Mini Iron & Alloys (P) Ltd., Kolkata V. ITO, Ward-3(4), Kolkata, Kolkata

ITA 1103/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6629 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 17-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: ANUP KR SINHA
• Keywords: Bogus purchase; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM] I.T.A NO. 1103/KOL/20 17 ASSESSMENT YEAR : 2005-0 6 M/S MINI IRON & ALLOYS (P) LTD. -VS- I.T.O., WARD-3(4),NOW WARD-3(3), KOLKATA [PAN: AADCM 4258 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ANUP KR. SINHA, AR FOR THE REVENUE : SMT. RANU BISWAS, ADDL. C IT DATE OF HEARING : 07.04.2018 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)-17, KOLKATA [ IN SHORT THE LD CITA] DATED 30.11.2016 AGAINST THE ORDER PASSED BY THE I.T.O, WARD-3(4), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3)(II) OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) DATED 28.12.2007 FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF TRADING AND IRON IN STEEL. 3. THOUGH THE ASSESSEE HAS RAISED IN ALL 12 GROUNDS OF APPEAL, THE LD. COUNSEL FOR THE ASSESSEE ARGUED ONLY GROUNDS NO. 5 AND 6 WHICH ARE EXTRACTED BELOW: 5. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS FAILED TO CONSIDER THAT THE INCOME TAX OFFICER HAS ERRED IN ADDING BACK THE AMOUNT OF RS. 4,25,550/- AS INCOME WHICH IS ACTUALLY THE PURCHASE PRICE OF TRAD ING GOODS ON FEBRUARY 24, 2 ITA NO.1103/KOL/2017 M/S MINI IRON & ALLOYS P LTD. A.YR .2005-06 2 2005 FROM M/S TRADE WELL CONCERN THROUGH ACCOUNT PA YEE CHEQUE AND NOT ANY FICTITIOUS TRANSACTION. 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS FAILED TO CONSIDER THAT THE INCOME TAX OFFICER HAS ERRED IN HOLDING THE PAY MENT OF RS. 42,000/- MADE TO SHLOK TRUST THROUGH CHEQUE AS SHAM TRANSACTION DESP ITE PROPER RENT BEING PRODUCED AT THE TIME OF HEARING, WHICH IN ITSELF WA S A CONCLUSIVE PROOF OF AUTHENTICITY. ALL THE OTHER GROUNDS WERE NOT PRESSED. HENCE THEY ARE DISMISSED AS NOT PRESSED. 4. WE HAVE HEARD MR. ANUP KR. SINHA, THE LD. COUNSE L FOR THE ASSESSEE AND SMT. RANU BISWAS, THE LD. DR ON BEHALF OF THE REVENUE. 5. AFTER HEARING RIVAL SUBMISSIONS AND ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, A PERUSAL OF PAPERS ON R ECORD AND ORDERS OF THE LOWER AUTHORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS. 6. THE FIRST ISSUE IS AN ADDITION OF RS. 4,25,550/- WHICH WAS A PURCHASE OF TRADING GOODS. THE GOODS WERE PURCHASED FROM M/S TRADE WELL CONCERN ON 24.02.2005, AND PAYMENT WAS MADE THROUGH A/C PAYEE CHEQUES. THE LD. AO MADE AN ADDITION ON THE GROUND THAT, A NOTICE ISSUED TO THE SELLER U/S 133( 6) OF THE ACT WAS RETURNED UNSERVED AND THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY BEFOR E HIM. IN MY VIEW, THIS IS NOT A CORRECT LEGAL GROUND FOR MAKING AN ADDITION. THE I TAT E BENCH OF MUMBAI TRIBUNAL IN THE CASE OF PRABHAT GUPTA VS. ITO IN I.T.A. NO. 277/MUM/2017 AND 1797/MUM/2017 HELD THAT NON-SERVICE OF NOTICE CANNOT BE A GROUND FOR MAKING AN ADDITION OF A PURCHASE, BY TREATING IT AS A BOGUS PURCHASE. FOR THIS PROPOS ITION THE BENCH RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIKUNJ EXIM ENTERPRISES PVT. LTD. (2016) TAXMAN.COM 171 (BOMB.). AS THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROOF THAT LAY ON IT AND AS THE SAME SELLER IS A RE GISTERED DEALER UNDER STATE SALES TAX, VAT AND CST AND AS THE PAYMENTS HAVE BEEN MADE THR OUGH A/C PAYEE CHEQUES, I HOLD 3 ITA NO.1103/KOL/2017 M/S MINI IRON & ALLOYS P LTD. A.YR .2005-06 3 THAT THE PURCHASES ARE GENUINE AND DELETE THE ADDIT ION. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED. 7. GROUND NO. 5 IS ON THE DISALLOWANCE OF RS. 42,00 0/- BEING RENT PAID TO SHLOK TRUST. ON A PERUSAL OF THE PAPERS, I FIND THAT SHLOK TRUS T HAD CONFIRMED THE PAYMENT OF RENT. THE ASSESSEE IS CARRYING ON THE BUSINESS AT THESE P REMISES SINCE 2002. HENCE THE DISALLOWANCE IS UNJUSTIFIED. ACCORDINGLY, I DELETE THE SAME AND ALLOW THIS GROUND OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. 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. M/S MINI IRON & ALLOYS P LTD., 37A, BENTICK STRE ET, 2 ND FLOOR, KOLKATA-700069. 2. ITO, WARD-3(3), KOLKATA, AAYKAR BHAVAN, 4 TH FLOOR, KOLKATA. 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