DY CIT CIRCLE-3, THANE V. SHRI. SUBHASH BHAGINATH KHAKAL, THANE

ITA 8052/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2268 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Accommodation entries; Tax effect
• Section: 271(1)(c); 143(3); 147

Judgement Text

1 ITAS 8052 & 8053/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI S.RIFAUR RAHMAN (ACCOUNTANT MEMBER) I.T.A. NOS.8052 & 8053/MUM/2019 (ASSESSMENT YEARS 2009-10 & 2010-11) DY.CIT, CIRCLE - 3, THANE VS SHRI SUBHASH BHAGINATH KHAKAL G-2, DEVPRAYAG CHS, HARINIWAS CIRCLE, BHAKTI MANDIR ROAD, NAUPADA, THANE(W)-400 602 PAN : ABEPK0747P APPELLANT RESPONDENT APPELLANT BY SHRI VIJAY KUMAR MENON, DR RESPONDENT BY NONE DATE OF HEARING 01 -06-2021 DATE OF PRONOUNCEMENT 3 0 - 0 6 - 2021 O R D E R PER : SAKTIJIT DEY (JM): CAPTIONED APPEALS BY THE REVENUE ARISE OUT OF TWO SEPARATE ORDERS, BOTH DATED 01-10-2019, OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, THANE DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. 2. WHEN THE APPEALS WERE CALLED FOR HEARING, NO ONE APPEARED FOR THE ASSESSEE. HOWEVER, CONSIDERING THE NATURE OF DISPUT E, WE PROCEED TO DISPOSE OF 2 ITAS 8052 & 8053/MUM/2019 THE APPEALS EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND BASED ON MATERIAL AVAILABLE ON R ECORD. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL AND FILED HIS RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS IN REGULAR COURSE. ASSESSMENTS IN CASE OF THE ASSESSEE WERE ORIGINALLY COMPLETED UNDER SEC TION 143(3) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORM ATION FROM THE SALES-TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSE SSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY WAY OF BOGUS PURC HASE BILLS IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. ON THE BASIS OF SUC H INFORMATION, THE ASSESSING OFFICER REOPENED THE ASSESSMENTS UNDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THOUGH, THE ASSESSEE CLAIME D THAT THE PURCHASES ARE GENUINE; HOWEVER, REJECTING THE CLAIM OF THE ASSESS EE, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PURCHASES AND ADDED BACK AN A MOUNT OF RS.87,33,917/- IN ASSESSMENT YEAR 2009-10 AND RS.64,38,381/- IN ASSES SMENT YEAR 2010-11. AGAINST THE ASSESSMENT ORDERS SO PASSED, ASSESSEE PREFERRED APPEALS BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND BEING UNSU CCESSFUL WENT IN FURTHER APPEALS BEFORE THE TRIBUNAL. DURING THE PENDENCY OF APPEALS BEFORE THE TRIBUNAL, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMP OSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY PASSED ORDERS I MPOSING PENALTY OF RS.26,98,780/- AND RS.16,80,459/- IN ASSESSMENT YEA RS 2009-10 AND 2010-11 RESPECTIVELY, ALLEGING CONCEALMENT OF INCOME. CHALL ENGING THE ORDERS PASSED BY THE ASSESSING OFFICER IMPOSING PENALTY, ASSESSEE PR EFERRED APPEALS BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HAVING TAKEN NOTE OF THE FACT THAT WHILE DECIDING QUANTUM APPEALS, THE TRIBUNAL HAS RESTRICT ED THE DISALLOWANCE TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES BY ESTIMATING AT 3 ITAS 8052 & 8053/MUM/2019 12.5% AND RELYING UPON CERTAIN JUDICIAL PRECEDENTS, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY IMPOSED UN DER SECTION 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DE PARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIALS AVAILABLE ON RECORD. UNDISPUTEDLY, BASED ON CERTAIN INFORMATION RECEIVED FROM THE SALE S-TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THE ASSESSING OFFICER HA S TREATED CERTAIN PURCHASES MADE BY THE ASSESSEE AS NON GENUINE AND HAS DISALLO WED THEM FULLY. THOUGH, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) UPHELD SUCH DISALLOWANCES MADE BY THE ASSESSING OFFICER; HOWEVER, WHILE DECIDING A SSESSEES APPEALS, THE TRIBUNAL IN ITAS 858 AND 859/MUM/2016 DATED 18-12-2017 HAS R ESTRICTED THE DISALLOWANCE TO 12.5%, BEING THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS UNDER DISPUT E. THUS, FROM THE AFORESAID FACTS, IT IS VERY MUCH CLEAR THAT THE TRIBUNAL BEIN G CONVINCED WITH THE FACT THAT THE ASSESSEE, INDEED, HAD PURCHASED THE DISPUTED GOODS, THOUGH, MAY BE FROM UNVERIFIED SOURCES, HAS RESTRICTED THE DISALLOWANCE ONLY TO THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES, THAT TOO, ON AN ESTIMAT E BASIS. THUS, THE DISALLOWANCE SUSTAINED BY THE TRIBUNAL WAS BY ENTER TAINING SOME DOUBT AND SUSPICION WITH REGARD TO THE SOURCE OF PURCHASES AN D TAKING INTO CONSIDERATION THE CONSEQUENTIAL SUPPRESSION OF PROFIT THAT MIGHT HAVE ESCAPED TAX. HOWEVER, SUCH ESTIMATED ADDITION IN NO WAY WOULD LEAD TO THE CONC LUSION THAT THE ASSESSEE HAS CONCEALED HIS INCOME. MOREOVER, A PERUSAL OF THE PE NALTY ORDERS PASSED BY THE ASSESSING OFFICER WOULD MAKE IT CLEAR THAT HE HAS I MPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT, BASED ON THE QUANTUM OF DISAL LOWANCE MADE BY THE ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APP EALS). HOWEVER, SUCH 4 ITAS 8052 & 8053/MUM/2019 QUANTUM OF DISALLOWANCE HAS SUBSTANTIALLY BEEN REDU CED AFTER THE DECISION OF THE TRIBUNAL. IN ANY CASE OF THE MATTER, AS RIGHTLY OB SERVED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE DISALLOWANCE / ADDITIO N SUSTAINED BY THE TRIBUNAL WAS PURELY ON ESTIMATE BASIS. THEREFORE, THE ALLEGE D CONCEALMENT OF INCOME BY THE ASSESSEE IS NOT BORNE OUT FROM RECORD. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER OF INCOME TAX (APP EALS) IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 5. EVEN OTHERWISE ALSO, THE TAX EFFECT ON THE AMOUN T DISPUTED BY THE REVENUE IN BOTH THESE APPEALS IS BELOW THE MONETARY LIMIT O F RS.50 LAKHS STIPULATED IN CBDT CIRCULAR NO. 17/2019 DATED 08 TH AUGUST, 2019. HAVING ANALYSED THE FACTUAL POSITION, WE ARE OF THE CONSIDERED OPINION THAT THE PRESENT APPEALS OF THE REVENUE ARE NOT COVERED BY ANY OF THE EXCEPTIONS PR OVIDED TO THE AFORESAID CIRCULAR ISSUED BY THE CBDT, AS, THE PENALTY PROCEE DING IS AN INDEPENDENT PROCEEDING. THEREFORE, IN OUR CONSIDERED OPINION, T HE PRESENT APPEALS OF THE DEPARTMENT ARE NOT MAINTAINABLE. FOR THIS REASON AL SO, THEY DESERVE TO BE DISMISSED. ACCORDINGLY, WE DO SO. 6. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED ON 30/06/2021. SD/- SD/- (S.RIFAUR RAHMAN) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 30/06/2021 PAVANAN 5 ITAS 8052 & 8053/MUM/2019 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. 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