TMI Blog2010 (3) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... and M/s Marvel Impex on the ground that they are not genuine parties. No statements were recorded from any person during the course of survey. Earlier the Income Tax Department had conducted survey in the case of M/s Pujan Impex and M/s Marvel Impex and have come to a conclusion that the purchases from them were not genuine. This fact was confronted to the assessee. The assessee in response, stated as follows : 5.1 The assessee in this respect submitted as follows: In this respect it is submitted that all purchases were genuine and all payments were made through cross a/c payee cheques. There were no accommodation bills. While the said purchases are genuine, we may not able to substantiate the same to the complete satisfaction of tax authorities due to inadequacy of documentary evidence and possible non-cooperation of the party and other diverse reasons. With a view to buy peace and avoid protracted litigation, we had agreed to offer additional income for taxation and pay the tax thereon. 3. The assessee filed a revised return and paid taxes thereon. This revised return of income was accepted by the AO and no further additions have been made. There were no purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Bench to page 4 of the paper book which is a bill dated 05-03-2005 from Pujan Impex which discloses that the assessee has purchased 492.19 carats for ₹ 44,57,381/- and another bill of even dated i.e. 05-03-2005 disclosing purchases of 188.67 carats for ₹ 38,69,090/-. On pages 6 and 7 he filed a copy of the stock register at the head office and on page 7 he drew the attention of the Bench to the entry on 6th March, 2005 which discloses 680.86 carats as purchases from Pujan Impex as received in stock and thereafter on 7, 8, 10 and 11th March issue of various quantities to the factory and to certain job workers for various purposes. He pointed out that the issues recorded in the stock register accounted to 447.65 carats. Thus he submits that the balance carats i.e. 680.86 - 447.65 i.e. 232.21 carats are in the closing stock and the assessee has not even claimed expenditure of these purchases. He further filed a copy of the factory stock register at page 8 and 9 and drew the attention of the Bench to entries on 7th March, 11th March etc. wherein receipts of stocks from head office are recorded and consumption of such stocks is also recorded. Pages 10 to 14 of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a voluntary one. He submitted that there is nothing like purchasing of peace and such concepts cannot be read into Income Tax Act. He pointed out that at page 26 of the assessee s paper book, a profit and loss account has been filed which shows that the assessee is already in losses and argued that bogus purchases have been made to inflate the losses. He relied on the judgment of the Hon ble Supreme Court in the case of K.P. Madhusudan 251 ITR 99 and submitted that both the AO and the CIT(Appeals) were right in levying and confirming the penalty respectively. He pointed out that the assessee has not filed any further evidence to substantiate its claim that the purchases are genuine. He relied on the order of the CIT(Appeals) and prayed that the same may be upheld. He pointed out that the first appellate authority has referred to the decision of the Supreme Court in the case of M/s Dharmendra Textiles and Processors 306 ITR 277. 7. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the orders of the authorities below as well as the case laws cited, we hold as follows : 8. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings, failed to conduct any investigation or collect any evidence to dispute the claim of the assessee that the purchases in question are genuine. Penalty proceedings are independent proceedings and when the assessee claims and produces evidence that the purchases are genuine, the AO cannot simply brush aside all these evidences and base his conclusions only on an additional offer made by the assessee in the quantum proceedings. There is no material brought on record by the Revenue either in the quantum proceedings or in the penalty proceedings, in support of its contention that the purchases are not genuine purchases. The assessee is a loss making company and the allegation that, bogus purchases have been booked for the purpose of inflating losses has not been proved with evidence. There might be various reasons for the person to come forward and make one offer, for avoiding litigation and one of the major reasons being cost, time and effort involved in litigation. The argument of the learned DR that the assessee should have made declaration, once the survey had taken place in the premises of the seller i.e. M/s Pujan Impex and M/s Marvel Impex, is devoid of merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Dharmendra Textile (supra). In this decision, the Hon ble Supreme Court has also upheld the finding of the Tribunal that If the revised return has been accepted by the Department and the penalty is not being imposed with reference to the original return filed by the assessee, it cannot be considered that the assessee is guilty of concealment of income. In this case also penalty has been levied with reference to the revised return of income and there is no addition made to the income returned in the revised return of income. 12. Regarding the decision of the Hon ble Supreme Court in the case of Dharmendra Textiles (supra), another Bench of Hon ble Supreme Court in the case of Rajasthan Spinning and Weaving Mills, Civil Appeal No. 3527 of 2009 dated 12th May, 2009, explained the same in the following words : (1) At this stage we need to examine the recent decision of this Court in Dharmendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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