NITON INDUSTRIES, MUMBAI v. ACIT 22(1), NAVI MUMBAI

1 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I BEFORE SHRI D.K. AGARWAL J.M. AND SHRI RAJENDRA SI NGH AM IT(SS)A NO. 113/MUM/2008 BLOCK PERIOD 1.4.88 TO 31.10.1998 M/S NITON VALVE INDUSTRIES PVT. LTD. C-138 GHATKOPAR INDUSTRIAL ESTATE L.B.S. MARG GHATKOPAR (W) MUMBAI 400086. PAN AAACN 4284C VS. A.C.I.T. CENTRAL CIR. 15 & 16 AAYAKAR BHAWAN M.K. ROAD MUMBAI.20 APPELLANT RESPONDENT IT(SS)A NO. 56/MUM/2009 BLOCK PERIOD 1.4.88 TO 24.7.88 M/S NITON INDUSTRIES C-138 GHATKOPAR INDUSTRIAL ESTATE L.B.S. MARG GHATKOPAR (W) MUMBAI 400086. PAN AACFN 9294K VS. A.C.I.T. 22 (1) VASHI NAVI MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI J.P. BAIRAGRA RESPONDENT BY SHRI R.S. SRIVASTAVA ORDER PER D.K. AGARWAL THESE TWO APPEALS PREFERRED BY THE RESPECTIVE ASSE SSEES ARE DIRECTED AGAINST SEPARATE ORDERS PASSED BY THE LD. CIT(A)-IV MUMBAI DATED 12.09.2009 FOR THE BLOCK PERIOD 1.4.88 TO 31.10.1998 IN THE CASE OF NITON VA LVE INDUSTRIES PVT. LTD. AND DATED 21.4.09 FOR THE BLOCK PERIOD 1.4.88 TO 24.7.1998 IN THE CASE OF NITON INDUSTRIES. SINCE 2 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES FACTS ARE ALMOST IDENTICAL AND THE ISSUE INVOLVED I S COMMON BOTH THE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM IT(SS)A 113/MUM/2008 IN THE CASE OF NITON VALVE INDUSTRIES PVT. LTD. ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL VALVES. A SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT 1961 (THE ACT) WAS CARRIED OUT AT TH E BUSINESS PREMISES OF THE ASSESSEE AS WELL AS RESIDENCE OF THE DIRECTORS OF THE COMPAN Y ON 24.7.88. IN RESPONSE TO THE NOTICE ISSUED U/S 158 BC OF THE ACT THE ASSESSEE FILED RE TURN FOR THE BLOCK PERIOD DECLARING UNDISCLOSED INCOME OF ` 40 66 431/-. HOWEVER THE ASSESSMENT WAS COMPLETE D ON A TOTAL UNDISCLOSED INCOME OF THE ASSESSEE OF ` 4 20 13 010/- INCLUDING ADDITION OF ` 2 56 96 081/- MADE ON ACCOUNT OF BOGUS PURCHASES VI DE ORDER DTD. 31.10.02 PASSED U/S 158BC OF THE ACT. ON APPEAL THE LD. CIT(A) IN THE FIRST ROUND OF APPEAL VIDE ORDER DATED 15.6.2001 CONFIRMED THE ADDITION OF ` 1 20 12 381/- IN RESPECT OF PURCHASES MADE FROM SIX PARTIES MENTIONED BY MR. HARSHED MEHTA AND LIST ED IN ANNEXURE I OF THE ASSESSMENT ORDER. THIS ADDITION WAS ALSO UPHELD BY THE TRIBUN AL AND HENCE THERE IS NO DISPUTE ON THIS ADDITION. HOWEVER IN RESPECT OF ADDITION MADE ON ACCOUNT OF PURCHASES FROM VARIOUS OTHER PARTIES MENTIONED IN ANNEXURE II OF THE ASSE SSMENT ORDER THE LD. CIT (A) SUSTAINED THE ADDITION OF ` 48 02 212/- AS AGAINST ` 2 56 96 081/- MADE BY THE A.O. ON FURTHER APPEAL BEFORE THE TRIBUNAL BY THE ASSESSEE AND REVENUE THE TRIBUNAL A BENCH MUMBAI VIDE ITS ORDER DATED 18.2.04 SET ASIDE THE A SSESSMENT ORDER OF THE A.O. TO THE FILE OF THE CIT(A) TO FURTHER EXAMINE THE TOTAL ADDITION MADE IN RESPECT OF PURCHASES 3 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES MENTIONED IN ANNEXURE II AMOUNTING TO ` 2 56 96 081/-. PURSUANT TO THE ORDER OF THE TRIBUNAL THE LD. CIT(A) AFTER EXAMINING THE ISSUE AFRESH CALLED FOR REMAND REPORT FROM THE A.O. THE LD. CIT(A) AFTER CONSIDERING THE TWO REMAND REPORTS FROM THE A.O. PASSED THE ORDER SUSTAINING THE ADDITION OF ` 48 02 212/- AGAINST THE TOTAL ADDITION MADE BY TH E A.O. IN RESPECT OF PURCHASES LISTED IN ANNEXURE-II OF THE ASSESSMENT ORDER AMOUNTING TO ` 2 56 96 081/- AND DELETED THE BALANCE OF ADDITION O F ` 2 08 93 869/-. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE AND REVENUE BOTH FILED THE SECOND APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL IN ITS ORDER IN IT(SS)A NO.1 18/MUM/2006 AND 140/MUM/2006 IN THE CASE OF ACIT VS. NITON VALVE INDUSTRIES PVT. LT D. AND VICE VERSE AND IN IT(SS)A NO. 380/MUM/2006 & 411/MUM/06 IN THE CASE OF NITON IND USTRIES AND VICE VERSA VIDE ORDER DATED 31.10.07 OBSERVED IN PARAGRAPH NO. 29 OF HIS ITS ORDER AS UNDER: HOWEVER WE FIND THAT THE LEARNED COUNSEL FOR THE A SSESSEE COULD NOT SATISFACTORILY EXPLAIN THE REASONS FOR PURCHASES VALUED AT RS. 48 02 212/- BEING NOT PASSED THROUGH THE OCTROI POST SITUATED NEAR TO THE FACTORY PREMIS ES SITUATED AT GHATKOPAR AND INSTEAD PASSED THROUGH THE MIRA BHAYANDER CHECK NAK A. THE TRIBUNAL HAD GIVEN A SPECIFIC DIRECTION TO THE LEARNED CIT(A) TO EXAMINE THIS ASPECT. HOWEVER WE FIND NOTHING MORE THAN WHAT WAS STATED IN THE EARLIER PR OCEEDINGS HAVE BEEN SUBMITTED. NO EVIDENCE WHATSOEVER WAS SUBMITTED BEFORE US TO S UBSTANTIATE THAT BRINGING GOODS THROUGH MIRA BHAYANDER OCTORI NAKE WAS FAVOURED ROU TE OF THE TRANSPORTERS AND NOTHING WAS OBJECTIONABLE IN IT. THE TRIBUNAL AFTER CONSIDERING THE TWO REMAND REPOR TS AND THE ORDER OF THE LD. CIT(A) HELD THAT (PARA 31) : CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND CONSIDERING THE DETAIL SPEAKING ORDER PASSED BY THE LD. CIT(A) GIVING PART RELIEF WHICH IN OUR OPINION IS A REASONABLE ORDER THEREFORE WE ARE NO T INCLINED TO INTERFERE IN THE SAME AND ACCORDINGLY UPHOLD THE SAME. 4 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES 3. IN THE ASSESSMENT PROCEEDINGS THE A.O. HAS ALSO INITIATED PENALTY PROCEEDINGS U/S 158 BFA(2) OF THE ACT. ACCORDINGLY THE ASSESSEE W AS ASKED TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. IN REPLY THE ASSES SEE VIDE ITS LETTER DATED 12.05.08 SUBMITTED AS UNDER:- IN THIS CASE THE ADDITIONS MADE BY THE AS PER ANNE XURE-II WAS BASED UPON AVAILABILITY OF DOCUMENTARY PROOF BASED ON CERTAIN SEVEN CRITERIAS AS LAID DOWN BY THE AO AND FAILURE TO COMPLY WITH ANY ONE OF THE CR ITERIAS AS LAID DOWN BY THE AO LED TO CLASSIFICATION OF THESE PURCHASE TRANSACTION S AS BOGUS. NONE OF THE ADDITIONS AS MADE IN RESPECT OF BOGUS PURCHASES AROSE OUT ANY PAPER OR DOCUMENTS SEIZED DURING THE COURSE OF THE SEARCH. OUT OF THE ADDITI ONS OF RS. 2.56 CRORES DISCUSSED IN ANNEXURE II OF THE ADDITIONS FINALLY SUSTAINED WERE ONLY OF RS. 48.02 CRORES. AS FAR AS THE ADDITION ARISING OUT OF ANNEXURE II OF RS. 4 8 02 212/- THOUGH THE ASSESSEE HAS ALL THE DOCUMENTS PERTAINING TO PURCHASE OF THESE S TEEL ITEMS THE DISALLOWANCE STANDS CONFIRMED ON THE GROUNDS THAT AS THE ASSESSEES FAC TORY WAS SITUATED IN GHATKOPAR THE GOODS SHOULD NOT HAVE PASSED THROUGH THE MIRA-B HAYANDER CHECK NAKA. ACCORDING TO THE AO THESE SHOULD HAVE PASSED THROUG H THE NEAREST CHECK NAKA FOR OCTORI SITUATED NEAR THE ASSESSEES FACTORY AT GHAT KOPAR. IN DOING SO THE AO HAS REJECTED THE ASSESSEES PLEA THAT IT WAS FOR THE TR ANSPORTERS TO DECIDE THE ROUTE TO BRING THE GOODS AND IT WAS IN THE HANDS OF THE ASSE SSE TO DECIDE THE ROUTE OF ENTRY POINT AT MUMBAI. THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ARISING OUT OF ANNEXURE II OF RS. 48.02 LACAS IS MADE ON AN HYPOTHESIS OF THE AO WHICH IS B ASED ON A PECULIAR PRESUMPTION THAT THE GOODS SHOULD HAVE PASSED THROUGH A CHECK N AKA CLOSE TO THE ASSESSEES BUSINESS PREMISES AND NOT FROM MIRA-BHAYANDER CHECK NAKA THE A.O. AFTER CONSIDERING THE ASSESSEES REPLY OBS ERVED THAT IF THERE ARE CERTAIN PURCHASES CLAIMED BY THE ASSESSEE WHICH ARE NOT PRO PERLY BACKED BY THE ESSENTIAL DOCUMENTS THE CLAIM OF THE ASSESSEE SHOULD FAIL FO R WANT OF PROPER EXPLANATION/EVIDENCE AND IN RESPECT OF SUCH CLAIMS FOR DEDUCTION IT IS N OT FURTHER NECESSARY TO ESTABLISH THAT THE CLAIM REPRESENTED BOGUS PURCHASES. THE A.O. AFTER RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BALLARPUR INDUSTRI ES 119 ITR 817 (BOM) WHEREIN IT BEEN HELD THAT BEFORE ANY ITEM OF EXPENDITURE CAN B E REGARDED AS EXPENDITURE ALL THE FACTS 5 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES AND CIRCUMSTANCES OF THE CASE HAVE TO BE LOOKED AT AND THE MERE STATED OBJECT WOULD NOT BE DECISIVE AND KEEPING IN VIEW THE ORDER OF THE L D. CIT(A) SUSTAINING THE ADDITION OF ` 48 02 212/- ON ACCOUNT OF BOGUS PURCHASES WHICH THE TRIBUNAL HAS ALSO CONFIRMED HELD THAT IT IS CLEARLY ESTABLISHED THAT THE ASSESSEE HA S REDUCED ITS TAXABLE PROFIT/INCOME BY DEBITING BOGUS PURCHASES IN ITS ACCOUNT THEREBY IT HAS REDUCED ITS INCOME AND ITS TAX BY ADOPTING THIS MODUS OPERANDI AS LIABILITY AND HENCE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME AND THUS IS LIABLE FOR IM POSITION OF PENALTY U/S 158BFA(2) OF THE ACT AND ACCORDINGLY HE IMPOSED THE PENALTY OF ` 28 81 327/- VIDE ORDER DATED 16.5.2008 PASSED U/S 158BFA(2) OF THE ACT. ON APPEAL THE LD . CIT(A) OBSERVED THAT THE INITIAL PRESUMPTION OF EXISTENCE OF UNDISCLOSED INCOME IS T HUS CREATED THE MOMENT AN ADDITION IS MADE AND INITIAL ONUS TO REBUT THAT PRESUMPTION IS ON THE APPELLANT BY OFFERING ITS EXPLANATION AND WHICH HAS TO BE BONAFIDE AND THE A PPELLANT SHOULD BE ABLE TO SUBSTANTIATE IT BY PROVIDING NECESSARY EVIDENCE WHICH AGAIN SHOU LD NOT TO BE FALSE HELD THAT THE A.O. HAS RIGHTLY IMPOSED THE PENALTY. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUND OF APPEAL:- ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT(A) HAS ERRED IN UPHOLDING THE ASSESSING OFFICERS VIEWS IN LEVY ING PENALTY U/S 158 BFA(2) OF THE INCOME TAX ACT AMOUNTING TO ` 28 81 327/- 5. AT THE TIME OF HEARING BEFORE US THE LEARNED CO UNSEL FOR THE ASSESSEE WHILE STATING THE FACTUAL MATRIX OF THE CASE FURTHER SUBMITS THAT IN THIS CASE THE LD. CIT(A) AS WELL AS THE 6 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES TRIBUNAL CONFIRMED THE ADDITION OF PURCHASES OF ` 48 02 212/- MERELY ON THE GROUND THAT GOODS HAVE NOT PASSED THROUGH THE OCTROI POST MORE PERTINENT TO THE LOCATION OF THE ASSESSEES FACTORY WHICH IS LOCATED AT GHATKOPAR B UT PASSED THROUGH THE CHECK NAKA OF MIRA BHAYANDAR. IT WAS FURTHER HELD THAT THE ASSES SEE HAS NOT FILED ANY SATISFACTORY REASON TO JUSTIFY THAT PASSING GOODS THROUGH MIRA B HAYANDAR CHECK NAKA THE ASSESSEE SIMPLY SUGGESTED THAT THIS WAS THE ROUTE THE TRANSP ORTER USED TO TAKE FOR WHICH THE ASSESSEE HAS NO EXPLANATION AND COULD NOT BE HELD R ESPONSIBLE FOR THE ACTIONS OF THE TRANSPORTER. HE FURTHER SUBMITS THAT VIDE LETTER D ATED 13.1.2000 FILED BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS APPEARI NG AT PAGE 148 TO 152 OF THE ASSESSEES PAPER BOOK IT WAS CLEARLY EXPLAINED ABO UT THE PAYMENT OF OCTROI AND TRANSPORT CHARGES. SIMILARLY IN RESPECT OF THE MATERIAL RECEI VED VIA MIRA BHAYANDAR ROUTE COMPLETE DETAILS WERE GIVEN TO THE A.O. I.E. NAME OF THE PAR TY BILL NO. DATE OF THE BILL AMOUNT OF THE BILL AND SALES TAX AND EXCISE DUTY CHARGED IN T HE BILL WHICH ARE ALSO APPEARING AT PAGE NO. 153 OF THE ASSESSEE;S PAPER BOOK. HE FURTHER SU BMITS THAT ALL THE COPIES OF THE INVOICES IN RESPECT OF THE PURCHASES OF ` 48.02 LAKHS AND SALES TAX AND EXCISE DUTY PAID ON THE SAME WERE ALSO FILED COPY OF WHICH ARE APPEARI NG AT PAGE NO. 153 TO 215 OF THE PAPER BOOK. HE FURTHER SUBMITS THAT THE LD. CIT(A) HAS NO T CONSIDERED THE ASSESSEES SUBMISSION FILED BEFORE HIM COPY OF WHICH IS APPEARING AT PAG E NO. 14 TO 20 OF THE ASSESSEES PAPER BOOK PARTICULARLY AT PAGE NO. 11 & 12 OF THE COMPIL ATION WHEREIN THE ASSESSEE HAS EXPLAINED THE REASONS TO JUSTIFY PASSING THE GOODS THROUGH MIRA BHAYANDAR CHECK NAKA. HE FURTHER SUBMITS THAT ALL THE MATERIALS REGARDING THE PURCHASES OF GOODS OF ` 48.02 LAKHS ARE AVAILABLE AND PROVIDED TO THE ASSESSING O FFICER AND THE ONLY GROUND ON WHICH 7 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES THE ADDITION WAS MADE AND CONFIRMED IS THAT THE GOO DS UNDER THESE BILLS WERE PASSED THROUGH MIRA BHAYANDAR CHECK NAKA AND NOT THE CHECK NAKA NEARER TO GHATKOPAR AREA WHERE THE ASSESSEES FACTORY WAS SITUATED AND THAT CANNOT A REASON FOR DISALLOWING THE PURCHASES MADE BY THE ASSESSEE COMPANY WHEN ALL THE PURCHASE BILLS DELIVERY CHALLANS OCTROI PAYMENTS TRANSPORT RECEIPTS WERE PRODUCED A ND ALL THESE PURCHASES WERE ALSO TAKEN IN THE QUANTITY STATEMENT ATTACHED TO THE AUDIT REP ORT. HE FURTHER SUBMITS THAT SINCE IT IS A SEARCH CASE NO SUCH MATERIAL RELATING TO THE SAID P URCHASES WAS FOUND AND SEIZED AND ALL OTHER MATERIAL DOCUMENTS AND PAPERS ARE IN THE CUS TODY OF THE DEPARTMENT THEREFORE THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCU RATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. HE FURTHER SUBMITS THAT U/S 158BFA (2) WHAT IS TO BE SEEN IS THAT THERE IS A REASONABLE CAUSE IN NOT DISCLOSING SUCH INCOME IN T HE BLOCK RETURN FILED BY THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE HAS MADE GENUINE PURCHASES FROM THESE PARTIES AND THERE IS NO MATERIAL TO SHOW THE PURCHASES ARE BOGUS OR THE ASSESSEE HAS INFLATED THE PURCHASES THE ASSESSEE HAS REASONABLE CAUSE IN NOT DISCLOSING THE INCOME ON ACCOUNT OF THESE PURCHASES IN THE BLOCK RETURN. RELIANCE WAS ALSO PL ACED ON THE FOLLOWING DECISIONS:- 1) GANDHI SERVICE STATION VS. ACIT 100 TTJ (AHD) 114 3 2) NEMCHAND JAIN & SONS VS. DCIT (2010) 131 TTJ (KOL ) 478 3) CH. SURESH REDDY (2009) 120 ITD 428 (CHENNAI) 4) SALUJA HIRE PURCHASE LTD. (2009) 120 ITD 394 (LUC K) 5) KOATEX INFRASTRUCTURE LTD. (2006) 100 ITD 510 (MUM) . 6) ACIT VS. SHANTI KUMAR CHABARA (2009) 121 TTJ (JP) 985 7) SMT. BITOLI DEVI VS. ACIT (2007) 110 TTJ (LUCKNOW) 735 8) SMT. MALA DAYANITHI (2004) 91 ITD 46 (BANG) 8 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES 9) DCIT VS. BLOW PLAST LTD. AND VICE VERSA IN IT(SS) N O. 13/M/07 AND IT(SS)/17/M/07 FOR THE BLOCK PERIOD 1.4.87 TO 21.6. 97 ORDER DTD.17.9.2009. 10) CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 15 8 (SC) HE THEREFORE SUBMITS THAT THE PENALTY IMPOSED BY TH E A.O. AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 6. ON THE OTHER HAND THE LEARNED D.R. WHILE RELYIN G ON THE ORDER OF THE A.O. AND THE LEARNED CIT(A) SUBMITS THAT SINCE THE ASSESSEE HAS FAILED TO PROVE THE PURCHASES OF ` 48 02 212/- AS GENUINE PURCHASES THE LD. CIT(A) WA S FULLY JUSTIFIED IN SUSTAINING THE PENALTY IMPOSED BY THE A.O. HE THEREFORE SUBMITS THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) B E UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE I S NO DISPUTE THAT THE ASSESSING OFFICER HAS IMPOSED THE PENALTY ON THE ADDITION OF UNPROVED PURCHASES OF ` 48 02 212/- CONFIRMED BY THE LD. CIT(A) AND ALSO BY THE TRIBUNA L. WE FURTHER FIND THAT IT IS NOT IN DISPUTE THAT NO SUCH INCRIMINATING MATERIAL WAS FOU ND DURING THE COURSE OF SEARCH TO SHOW THAT THE ASSESSEE HAS MADE PURCHASES OUTSIDE THE BO OKS OF ACCOUNT OR PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE. IT IS ALSO NOT A CAS E OF THE REVENUE THAT THE ASSESSEE HAS NOT MADE ANY SUCH PURCHASES OF ` 48 02 212/-. AS A MATTER OF FACT THE ASSESSEE HAS FILED COMPLETE DETAILS OF PURCHASES OF ` 2 56 96 081/- INCLUDING PURCHASES OF ` 48 02 212/- ALONG WITH ZEROX COPIES OF INVOICES DATE OF BILL AMOUNT OF BILL SHOWING THE PAYMENT OF SALES TAX & EXCISE DUTY IN RESPECT OF ALL THESE PUR CHASES. THE ADDITION OF ` 48 02 212/- 9 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES MADE ON ACCOUNT OF BOGUS PURCHASES WAS CONFIRMED BY THE TRIBUNAL ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THAT BRINGI NG OF GOODS THROUGH MIRA BHAYANDAR WAS FAVOURED ROUTE OF THE TRANSPORTER AND NOTHING WAS O BJECTIONABLE IN IT. HOWEVER WE FIND THAT IN SUPPORT OF THE AFORESAID PURCHASES THE ASS ESSEE HAS FILED ALL THE RELEVANT MATERIAL INCLUDING THE COPY OF THE OCTROI RECEIPT TO SHOW TH AT THE GOODS WAS ROUTED THROUGH MIRA BHAYANDAR CHECK POST AS PER THE CONVENIENCE OF THE TRANSPORTER ON WHICH THE ASSESSEE HAS NO CONTROL OVER IT. IN THIS VIEW OF THE MATTER AND KEEPING IN VIEW THAT THE ASSESSEE HAS RECORDED THE SAID PURCHASES IN ITS BOOKS OF ACCOUNT INCLUDING STOCK REGISTER AND NO CONTRARY MATERIAL WAS FOUND EVEN DURING THE COURSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT THAT THE SAID PURCHASES ARE BOGUS AND ME RELY BECAUSE SUCH ADDITION OF ` 48 02 212/- HAS BEEN UPHELD BY THE TRIBUNAL IN QUAN TUM PROCEEDINGS DOES NOT MEAN THAT THE ASSESSEE IS LIABLE TO PENALTY. . 8. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEI R LORDSHIPS AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF VS. JCI T (2007) 291 ITR 519(SC) AND UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) HAVE OBSERVED AND HELD (PAGE 158 HEAD NOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TH E MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS IN ORDER TO EXPOSE THE ASSESSEE TO PENA LTY UNLESS THE CASE IS STRICTLY 10 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EX ACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THE RE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS 9. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DE CISION AND OTHER DECISIONS RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE AND ALSO KEEPING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE SAID PURCHASES ARE FOUND TO BE FALSE OR UNTRUE OR THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT BONAFIDE WE ARE OF T HE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHICH MAY ATTRACT LEVY OF PENALTY U/S 158 BFA(2). ACCORDINGLY THE PENALTY OF ` 28 81 327/- IMPOSED BY THE ASSESSING OFFICER U/S 158BFA(2) AND CONFIRMED BY THE LD. CIT(A) IS DELETE D. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 10. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E IN IT(SS)A NO. 56/MUM/2009. 11. AT THE TIME OF HEARING BOTH THE PARTIES HAVE A GREED THAT THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE FACTS OF THE CASE OF NITIN VALVE INDUSTRIES PVT. LTD. THEREFORE THE PLEA TAKEN BY THEM IN THE SAID APPEAL MAY BE CONSIDERED WHILE DECIDING THE PRESENT APPEAL. 11 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES 12. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF OUR FINDINGS RECORDED IN PARA 7 TO 9 OF THIS ORDER WHEREIN IN THE CASE OF NITIN VALVE INDUSTRIES PVT. LTD. (SUPRA ) WE HAVE DELETED THE PENALTY IMPOSED BY THE A.O. U/S 158BFA(2) WE FOR THE SAME REASONS DELETE THE PENALTY OF ` 8 LAKHS IMPOSED BY THE A.O. U/S 158BFA(2) IN THE CASE OF NI TON INDUSTRIES ALSO. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 13. IN THE RESULT ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED ON 18 TH FEBRUARY 2011. SD/- SD/ - (RAJENDRA SINGH) (D.K. AGARWAL) ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI DATED 18 TH FEBRUARY 2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IV - MUMBAI 4. THE CIT- CENTRAL II MUMBAI 5. THE DR BENCH I 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 12 IT(SS)A 113//MUM/08 & IT(SS)A 56/M/09 M/S NITON VALVE I ND. P. LTD. & NITON INDUSTRIES DATE INITIALS 1 DRAFT DICTATED ON 10.02.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 11.2.2011 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER