RAJKAMAL METAL CORPORATION, MUMBAI V. INCOME TAX OFFICER WARD 19(3)(1), MUMBAI

ITA 1024/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7372 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Principle of natural justice; Initiation of penalty proceedings; Reason to believe
• Section: 234B; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1024/M/2018 ASSESSMENT YEAR: 2010-11 M/S. RAJKAMAL METAL CORPORATION, SHOP NO.1, BHARAJA BHUVAN, 110-114, KIKA STREET, GULAL WADI, MUMBAI 400 004 PAN: AAJFR 0648G VS. ITO WARD 19(3)(1), ROOM NO.20, 2 ND FLOOR, MATRU MANDIR, TARDEO, MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : SHRI RAM TIWARI, D.R. DATE OF HEARING : 16.04.2018 DATE OF PRONOUNCEMENT : 27.04.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 11.08.2017 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) ERRED IN CONFIRMING THE INITIATION OF THE REASSESSMENT PROCE EDING UNDER SECTION 147. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD CIT(A) FAILED TO CONSIDER THAT REASSESSMENT PROCEEDING CANNOT BE INITIATED. A) NO REASSESSMENT CAN BE MADE JUST TO MAKE AN ENQU IRY OR VERIFICATION. B) REASSESSMENT PROCEEDING CANNOT BE INITIATE MEREL Y ON THE INFORMATION RECEIVED FROM INVESTIGATION WING. C) REASSESSMENT PROCEEDING CANNOT BE INITIATED WHEN THE LD. CIT(A) HAVE REASON TO SUSPECT AND NOT REASON TO BELIEVE. ITA NO.1024/M/2018 M/S. RAJKAMAL METAL CORPORATION 2 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND LAW THE LD CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER UNDER SECTION 143 S UB SECTION 3 R W S 147 OF INCOME TAX ACT WHICH IS PASSED AGAINST THE PRINC IPAL OF NATURAL JUSTICE. 4. THE LD CIT(A) ERRED IN CONFIRMING AND REJECTING THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE INCOME TAX ACT. 5. THE LD CIT(A) ERRED IN CONFIRMING AND TREATING R S.40,46,620/- BEING 12.5 PERCENT OF THE TOTAL PURCHASES OF RS.3,23,96,962 AS BOGUS NON-GENUINE EXPENDITURE AND THEREBY ERRED IN ADDING THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE LD. CIT(A) ERRED IN CONFIRMING THE CHARGING OF INTEREST UNDER SECTION 234A, 234B 234C AND 234D OF THE INCOME TAX ACT 1961 . 7. THE LD. CIT(A) ERRED IN CONFIRMING THE INITIATION O F THE PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961. 8. THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DAT E OF HEARING. 3. THE GROUND NOS.1, 2, 3 & 4 ARE NOT PRESSED AND THE REFORE THE SAME ARE DISMISSED BEING NOT PRESSED. 4. THE ISSUE RAISED IN GROUND NO.5 IS AGAINST THE CONFIRMATION OF RS.40,46,620/- BY CIT(A) BEING 12.5% OF THE TOTAL PURCHASES OF RS.3,23,96,962/- AS MADE BY THE AO BY TREATING THE SAME AS NON GENUINE EXPENDITURE. AT TH E OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE T HE BENCH THAT THE LOWER AUTHORITIES HAVE TOTALLY ERRED IN TR EATING THE GENUINE PURCHASES AS BOGUS PURCHASES DESPITE THE FA CT THAT THE ASSESSEE HAS ALL THE EVIDENCES TO PROVE THE GEN UINENESS OF THE PURCHASES BUT THE CASE WAS DECIDED EXPARTEE. T HE LD. A.R. CONTENDED THAT THE CASE WAS DECIDED EX-PARTE BY LD. CIT(A) WITHOUT HEARING THE CASE ON MERIT AS THE COU NSEL COULD NOT APPEAR DUE TO UNAVOIDABLE CIRCUMSTANCES WHICH W ERE BEYOND THE CONTROL OF THE COUNSEL OF THE ASSESSEE. NOW THE LD. A.R. PRAYED BEFORE THE BENCH THAT HE IS WILLING TO PRODUCE ALL THE MATERIALS BEFORE THE AUTHORITIES BELOW SO T HAT THE GENUINENESS OF THE PURCHASES COULD BE PROVED. ITA NO.1024/M/2018 M/S. RAJKAMAL METAL CORPORATION 3 5. THE LD. D.R., ON THE OTHER HAND, DID NOT OBJECT TO THE ARGUMENT PUT FORWARD BY THE LD. A.R. 6. HAVING HEARD BOTH THE PARTIES AND PERUSING THE F ACTS ON RECORD, WE FIND THAT THE CASE WAS DECIDED EX-PARTE B Y THE FIRST APPELLATE AUTHORITY AS THE AUTHORISED REPRESENTATIV E COULD NOT APPEAR ON THE VARIOUS DATES FIXED FOR HEARING. NOW THE ASSESSEE PRAYED BEFORE US THAT ONE MORE OPPORTUNITY MAY BE GRANTED TO PROVE THE GENUINENESS OF THE PURCHASES A S HE WAS HAVING ALL THE NECESSARY EVIDENCES IN HIS POSSESSIO N. TAKING THE FACTS AND CIRCUMSTANCES IN TOTALITY, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY T O PROVE THE GENUINENESS OF THE PURCHASES IN THE INTEREST OF JUSTICE AND FAIRPLAY. ACCORDINGLY, THE ISSUE IS RESTORED TO TH E FILE OF AO WITH A DIRECTION TO DECIDE THE SAME AFRESH AS PER F ACTS AND LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. 7. THE GROUND NO 6 IS CONSEQUENTIAL AND GROUND NO 7 IS AGAINST THE INITIATION OF PENALTY PROCEEDINGS U/S 2 71(1) WHICH REQUIRE NO ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.2018. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27.04.2018. * KISHORE, SR. P.S. ITA NO.1024/M/2018 M/S. RAJKAMAL METAL CORPORATION 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.