Shri Raj Kumar Goel, Kolkata V. ITO, Ward 36(1), Kolkata, Kolkata

ITA 1028/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6617 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2017

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 1028/KOL/20 17 ASSESSMENT YEAR : 2010-1 1 SHRI RAJ KUMAR GOEL -VS- I.T.O., WARD-36(1), KOLKATA [PAN: ADVPG 0006 C] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUNIL SURANA, ADVOCA TE FOR THE REVENUE : SHRI AMITAVA BHATTACHARYA , ADDL. CIT DATE OF HEARING : 16.04.2018 DATE OF PRONOUNCEMENT : 27.06.2018 ORDER THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKATA [ IN SHORT THE LD CITA] DATED 20.03.2017 AGAINST THE ORDER PASSED BY THE I.T.O, WARD-36(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3)/147 OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) DATED 29.03.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGE D IN THE BUSINESS OF TRADING IN BEARING. IT FILED ITS RETURN OF INCOME U/S 143(1) ON 22.09.2010 DECLARING TOTAL INCOME OF RS. 3,09,233/-. THE ASSESSMENT WAS REOPENED U/S 147 AND ASSESSMENT WAS COMPLETED U/S 143(1) READ WITH SECTION 147 DETERMINING THE TOTAL INCOME AT RS. 28,26,345/- BY ADDING AN AMOUNT OF RS. 25,17,112/- AS BOGUS PURCHASES MAD E FROM HAWLA DEALERS. ON APPEAL THE FIRST APPELLATE AUTHORITY CONFIRMED THE SAME. F URTHER AGGRIEVED THE ASSESSEE IS IN 2 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 2 APPEAL BEFORE US BY CHALLENGING THE LEGALITY OF REO PENING OF ASSESSMENT AND ADDITION MADE ON MERITS. 3. THE LD. COUNSEL FOR THE ASSESSEE SHRI SUNIL SURA NA FILED A PAPER BOOK RUNNING INTO 157 PAGES AND SUBMITTED THAT THE REOPENING IS BAD I N LAW AS IT SUFFERS FROM NON- APPLICATION OF MIND BY THE AO AND WAS BASED ONLY ON CERTAIN INFORMATION RECEIVED FROM DGIT(INV.), MUMBAI. HE ARGUED THAT THE SO CALLED IN FORMATION WAS NOT VERIFIED OR CROSS-EXAMINED. HE MADE VARIOUS SUBMISSIONS AS TO W HY THE REOPENING HAD TO BE HELD AS BAD IN LAW AND ALSO RELIED ON CERTAIN CASE LAWS , WHICH WOULD BE DEALT BY ME DURING THE COURSE OF THE ORDER. ON MERITS HE POINTED OUT T HAT THE ASSESSING OFFICER HIMSELF HAS HELD IN HIS ORDER THAT, THE ASSESSEE HAD MADE PURC HASES OF ALL THE BEARING IN QUESTION AND IT COULD HAVE BEEN A CASE WHERE THE PURCHASES H AVE BEEN MADE FROM DIFFERENT PARTIES AND WHEREAS THE BILLS WERE OBTAINED FROM H AWLA DEALERS IN MUMBAI. HE TOOK THIS BENCH THROUGH THE VARIOUS EVIDENCES FILED BY THE AS SESSEE INCLUDING BILLS, PAYMENT BY ACCOUNT PAYEE CHEQUES, DELIVERY DETAILS AND CORRESP ONDING SALES AND THE RECEIPTS OF SALE PROCEEDS. HE FURTHER POINTED OUT THAT A MISTAKE WAS COMMITTED BY THE ASSESSING OFFICER WHILE DISCUSSING A PARTICULAR CHALLAN S/08-09-832, WHICH WAS MENTIONED IN THE COMPUTER GENERATED TAX INVOICE AS 832 AND ARGUED TH AT THERE IS NO CHANGE IN THE INVOICE NO. 4. THE LD. DR MR. AMITAVA BHATTACHARYA ON THE OTHER HAND OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE REOPENING WAS M ADE AS THE ASSESSEE HAS MADE EXCESSIVE CLAIM AND DEDUCTION BY SUBMITTING BOGUS B ILLS OF PURCHASES. HE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT BOTH ON THE ISSUE OF RE-OPENING AS WELL AS ON MERITS THE LD. CIT(A) HAS DEALT, IN DETAIL, WITH TH E ARGUMENTS OF THE ASSESSEE. 5. HE ARGUED THAT THE INFORMATION WAS RECEIVED FROM THE DGIT(INV.)- MUMBAI AND THE ASSESSING OFFICER HAS NO POWER TO INVESTIGATE THE C ORRECTNESS OF THE INFORMATION, UNLESS 3 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 3 HE REOPENS THE ASSESSMENT. HE RELIED ON THE DECISIO N OF HONBLE DELHI HIGH COURT IN THE CASE OF PR.CIT-7, VS. PARAMOUNT COMMUNICATION PVT. LTD. IN (2017) 79 TAXMANN.COM 409 (DEL). 6. ON MERITS HE REFERRED TO THE ORDER OF THE ASSESS ING OFFICER AS WELL AS THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS NO S TOCK REGISTER. HE SUBMITTED THAT THERE IS A DIFFERENCE BETWEEN ORIGINAL CHALLAN NUMB ERS AND COMPUTER GENERATED CHALLANS AND HENCE THE INVOICE PRODUCED CANNOT BE RELIED UPO N. ON FACTS HE RELIED ON THE ORDER OF THE LD. CIT(A) AND PRAYED THE SAME BE UPHELD. 7. I HAVE CAREFULLY CONSIDERED RIVAL CONTENTIONS, P ERUSED THE PRAYERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW, CASE LAW CITED AND HOLD AS F OLLOWS. FIRST I TAKE UP THE ISSUE ON MERITS. THE ASSESSING OFFICERS ORDER IS SELF-CONTR ADICTORY. THE ENTIRE ADDITION IS BASED ON CERTAIN INFORMATION RECEIVED FROM DIT(INV), KOLK ATA, WHICH IS IN TURN BASED ON INFORMATION AVAILABLE ON THE OFFICIAL WEBSITE OF TH E DEPARTMENT OF SALES TAX, GOVT. OF MAHARASHTRA, WHEREIN A LIST OF ALLEGED HAWLA DEALE RS WAS PUT UP. THE ASSESSING OFFICER STATED THAT THE ASSESSEES CLAIM THAT, IT HAS MA INTAINED STOCK REGISTER, IS NOT CORRECT AND THAT THE CLOSING STOCK WAS SPECIFICALLY ASCERTAINED AND VALUED AT THE END OF THE YEAR. AT THE SAME TIME, HE MENTIONED IN HIS ORDER THAT THE MAINTENANCE OF STOCK REGISTER WOULD NOT BE SUFFICIENT TO PROVE THE CLAIM OF THE ASSESSE E. HE ALSO STATES THAT STOCK MOVEMENT AS PER DETAILS IN THIS CASE, AND SOME PURCHASE BIL LS, DO NOT PROVE THAT THE PURCHASES HAVE ACTUALLY BEEN MADE. AT PAGE 6 OF HIS ORDER, T HE AO STATES AS FOLLOWS: IT IS NOT BEEN DOUBTED THAT THE GOODS SOLD BY THE ASSESSEE HAVE NOT BEEN PURCHASES AT ALL. THE DISPUTE IS WHETHER THE ASSESSEE HAD ACTUA LLY PURCHASED GOODS FROM THE ABOVE MENTIONED PARTIES. LATER AT PAGE 7 OF THE ORDER HE HELD AS FOLLOWS: THERE IS NO DOUBT THAT THE ASSESSEE HAD PURCHASED GOODS AS REFLECTED IN THE PURCHASE BILLS AND ALSO SOLD THE SAME. BUT THE PURCHASES WER E OBVIOUSLY NOT MADE FROM THE ABOVE MENTIONED PARTIES AS NO DOCUMENTS IN SUPPORT OF MOV EMENT AND RECEIPT OF GOODS HAVE BEEN PRODUCED BY THE ASSESSEE AND THE SALES TAX DEP ARTMENT, GOVT. OF MAHARASHTRA HAS ALSO FOUND THE AFORESAID PARTIES AS NON-GENUINE DEALERS WHO HAD ISSUED FALSE BILLS 4 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 4 WITHOUT DELIVERY OF GOODS. THUS, IT IS CLEAR THAT T HE PURCHASES WERE MADE FROM THE SOME OTHER PARTIES BUT THE DETAILS ARE THE SAME HAVE NOT BEEN DISCLOSED TO THE DEPARTMENT. 8. THE ABOVE FINDINGS OF THE AO GOES AGAINST HIS CO NCLUSION THAT THE ENTIRE PURCHASES OF RS. 25,17,112/- ARE BOGUS AND THE SAME HAS TO BE AD DED TO THE INCOME. WHEN THE PURCHASE IS SAID TO HAVE BEEN MADE FROM SOME PARTIE S AND WHEN BILL ARE OBTAINED FOR THOSE PURCHASES FROM THOSE HAWLA DEALERS, THE AMOU NT OF PURCHASE CANNOT BE ADDED. AT BEST A PERCENTAGE OF SUCH PURCHASES SHOULD BE TAKEN AS PROFITS. 9. BE AS IT MAY, THE ASSESSEE HAS PRODUCED PURCHASE BILLS AND HAD MADE PAYMENTS BY ACCOUNT PAYEE CHEQUES. DELIVERY DETAILS AND ALSO CO RRESPONDING SALES OF THESE PURCHASES HAVE BEEN FILED. AGAINST THESE EVIDENCES, THE ASSES SING OFFICER HAS MERELY RELIED ON THE LETTER RECEIVED FROM DIT(INV)-KOLKATA, WHICH JUST MENTIONS THAT THE PAYMENTS WERE MADE AGAINST THE ISSUE OF FALSE BILLS WITHOUT DELI VERY OF GOODS, AS SAID TO HAVE BEEN STATED IN THE OFFICIAL WEBSITE OF DEPARTMENT OF SAL ES TAX, GOVT. OF MAHARASTHRA. NO FURTHER EVIDENCES IS AVAILABLE WITH THE ASSESSING O FFICER. THE ASSESSING OFFICER ISSUED LETTER TO THE SUPPLIERS AND THESE LETTERS WERE RETU RNED WITH COMMENTS UNKNOWN. RETURN OF THE LETTERS DOES NOT BY ITSELF TAKE US TO A CON CLUSION THAT THE PURCHASES ARE BOGUS. THE MISTAKE THAT THE ASSESSING OFFICER COMMITTED WAS AT PAGE 6 OF HIS ORDER. HE DOUBTED THE TAX INVOICE NUMBER MENTIONED IN THE CASE OF OMKAR METAL AND ALLOYS CORPORATION LTD. IN FACT THERE IS NO DIFFERENCE AT ALL. MEREL Y RELYING AS SOME PUBLICATION IN THE WEBSITE OF THE MAHARASHTRA SALES TAX AUTHORITIES FO R MAKING THIS ADDITION CANNOT BE SUSTAINED. NO MATERIAL/INFORMATION WAS GATHERED BY THE AO FROM THE AUTHORITY WHICH ALLEGED THAT THE DEALERS IN QUESTION ARE HAWLA DEA LERS. 10. THUS, IN OUR VIEW, THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT LAY ON HIM. ALL POSSIBLE EVIDENCES HAVE BEEN PRODUCED TO PROVE THE GENUINENESS OF THE PURCHASES BY THE ASSESSEE. ON THE OTHER HAND, THE ASSESSING OFFI CER HAS MADE THIS DISALLOWANCE BASED 5 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 5 ON SURMISES AND CONJECTURES, THAT TO, BY GIVING CON TRADICTORY FINDINGS ON THE FACTUM OF PURCHASE. THUS, WE DELETED THE ADDITION MADE AND A LLOW THIS GROUND OF THE ASSESSEE. 11. COMING TO THE ISSUE OF REOPENING THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASONS FOR REOPENING : 6 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 6 12. ON A PERUSAL OF THESE REASONS WE FIND THAT O N SIMILAR CIRCUMSTANCES B BENCH OF THE KOLKATA ITAT IN I.T.A. NO. 660/KOL/2011 FOR ASS ESSMENT YEAR 2002-03 AT PARA 8-9 HELD AS FOLLOWS: 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED CO UNSEL FOR THE ASSESSEE BOTH ON THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS AS WELL AS THE MERITS OF THE APPEAL. NONE APPEARED ON BEHALF OF THE DEPARTMENT. 8.1.WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE ASSESSEE. AS FAR AS THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROC EEDINGS ARE CONCERNED THE REASONS RECORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 1 48 ARE AS FOLLOWS :- 'NO. DCIT/CIR-6/REASONS FOR REOPENING/09-10 DAT ED 22/04/2009 TO THE PRINCIPAL OFFICER GREATWALL MARKETING (P) LTD. C/O SRI. S.M. DAGA 11, CLIVE ROW, ROOM NO. 2 .Z-. FIR. KOLKATA- 700001. SIR. SUB: RECORDED REASONS FOR REOPENING IN THE CASE OF GREATWALL MARKETING (P) LTD. FOR ASST. YR. 02-03 REF: YOUR LETTER DATED 02/04/09 PLEASE REFER TO THE ABOVE. AS PER INFORMATION RECEIVED FROM INVESTIGATION WING NEW DELHI THE INTRODUCED SHARE CAPITAL DURING THE YEAR. HAD BEEN RECEIVED FROM COR PORATE BODIES WHICH ARE NON EXISTENT AND WHOSE CAPACITY TO INVEST ( CREDIT WORT HINESS ) COULD NOT BE ESTABLISHED . THEREFORE I HAVE REASONS TO BELIEVE THAT UNEXPLAINE D CASH CREDIT HAD BEEN INTRODUCED IN YOUR BOOKS OF ACCOUNTS IN THE NAME OF INTRODUCTION OF SHARE CAPITAL AND RECEIPT OF SHARE APPLICATION MONEY. IN ABSENCE OF SATISFACTORY IDENT ITY AND CREDIT WORTHINESS OF THE OTHER PARTIES. THE ENTIRE INTRODUCED CAPITAL AND SHARE AP PLICATION MONEY WILL BE TREATED AS YOUR INCOME FOR THAT YEAR. 7 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 7 I WILL THEREFORE CONTINUE THE PROCEEDINGS FOR REASS ESSMENT OF YOUR RETURN U/S 147. STATUTORY NOTICES U/S 143(2) AND 142(1) ARE ENCLOSE D HEREWITH. YOURS FAITHFULLY. SD/- ( SANJAY MUKHERJEE) DCIT /CIR-6/KOL ' 8.2. THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US WAS THAT THE REASONS RECORDED BY THE AO WERE MERE INFORMATION RE CEIVED FROM D.I.T.(INVESTIGATION), NEW DELHI. THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE AO BASED ON WHICH IT CAN BE SAID THAT HE ARRIVED AT THE SATISFACTION THA T THE INCOME OF THE ASSESSEE IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT WAS SU BMITTED THAT INFORMATION RECEIVED BY THE AO WAS VAGUE AND UNCERTAIN AND CANNOT BE CON STRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH REASONABLE PERSON CAN FORM BELIEF REGARDING ESCAPEMENT OF INCOME. RELIANCE WAS PLACED BY THE LE ARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS INSCETICIDES (INDIA) LTD 357 ITR 330 AND CIT VS SFIL STOCK BROKING LTD . 325 ITR 285 (DELHI). IN BOTH THE AFORESAID DECISIONS THE REASONS RECORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 148 OF THE ACT THE HON'BLE DELHI HIGH COURT UPHELD THE ORD ER OF THE TRIBUNAL QUASHING THE PROCEEDINGS. RELIANCE WAS ALSO PLACED ON THE DECISI ON OF ITAT, KOLKATA 'C' BENCH IN THE CASE OF M/S. CONTROLLA ELECTROTECH (P)LTD VS DC IT IN ITA NOS.1443 & 1444/KOL/2014 WHEREIN ON IDENTICAL FACTS THE TRIBUN AL WAS PLEASED TO QUASH THE REASSESSMENT PROCEEDINGS. ON MERITS THE LEARNED COU NSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 9. WE HAVE GIVEN A CAREFUL CONSIDERATION OF THE SUB MISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS CLEAR FROM THE REAS ONS RECORDED BY THE AO THAT THE AO ACTED ONLY ON THE BASIS OF A LETTER RECEIVED FROM I NVESTIGATION WING , NEW DELHI. THE REASONS RECORDED DOES NOT GIVE AS TO WHO HAS GIVEN THE BOGUS ENTRIES TO THE ASSESSEE. THE REASONS RECORDED ALSO DOES NOT MENTION AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES WERE MADE BY THE ASSESSEE. T HE REASONS RECORDED WHICH ARE EXTRACTED IN THE EARLIER PART OF THE ORDER DOES NOT SHOW, WHAT WAS THE INFORMATION GIVEN BY DIT(INV.),NEW DELHI. THE DATE OF THE INFORMATION RECEIVED BY THE AO WERE NOT SPELT OUT IN THE REASONS RECORDED. THE INVOLVEMENT OF THE ASSESSEE IS ALSO NOT SPELT OUT, EXCEPT MENTIONING THE CORPORATE BODIES WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE WERE NON-EXISTENT AND NOT CREDITWORTHY. ON IDENTICAL FACTS THE HON'BLE DLEHI HIGH COURT IN THE CASE OF CIT VS INSECTICIDES (INDIA) LTD (SUPRA) HAS TAKEN A VIEW THAT THE REASONS RECORDED WERE VAGUE AND UNCERTAIN AND C ANNOT BE CONSTRUED AS SATISFACTION ON THE BASIS OF THE RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON CAN FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE HO N'BLE DELHI HIGH COURT HAS ALSO COME TO THE CONCLUSION THAT THE REASONS RECORDED DI D NOT DISCLOSE THE AO'S MIND REGARDING ESCAPEMENT OF INCOME. THE HON'BLE DELHI H IGH COURT ULTIMATELY HELD THAT INITIATION OF PROCEEDINGS U/S 148 OF THE ACT WAS NO T VALID AND JUSTIFIED IN THE EYES OF 8 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 8 LAW. THE FACTS AND CIRCUMSTANCES IN THE PRESENT CAS E ARE IDENTICAL TO THE CASE DECIDED BY THE HON'BLE DELHI HIGH COURT. FOLLOWING THE SAID DECISION WE HOLD THAT INITIATION OF RE-ASSESSMENT PROCEEDINGS IS NOT VALID. ON THIS GRO UND, THE ASSESSMENT IS LIABLE TO BE ANNULLED. 9.1. EVEN ON MERITS WE HOLD THAT THE CONCLUSION DRA WN BY CIT(A) ARE JUSTIFIED AND DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY THE APPE AL OF THE REVENUE IS DISMISSED. THERE IS NO APPLICATION OF MIND BY THE ASSESSING OF FICER IN THE CASE ON HAND. THE SO- CALLED CONFESSIONS BY HAWLA AGENTS ARE NOT IN THE R ECORD OF THE ASSESSING OFFICER EITHER AT THE TIME OF RECORDING REASONS FOR REOPENING OR A T THE TIME OF ASSESSMENT. THUS THE REOPENING OF ASSESSMENT IS BAD IN LAW. HENCE THE GR OUND OF THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 27.06.2018 SD/- [ J.SUDHAKAR REDDY] ACCOUNTANT MEMBER DATED : 27.06.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. SHRI RAJ KUMAR GOEL, AGARWAL BIMAL & CO., P-2, N EW C.I.T. ROAD, ROOM NO. 302, 3 RD FLOOR, KOLKATA-700073. 2. ITO, WARD-36(1), KOLKATA, 110, SHANTIPALLY, AAYA KAR BHAWAN POORVA, NEAR RUBY HOSPITAL, E.M. BYE PASS, KOLKATA-700107. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 9 ITA NO.1028/KOL/2017 SHRI RAJ KUMAR GOEL A.YR .2010-11 9