DY CIT 1 (3)92), MUMBAI V. M/S TOSHVIN ANALYTICAL PVT LTD., MUMBAI

ITA 7505/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3522 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 06-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND PAVAN KUMAR GADALE , JM ITA NO. 7505/MUM/2019 (ASSESSMENT YEAR: 2011-12) DCIT-1(3)(2) 540, AAYKAR BHAWAN M.K.ROAD, MUMBAI-400 020 VS. M/S. TOSHVIN ANALYTICAL PRIVATE LIMITED 103, S.J.HOUSE, SITARAM MILLS COMPOUND, N.M.JOSHI MARG, LOWER PAREL(E) MUMBAI-400 011 PAN/GIR NO. A A BCT4482D ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIJAY KUMAR MENON RESPONDENT BY : SHRI RUTURAJ H.GURJAR DATE OF HEARING : 08.06.2021 DATE OF PRONOUNCEMENT : 10 .06.2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (LD .CIT(A) FOR SHORT) DATED 04.09.2019 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2011-12. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C1T(A) ERRED IN DELETING THE PENALTY LEVIED U/S. 271(L)(C) OF THE I.T. ACT, IGNORING THE ENQUIRIES MADE AND FACTUAL DETAILS BROUGHT ON RECORD BY THE AO IN HIS ASSESSMENT , WHI CH LED THE AO TO CONCLUDE THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO ESTABLISH THE GENUI NENESS OF THE PURCHASES AND IDENTITY OF THE PARTIES FROM WHOM THE ASSESSEE MADE PURCHASES AND H ENCE, THE AO ESTABLISHED THESE TO BE NON- GENUINE AND LEVIED PENALTY THEREON'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S. 271(L)(C) OF THE I.T. ACT, LEVIED ON THE ADDITION OF RS. 53,26,539/-MADE ON ACCOUNT OF BOGUS PURCHASES WHICH WAS UPHELD BY THE LD. CIT(A) AND SUBSEQUENTLY RESTRICTED TO RS. 3,53,388/- BY THE HON'BLE ITAT AGAINST WHICH TH E ASSESSEE HAS NOT FILED ANY FURTHER APPEAL LEADING TO THE CONCLUSION THAT THE ASSESSEE HAS ACC EPTED THE ADDITION.' 3. THE ISSUE ARISING OUT OF THE ABOVE APPEAL IS T HE DELETION OF PENALTY U/S 271(1)(C) WITH RESPECT TO ESTIMATED ADDITION FOR BOGUS PURCHA SE OF RS.3,53,388/-. 2 7505/MUM/2019 4. THE BRIEF FACTS OF THE CASE LEADING TO THE LEV Y OF PENALTY ARE AS UNDER:- IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2011 DECLARING LOSS OF RS.11,81,98,172/-. THE ASSESSMENT WAS COMPLETED ON 20.03.2014 DETERMINING TOTAL INCOME OF RS.12,59,09,760/-. THE AO MADE FOLLOWING ADDITIONS TO THE TOTAL INCOME AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. I) BOGUS PURCHASES RS.53,26,539/- II) DISALLOWANCE U/S 14A RS.8,84,101/- III) FOREIGN EDUCATION EXPENSES RS.15,00,947/- AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFO RE CIT(A). THE CIT(A) CONFIRMED THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO THE EXTEN T OF RS.6,65,817/-. THE ASSESSEE WAS GIVEN RELIEF OF RS.46,60,722/-. AS REGARDS THE ISSU E OF FOREIGN EDUCATION EXPENSES OF RS.15,00,947/-, THE CIT(A) DISMISSED ASSESSEES APP EAL. THE AO THEN PROCEEDED WITH PENALTY PROCEEDINGS. DURING THE COURSE OF PENALTY PROCEEDIN GS, THE AO HELD THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND THUS CONCEALED INCOME TO THE EXTENT OF RS.21,66,764/-. THEREFORE, AO LEVIED A MINIMUM PENALTY OF RS.7,22,1 82/- U/S 271(1)(C) OF THE ACT. 5. UPON ASSESSEE APPEAL, THE LD.CIT(A) NOTED THA T, IN APPEAL FOR ADDITION, THE LD.CIT(A) HAS DELETED THE DISALLOWANCES U/S 14A AN D ITAT HAS DELETED THE DISALLOWANCES ON ACCOUNT FOREIGN EDUCATION EXPENSE AND AS REGARDS THE BOGUS PURCHASES ITAT HAS SUSTAINED ADDITION ONLY AT RS. 3,83,388/-. THE LD.CIT(A) HELD THAT THE PENALTY REMAINS ONLY WITH REFERENCE TO T HIS BOGUS PURCHASE ADDITIONS. REFERRING TO SEVERAL DECISIONS OF ITAT ON SUCH SITU ATIONS AND FINDING THE ADDITION ONLY ON ESTIMATED BASIS, THE LD.CIT(A) DELETED THE PENALTY. 6. AGAINST THIS ORDER REVENUE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. AS PER FACTS RECORDED ABOVE, THE PENALTY IN THIS CASE IS ONLY WITH REFERE NCE TO ADDITION ON BOGUS PURCHASES AMOUNTING TO RS.3,83,388/-. THE ADDITION WAS SUSTAI NED BY THE ITAT @8% OF THE BOGUS PURCHASES. WE FIND THAT ON THE FACTS AND CIRC UMSTANCES OF THE CASE, THE LD.CIT(A) HAS PASSED A REASONABLE ORDER. HE HAS COR RECTLY DELETED THE PENALTY WITH REFERENCE TO BOGUS PURCHASE ADDITION AT RS.3,83,388 /-, AS THE ADDITION WAS DONE ON ESTIMATED BASIS. 3 7505/MUM/2019 8. WE FURTHER NOTE THAT TAX EFFECT IN THIS CASE IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE ITAT. THE REVENUE HAS TRIED T O MAKE OUT A CASE THAT SINCE THE ADDITION WAS MADE PURSUANT TO INFORMATION FROM SALE S TAX DEPARTMENT, THIS PENALTY APPEAL FALLS IN THE EXCEPTION CARVED OUT IN THE CBD T CIRCULAR REGARDING APPEALS ARISING OUT OF ADDITIONS MADE PURSUANT TO INFORMATI ON FROM OUTSIDE AGENCIES. WE ARE OF THE OPINION THAT THIS PLEA IS NOT TENABLE INASMU CH AS ONCE REVENUE ACCEPTS THAT PENALTY IS LEVIED ON OUTSIDE AGENCY INFORMATION ,TH E PENALTY LEVIED WILL HAVE NO LEGS TO STAND. 9. IN THE BACKGROUND OF AFORESAID DISCUSSION AND P RECEDENT WE UPHOLD THE ORDER'S OF LD. CIT(A) AND DELETE THE LEVY OF PENALTY. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 10 .06.2021 SD/- SD/- (PAVAN KUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 10 .06.2021 THIRUMALESH , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI