EVONIK CATALYSTS INDIA P.LTD, THANE V. ITO WD 1(2), KALYAN

ITA 1084/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8717 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 24-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2016
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Revised return
• Section: 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.1084/MUM/2016 ASSESSMENT YEAR: 2010-11 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), F1/MIDC, PHASE-1, DOMBIVLI (EAST), THANE-421203 / VS. INCOME TAX OFFICER, WARD-1(2), KALYAN ( !'# $ /ASSESSEE) ( / REVENUE) PAN. NO . AAACM5013G ITA NO.1287/MUM/2016 ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER, WARD-1(2), KALYAN / VS. EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), F1/MIDC, PHASE-1, DOMBIVLI (EAST), THANE-421203 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO . AAACM5013G ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 2 % & $ ' / DATE OF HEARING : 24/01/2017 & $ ' / DATE OF ORDER: 27/01/2017 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE ASSESSEE AS WELL AS REVENUE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 31/12/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. IN THE APPEAL OF THE ASSESSEE (ITA NO.1084/MUM/2016), THE ASSESSEE HAS CHALLENGED CONFIRMATION OF DISALLOWANCE OF RS.64,44 ,938/- ON ACCOUNT OF PURCHASES (BEING 25% OF RS.2,57,79,75 0/-) CONSIDERING THE SAME AS INFLATED PURCHASES. IN THE APPEAL OF THE REVENUE (ITA NO.1287/MUM/2016), THE DEPARTME NT IS AGGRIEVED BY THE SUBSTANTIAL RELIEF GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IN SPITE OF THE FACT THAT THE ASSESSEE COULD NOT PRODUCE OCTROI RECEIPTS , DELIVERY CHALLANS, ETC AS A EVIDENCE TO PROVE THE GENUINENES S OF THE PURCHASES BEFORE THE ASSESSING OFFICER AS WELL AS B EFORE LD. COMMISSIONER OF INCOME TAX (APPEAL) AND FURTHER THE AFFIDAVIT FILED BY THE ENTRY PROVIDERS, BEFORE THE SALES TAX AUTHORITIES, CANNOT BE IGNORED HAVING EVIDENTIARY V ALUE AND IGNORING THE ORDER OF THE TRIBUNAL OF THE PUNE BENC H IN THE !'# $ ! / ASSESSEE BY SHRI NARESH KUMAR & SHRI VARUN SANKHESARA ALONG WITH SHRI TEHMTON WADIA ! / REVENUE BY MISS ANUPAMA SINGLA-DR ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 3 CASE OF M/S KOLTE PATIL DEVELOPERS LTD. (ITA NO.141 1 TO 1415 ORDER DATED 20/02/2015), WHEREIN, 100% ADDITION OF BOGUS PURCHASES WAS CONFIRMED. 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSE L FOR THE ASSESSEE, SHRI NARESH KUMAR ALONG WITH SHRI VARUN SANKHESARA AND SHRI TEHMTON WADIA, CONTENDED THAT N O DISCREPANCY WAS NOTED IN THE STATEMENT RECORDED BY THE CONCERNED OFFICER AS THE ASSESSEE WAS NOT CONFRONTE D WITH THE STATEMENT AND FURTHER THE ASSESSEE WAS NOT PROV IDED CROSS EXAMINATION, ASK FOR BY THE ASSESSEE, BY THE ASSESSING OFFICER. IT WAS ALSO CONTENDED THAT THE ASSESSEE FI LED CONFIRMATION FROM MANIRATAN. THE BENCH ASKED THE QU ERY AS TO WHY MANIRATAN WAS NOT PRODUCED BEFORE THE ASSESS ING OFFICER. THE LD. COUNSEL CONTENDED THAT HE REFUSED TO APPEAR BEFORE THE INCOME TAX AUTHORITIES. THE CRUX OF THE ARGUMENT, ON BEHALF OF THE ASSESSEE IS THAT THE ASS ESSEE DISCHARGED ITS ONUS BY FILING A CONFIRMATION FROM M R. MANIRATAN. THE LD. COUNSEL EXPLAINED THAT THE ASSES SEE ALSO PAID VAT ON BEHALF OF MR. RATNA. ON THE OTHER HAND, THE LD. DR, MISS. ANUPAMA SINGLA, STRONGLY DEFENDED THE ORD ER OF THE LD. ASSESSING OFFICER BY ARGUING THAT THE ONUS CAST UPON THE ASSESSEE WAS NOT DISCHARGED BECAUSE IF THE ASSE SSEE IS IN A POSITION TO FILE THE ALLEGED CONFIRMATION FROM MR. MANIRATAN, HE CAN BE PRODUCED ALSO. THE LD. DR CONT ENDED THAT THE ASSESSEE RIGHT FROM ASSESSMENT STAGE AND T ILL THE STATE OF THE TRIBUNAL DID NOT PROVIDE THE CORRECT/N EW ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 4 ADDRESS OF MR. MANIRATAN AND EVEN NO CIVIL/CRIMINAL ACTION WAS TAKEN BY THE ASSESSEE AGAINST MR. MANIRATAN WIT H RESPECT TO ITS CLAIM/REFUND OF VAT. OUR ATTENTION WAS SPECIFICALLY INVITED TO PAGES 30 AND 38 OF THE PAPE R BOOK BY TAKING A SERIOUS OBJECTION TO THE SIGNATURES BY EXP LAINING THAT THERE IS HUGE DIFFERENCE IN THE SIGNATURE AND NO QUANTITATIVE DETAILS WERE PRODUCED BY THE ASSESSEE. IN REPLY THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT TH E ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CROSS EXAMINE OF MR . MANIRATAN. THE BENCH RAISED A QUERY, WHETHER MR. MANIRATAN WAS PRODUCED BEFORE THE ASSESSING OFFICER . THE LD. COUNSEL FAIRLY AGREED THAT HE WAS UNABLE TO PRO DUCE MR. MANIRATAN. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS A CLOSELY HELD PRIVATE LIM ITED COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING N ICKEL BASED CATALYST, ACTIVATED ALLOY CATALYST, PRECIOUS METAL CATALYST AND OTHER ALLIED ITEMS, FILED ORIGINAL RET URN, DECLARING NET PROFIT AFTER TAX OF RS.5,10,13,856/-, WHICH WAS SET OFF AGAINST THE LOSSES OF ASSESSMENT YEAR 2009- 10. THE TURNOVER OF THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, WAS RS.90,67,59,607/- AND THE GROSS PROFIT WAS SHOWN AT RS.21,62,14,000/- (23.8%). THE ASSESSE E FILED REVISED RETURN VIDE LETTER DATED 10/09/2012 SHOWING INCREASE IN TAXABLE INCOME OF RS.5,44,98,649/-. TH E SAID ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 5 RETURN WAS SELECTED FOR SCRUTINY AND ORDER U/S 143( 3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WAS PASS ED MAKING DISALLOWANCE OF RS.2,57,79,750/- ON ACCOUNT OF PURCHASES MADE FROM ONE SUPPLIER M/S MANIRATAN META L. A SURVEY WAS CONDUCTED AT THE OFFICE PREMISES OF THE ASSESSEE ON 06/02/2013, WHEREIN, THE SURVEY TEAM CHECK THE PURCHASES AND MODUS-OPERANDI OF THE ASSESSEE FOR SU CH PURCHASES AND VERIFIED THE STOCK. THE STATEMENT OF EXECUTED DIRECTOR, SHRI KRISHNAN MUTHUKUMAR WAS RECORDED. A SPECIFIC QUESTION WAS ASKED WITH RESPECT TO PURCHAS ES MADE FROM M/S MANITRATAN METAL. ORIGINAL PURCHASE BILLS OF M/S MANIRATAN METAL WERE IMPOUNDED. THE LD. ASSESSING OFFICER VIDE LETTER DATED 12/02/2013 ASKED FOR VARI OUS DETAILS WITH RESPECT TO THE PURCHASES, WHICH WERE R EPLIED VIDE DATED 25/02/2013. A SHOW-CAUSE NOTICE DATED 11/02/2013 WAS ISSUED TO THE ASSESSEE AS TO WHY THE PURCHASES MADE FROM M/S MANIRATAN METAL, SHOULD NOT BE TREATED AS NON-GENUINE AS THE PROPRIETOR DEPOSED FR OM IN SWORN STATEMENT BEFORE THE SALES TAX AUTHORITIES TH AT NO SUCH BUSINESS HAD EVER BEEN CARRIED ON BY HIM. THE ASSESSEE DID NOT PRODUCE MR. MANIRATAN BUT SUBMITTE D A AFFIDAVIT DATED 14/03/2013 SIGNED BY EXECUTIVE DIRE CTOR OF THE ASSESSEE COMPANY SHRI KRISHNAN MUTHUKUMAR. THE ASSESSEE ALSO FILED A LETTER OF CONFIRMATION FROM M /S MANIRATAN METAL. THE STAND OF THE ASSESSEE IS THAT VARIOUS DOCUMENTS WERE PRODUCED BY THE ASSESSEE, THEREFORE, THE PURCHASES ARE GENUINE. THE ASSESSEE HAS ALSO TOOK A STAND ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 6 THAT THE ASSESSING OFFICER COULD NOT PRODUCE MR. MA NIRATAN FOR CROSS EXAMINATION, WHEREAS, THE STAND OF THE DE PARTMENT IS THAT IT IS THE DUTY OF THE ASSESSEE TO PRODUCE H IM AND HEAVY ONUS IS CAST UPON THE ASSESSEE. ONE MR. SANJA Y B. JAIN (KOTHARI) PROPRIETOR OF M/S MANIRATAN METAL AL SO MADE A STATEMENT BEFORE THE SALES TAX AUTHORITIES ON 28/ 07/2011 IN RESPECT OF BUSINESS ACTIVITIES OF M/S MANIRATAN METAL, WHEREIN, HE TENDERED THAT HE NEVER ENGAGED IN THE A CTIVITY OF PURCHASE AND SALES OF ANY COMMODITY, EXCEPT BROKERA GE BUSINESS WITH THE ASSESSEE. THE ASSESSING OFFICER I SSUED NOTICE U/S 133(6) DATED 07/02/2013 TO M/S MANIRATAN METALS, WHICH WAS RETURNED BY THE POSTAL AUTHORITIE S WITH THE REMARK NOT KNOWN. DURING HEARING, THE LD. DR INVITED OUR ATTENTION TO PAGES -30 AND 38 OF THE PAPER BOOK CONTAINING THE AFFIDAVIT OF SHRI SANJAY B. JAIN AND A TAX INVOICE DATED 23/06/2009 (BILL NO.30 OF MANIRATAN M ETAL, WHERE THE SIGNATURES ARE ALL TOGETHER DIFFERING. W HEN THIS OBJECTION WAS POINTED OUT TO THE LD. COUNSEL FOR TH E ASSESSEE, NO SATISFACTORY REPLY WAS ADDUCED. THE ASSESSEE CLA IMED TO HAVE MADE PURCHASES OF PLATINUM FROM M/S MANIRATAN METALS FROM TIME TO TIME DURING FINANCIAL YEAR 2009 -10 AGAINST PAYMENT. ON 26/03/2012, A GENERAL ENTRY WAS PASSED TOWARDS VAT PAYMENT. THE ASSESSEE WAS NOT ALLOWED THE VAT CREDIT FOR THE SUPPLIER I.E. M/S MA NIRATAN METALS AS THE AMOUNT OF RS.2,54,750/- WAS PAID BY T HE ASSESSEE. THIS PAYMENT WAS TO BE MADE BY THE SAID S UPPLIER. AN ATTEMPT WAS ALSO MADE THROUGH THE INCOME TAX ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 7 INSPECTOR TO TRACE M/S MANIRATAN METAL. THE INCOME TAX INSPECTOR VIDE REPORT DATED 12/02/2013, REPORTED TH AT THERE WAS NO TRACE OF M/S MANIRATAN METAL AT THE GIVEN AD DRESS. SHRI SANJAY JAIN ALSO TENDERED IN HIS STATEMENT THA T HE HAS NEVER SIGNED ANY CHEQUE ON BEHALF OF M/S MANIRATAN METAL. SHRI SANJAY JAIN ALSO SWORN AN AFFIDAVIT BEFORE THE AUTHORITIES THAT HE NEVER INDULGED IN ANY TRANSACTI ON OF BUYING AND SELLING OF ANY METAL WITH THE ASSESSEE. THIS STATEMENT WAS PROVIDED TO THE ASSESSEE VIDE LETTER DATED 11/03/2013. IN VIEW OF THESE FACTS, THE ASSESSEE WA S ASKED TO PRODUCE THE PROPRIETOR OF M/S MANIRATAN METAL AS KING TO FURNISH THE FACTUAL MATRIX AND AS TO WHY THESE PURC HASES MAY NOT BE TREATED AS NON-GENUINE SPECIALLY WHEN TH E PROPRIETOR SPECIFICALLY DENIED THAT NO SUCH PURCHASE S HAD EVER BEEN CARRIED OUT BY HIM. UNDISPUTEDLY, UNDER T HESE CIRCUMSTANCES, AVAILABLE ON RECORD, WE ARE OF THE V IEW THAT IT IS THE ASSESSEE, WHO HAS MADE THE CLAIM, THEREFORE, HEAVY ONUS IS CAST UPON THE ASSESSEE TO EXPLAIN THE FACTU AL MATRIX AND SUBSTANTIATE ITS CLAIM, WHICH HAS NOT BEEN DISC HARGED. IT IS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM, THEREFORE, DIRECTED TO PRODUCE THE CONCERNED PERSON /PERSONS BEFORE THE ASSESSING OFFICER. THE LD. ASSESSING OFF ICER IS DIRECTED TO EXAMINE THE FACTUAL MATRIX AND GENUINEN ESS OF CLAIM OF THE ASSESSEE AND DECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD. T HUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES ONLY. ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 8 SO FAR AS, THE APPEAL OF THE REVENUE IS CONCERNED, THE GRUDGE OF THE DEPARTMENT IS THAT THE ASSESSEE COULD NOT PRODUCE THE PRIMARY EVIDENCE LIKE OCTROI RECEIPT, D ELIVERY CHALLAN, EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE ASSESSING OFFICER/CIT(A), THER EFORE, THE PART RELIEF GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS QUITE UNJUSTIFIED. CONSIDERING THE TOTA LITY OF FACTS AND SINCE WE HAVE SENT THE APPEAL OF THE ASSESSEE, ON IDENTICAL FACTS, TO THE FILE OF THE LD. ASSESSING O FFICER, THEREFORE, KEEPING IN VIEW, THE PRINCIPLE OF NATURA L JUSTICE AND NO PREJUDICE IS CAUSED TO EITHER SIDE, THIS APP EAL OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURPOSES ON THE SAME OBSERVATION AS MENTIONED IN THE APPEAL OF THE ASSES SEE. FINALLY, THE APPEAL OF THE ASSESSEE AS WELL AS OF T HE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27/01/2017. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ) DATED : 27/01/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( + ) / THE CIT, MUMBAI. ITA NO.1084 & 1287/MUM/2016 EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYSTS PVT. LTD.), 9 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$! , 0 +' ! 5 , % / DR, ITAT, MUMBAI 6. 6' % / GUARD FILE. ! / BY ORDER, /3+$ .$ //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI