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TMI Blog2016 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... remand as well as penalty proceedings despite the direction of Hon'ble ITAT. c) because the ld.CIT(A) has failed to appreciate that penalty proceedings are separate proceedings and penalty is not automatic. d) because the ld.CIT(A) has also failed to appreciate that assessee has no reasons to file inaccurate particulars and make bogus purchases as his income was totally exempt u/s 80HHC. e) because the ld.CIT(A) has erred in law as well as on facts in confirming the penalty due to addition of an amount which assessee has already written off in the books of account in the year in which it became bad and declared the same as income in AY 2007-08 and so the same cannot be treated as income in assessment year 1995-96 again. f) because the ld.CIT(A) has failed to appreciate that assessee has filed all the evidence pertaining to purchase which was examined and expenditure was allowed as a deduction while computing under section 80HHC, merely by denying by one person it would not amount to filing any inaccurate particular of income. 2. That the ld.CIT(A) has erred in law as well as on facts in not providing proper opportunity of being heard as he passed the order just on the nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh u/s 69. On appeal, learned CIT(A) sustained the addition. Therefore, the assessee again filed the appeal before the ITAT in which assessee raised two grounds, one with regard to the addition of Rs. 66.15 lakhs and second, for not granting enhanced deduction u/s 80HHC on account of increase in total income because of the aforesaid addition. The ITAT, vide order dated 14th January, 2011, dismissed the assessee's appeal. The relevant finding of the ITAT is reproduced herein below for ready reference :- "The facts are that the assessee showed purchase of goods of the value of Rs. 66,15,000/- from M/s Unifoil Enterprises. The bills of purchases were filed before the AO. No other evidence regarding the genuineness of the transaction was filed before him. In the course of original assessment proceedings, the AO made enquiries by summons proceedings and in reply dated 23.1.1998, the creditor informed that it has not made any sale to the assessee. Therefore, the amount was added to the total income of the assessee. As mentioned earlier, the matter was restored to the file of the AO for de-novo examination and assessment. In particular, it was mentioned that there is force in the argumen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cured by remand report. However, the ld. counsel has opposed such a course of action on the ground that the matter is old. 5.2 The question whether the purchases were made or not is essentially a question of fact. The most significant evidence in this regard is that the amount which became due in financial year 1994-95 was not paid by the assessee at all and it was written off in financial year 2006-07. The reason for non-payment is stated to be the supply of inferior quality goods, leading to disputes. No evidence has been filed in this regard. If the goods had actually been supplied, no creditor would silently forego his claim even if it had to be settled for a lesser amount. According to us, the non-payment of the purchase consideration is a strong circumstance regarding non genuineness of the transaction and stands on its own de hors any other evidence. Lack of evidence about dispute further strengthens the conclusion. Thus, even if the statements of the creditor are ignored, significant fact of non-payment and absence of dispute lead to a justifiable conclusion that no payment was due as no sale was made by M/s Unifoil Enterprises to the assessee. In any case, the ld. Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following decisions :- (i) CIT Vs. Reliance Petroproducts Pvt.Ltd. - [2010] 322 ITR 158 (SC). (ii) Chambal Fertilisers & Chemicals Ltd. Vs. ACIT - [2014] 112 DTR (Jp)(Trib) 140. (iii) New Holland Tractors (India) (P.) Ltd. Vs. CIT, Delhi-V - [2015] 275 CTR 291 (Delhi). (iv) Decision of ITAT Ahmedabad Bench in the case of Ruchi Developers Vs. ITO in ITA No.3348/Ahd/2010. He, therefore, submitted that the penalty levied u/s 271(1)(c) may be cancelled. 7. Learned DR, on the other hand, stated that the decision of Ruchi Developers (supra) is not applicable because the facts in the said case are altogether different. In the aforesaid case, the purchasers were not available at the given address while in the case of the assessee, the purchaser has denied to have sold the goods to the assessee. Moreover, in the case of the assessee, the payment is not made for the purchases made and ultimately, the assessee wrote back the outstanding amount. He relied upon the decision of ITAT dated 14th January, 2011 and stated that all these arguments were raised by the assessee in quantum proceedings and the ITAT, after considering all these arguments and the facts of the case, dismissed both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n found to be false/bogus. Therefore, the above decision of the ITAT in the case of Ruchi Developers (supra) would not be applicable to the case of the assessee. 10. Learned counsel for the assessee has also contended that the goods purchased from M/s Unifoil Enterprises were exported by the assessee and the sales have been accepted by the Revenue. Therefore, the genuineness of purchases cannot be doubted. From the assessment order of set aside proceedings, it is evident that the Assessing Officer himself has mentioned that the assessee did not make any purchase from M/s Unifoil Enterprises but made purchase from some other party to whom the payment was made in cash. Therefore, the addition was made in respect of unexplained cash u/s 69. This finding of the Assessing Officer has been upheld by the ITAT. Therefore, the contention of the learned counsel has no merit. The same has been rightly rejected by the CIT(A). 11. The next contention of the learned counsel was that due to the addition of Rs. 66,15,000/-, the assessee would be entitled to enhanced deduction u/s 80HHC because it is entitled to 100% deduction u/s 80HHC. We find that this argument of the learned counsel has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g :- "The reason for non-payment is stated to be the supply of inferior quality goods, leading to disputes. No evidence has been filed in this regard. If the goods had actually been supplied, no creditor would silently forego his claim even if it had to be settled for a lesser amount. According to us, the non-payment of the purchase consideration is a strong circumstance regarding non-genuineness of the transaction and stands on its own de hors any other evidence. Lack of evidence about dispute further strengthens the conclusion." 13. That the purchases were held to be bogus/non-genuine by the Assessing Officer and which has been upheld by the ITAT in quantum proceedings. During financial year 2006-07, the assessee wrote back the amount which was claimed to be payable in respect of bogus purchases. When the purchase itself has been held to be bogus, obviously no amount was payable in respect of such bogus purchase and, therefore, the writing back of such non-existent liability will, in no way, affect the levy of penalty in assessment year 1995-96. 14. Learned counsel for the assessee has relied upon the decision of Hon'ble Apex Court in the case of Reliance Petroproducts Pvt.Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years. Mere fact that entire amount in question was found to be taxable during the relevant year itself could not be regarded as guilt of concealment of particulars of income. With this remark, the penalty was cancelled by Hon'ble Jurisdictional High Court. However, the facts of the assessee's case are altogether different. Here, the particulars of the purchases shown by the assessee are found to be incorrect because the purchase from M/s Unifoil Enterprises was held to be non-genuine. In our opinion, on the facts of the present appeal, the decision of Hon'ble Jurisdictional High Court in the case of Harparshad and Company Ltd. (supra) relied upon by the learned DR would be applicable wherein Hon'ble Jurisdictional High Court held as under:- "That the reasons given by the Tribunal for quashing the penalty proceedings were irrelevant, not germane to the issue and the Tribunal had lost sight of aspects which had been conclusively established in the quantum proceedings. The Tribunal had failed to take note of the fact that part of the claim as commission was allowed to the assessee not because R had rendered any services but because J had rendered services for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue authorities. The ITAT in the quantum proceedings has clearly held that the nonpayment of purchase consideration is a strong circumstance regarding non-genuineness of transactions and stands on its own de hors any other evidence. Hon'ble Jurisdictional High Court in the above case held that the findings given in assessment proceedings are relevant and have probative value. Where the assessee produces no fresh evidence or fresh circumstance in penalty proceedings, he would be deemed to have failed to discharge the onus placed upon him and the levy of penalty can be justified. In this case also, the assessee has not produced any fresh evidence or fresh circumstance so as to prove the genuineness of purchase and, therefore, the finding recorded by the ITAT in quantum proceedings is relevant. Even otherwise, it cannot be believed that anybody would sell the goods worth Rs. 66 lakhs and would not pursue for payment thereof. No satisfactory explanation is given by the assessee for not making the payment of goods claimed to have been purchased from M/s Unifoil Enterprises. The only explanation given is that the goods supplied were of inferior quality but no evidence in this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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