M/S SANDEEP STEEL, MUMBAI V. ACIT 17 (3), MUMBAI

ITA 7946/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9642 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 271(1)(c); 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER IT A NO. 7946 /MUM./2019 ( ASSESSMENT YEAR : 20 11 12 ) ITA NO. 7947/MUM./2019 ( ASSESSMENT YEAR : 20 10 11 ) M/S. SANDEEP STEEL 511, ASHIRWAD BUILDING AHMEDABAD STREET, CARNAC BUNDER MUMBAI 400 009 PAN ABAFS1100J . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX WARD 17 (3), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI VIJAY KUMAR MENON DATE OF HEARING 01 . 0 6 .202 1 DATE OF ORDER 27.07.2021 O R D E R PER S. RIFAUR RAHMAN, A.M. TH E PRESENT APPEAL S PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER S OF EVEN DATED 2 1 ST NOVEMBER 2019 , PASSED BY THE LEARNED CIT(A) 28 , MUMBAI, CONFIRMING PENALTY OF ` 1 , 09 , 164 , FOR THE ASSESSMENT YEAR 2010 11, AND PENALTY OF ` 2,78,633, FOR THE ASSESSMENT YEAR 2011 12 IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) BY THE ASSESSING OFFICER . 2 M/S. SANDEEP STEEL 2. BEFORE US, DURING THE COURSE OF HEARING W HEN THE SE APPEAL S W ERE CALLED FOR HEARING NEITHER THE ASSESSEE NOR ANY OF HER AUTHORIZED REPRESENTATIVES WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE . THERE IS NO APPLICATION FOR ADJOURNMENT OF HEARING EITHER. CONSEQUENTLY, WE DEEM IT FIT AND APPROPRIATE TO PROCEED TO DISPOSE OFF THE APPEAL S EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. SINCE BOTH THESE APPEALS PERTAIN TO THE SA ME ASSESSEE INVOLVING COMMON ISSUE, EXCEPT VARIATION IN FIGURES, WHICH AR OSE OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED OR DER. HOWEVER, IN ORDER TO UNDERSTAND THE IMPLICATION, IT WOULD BE NECESSARY TO TAKE NOTE OF THE FACTS OF ONE APPEAL. WE ARE, ACCORDINGLY, NARRATING THE FACTS, AS THEY APPEAR IN THE APPEAL BEING ITA NO. 7947 /MUM./201 9 , FOR ASSESSMENT YEAR 20 10 11 , THE CONCLU SIVE RESULT OF WHICH WILL BE APPLICABLE EQUALLY TO THE OTHER APPEAL BEING ITA NO. 7946/MUM./2019, FOR THE A.Y. 2011 12. ITA NO.9747/MUM./2019 ASSESSMENT YEAR 2010 11 4. FACTS IN BRIEF : T HE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF IMPORT AND DEALER IN SS & MS ITEMS. THE ASSESSEE FILED ITS RETURN OF 3 M/S. SANDEEP STEEL INCOME ON 30 TH SEPTEMBER 2010, FOR THE ASSESSMENT YEAR 2010 11 DECLARING TOTAL INCOME OF ` 2,47,97,450. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143( 1) OF THE ACT. MEANWHILE, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, MUMBAI, THROUGH DGIT (INV.), MUMBAI, THAT SOME OF THE DEALERS UNDER MVAT ACT, 2002, INDULGING IN THE PRACTICE OF PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF ISSUING BOGUS SALES BILLS/ TAX INVOICE I.E., NOT SUPPLYING THE GOODS PHYSICALLY BUT PROVIDING SALES BILLS ONLY. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE BOGUS PURCHASE TO THE TUNE OF ` 88,31,987, FROM FIVE PARTIES. ACCORDINGLY, THE CASE WAS RE OPENED UNDER SECTION 147 OF THE ACT AND AFTER RECORDING THE REASONS NOTICE DATED 15 TH OCTOBER 2015, UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE, THE ASSESSEE FURNISHED ITS WRITTEN SUBMISSIONS ON 15 TH DECEMBER 2015. HOWEVER, THE SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTABLE TO THE ASSESSING OFFICER. HE HELD THAT THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF ALL THE EXPENSES INCLUDING PURC HASES TO THE SATISFACTION OF THE ASSESSING OFFICER, WHICH WAS NOT DISCHARGED BY THE ASSESSEE. NO CORROBORATIVE EVIDENCE HAS BEEN FILED BY THE ASSESSEE. HE HELD THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS OBLIGATION TO PROVE THE GENUINENESS OF PURCHASES B EYOND DOUBT. HENCE, THE ASSESSING OFFICER MADE ADDITION OF ` 88,31,987, ON ACCOUNT OF ENTIRE BOGUS PURCHASE AND ADDED TO THE INCOME OF THE ASSESSEE. THE 4 M/S. SANDEEP STEEL QUANTUM ADDITION WAS CHALLENGED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE LEARNED CIT(A) HAS RES TRICTED THE ADDITION TO 4% OF THE AGGREGATED BOGUS PURCHASE. CONSEQUENT UPON THE ADDITION CONFIRMED BY THE LEARNED CIT(A), T HE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME AND VIDE ORDER DATED 12 TH SEPTEMBER 2018, IMPOSED PENALTY OF ` 1,09,164, BEING 100% OF THE TAX SOUGHT TO BE EVADED ON ACCOUNT OF ADDITION MADE FOR BOGUS PURCHASE . THE ASSESSEE BEING AGGRIEVED BY THE PENALTY ORDER SO PASSED BY THE ASSESSING OFFICER FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY FOR CONTESTING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 5. THE LEARNED CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) BY RELYING UPON THE JUDICIAL PRONOUNCEMENTS RENDERED BY THE HONBLE HIGH COURTS, HONBLE SUPREME COURT AS WELL AS THE CO ORDINATE BENCH DECISIONS OF THIS TRIBUNAL. THE ASSESSEE BEING AGGRIEVED WITH THE CONFIRMATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY THE LEARNED CIT(A), FILED APPEAL BEFORE THE TRIBUNAL. 6. CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS IT APPEARS, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT 5 M/S. SANDEEP STEEL ON THE BASIS OF AD HOC ADDITION ON ACCOUNT OF BOGUS PURCHASE THAT TOO WITHOUT ADDUCING ANY EVIDENCE ON RECORD FOR CONCEALMENT OF INCOME. P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LIABLE TO BE IMPOSED ONLY WHERE THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS. ACTION OF M AKING ADDITION ON AD HOC BASIS DOES NOT RESULT INTO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND HENCE CANNOT BE TERMED AS EITHER CONCEALM ENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND SUPPORT FROM THE SERIES OF DECISIONS BY DIFFERENT HIGH COURTS AS WELL THE DECISION OF THE CO ORDINATE BENCHES OF THE TRIBUNAL, WHEREIN IT WAS HELD THAT WHEN ADDITION IS MADE ON ESTIMATE BASIS, PENALTY IS NOT SUSTAINABLE IN THE EYES OF LAW . IN SUPPORT OF THIS CONTENTION, FOLLOWING CASE LAWS ARE RELIED UPON: - I) CIT V/S NORTO N ELECTRONICS SYSTEMS (P) LTD. [2014] 41 TAXMANN.COM 280 (ALLAHABAD HC); II) ACIT V/S VISION RESEARCH MANAGEMENT (P) LTD., [2015] 63 TAXMANN.COM 8 (LUCKNOW) (TRIB.); III) PREM CHAND V/S ACIT, [2014] 52 TAXMANN.COM 95 (CHANDIGARH) (TRIB.); IV) CIT V/S PHI SEEDS INDIA LTD., [2008] 301 ITR 0013 (DEL); AND V) DILIP N. SHROFF V/S JCIT [2007] 291 ITR 519 (SC). 7. THE LEAR NED DEPARTMENTAL AUTHORITIES HAS NOT BROUGHT ANY COGENT MATERIAL TO PROVE OTHERWISE WARRANTING INTERFERENCE AT THE INSTANCE OF THE REVENUE. IN THIS VIEW OF THE MATTER, WE ARE OF THE 6 M/S. SANDEEP STEEL CONSIDERED VIEW THAT THE LEARNED CIT(A) WAS INDEED NOT JUSTIFIED IN CONFIR MING THE PENALTY IMPOSED BY THE ASSESSING OFFICER , AS THERE WAS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE HAVE BEEN PROVED BY THE REVENUE AND ADDITIONS MADE ON ESTIMATION BY THE ASSESSING OFFICER DO NOT CALL FOR INITIATION OF PENALTY. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) BY DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED . ITA NO.974 6 /MUM./2019 ASSESSMENT YEAR 20 11 12 9. THE ISSUE RAISED IN THIS APPEAL RELATES TO IMPOSITION OF PENALTY OF ` 2,78,633, ON ACCOUNT OF BOGUS PURCHASE. 10. THE RELATED FACTS AND CIRCUMSTANCES OF THE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL IS MATERIALLY IDENTICAL TO THE ISSUE DECIDED BY US VIDE GROUND NO.1, RAISED BY THE ASSESSEE IN ITS APPEAL BEING ITA NO. 7947 /MUM./2019, FOR THE ASSESSMENT YEAR 2010 11, VIDE PARA 6 & 7 OF THIS ORDER, WHEREIN WE HAVE DELETED THE PENALTY FOR T HE REASONS STATED THEREIN. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT SO IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY T HE LEARNED CIT(A). 7 M/S. SANDEEP STEEL 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.07.20 21 SD/ - SAKTIJIT DEY JUDICIAL MEMBER SD/ - S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 27.07.2021 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