ITO 6(3)(2), MUMBAI V. JAINEX FIRE & SAFETY SYSTEMS P. LTD, MUMBAI

ITA 7148/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0008 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINAY SHEEL GAUTAM
• Keywords: Bogus purchase; Tax effect; Set aside
• Section: 271(1)(c); 143(1); 274; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PRAMOD KUMAR (VICE PRESIDENT) AND SHRI PAWAN SINGH (JUDICIAL MEMBER) ITA NO.7148/MUM/2018 AY 2010-11 ITA NO.7149/MUM/2018 AY 2011-12 ITA NO.7150/MUM/2018 AY 2009-10 ITO-6(3)(2), MUMBAI VS M/S JAINEX FIRE & SAFETY SY STEMS PVT LTD, 6/10D, GROUND FLOOR, LAXMI WOOLLEN MILL COMPOUND, SHAKTI MILL LANE, OPP. DR E MOSES ROAD, MAHALAXMI, MUMBAI-400 011 PAN : AABCJ1799H APPELLANT RESPONDEDNT APPELLANT BY SHRI VINAY SHEEL GAUTAM (DR) RESPONDENT BY SHRI SATISH MODI (AR) DATE OF HEARING 17-12-2019 DATE OF PRONOUNCEMENT 17-12-2019 O R D E R PER BENCH : 1. THESE THREE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE INDEPENDENT ORDERS OF LEARNED CIT(A)-12, MUMBAI, AL L DATED 21-09- 2018, WHICH, IN TURN, ARISE OUT OF THE ORDERS PASSE D BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE I.T. ACT, 1961 FOR ASS ESSMENT YEAR 2010-11, 2011-12 & 2009-10, RESPECTIVELY. THE REVENUE HAS R AISED IDENTICAL GROUNDS OF APPEAL IN ALL THE YEARS; THE FACTS ARE A LSO ALMOST IDENTICAL EXCEPT FOR VARIATION IN FIGURES. THEREFORE, WITH T HE CONSENT OF PARTIES, 2 ITA 7148-7150/MUM/2018- M/S JAINEX FIRE & SAFETY SYSTEMS PVT LTD ALL THE THREE APPEALS WERE CLUBBED TOGETHER, HEARD AND ARE DECIDED BY THIS COMMON ORDER. WITH THE CONSENT OF PARTIES, AP PEAL FOR AY 2010- 11 WAS TREATED AS LEAD CASE. IN THIS APPEAL, THE R EVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S . 271(L)(C) OF THE ACT AMOUNTING TO RS. 1,47,343/- BY NOT APPRECIATING THA T QUANTUM ADDITION ON ACCOUNT OF BOGUS BILL PURCHASES FROM TWO PARTIES IS SUSTAINED BY THE HON'BLE TRIBUNAL TO THE EXTENT OF RS. 4,76,839/'. 7 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, ID. CIT(A) HAS ERRED IN DIRECTING THE PENALTY IGNORING THAT THE INFORMATION ON ACCOUNT OF BOGUS PURCHASES IS RECEIVED FROM THE EXTERNAL AGENCY THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY. ' 8 THOUGH THE TAX EFFECT IN THIS CASE IS RS. 1,47, 343/-, HOWEVER THIS APPEAL HAS BEEN FILED BECAUSE IT IS COVERED BY EXCE PTION MENTIONED IN PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018 DT. 11-7 -2018 AS SUBSEQUENTLY CLARIFIED BY BOARD LETTER DID. 20/08/2 018 VIDE NO. 279/MISC./142/2007-ITJ(PT.). 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR THE YEAR U NDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.83,295/-. THE RETURN WAS ACCEPTED U/S 143(1) ON 27-05-2011. SUBSE QUENTLY, THE CASE WAS REOPENED U/S 147 AFTER RECORDING REASONS, BY IS SUE OF NOTICE U/S 148. THE CASE WAS REOPENED ON THE BASIS OF INFORMAT ION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT CERTA IN TRADERS WERE INDULGED IN PROVIDING ACCOMMODATION BILLS WITHOUT A CTUAL DELIVERY OF 3 ITA 7148-7150/MUM/2018- M/S JAINEX FIRE & SAFETY SYSTEMS PVT LTD GOODS AND THAT THE ASSESSEE WAS ONE OF SUCH BENEFIC IARY OF HAWALA PURCHASES. THE AO MADE 100% OF THE ADDITION OF ALLE GED BOGUS PURCHASES IDENTIFIED AS NON-GENUINE / BOGUS PURCHAS ES. ON APPEAL BEFORE LD CIT(A) THE ADDITIONS WERE SUSTAINED TO TH E EXTENT OF 15% OF ALLEGED BOGUS PURCHASES. THE AO ALSO INITIATED PENA LTY U/S 271(1)(C) OF THE ACT. NOTICE U/S 274 R.W.S. 271(1)(C) WAS ISSUE D TO THE ASSESSEE ON 21-12-2015 AND AFTER GIVING OPPORTUNITY OF HEARING THE AO LEVIED PENALTY @100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 30-10- 2017. ON FURTHER APPEAL BEFORE CIT(A), THE ORDER O F PENALTY WAS SET ASIDE / QUASHED. THUS, AGGRIEVED BY THE ORDER OF C IT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSIONS OF LD. DEPARTMENTAL R EPRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORISED REPRESENTAT IVE (AR) FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECO RD. AT THE OUTSET OF HEARING, THE LD.AR OF THE ASSESSEE SUBMITS THAT THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS LESS THAN THE MONETARY LIM IT PRESCRIBED BY THE CBDT IN ITS CIRCULAR NO.17 OF 20189, FOR FILING THE APPEAL BEFORE THE TRIBUNAL AND THE APPEAL IS NOT LIABLE TO BE ENTERTA INED. THE LD AR ACCORDINGLY PRAYED FOR DISMISSAL OF THE APPEAL. 4. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, SUBM ITS THAT THE ADDITION MADE IN THE IMPUGNED ASSESSMENT WAS BASED ON THE BASIS OF 4 ITA 7148-7150/MUM/2018- M/S JAINEX FIRE & SAFETY SYSTEMS PVT LTD INFORMATION RECEIVED FROM EXTERNAL SOURCES. THEREF ORE, THE PRESENT APPEAL IS COVERED BY THE EXCEPTION CLAUSE OF PARA 1 0(E) OF CIRCULAR NO.3 OF 2018 DATED 11-07-2018 AND ACCORDINGLY, THE APPEA L MAY BE DECIDED ONLY ON MERIT. ON MERIT, THE LD. DR SUPPORTED THE ORDER OF AO AND WOULD SUBMIT THAT HE LEVIED PENALTY ONLY ON THE ADD ITIONS SUSTAINED BY LD CIT(A). 5. ON THE CONTRARY, THE LD.AR OF THE ASSESSEE SUBMITS THAT PARA 10(E) OF THE CIRCULAR NO.3 OF 2018 IS NOT APPLICABLE AS THE APPEAL RELATES TO THE PENALTY U/S 271(1)(C). HOWEVER, THE SAID CIRCULAR IS SPECIFIC ONLY ABOUT THE ADDITIONS WHICH ARE BASED ON THE INFORMATION FR OM EXTERNAL SOURCES. ON MERIT OF THE CASE, THE LD.AR SUBMITS T HAT THE AO MADE ADDITION ON ESTIMATE BASIS ON WHICH NO PENALTY IS L EVIABLE. IN SUPPORT OF HIS SUBMISSION, THE LD.AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- ELCON PIPE & FITTINGS PVT LTD VS ITO ITA NO.496/MUM /2018 ORDER DATED 11-02-2019. SHRI DEEPAK GOGRI VS ITO ITA NO.1396/MUM/2017 ORD ER DATED 23-11-2017, SHRI AJAY LOKNATH LOHIA ITA NO.2998/MUM/2017, OR DER DT 05-10-2018 . 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED TH AT THE AO IN RE- ASSESSMENT ORDER DATED 21-12-2015 MADE ADDITION OF 100% OF THE 5 ITA 7148-7150/MUM/2018- M/S JAINEX FIRE & SAFETY SYSTEMS PVT LTD ALLEGED BOGUS PURCHASES; HOWEVER, ON APPEAL BEFORE THE LD CIT(A), THE ADDITION WAS RESTRICTED TO 15% OF THE ALLEGED BOGUS PURCHASES. THE AO INITIATED AND LEVIED PENALTY ON THE ADDITION MAD E ON ESTIMATE BASIS AND LEVIED PENALTY VIDE ORDER DATED 30-10-2017 AND LEVIED PENALTY @100% OF TAX SOUGHT TO BE EVADED. THE LD. CIT(A) D ELETED THE PENALTY BY TAKING VIEW THAT NO CONCEALMENT PENALTY COULD BE LEVIED ON ESTIMATE ADDITION. THE LD. CIT(A) WHILE DELETING T HE PENALTY, RELIED UPON THE DECISION OF TRIBUNAL IN EARTHMOVING EQUIP MENT SERVICE CORPORATION VS ITO [2017] 84 TAXMANN.COM 51 (MUM.TR IB.) AND DELETED THE PENALTY. 7. THE LD. AR OF THE ASSESSEE VEHEMENTLY RELIED UPON T HE DECISION OF AS REFERRED IN PARA-5 ABOVE ON THE RATIO THAT ADDITION WAS MADE ON ADHOC BASIS AND NO PENALTY IS LEVIABLE ON SUCH ADHOC ADDI TION. CONSIDERING THE FACT THAT THE SOLE BASIS OF PENALTY IS THE ADDI TION ESTIMATED ON ACCOUNT OF BOGUS PURCHASES. IN OUR VIEW, IT IS NOW SETTLED LEGAL POSITION THAT NO PENALTY U/S 271(1)(C) IS LEVIABLE ON ADHOC DISALLOWANCES. CONSIDERING THE DECISION OF CO-ORDINATE BENCHES OF THE TRIBUNAL, AS RELIED UPON BY THE LD.AR OF THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A), WHICH WE UPH OLD. NO CONTRARY FACTS OR LAW HAS BEEN BROUGHT TO OUR NOTICE TO TAKE A DIFFERENT VIEW. 6 ITA 7148-7150/MUM/2018- M/S JAINEX FIRE & SAFETY SYSTEMS PVT LTD 8. AS WE HAVE DECIDED THE APPEAL ON MERIT, DISCUSSION ON ISSUE OF TAX EFFECT RENDERED ACADEMIC. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO.7149/MUM/2018 & 7150/MUM/2018 (AYS 2011-12 & 2009-10) 10. THE FACTS AND CIRCUMSTANCES IN THESE APPEALS ARE ID ENTICAL TO THE APPEAL IN ITA NO.7148/MUM/2018, WHICH, WE HAVE ALREADY DEC IDED ABOVE. THIS BEING SO, THE DECISION RENDERED ABOVE AGAINST ITA NO.7148/MUM/2018 SHALL APPLY MUTATIS MUTANDIS TO TH ESE APPEALS ALSO. AS SUCH, THE APPEALS FILED BY THE REVENUE ARE DISMI SSED. 11. AS A RESULT, ALL THE THREE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-12-2019. SD/- SD/- (PRAMOD KUMAR) (PAWAN SINGH) VICE PRESIDENT JUDICIALMEMBER MUMBAI, DT : 17 TH DECEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI