TaxTMI 
TaxTMI 
2019 (10) TMI 286
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....ant to the instant appeal is the alleged bogus purchases of Rs. 27,72,702/- made by the assessee from the following parties : 1. Dhruv Sales Corporation Rs. 7,65,847/- 2. Nidhish Impex Pvt. Ltd. Rs. 10,24,145/- 3. Toral Enterprises Rs. 4,67,460/- 4. Tulsiani Trading Pvt. Ltd. Rs. 5,15,250/- Total Rs. 27,72,702/- In the assessment order dated 20.03.2013, the AO made an addition of Rs. 27,72,702/- towards bogus purchases and also initiated penalty proceedings u/s 271(1)(c) of the Act separately. During the course of penalty proceedings, the AO gave another opportunity to the assessee vide show cause notice dated 18.09.2013 asking to explain why penalty u/s 271(1)(c) should not be levied in his case. The Authorized Representative of the assessee filed a reply dated 23.09.2013 explaining it. However, the AO was not convinced with the above explanation of the assessee of the ground that both during the course of assessment proceedings and penalty proceedings, the assessee could not produce any documentary evidence to prove the genuineness of these transactions. Therefore, he levied a penalty of Rs. 8,56,765/- u/s 271(1)(c) of the Act. 4. In appeal, the ....
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....elies on the decision in Union of India v. Dharamendra Textile Processors (2007) 295 ITR 244, R L Traders v. ITO (2017-TIOL-2583-HC-DEL-IT), CIT v. Zoom Communication (P.) Ltd. 191 Taxman 179 (Delhi), CIT v. Moser Baer India Ltd. 184 Taxman 8 (SC), CIT v. Gold Coin Health Food (P.) Ltd. 172 Taxman 386 (SC), MAK Data P. Ltd. v. CIT 38 taxmann.com 448 (SC), B.A. Balasubramaniam & Bros. Co v. CIT 116 Taxman 842, CIT v. Gates Foam & Rubber Co 91 ITR 467, CIT v. India Seafood 105 ITR 708, Steel Ingots Ltd v. CIT 296 ITR 228, CIT Vs Escorts Finance Ltd 183 Taxman 453 (Delhi), CIT v. R.M.P. Plasto (P.) Ltd 184 Taxman 372 (SC), K.P. Madhusudhanan v. CIT [2001] 118 Taxman 324 (SC), Earthmoving Equipment Service Corporation v. DCIT 22(2) Mumbai, Dilip N. Shroff v. JCIT (2007) 291 ITR 519 (SC), CIT v. Reliance Petroproducts Pvt. Ltd (2010) 322 ITR 0158(SC), UOI v. Rajasthan Spinning & Weaving Mills (2010) 1 GSTR 66 (SC), CIT v. Atul Mohan Bindal (2009) 317 ITR 1 (SC), Price Water House Coopers Pvt. Ltd. v. CIT (2012)348 ITR 306(SC), CIT v. Somany Evergreen Knits Ltd (2013)352 ITR 592 (Bom.), CIT v. Smt. Kaushalya (1994) 75 Taxman 549 (Bombay), Maharaj Garage & Co. v. CIT Nagpur 85 taxmann.com....
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....h is not the case here. 13. K. P. Madhusudhanan vs. CIT [2001] 251 ITR 99 (SC) It merely provides that no express invocation of the Explanation to section 271 in the notice under section 271 is necessary before the provisions of the Explanation therein are applied. It does not deal with the non-striking off issue. 14. Earthmoving Equipment Service Corporation vs. DCIT 166 ITD 113 (Mum) This decision has been considered in the case of Jeetmal Choraria vs. ACIT [2018] 91 taxmann.com 311(Kolkata - Trib.) in detail. The issue has been decided in favour of the assessee in the case of Syed Ahmed Abbas Naqvi vs. ACIT ITA No. 2230/Mum/2014 even after considering this decision. 15. Dilip N. Shroff vs. JCIT (2007) 291 ITR 519 (SC) In fact, the reliance has been placed on this decision while deciding the issue in favour of the assessee in both the cases relied upon by us. 16. CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) In fact, this decision is in favour of the assessee. 17. UOI vs. Rajasthan Spinning & Weaving Mills Not relevant to the issue under consideration as it merely provides that mens rea is not essential. 18. CIT vs. Atul Mohan Bindal....
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....the purchases were disallowed as bogus purchases. However we reiterate that the purchases were genuine and the material was received and utilized. It may also please be noted that the list published Sales Tax Authorities is subject to objections raised by the parties. In other words, it is not confirmed that the suppliers are not genuine. Thus the disallowance was itself not correct. Levying of penalty will be further unreasonable. In the light of the foregoing, you are requested to drop the penalty proceedings." 8.1 In the instant appeal, if the case of the assessee is that they have been put to prejudice and the principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the AO or before the First Appellate Authority or before the Tribunal. Thus on facts, we could safely conclude that in the instant case no prejudice is caused to the assessee and the assessee clearly understood what was the purport and import of notice issued u/s 274 r.w.s. 271(1) of the Act. In Mak Data P. Ltd. vs. CIT (Civil Appeal No.9772 of 2013), it is held by the Hon'ble Supre....
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....see was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings." Thus the instant case is distinguishable from the decisions at para 5 hereinabove relied on by the Ld. counsel in respect of his contentions that the AO neither clarified about a charge in the assessment order nor struck off the concerned details in the notice issued by him u/s 274 of the Act. Following the ratio laid down in Mak Data P. Ltd (supra) and Smt. Kaushalya and Others (supra), we hold that the AO has rightly initiated penalty proceedings u/s 271(1)(c) of the Act. 8.3 The Hon'ble Supreme Court in Sir Kikabhai Prem Chand v. CIT [1953] 24 ITR 506 and P.M. Mohammed Meerakhan v. CIT [1969] 73 ITR 735 has held that : 'For income-tax purposes, each year is a self-contained accounting period'. The contention of the Ld. counsel that similar disallowance made by the AO in subsequent has been restricted by the ITAT to 12.5% is not relevant here because each assessment year is a self-contained accounting period. 8.4 As mentioned earlier, the dispute here is the penalty levied u/s 271(1)(c) on the addition of Rs. 27,7....