ASSTT. COMMISSIONER OF INCOME TAX 27(1), MUMBAI V. M/S.DEDHIA HOUSING CORPORATION, MUMBAI

MA 77/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7893 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect
• Section: 271(1)(c); 13

Judgement Text

MA NO 77/MUM/2020 IN ITA NO. 6376/MUM/2018 ASSESSMENT YEAR: 2010 - 11 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI 'D' BENCH, MUMBAI [CORAM: JUSTICE P.P. BHATT (PRESIDENT), AND PRAMOD KUMAR (VICE PRESIDENT)] MA NO 77/MUM/2020 IN ITA NO. 6376/MUM/2018 ASSESSMENT YEAR: 2010 - 11 ASSISTANT COMMISSIONER OF INCOME TAX - 27(1) .APPLICANT MUMBAI. VS. M/S. DEDHIA HOUSING CORPORATION RESPONDENT PLOT NO. 231/6, 1 ST FLOOR, MANJU APPT. R.B MEHTA MARG, GHATKOPAR (E), MUMBAI 400077 [PAN: AAAFD2512Q] APPEARANCES BY SUNIL DESHPANDE FOR THE APPLICANT DINESH SHAH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : JULY 13 , 2021 DATE OF PRONOUNCEMENT OF ORDER : SEPTEMBER 0 2 , 2021 ORDER PER BENCH: 1. BY THIS MISCELLANEOUS APPLICATION, THE APPLICANT REVENUE SEEKS TO RECALL OUR ORDER PASSED IN ITA NO. 6376/MUM/2018, DATED 20.08.2019, WHEREIN THE REVENUES APPEAL WAS SUMMARILY DISMISSED ON ACCOUNT OF LOW TAX EFFECT. IT IS THE CLAIM OF THE REVENUE THAT THOUGH THE TAX EFFECT INVOLVED IN THE APPEAL IN QUESTION WAS ADMITT EDLY BELOW THE THRESHOLD MONETARY LIMIT OF RS. 50 LAC SPECIFIED IN THE CBDT CIRCULAR NO. 17/2019, DATED 08.08.2019, HOWEVER, THE SAME BEING COVERED BY THE EXCEPTION CARVED OUT IN PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018 WAS THUS MAINTAI NABLE 2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND DULY CONSIDERED THE FACTS OF THE CASE IN LIGHT OF THE EXTANT APPLICABLE LEGAL POSITION. MA NO 77/MUM/2020 IN ITA NO. 6376/MUM/2018 ASSESSMENT YEAR: 2010 - 11 PAGE 2 OF 3 3. AS OBSERVED BY US HEREINABOVE, IT IS THE CLAIM OF THE ASSESSING OFFICER, THAT AS THE ISSUE INVOLVED IN THE APPEAL IN QUESTION PERTAINS TO A PENALTY THAT WAS IMPOSED U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION OF BOGUS PURCHASES MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES I.E AN EXTERNAL AGENCY, THEREFORE, PURSUANT TO THE EXCEPTION CARVED OUT IN PARA 10 OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018 THE APPEAL WAS MAINTAINABLE AND HAD WRONGLY BEEN SUMMARILY DISMISSED ON THE GROUND OF LOW TAX EFFECT THEREIN INVOLVED . 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, AND FIND, THAT WHILE DISPOSING OFF THE CAPTIONED APPEAL VIDE AN ORDER DATED 21.08.2019 LIBERTY WAS GRANTED TO THE REVENUE TO SEEK RECALLING OF THE ORDER AND REINSTITUTION OF ITS APPEAL FOR ADJUDICAT ION ON MERITS, IF, IN CASE IT WAS SUBSEQUENTLY FOUND THAT THE APPEAL WAS COVERED BY AN EXCEPTION PROVIDED IN PARA 10 OF THE CBDT CIRCULAR NO. 3/2018, DATED 11.07.2018 5. AS CAN BE GATHERED FROM THE MISCELLANEOUS APPLICATION, IT IS THE CLAIM OF THE A.O TH AT AS THE APPEAL IN QUESTION WAS COVERED BY THE EXCEPTION CARVED OUT IN PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018, (AS AMENDED ON 20.08.2018) THUS, THE SAME IRRESPECTIVE OF THE TAX EFFECT THEREIN INVOLVED WAS MAINTAINABLE. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID CLAIM OF THE REVENUE AND ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE SAME. ON A PERUSAL OF PARA 10(E) OF THE CBDT CIRCULAR NO. 3/2018 (AS AMENDED ON 20.08.2018), WE FIND THAT THE SAME READS AS UNDER: 10. ADVERSE JUDGMEN TS RELATING TO THE FOLLOWING ISSUES 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) (E) WHERE AD DITION IS BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES SUCH AS CBI / ED / DRI / SFIO / DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI). IT IS A SETTLED POSITION OF LAW THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE INDEPENDENT AND DISTINCT PROCEEDINGS AND CONFIRMATION OF AN ADDITION CANNOT ON A STANDALONE BASIS JUSTIFY IMPOSITION/UPHOLDING OF A PENALTY U/S 271(1)(C) OF THE ACT. ADOPTING THE SAME LOGIC, WE ARE OF THE CONSIDERED VIEW THAT UNLESS A SPEC IFIC EXCEPTION IS PROVIDED IN THE CIRCULAR W.R.T PENALTY ALSO, IT COULD BY NO MEANS BE CONSTRUED THAT PENALTY WAS TO BE TREATED AT PAR WITH THE QUANTUM ADDITION. AS IS DISCERNIBLE FROM PARA 10(E) OF THE AFORESAID CBDT CIRCULAR NO. 3/2018 (AS AMENDED ON 20. 08.2018), THE SAME APPLIES ONLY TO ADDITIONS WHICH WERE BASED ON INFORMATION RECEIVED FROM EXTERNAL SOURCES. AS NOTICED BY US HEREINABOVE, SINCE THE LEVY OF PENALTY BY NO MEANS COULD BE CONSTRUED AS AN ADDITION WITHIN THE MEANING OF PARA 10(E) OF THE AFORE SAID CIRCULAR, THEREFORE, WE DO NOT FIND ANY MERIT IN THE CLAIM RAISED BY THE REVENUE THAT THE AFOREMENTIONED EXCEPTION CARVED OUT IN THE CBDT CIRCULAR NO. MA NO 77/MUM/2020 IN ITA NO. 6376/MUM/2018 ASSESSMENT YEAR: 2010 - 11 PAGE 3 OF 3 3/2018 (SUPRA) WOULD ALSO TAKE WITHIN ITS SCOPE AND GAMUT A PENALTY IMPOSED UNDER SEC. 271(1)(C) IN RESPECT OF AN ADDITION OF BOGUS PURCHASES MADE BY THE A.O ON THE BASIS OF AN INFORMATION RECEIVED FROM SALES TAX AUTHORITIES I.E AN EXTERNAL AGENCY. ACCORDINGLY, NOT FINDING ANY MERIT IN THE PRESENT MISCELLANEOUS APPLICATION FILED BY THE REVENUE, WE DISMIS S THE SAME. 7. RESULTANTLY, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 0 2 . 0 9 .2021 S D / - S D / - JUSTICE P.P. BHATT PRAMOD KUMAR (PRESIDENT) (VICE PRESIDENT) MUMBAI, D ATED THE 0 2 N D SEPTEMBER , 2021 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI