DCIT 5(2)(1), Mumbai V. M/S KARP IMPEX LIMITED, Mumbai

ITA 899/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4047 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DROP SINGH MEENA
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 69C; 143(3); 147

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY , JM & SHRI S. RIFAUR RAHMAN, AM ./ I.T.A. NO . 899 / MUM/ 2019 ( / ASSESSMENT YEAR: 2010 - 11 ) DCIT 5(2)(1) ROOM NO. 525, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020 / VS. M/S KARP IMPEX LTD. GE 3051, 3 RD FLOOR, BHARAT DIAMOND BOURSE BKC EAST, MUMBAI - 400 051 ./ ./ PAN NO. AA BCK 1823 F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI DROP SINGH MEENA , DR / RESPONDENTBY : NONE / DATE OF HEARING : 03.02 .2020 / DATE OF PRONOUNCEMENT : 19.02.2020 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) 10 IN SHORT REFERRED AS LD. CIT(A) , MUMBAI, DATED 30.11 .18 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2010 - 11 . 2 I.T.A. NO 899 /MUM/201 9 M/S KARP IMPEX LTD. 2. AT THE OUTSET, IT IS NOTICED THAT NO NE APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. ON THE OTHER HAND, L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE , WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. T HE BRIEF FACTS OF THE C ASE ARE , BASED ON THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT ABOUT THE ACCOMMODATION ENTRIES OBTAINED BY THE ASSESSEE FROM BHANWARLAL JAIN GROUP. ACCORDINGLY, ASSESSMENT WAS REOP ENED U/S 147 OF THE ACT AND SUBSEQUENTLY ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT ON 17.03.16. AO COMPLETED THE ASSESSMENT WHILE TREATING THE TRANSACTIONS OF PURCHASE AMOUNTING TO RS. 63,65,39,341/ - AS NOT GENUINE AND ACCORDINGLY HE ESTIMAT ED THE INCOME OF THE ASSESSEE @ 9% AS ADDITION U/S 69C OF THE ACT. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) SUSTAINED THE ADDITION OF BOGUS PURCHASES, BU T REDUCED THE DISALLOWANCE @ 3%. SUBSEQUENTLY, AO INI TIATED PENALTY PROCEEDINGS AND IMPOSED 3 I.T.A. NO 899 /MUM/201 9 M/S KARP IMPEX LTD. PENALTY. AGGRIEVED WITH THE ABOVE, ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) DELETED THE PENALTY AS NO PENALTY CAN BE IMPOSED ON THE ESTIMATION BY RELYING ON VARIOUS DECISIONS OF COORDINATE BENCH OF ITAT IN THE CASE OF DEEPAK GOGRI VRS ITO AND DCIT VRS. MANOHAR MANAK ALLOYS PVT. LTD. 5 . AGGRIEV ED WITH THE ABOVE ORDER, REVENUE HAS PREFERRED THE APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN BELOW: - 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CI T(A) ERRED IN DELETING THE PENALTY LEVIED ON DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES WHICH WAS DONE ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING.' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. C IT( A) ERRED IN NOT APPRECIATING THE FACT THAT THE CASE FALLS IN EXCEPTION AS PER BOARD CIRCULAR NO. 3/2018 WITH REGARD TO ADDITION/DISALLOWANCE MADE ON ACCOUNT OF INFORMATION RECEIVED FROM EXTERNAL AGENCIES.' 4 I.T.A. NO 899 /MUM/201 9 M/S KARP IMPEX LTD. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD ANY OTHER GROUNDS WHICH MAY BE NECESSARY. 6 . CONSIDERED THE SUBMISSION OF LD. DR AND MATERIAL PLACED ON RECORD. WE NOTICE FROM THE RECORDS THAT AO INITIATED PENALTY PROCEEDINGS BASED ON HIS FINDINGS ON GENUINENESS OF PURCHASES AND ESTIMATED THE INCOME @ 9%, WHEREAS THE SAME WAS REDUCED BY LD. CIT(A) @ 3%. IT IS A FACT THAT INCOME OF TH E ASSESSEE WAS ESTIMATED. ACCORDINGLY, ADDITION WAS MADE U/S 69C OF THE ACT. THE VARIOUS COURTS HAVE HELD THAT PENALTY PROCEEDINGS CANNOT BE INITIATED ON THE BASIS OF ESTIMATION OF INCOME. IN THIS CASE, THE ADDITION WAS MADE BY TREATING THE PURCHASES AS NO N - GENUINE, AT THE SAME TIME, THE SALES WERE ACCEPTED AS DECLARED BY THE ASSESSEE. SINCE THE INCOME WAS DETERMINED BY APPLYING ESTIMATION OF CERTAIN PERCENTAGE ON BOGUS PURCHASES, T HEREFORE, IT IS NOT PROPER CASE TO INITIATE THE PENALTY PROCEEDINGS. 5 I.T.A. NO 899 /MUM/201 9 M/S KARP IMPEX LTD. ACCORDI NGLY, WE ARE INCLINED TO AGREE WITH THE FINDINGS OF LD. CIT(A). THEREFORE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STA NDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEB , 2020 . SD/ - SD/ - ( VIKAS AWASTHY ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 . 02 .2020 SR.PS . DHANANJAY / 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 F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI