KAIZEN ENGINEERING PRIVATE LIMITED , MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI

CO 35/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3594 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-11-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 18-09-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Bogus purchase; Tax effect; Onus to prove
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM ITA NO. 2900/MUM/2019 (ASSESSMENT YEAR: 2010-11) ACIT, CIRCLE 6(3)(2) MUMBAI VS. M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. SHANTA PRASAD, HINDU COLONY LANE, 01, DADAR, MUMBAI-400 014 PAN/GIR NO. AADCK 1418 N ( APPELLANT ) : ( RESPONDENT ) CROSS OBJECTION NO. 35/MUM/2020 (ARISING OUT OF ITA NO. 2900/MUM/2019) (ASSESSMENT YEAR: 2010-11) ACIT, CIRCLE 6(3)(2) MUMBAI VS. M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. SHANTA PRASAD, HINDU COLONY LANE, 01, DADAR, MUMBAI-400 014 PAN/GIR NO. AADCK 1418 N ( APPELLANT ) : ( RESPONDENT ) REVENUE BY : SHRI GURBINDER SINGH ASSESSEE BY : SHRI MADHUR AGRAWAL DATE OF HEARING : 09.11.2020 DATE OF PRONOUNCEMENT : 09.11.2020 O R D E R PER BENCH: THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-12, MUMBAI (LD.CIT(A) FOR SHORT) DATED 17.01.2019 AND PERTAIN S TO THE ASSESSMENT YEAR (A.Y.) 2010- 11. REVENUES APPEAL: 2. THE GROUNDS OF APPEAL READ AS UNDER: 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CTT (A) HAS ERRED IN RESTRICTING THE ADDITION TO 5% INSTEAD OF 100% BEIN G RS.40,43,025/- MADE BY THE AO U/S.69C OF THE ACT OUT OF THE BOGUS PURCHASE TRANSACTION ACCOM MODATION ENTRY OBTAINED BY ASSESSEE FROM M/S. SUMUKH COMMERCIAL PUT. LTD. (CAPETOWN MERCANTI LE PUT. LTD,), IN THE ORDER DTD 29/03/2016 PASSED U/S. 143(3) RWS 147 OF THE ACT'. 2 ITA NO. 2900/MUM/2019 & CO NO. 35/MUM/2020 M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CTT (A) HAS ERRED IN RESTRICTING THE ADDITION TO 5% INSTEAD OF 100% BEIN G RS.40,43,025/- MADE BY THE AO U/S.69C OF THE ACT OUT OF THE BOGUS PURCHASE TRANSACTION ACCOM MODATION ENTRY OBTAINED BY ASSESSEE THOUGH ID.CIT(A) HIMSELF AT PARA 4.6 OF THE APPELLATE ORDE R HELD ON VERIFICATION OF COMPUTER BLOCK AFFIXED ASSET SCHEDULE THAT THE SAID BLOCK DOES NOT SHOW ANY ADDITION OF RS.11,25,311/- HENCE EVEN REJECTING THE ASSESSEE'S CLAIM OF THIS EXPENDI TURE BEING CAPITAL IN NATURE'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD.CIT(A) HAS ERRED IN DELETING THE ADDITION U/S.69C BY HOLDING THAT OPPOR TUNITY OF CROSS-EXAMINATION IS NOT PROVIDED TO THE ASSESSEE IGNORING THE FACT THAT AT PARA 4.2 OF THE ASSESSMENT ORDER THE AO HAS CATEGORICALLY MENTIONED THAT FURTHER TO THE NON SERVICE OF NOTICE ISSUED U/S. 133(6) BY POSTAL AUTHORITY, THE ASSESSEE WAS ALSO ASKED TO PRODUCE PARTY FOR VERIFI CATION WHICH THE ASSESSEE DID NOT COMPLY AND THEREFORE, LD.CIT(A) FAILED TO APPRECIATE THAT THE ONUS TO PROVE GENUINENESS IS NOT DISCHARGED BY ASSESSEE.' 3.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD.CTT(A) HAS ERRED IN DELETING THE ADDITION U/S. 68 OF THE ACT IN VIOLATI ON OF RULE 46A OF THE I.T.RULES, BY NOT REMANDING THE AO TO AFFORD OPPORTUNITY OF CROSS-EXA MINATION TO THE ASSESSEE.' 3.2 LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR S HORT) IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD.CIT(A) HAS ERRED IN DELETING THE ADDITION U /S.68 OF THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) DISREGARDING THE HONBLE DELHI H IGH COURT DECISION IN THE CASE OF CJT-H VS. JANSAMPARK ADVERTISING & MARKETING (P) LTD, 375 ITR 373 (DELHI) WHEREIN HONBLE COURT WHILE REMANDING THE MATTER HELD THAT TWO APPELLATE AUTHOR ITIES VIZ., COMMISSIONER (APPEALS) AND TRIBUNAL, ARE ALSO FORUMS FOR FACT-FINDING, IN EVEN T OF ASSESSING OFFICER FAILING TO DISCHARGE HIS FUNCTIONS PROPERLY, OBLIGATION TO CONDUCT PROPER IN QUIRY ON FACTS WOULD NATURALLY SHIFT TO DOOR OF SAID APPELLATE AUTHORITIES AND THEY HAVING NOTICED WANT OF PROPER INQUIRY, CANNOT CLOSE CHAPTER SIMPLY BY ALLOWING APPEAL AND DELETION ADDITIONS MA DE. 3. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT THE TAX EFFECT IN THIS CASE IS BELOW THE LIMIT OF RS.50,00,000/- FIXED BY CBDT CIRCULAR NO. 17 OF 2019 DATED 08.08.2019 FOR FILING THE APPEAL BEFORE THE ITAT. 4. HENCE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS APPEAL BY THE REVENUE IS NOT MAINTAINABLE. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) FOR SHORT) COULD NOT DISPUTE THA T THE TAX EFFECT IS BELOW THE SAID LIMIT. HE COULD NOT POINT OUT THAT THE APPEAL FALLS IN ANY OF THE EXCEPTIONS CARVED IN SAID CIRCULAR. 6. UPON CAREFUL CONSIDERATION, WE FIND THAT AS THE TAX EFFECT IS BELOW THE LIMIT FIXED BY THE CBDT FOR FILING THE APPEALS BEFORE THE ITAT, THIS APPEAL BY THE REVENUE IS LIABLE TO BE DISMISSED IN LIMINE. 7. ACCORDINGLY, THE APPEAL STANDS DISMISSED AS SUCH . 3 ITA NO. 2900/MUM/2019 & CO NO. 35/MUM/2020 M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. ASSESSEES CROSS OBJECTION: 8. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE P LEADED THAT HE SHALL NOT BE PRESSING THE CROSS OBJECTION. HENCE, THE C.O. STANDS DISMISS ED AS NOT PRESSED. 9. IN THE RESULT, THE REVENUES APPEAL AS WELL AS A SSESSEES CROSS OBJECTION STANDS DISMISSED. ORDER PRONOUNCED IN THE COURSE OF VIRTUAL HEARING O N 09.11.2020. SD/- SD/- (RAM LAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 09.11.2020 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI