DEPUTY COMMISSIONER OF INCOME TAX 8(3)(1), MUMBAI V. TURNKEY ELECTRICALS PRIVATE LIMITED, MUMBAI

MA 450/MUM/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5839 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR SR AR
• Keywords: Bogus purchase; Tax effect

Judgement Text

1 MA 450/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SHAMIM YAHYA ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER M.A.450/MUM/2019 (ARISING OUT OF ITA NO. 207/MUM/2019) (AY : 2008-09 ) DY.CIT 8(3)(1), MUMBAI VS M/S TURNKEY ELECTRICALS P LTD PLOT NO.236 /13, TEKCHAND NIWAS KEWAL ANAND SOCIETY, OPP GTBN STATION, SION (E), MUMBAI 400 022 PAN : AAACT1459M APPLICANT RESPONDEDNT APPLICANT BY SHRI V VINOD KUMAR (SR.AR CIT) RESPONDENT BY SHRI MANDAR VAIDYA DATE OF HEARING 04-10-2019 DATE OF PRONOUNCEMENT 14-10-2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER : THIS MISCELLANEOUS APPLICATION IS FILED BY REVENUE FOR SEEKING RECTIFICATION OF ALLEGED MISTAKE IN ORDER DATED 05- 06-2019. IN THE APPLICATION, THE APPLICANT REVENUE STATED THAT THIS APPEAL WAS DISPOSED OF BY THE TRIBUNAL ON THE GROUND THAT TAX EFFECT IN VOLVED IN THE APPEAL IS BELOW RS. 20 LAKHS I.E., THE TAX LIMIT PRESCRIBED I N CBDT CIRCULAR NO.3 OF 2018. 2. THE LD. DR FOR THE REVENUE SUBMITS THAT THE PENA LTY ORDER EMANATES FROM ADDITION BASED ON INFORMATION RECEIVE D FROM EXTERNAL SOURCES, I.E. SALES-TAX DEPARTMENT THROUGH DGIT (IN V). THUS, THIS CASE 2 MA 450/MUM/2019 FALLS UNDER EXCEPTION CONTAINED IN CLAUSE (E) OF PA RA 10 OF CBDT CIRCULAR NO.03/2018. THE LD.DR FOR THE REVENUE MAD E HIS SUBMISSIONS ON THE SIMILAR LINES. THE LD. DR FURTHER SUBMITS T HAT THE CASE CLEARLY FALLS UNDER CLAUSE (E) OF PARA 10 OF CBDT CIRCULAR NO.03/2018 AND ACCORDINGLY THE CASE FALLS IN THE EXCEPTION CLAUSE AND IS NOT COVERED BY THE AFORESAID CIRCULAR AND THE APPEAL OF THE REVEN UE WAS NOT LIABLE TO BE DISMISSED. THE ORDER OF DISMISSAL OF THE APPEAL IS NOT IN CONSONANCE WITH THE CBDT CIRCULAR, WHICH CONSTITUTES MISTAKE A PPARENT ON RECORD. THE LD. DR PRAYED FOR RECALLING THE ORDER AND TO FI X THE APPEAL FOR HEARING AFRESH. 3. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SUB MITS THAT THE PRESENT APPEAL RELATES TO PENALTY LEVIED U/S 271(1) (C). THE AO INITIATED THE PENALTY WHILE MAKING DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND THAT CLAUSE (E) OF PARA 10 OF CBDT CI RCULAR NO.03/2018 IS NOT APPLICABLE ON THE FACTS OF THIS CASE AS THE PENALTY LEVIES IN THE PRESENT APPEAL IS NOT DIRECTLY LINKED WITH PARA 10( E) OF THE CBDT CIRCULAR DATED 3 RD AUGUST 2018. IN THE ALTERNATIVE AND WITHOUT PREJU DICE SUBMISSION, THE LD.AR SUBMITS THAT THE AO MADE ADDI TION ON ADHOC BASIS, I.E. DISALLOWANCE WAS MADE ON ESTIMATION BAS IS. THE AO MADE ADDITION BY MAKING DISALLOWANCE OF 12.5% OF THE ALL EGED BOGUS 3 MA 450/MUM/2019 PURCHASES. THE LD.AR SUBMITS THAT IT IS SETTLED LA W THAT NO PENALTY IS LEVIABLE ON ADHOC DISALLOWANCE / ADDITION. THE LD. AR SUBMITS THAT THOUGH THERE IS NO MISTAKE APPARENT IN THE ORDER PA SSED BY TRIBUNAL, THE LEVY OF PENALTY ON ADHOC ADDITION IS NOT OTHERWISE SUSTAINABLE. IN OTHER ALTERNATIVE AND WITHOUT PREJUDICE SUBMISSIONS THE L D AR FOR THE ASSESSEE FURTHER SUBMITS THAT IF ASSUME THAT CLAUSE (E) OF P ARA 10 OF CBDT CIRCULAR NO.03/2018 IS APPLICABLE ON THE FACTS OF T HE CASE, IT WOULD BE A FUTILE EXERCISE FIRST TO RECALL AND DISMISS THE APP EAL AS PENALTY IS NOT IN ANY WAY SUSTAINABLE AGAINST THE ASSESSEE. 4. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PA RTIES, PERUSED THE RECORD AND CONTENTS OF CBDT CIRCULAR NO.03/2018 INCLUDING PARA 10 OF THE SAID CIRCULAR. THERE IS NO DISPUTE THAT THI S APPEAL WAS DISPOSED OF ON THE GROUND THAT TAX EFFECT INVOLVED IN THE APPEA L WAS BELOW THE MONETARY LIMIT OF RS.20 LAKHS AS PRESCRIBED IN CBDT CIRCULAR NO.03/2018. HOWEVER, IN THE ORDER THE BENCH HAS GI VEN LIBERTY TO THE REVENUE TO MOVE THE TRIBUNAL FOR RECALLING OF THE O RDER AND RE- INSTITUTION, IF AT A LATER STAGE, THE REVENUE FOUND THAT FILING OF APPEAL WAS PROTECTED BY EXCEPTION PROVIDED IN CLAUSE (E) OF PA RA 10 OF CBDT CIRCULAR NO.03/2018. WE HAVE NOTED THAT THE PENALTY WAS INITIATED ON THE BASIS OF ADDITION / DISALLOWANCE MADE BY AO WHI LE PASSING THE 4 MA 450/MUM/2019 ASSESSMENT ORDER. CLAUSE (E) OF PARA 10 OF CBDT CI RCULAR NO.03/2018 IS EXTRACTED BELOW:- '10. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING IS SUES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: (A) TO (D) XXXXXXXXXXXXXXXXXXXXXXXXXXXX (E) WHERE ADDITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CB// ED/ DRI/ SFIO/ DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI). (F) XXXXXXXXXXXXXXXX 5. ON A CAREFUL READING OF CLAUSE (E) OF PARA 10 OF CBDT CIRCULAR NO.03/2018 ABOUT THE ADDITION (DISALLOWANCE) BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCE IN THE NATURE OF LAW ENFORCEMENT AGENCY, I.E. CBI / ED / DRI / SFIO / DIRECTORATE OF GST INT ELLIGENCE (DGGI). HOWEVER, PRESENT APPEAL IS AGAINST PENALTY LEVIED U /S 271(1)(C). IN OUR VIEW, IT IS A DEBATABLE ISSUE WHETHER THE PENALTY L EVIED IS DIRECTLY COVERED BY THE EXCEPTION PROVIDED IN CLAUSE (E) OF PARA 10 OF CBDT CIRCULAR NO.03/2018. IN OUR VIEW, ON DEBATABLE ISS UE, THE REVENUE / AO CANNOT TAKE THE INVOKE THE PROVISION OF SECTION 254 (2) OF THE ACT. THEREFORE, WE ARE NOT INCLINED TO RECALL OUR ORDER DATED 22-01-2019. RESULTANTLY, THE APPLICATION FILED BY REVENUE IS DI SMISSED. 6. AS WE HAVE DISMISSED THE APPLICATION OF REVENUE, DISCUSSION ON OTHER ALTERNATIVE SUBMISSION RAISED BY LD.AR OF THE ASSESSEE HAVE 5 MA 450/MUM/2019 BECOME ACADEMIC. IN THE RESULT, MISCELLANEOUS APPLI CATION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14-10-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 14 TH OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI