SANJAY LALCHAND BATTHIJA, MUMBAI V. INCOME TAX OFFICER WARD-2(4), KALYAN

ITA 7141/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7367 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOK KUMAR
• Keywords: Bogus purchase
• Section: 271(1)(c); 143(1); 274; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT, AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO . 7141 / MUM . /2017 ( ASSESSMENT YEAR : 20 10 1 1 ) SHRI SANJAY LALCHAND BATHIJA 301, SAI ASHIRWAD APARTMENTS OPP. DENA BANK, NETAJI CHOWK ULHASNAGAR 421 005 (THANE) PAN AFHPB8596C . APPELLANT V/S INCOME TAX OFFICER WARD 2(4), KALYAN . RESPONDENT ASSESSEE BY : SHRI PRATEEK JAIN REVENUE BY : SHRI V. VINOK KUMAR DATE OF HEARING 17 .09.2019 DATE OF ORDER 28 .10.2019 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 3 RD JULY 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, THANE, CONFIRMING PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) AMOUNTING TO ` 11,99,003, FOR THE ASSESSMENT YEAR 2010 11. 2 GRASIM BHIWANI TEXTILES LTD. 2. BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE FILED HIS RETURN OF INCOME ON 5 TH OCTOBER 2010, DECLARING TOTAL INCOME OF ` 7,69,540. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORM ATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOV ERNMENT OF MAHARASHTRA, REVEALING THAT PURCHASES WORTH ` 38,80,265, CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM FOUR PARTIES ARE NOT GENUINE , AS , THE CONCERNED PARTIES ARE PROVIDING ACCOMMODATION BILLS, T HE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. AS ALLEGED BY THE ASSESSING OFFICER, THE ASSESSEE DID NOT COMPLY WITH THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT. FURTHER, VARIOUS STATUTORY NOTICES AND REMINDERS ISSUED THERE A FTE R WERE ALSO NOT RESPONDED TO BY THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION 147 OF THE ACT TO THE BEST OF HIS JUDGMENT. THUS, ULTIMATELY, THE ASSESSING OFFICER HELD THE PURCHASES OF ` 38,80,265, AS NON GENUINE ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. THE LEARNED COMMISSIONER (APPEALS), HOWEVER, CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. IN THE MEANWHILE, ON THE BASIS OF THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES, THE 3 GRASIM BHIWANI TEXTILES LTD. ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY ISSUING NOTICE UNDER SECTION 274 OF THE ACT. THOUGH, THE ASSESSEE FILED HIS EXPLANATION OBJECTING TO IMPOSITION OF PENALTY, HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSEE PROCEEDED TO IMPOSE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR AN AMOUNT OF ` 11,90,003. THE PENALTY SO IMPOSED WAS ALSO CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). 4. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE VIDE ITA NO.7142/MUM./ 2017, DATED 14 TH MAY 2018, THE TRIBUNAL HAVING FOUND THAT SALES EFFECTED B Y THE ASSESSEE HAVE NOT BEEN DOUBTED BY THE DEPARTMENTAL AUTHORITIES , PROCEEDED TO ESTIMATE PROFIT ON THE ALLEGED NON GENUINE PURCHASES. THUS, HE SUBMITTED , WHEN THE DISPUTED ADDITION WHICH NOW SURVIVES IS ONLY ON THE BASIS OF ESTIMATION, THERE CANNOT BE E ITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THEREFORE, NO PENALTY UNDER SECTION 271(1)(C) CAN BE LEVIED. IN SUPPORT, HE RELIED UPON THE FOLLOWING DECISIONS: I) ITO V/S BANDU HATWAR, ITA NO.1567/MUM./2017, D ATED 10.10.2018; AND II) DCIT V/S HEMAA BUILDERS & DEVELOPERS LTD., ITA NO.116/ MUM./2018, DATED 13.03.2019. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS). 4 GRASIM BHIWANI TEXTILES LTD. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AT THE OUTSET, WE MUST OBSERVE THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS IMPOSED ON THE ADDITION OF ` 38,80,265, REPRESENTING THE QUANTUM OF ALLEGED NON GENUINE PURCHASES. HOWEVER, THE TRIBUN AL, WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE , IN THE ORDER REFERRED TO ABOVE , HAS RESTRICTED THE ADDITION TO 12.5% OF THE DISPUTED PURCHASE S . THEREFORE, TO THAT EXTENT, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT HAS TO BE REVISED. BE T HAT AS IT MAY, UNDISPUTEDLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT CERTAIN PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE, THE ASSESSING OFFICER HAS TREATED THE SAID PURCHASES TO BE BOGUS AND AD DED BACK TO THE INCOME OF THE ASSESSEE. THE SUBJECT ADDITION WAS ALSO CONFIRMED BY LEARNED COMMISSIONER (APPEALS). HOWEVER, WHILE CONSIDERING ASSESSEES APPEAL ON THE ISSUE, THE TRIBUNAL HAVING FOUND THAT THE DEPARTMENTAL AUTHORITIES HAVE NOT DISPUTED THE SALE S EFFECTED BY THE ASSESSEE AND FURTHER , THE PAYMENT IN RESPECT OF PURCHASES EFFECTED WERE MADE THROUGH BANKING CHANNEL AND ALSO THE PURCHASES WERE ENTERED IN THE STOCK REGISTER , HAD CONCLUDED THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GREY MARKET TO SAVE VAT AND TO REGULARIZE SUCH PURCHASES HAS OBTAINED THE ACCOMMODATION BILLS. ACCORDINGLY, TO TAKE CARE OF ANY POSSIBILITY OF LEAKAGE OF REVENUE ON 5 GRASIM BHIWANI TEXTILES LTD. ACCOUNT OF SU PPRESSION OF PROFIT , THE TRIBUNAL, HAS ESTIMATED THE PROFIT ON BOGUS PURCHASES @ 12.5% AND RESTRICTED THE ADDITION TO THAT EXTENT. THUS, FROM THE AFORESAID FACTS, IT IS VERY MUCH CLEAR THAT WHAT THE ASSESSEE FAILED TO PROVE IS THE SOURCE OF PURCHASE OF GOODS. OTHER WISE, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAD PURCHASED THE GOODS , THOUGH , MAY NOT BE FROM THE DECLARED SOURCE BUT FROM SOME OTHER SOURCE. THE FAILURE ON THE PART OF THE ASSESSEE TO PROVE THE SOURCE OF PURCHASES COULD BE FOR VARIO US REASONS , WHICH , IN SOME CASES MAY EVEN TURN OUT TO BE VALID. THUS, IN SUCH CIRCUMSTANCES, ONCE THE PROBABLE LEAKAGE OF REVENUE HAS BEEN TAKEN CARE OF BY ESTIMATING THE PROFIT, THERE IS NO NEED TO PENALIZE THE ASSESSEE ANY FURTHER BY IMPOSING PENALTY UND ER SECTION 271(1)(C) OF THE ACT . MORE SO, WHEN THE ADDITION HAS BEEN FINALLY MADE ON ESTIMATE BASIS. IN VIEW OF THE AFORESAID, WE HAVE NO HESITATION IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. GROUNDS ARE ALLOWED. 7. IN THE RESULT, AS SESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.10.2019 SD/ - PRAMOD KUMAR VICE PRESIDENT SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.10.2019 6 GRASIM BHIWANI TEXTILES LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI