TaxTMI 
TaxTMI 
2017 (2) TMI 1184
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....d in holding that the additions were not confirmed by his predecessors in his office on estimated basis. 2. The Learned CIT (Appeals) erred in holding that the appellant company had concealed the particulars of income. 3. The Learned CIT (Appeals) erred in confirming penalty u/s 271(1)(c) of Rs. 2,92,270/-." 3. Both these appeals filed by the assessee for assessment year 2000-01 and 2001-02 involve similar facts so we take the facts of ITA No. 2461/Ahd/2013 as the lead case and decide both the appeals accordingly. All these three grounds of appeals are interconnected so they are decided together as under:- 4. In this case, the assessing has filed return of income declaring income of Rs. nil on 31st November, 2000. There after a notice under section 148 of the act was issued on 12/07/2006 to which the assessee has not responded. The facts of the case that information was received from the Preventive Section of the Central Excise and Customs, Baroda stating that the assessee company had availed CENVAT credit of aggregating to Rs. 50,31,380/- during the assessment year 2000-01 and 2001-02 on the basis of fabricated and bogus invoices of purchases HDPE/LDPE/LLDPE and Polypropyl....
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....redit amounting to Rs. 50,31, 380/- on the basis of 71 invoices issued by M/s. J.K. Enterprises, as detailed in Annexure-I to the show cause notice, in a wrong and fraudulent manner which is otherwise is not admissible to the assessee company. 6. The relevant portions of the order of the Commissioner of Central Excise & Customs, Vadodara-II bearing No. F.No. V.Ch.39(15)15/OA/AC/Prev./03 dated 30/11/2004 are extracted herein below:- "5.1. The allegation that the credit amount to Rs. 5031380/- was taken by Ibkey against 71 invoices issued by M/s. J.K. Enterprises as debited in annexure-I to the show cause notice, without actually receiving any material covered under these invoices and that, as such, these invoices were just dummy invoices issued by JKE is based on the following evidence. (i) Statement dated 20-12-2000 of Shri Mukesh D Patel, Authorised Signatory of Ibkey recorded u/s 14 of the Central Excise Act, 1944 wherein he has stated that he was looking after the excise matters and day to day functions of the company that he had made fake entries for the goods viz. HDPE/LDPE/LLDPE and polypropylene granules shown to have been received under invoices issued by JKE and had ....
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....ices issued by JKE was passed on to RPP and RIP by raising invoices in their name as mentioned in their name as mentioned in Annexure-II to his statement that no goods as mentioned in the invoices as details in annexure-II were dispatched to RPP and RIP and only modvat credit was passed on to them that he has been shown the statement dated 20-11-2000 of Shri Mukesh D Patel, authorized signatory of Ibkey and he has gone through the same and that he agrees with the contents of the statement in toto without any reservation. (v) Further statement dated 27-2-2001 of Shri Keval V Trivedi, recorded under section 14 of the Central Excise Act, 1944 wherein he stated that he has gone through the contents of the statement dated 24-2-2001 of Shri Vipinbhai V patel godown in charge of JKE and that notwithstanding the claim of Shri Vipinbhai V Patel that the material covered the 71 invoices issued by JKE to Ibkey had actually been dispatched, the fact is that no goods had been received in his factory at village - Ankhi. (vi) Statement dated 13/2/2001 of the Shri Vinodkumar Chaturvedi, authorized signatory of RPP recorded u/s 14 of the Central Excise Act, 1944 wherein he stated that no goods ....
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....lected in the Profit & Loss Account. Accordingly, in view of the facts and circumstances of the case discussed and relied upon by the by the Commissioner of Central Excise & Customs, Vadodara-II in the order bearing No. F.No. V.Ch.39(15)15/OA/AC/Prev./03 .dated 30.11.2004 extracted as above, an addition of Rs. 1,84,20,574/- is made to the total income of the assessee on account of bogus purchases claimed by the assessee. Penalty proceedings u/s 271(1)(c) are initiated separately for furnishing inaccurate particulars and making a bogus claim of purchases." 5. The ld. CIT(A) had confirmed the addition made by the assessing officer from Rs. 18434,443/- to Rs. 15,59,506/- . Thereafter, the assessing officer had issued show cause notice for imposition of penalty u/s. 271(1)(c) r.w.s 271(4) of the act. In response to show cause notice the assessee has furnished the following submission at the time of penalty proceedings before the assessing officer:- "In this regard, it is submitted that the company had filed Return of Income on 31.10.2000 declaring total loss of Rs. Nil. Assessment u/s 144 was completed on 14/12/2007 on a total income of Rs. 75,52,235/-. The additions made in the a....
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....ourable CIT (Appeals) is on estimated basis and therefore penalty u/s 271(1)(c) cannot be levied. For this purpose Reliance is placed on the following decisions in the case of - (i) CIT vsAero Traders Pvt. Ltd. 322 ITR 316 (ii) CIT vs Modi Industrial Corporation 195 Taxman (iii) Harigopal Singh vs. CIT 258 ITR 0085 (iv) Bhagyodaya Group Co-operative Cotton Sale & Ginning & Pressing Society Ltd. Vs. Asst. CIT 127 TTJ 001. (v) Harms/i B Shah vs ITO 126 TTJ 283 (vi) CIT vs M.M. Rice Mills 253 ITR 17 (vii) CIT vs. Ravail Singh & Co. 254 ITR 191 (viii) CITvs.AjaiSingh&Co.253ITR630 (ix) CIT vs Dhillon Rice Mills 256 ITR 447 (x) CIT vs. Rajbahadur Singh 273 ITR 351 (xi) CIT vs Metal Product of India 150 ITR 714 (xii) Sudarshan Silks & Sarees vs. CIT 300 ITR 205 (xiii) CIT vs Shivnarayan Jamnalal & Co. In view of the aforesaid facts and circumstances it is submitted that penalty proceedings may kindly be dropped on the additions have been sustained on estimated basis." 5.1 The assessing officer has not accepted the explanation of the assessee and levied penalty of Rs. 3,65,587/- u/s. 271(1)(c) of the act. Aggrieved against the order of the assessing officer, t....
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....ant and the same is reproduced here under for reference:- "5.2 I have carefully considered the facts of the case, the submission of the appellant, the assessment order and the remand report. The Central Excise official had visited the appellant premises on 23-11-2000 and had found bogus purchases of Rs. 1,84,20,574/- for AY 2000-01 and Rs. 48,87,444/- for AY 2001-02 allegedly from M/s. J.K. Enterprises. The closing stock as on 31-03-2000 was shown as Rs. 1,84,20,574/- and in the opening stock as on 01-04- 2000 under the head "purchase" the appellant had reversed the entry as -1,83,94,170/- (It is not clear as to how opening stock for AY 2001-02 and closing stock of 2000-01 could be different). The appellant had shown sales of Rs. 18,76,532/- in the trading account whereas apparently there was no raw material to process or manufacture. In other words, there is no corresponding purchases and thus all the expenses such as on power of Rs. 14,71,939/- appears to be bogus. The second scenario is that there were undisclosed purchases which were processed and sold during the year. Considering the background of the appellant that it had indulged in malpractices such as incorporating bogus....
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....y been levied by the AO. In view of this, the penalty of Rs. 3,65,590/- as levied by the AO u/s 271(1)(c) of the Act is hereby confirmed." 6. During the course of appellate proceedings before us, the learned counsel has contended that the ld. CIT(A) has erred in sustaining the penalty levied by the assessing officer on estimated basis. He also furnished the paper book which contains the detail of written submission made by the assessee before the lower authorities. On other hand, ld. departmental representative contended that penalty was levied because of concealment of income detected on account of bogus purchases made by the assessee and he strongly supported the order of the lower authorities. 7. We have heard both the sides and perused the material on record. We find that in this case the penalty was levied on the basis of addition made on specific issue pertaining to bogus purchases made by the assessee. We find that the substantive addition made in this case was not on estimated basis but was made specifically on the indulgence of mal-practices and bogus purchases committed by the assessee. We do not inclined with the submission of the assessee that the penalty was levied ....