DCIT, Tiruppur V. Imtiaz Gulamgus Mulla, Tiruppur

ITA 1101/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7826 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 22-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: G BASKAR
• Keywords: Bogus purchase; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.685/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) MR. IMTIAS GULAMGAUS MULLA, PROP. TEXTILES N APPARELS 57/13, AMARJOTHI GARDEN, WEST MAIN ROAD, KANGAYAM ROAD, TIRUPUR-641 604. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, TIRUPUR. PAN: AABPM6505H ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NO,1101/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, TIRUPUR. VS MR. IMTIAS GULAMGAUS MULLA, PROP. TEXTILES N APPARELS 57/13, AMARJOTHI GARDEN, WEST MAIN ROAD, KANGAYAM ROAD, TIRUPUR-641 604. PAN: AABPM6505H ( /APPELLANT) ( /RESPONDENT) ASSESSEE BY : MR. G.BASKAR,ADVOCATE REVENUE BY : MR. SUPRIYO PAL, JCIT /DATE OF HEARING : 3 RD NOVEMBER, 2016 /DATE OF PRONOUNCEMENT : 30 TH DECEMBER, 016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE RESPECTIVELY AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE DATED 31.12.2015 IN ITA NO.141/15-16 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2 ITA NOS.685 & 1101/MDS/2016 2. THE APPEAL FILED BY THE REVENUE IN ITA NO.1101/MDS/2016 IS BARRED BY LIMITATION OF 24 DAYS . THE REVENUE FILED AN AFFIDAVIT EXPLAINING THE REASON FO R THE DELAY IN FILING THE APPEAL BY STATING THAT DUE TO DEARTH OF TIME LIMIT FOR COMPLETION OF SCRUTINY ASSESSMENTS AND SUBMISSI ON OF REPORTS TO HIGHER AUTHORITIES, THERE WAS DELAY OF 2 4 DAYS WHICH IS UNINTENTIONAL. THEREFORE IT WAS PLEADED TH AT THE DELAY IN FILING THE APPEAL MAY BE CONDONED. CONSID ERING THE SUBMISSIONS OF THE REVENUE, WE ARE SATISFIED THAT T HERE WAS REASONABLE CAUSE FOR THE DELAY IN FILING THE APPEAL . HENCE IN THE INTEREST OF JUSTICE, WE HEREBY CONDONE THE DELA Y IN FILING THE APPEAL AND ADMIT THE SAME FOR ADJUDICATION. ITA NO.685/MDS/2016:- (ASSESSEE APPEAL): 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUBSTITUTING THE SUBSTANTIVE ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER AS PROTECTIVE ASSESSMENT BEING THE ADDITION OF RS.5,72,54,112/- ON ACCOUNT OF BOGUS PURCHASES. 3 ITA NOS.685 & 1101/MDS/2016 ITA NO.1101/MDS/2016: (REVENUE APPEAL): 4. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUBSTITUTING THE SUBSTANTIVE ASSESSMENT MADE BY THE LEARNED ASSESSING OFFICER AS PROTECTIVE ASSESSMENT TOWARDS THE ADDITION MADE OF RS. 5,72,54,112/- ON ACCOUNT OF BOGUS PURCHASES. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PURCHASE AND EXPORT OF HOSIERY, GARMENTS FILED HIS RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2012-13 ON 13.03.2013 ADMITTING INC OME OF RS.1,63,46,444/-. THE CASE WAS SELECTED FOR SCRUTIN Y AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSES SEE ON 16.08.2013. SUBSEQUENTLY, THE ASSESSMENT WAS COMPLE TED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 143( 3) OF THE ACT ON 31.03.2015 WHEREIN HE MADE ADDITION OF RS.5,72,54,112/- BY DISALLOWING THE CLAIM OF PURCHA SES MADE FROM M/S. ENGEL GARMENTS (PROPRIETOR MR. IRFAN SHAH ) & M/S. SEVEN STAR GARMENTS (PROPRIETOR MR. IMRAN SHAH S/O. MR. 4 ITA NOS.685 & 1101/MDS/2016 IRFAN SHAH) AS BOGUS. THE REASONS FOR THE LEARNED A SSESSING OFFICER TO ARRIVE AT SUCH CONCLUSION ARE BRIEFLY BR OUGHT UP HEREIN BELOW:- I) BOTH THE CREDITORS M/S. ENGEL GARMENTS & M/S. SE VEN STAR GARMENTS DID NOT FURNISH CONFIRMATION STATEMENT REG ARDING SALE OF RAW MATERIALS TO THE ASSESSEE. II) LETTERS SENT TO THEIR ADDRESSES WERE RETURNED U N-SERVED. III) FINALLY WHEN THE CREDITORS WERE TRACED BOTH TH E PARTIES STATED THAT THEY WERE COMMISSION AGENTS AND THEY NE VER SOLD YARN, GARMENTS OR CLOTHS TO THE ASSESSEE. IV) BOTH THE CREDITORS CONFIRMED THAT THE ASSESSEE HAD OPENED BANK ACCOUNTS IN THEIR NAMES AND BLANK CHEQU ES WERE GIVEN TO THEM AND THE ASSESSEE HAD OPERATED TH EIR BANK ACCOUNTS. V) BOTH THE CREDITORS FURTHER CONFIRMED THAT THEY W ERE NOT AWARE OF THE BANK OPERATIONS MADE IN THEIR BANK ACC OUNTS BY THE ASSESSEE. VI) CHEQUES WERE DEPOSITED IN THE ACCOUNTS OF THE C REDITORS AND ON THE SAME DAY OR SUBSEQUENT DAY CASH WAS WITHDRAWN. 5 ITA NOS.685 & 1101/MDS/2016 FOR THE AFORESAID REASONS, THE LEARNED ASSESSING OF FICER TREATED THE SUM OF RS.2,88,73,838/- AND RS.2,83,80, 274/- BEING PURCHASES MADE FROM M/S. ENGEL GARMENTS & M/S . SEVEN STAR GARMENTS RESPECTIVELY AGGREGATING TO RS.5,72,54,112/- AS BOGUS PURCHASES AND ADDED TO TH E INCOME OF THE ASSESSEE. 6. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) AFTER DELIBERATING THE ISSUE OPINED THAT PREPONDERANCE OF PROBABILITY MIGHT NATURALLY LEAD T O THE CONCLUSION THAT PURCHASES HAVE BEEN MADE BY THE ASS ESSEE BUT MAY BE NOT BE FROM M/S. ENGEL GARMENTS & M/S. S EVEN STAR GARMENTS. FURTHER SINCE BOTH M/S. ENGEL GARMEN TS & M/S. SEVEN STAR GARMENTS WERE ASSESSED BY THE COMME RCIAL TAX DEPARTMENT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED BY MAKING PROTECTIVE ASSESSMENT IN THE HANDS OF THE ASSESSEE TILL THE JURISDICTIONAL ASSES SING OFFICER GIVES EFFECT TO THE FINDINGS GIVEN IN THE APPELLATE ORDER UNDER SECTION 150 OF THE I.T.ACT, 1961. 6 ITA NOS.685 & 1101/MDS/2016 7. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO T HE FILE OF THE LEARNED ASSESSING OFFICER BECAUSE DETAILS OF TH E ASSESSMENT MADE IN THE HANDS OF M/S. ENGEL GARMENTS & M/S. SEVEN STAR GARMENTS ARE NOT ON RECORD. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE STOUTLY ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSES SING OFFICER AND PRAYED FOR CONFIRMING THE SAME. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE PURCHASES MADE BY THE ASSESSEE FROM M/S. ENGEL GARMENTS & M/S. SEVEN STAR GARMENTS CANN OT BE GENUINELY ESTABLISHED. FURTHER, IT IS EVIDENT THAT THE BANK ACCOUNTS OF M/S. ENGEL GARMENTS & M/S. SEVEN STAR GARMENTS ARE NOT GENUINE. MOREOVER, CASH IS WITHDRA WN FROM THE CREDITORS BANK ACCOUNT IMMEDIATELY AFTER THE C HEQUES ARE DEPOSITED. THE PROPRIETORS OF M/S. ENGEL GARMENTS & M/S. 7 ITA NOS.685 & 1101/MDS/2016 SEVEN STAR GARMENTS ALSO CONFIRM THAT THEIR BANK AC COUNTS WERE NOT OPERATED BY THEM BUT BY THE ASSESSEE. IN T HIS SITUATION, THE ONLY OPTION LEFT FOR THE REVENUE IS TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ASSESS THE IN COME ON ESTIMATE BASIS. THE LD A.R ALSO AGREED BEFORE US FO R OPEN REMAND. THEREFORE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER AND DIRECT HI M TO ASSESS THE INCOME OF THE ASSESSEE ON ESTIMATE BASIS IN HIS WISDOM. 10. SINCE WE HAVE REMITTED BACK THE CASE TO THE FIL E OF THE LEARNED ASSESSING OFFICER WITH CERTAIN DIRECTIONS, THE APPEAL OF THE REVENUE DOES NOT SURVIVE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DECEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, ' /DATED 30 TH DECEMBER, 2016 SOMU 8 ITA NOS.685 & 1101/MDS/2016 )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 0 /DR 6. /GF