THE CIT(A) ERRED IN IGNORING THE FACTS THAT ADD ITION IS ONLY MADE ON PURELY ESTIMATED BASIS ON ACCOUNT OF A LLEGED BOGUS PURCHASES BY ESTIMATING A PART OF ALLEGED BOG US PURCHASES AS NON-GENUINE, FOR WHICH THERE IS NO BAS IS. ITA NO. 7107/MUM/2019 RAJENDRA PRASAD MAURYA, MUMBAI - 2 - 2. THE CIT(A) ERRED IN NOT ACCEPTING SUCH 10% PURCH ASES AS GENUINE ON PURELY ESTIMATE BASIS, WHEN 90% OF SUCH PURCHASES ARE HELD AS GENUINE. IT CANNOT BE SAID T HERE IS CONCEALMENT OF INCOME OR FURNISH OF INACCURATE PART ICULARS OF INCOME WHEN ADDITIONAL MADE ON PURELY ESTIMATE BASI S. 3. THE CIT(A) FAILED TO APPRECIATE THAT THERE IS NE ITHER CONCEALMENT OF PARTICULARS OF INCOME NOR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME, WHEN ADDITION MADE ON ESTIMATE BASIS. THEREFORE, PENALTY IMPOSED UNDER S . 271(1)(C) IS BAD IN LAW. 4. THE LD. CIT(A) ERRED IN UPHOLDING PENALTY ORDER U/S 271(1)(C) PASSED BY THE A.O IGNORING THE FACT THAT IN THE QUANTUM APPEAL, THE HONBLE ITAT, MUMBAI SUSTAINED PARTIAL ADDITION OF RS. 5,69,384/- ON ESTIMATED BASIS REDUC ING THE ADDITION OF RS. 14,23,467/- TO RS. 5,69,384/-. SIN CE BOTH THE ADDITIONS ARE BASED ON ESTIMATE BASIS, NEITHER CONC EALMENT OF PARTICULARS OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. HENCE THE IMPUGNED ORD ER OF THE CIT(A) DATED 25 JUNE, 2019 IS THEREFORE LIABLE TO B E ANNULLED ON THIS GROUND ALSO. 5. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, AND OR SUBSTITUTE ALL ANY OF THE AFORESAID GROUNDS OF APPE AL AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING OF WASHERS. THE ASSESSEE HAS FILED THE RETURN OF INCOM E FOR THE A.Y 2009-10 ON 27.09.2009 DECLARING A TOTAL INC OME OFRS. 2,72,440/-. THE RETURN OF INCOME WAS PROCESSE D U/S 143(1) OF THE ACT. THE A.O HAS RECEIVED INFORMATION FROM SALES TAX DEPARTMENT THROUGH DGIT (INV.) WING, MUMB AI THAT THE ASSESSEE HAS ENTERED INTO BOGUS PURCHASE ITA NO. 7107/MUM/2019 RAJENDRA PRASAD MAURYA, MUMBAI - 3 - TRANSACTIONS WITH THE PARTIES WHO ARE PROVIDING ACCOMMODATION BILLS. AS PER THE INFORMATION OF SALE TAX DEPARTMENT, GOVT OF MAHARASHTRA THE ASSESSEE IS ON E OF THE BENEFICIARY AND OBTAINED BOGUS BILLS AGGREGATIN G TO RS.56,93,838/- FROM FOUR PARTIES AND BASED ON THE SAID INFORMATION THE A.O. HAS ISSUED NOTICE U/S 148 OF T HE ACT. THE ASSESSEE HAS FILED A LETTER ON 26.08.2014 ALON G WITH THE COPY OF RETURN OF INCOME AND AUDIT REPORT AND TO TREAT THE RETURN OF INCOME AS COMPLIANCE TO NOTICE U/S 148 OF THE ACT. SUBSEQUENTLY, THE NOTICE U/S 143(2) AND 142(1)OF THE ACT WAS ISSUED. IN COMPLIANCE, THE LD. AR OF THE ASSESSE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE A.O CONSIDERING THE FACTS AND DETAIL S SUBMITTED BY THE ASSESSEE HAS DEALT ON THE DISPUTED ISSUE AND REQUIRED THE ASSESSEE TO PROVE THE PURCHA SE TRANSACTIONS ARE GENUINE AND NOTICE U/SEC133(6) OF THE ACT ARE ISSUED ON THE PARTIES AND THE SAID NOTICES WERE RETURNED UN SERVED BY THE POSTAL AUTHORITIES AND ON E PARTY DENIED THE TRANSACTIONS.FURTHER, THE A.O. WAS NOT SATISFIED WITH THE REPLY AND SUPPORTING DOCUMENTS. FINALLY THE A.O. HAS ESTIMATED PROFIT ELEMENT/GROSS PROFIT (GP) ON NON-GENUINE PURCHASES @25% WHICH WORKS OUT TO RS.14,23,467/-AND ASSESSED THE TOTAL INCOME OF RS. 16,95,907/- AND PASSED THE ORDER U/S 143(3) R.W.S 1 47 OF THE ACT ON 24.03.2015. ITA NO. 7107/MUM/2019 RAJENDRA PRASAD MAURYA, MUMBAI - 4 - SUBSEQUENTLY, THE A.O. HAS INITIATED PENALTY PROCEE DINGS U/S 271(1)(C) OF THE ACT, SINCE THE ASSESSEE HAS EN TERED INTO BOGUS PURCHASE TRANSACTIONS, THE A.O RELIED ON THE FINDINGS IN THE SCRUTINY ASSESSMENT AND ALSO OBSERV ED THAT IN SPITE OF PROVIDING OPPORTUNITY OF HEARING NO EXPLANATIONS WERE FILED IN THE PENALTY PROCEEDINGS. THEREFORE,THE A.O. HAS LEVIED PENALTY BASED ON THE ADDITION MADE IN THE SCRUTINY ASSESSMENT, WHICH WOR KED OUT TO RS.3,06,532/-AND PASSED THE ORDER U/S 271(1) (C) OF THE ACT ON26-04-2018. 3.AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). THE CIT(A) CONSIDE RED THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF THE ASSESSEE BUT THE CONFIRMED THE ACTION OF THE A.O I N THE LEVY OF PENALTY AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED AN APPEAL WITH THE HONBLE TRIBUNAL. 4. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THE LD. DR RELIED ON THE ORDERS OF LO WER AUTHORITIES. 5. WE HEARD THE LD. DR SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED I SSUE ITA NO. 7107/MUM/2019 RAJENDRA PRASAD MAURYA, MUMBAI - 5 - IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT BY THE A.O BASED ON THE ASSESSMENT ORDER UNDE R SECTION 143 R.W.S 147 OF THE ACT. WE FIND THE A.O H AS MADE DISALLOWANCE OF BOGUS PURCHASES BY ESTIMATION OF INCOME/GROSS PROFIT@25% BUT HAS ACCEPTED THE SALES IN THE BOOKS OF ACCOUNTS. WE FIND IN THE PENA LTY ORDER AT PAGE 2 PARA 3.6, IN RESPECT OF QUANTUM ADDITION, THE ASSESSEE ON FURTHER APPEAL TO HONBLE TRIBUNAL, IT WAS RESTRICTED TO @10%. WE ARE OF THE OPINION, THAT WHERE THE ADDITION IS SUSTAINED ON TH E ESTIMATED BASIS NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED. ACCORDINGLY, WE CONSIDERING THE FACTS, CIRCUMSTANCES AND JUDICIAL DECISIONS SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICE R TO DELETE THE PENALTY AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 6.INTHE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2021 SD/- SD/- (S RIFIAUR RAHMAN) (PAVAN KUMAR GADAL E) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24.05.2021 ITA NO. 7107/MUM/2019 RAJENDRA PRASAD MAURYA, MUMBAI - 6 - KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. !!' , $ % , / DR, ITAT, MUMBAI 6. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I