SIDDHANT DIAMONDS PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -5(3)(1), MUMBAI

ITA 1103/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6977 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: MRUGAKSHI JOSHI LD
• Keywords: Bogus purchase; Onus to prove; Reassessment proceedings
• Section: 143(3); 147; 131

Judgement Text

ITA.NO.1103/MUM/2018 SIDDHANT DIAMONDS PRIVATE LIMITED ASSESSMENT YEAR- 2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1103/MUM/2018 ( / ASSESSMENT YEAR:2009-10) S IDDHANT DIAMONDS PVT. LTD. FE9011/FC9031 BLOCK BHARAT DIAMOND BOURSE BKC, BANDRA MUMBAI-400 051 / VS. DEPUTY COMMISSIONER OF INCOME TAX-5(3)(1) ROOM NO.583 5 TH FLOOR, AAYKAR BHAVAN MUMBAI- 400 020 ! ./ ./PAN/GIR NO. AAECS-8548-Q ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : MRUGAKSHI JOSHI, LD.AR REVENUE BY : N. HEMALATHA, LD. DR / DATE OF HEARING : 22/05/2018 / DATE OF PRONOUNCEMENT : 23 /05/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)-10 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-10/DC-5(3)(1)/65/16- 17 DATED 21/11/2017 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED ITA.NO.1103/MUM/2018 SIDDHANT DIAMONDS PRIVATE LIMITED ASSESSMENT YEAR- 2009-10 2 BY LD. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-5(3)(1 ), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 04/03/2016, WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.37,45,250/- AFTER CERTAIN ADDITIONS AS AGAINST R EVISED RETURNED INCOME OF RS.36.54 LACS E-FILED BY THE ASSESSEE ON 26/03/2010 WHICH WAS PROCESSED U/S 143(1). THE ISSUE UNDER APPEAL IS QUA NTUM ADDITION AGAINST CERTAIN ALLEGED BOGUS PURCHASES. DURING IMPUGNED AY, THE ASSESSEE WAS ENGAGED IN MANUFACTURING & TRADING OF GOLD, PLATINUM & SILVER JEWELLERY INCLUDING STUDDED JEWELLERY. 2.1 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE MADE SUSPICIOUS PURCHASES OF RS.7,26,494/- FROM AN ENTITY NAMELY A2 JEWELS. THE SAID ENTITY WAS PART OF BHANWARLAL JAIN GROUP, WHO WAS SUBJECTED TO SEARCH OPERATIONS BY THE DEPAR TMENT ON 03/10/2013, WHEREIN IT WAS FOUND THAT THE SAID GROU P, THROUGH WEB OF NUMEROUS ENTITIES, WAS ENGAGED IN PROVIDING ACCOMMO DATION ENTRIES OF BOGUS PURCHASE/SALES/LOANS & ADVANCE S TO MANY PARTIES. 2.2 THE ASSESSEE, WHILE DEFENDING THE PURCHASES, INTER-ALIA SUBMITTED COPY OF LEDGER EXTRACTS, COPIES OF PURCHASE INVOICE S, BANK STATEMENT EVIDENCING PAYMENT TO THE SAID ENTITY, CONFIRMATION / AFFIDAVIT OF THE SAID PARTY, VAT DETAILS ETC. HOWEVER, NOT CONVINCED, LD. AO NOTED THAT ALL THE CONCERN OF THE SAID GROUP WERE NOT DOING ANY ACTUAL BUSINESS BUT ONLY BEING OPERATED AS CONDUITS FOR ISSUING ACCOMMODATIO N ENTRIES. THE STATEMENT MADE U/S 131 BY PARTNER OF A2 JEWEL , SHRI RITESH SIROYA WAS ALSO PERUSED. FINALLY NOT CONVINCED WITH DOCUMENTAR Y EVIDENCES INCLUDING AFFIDAVIT OF THE PARTNER OF A2 JEWELS, FILED BY THE ASSESSEE ITA.NO.1103/MUM/2018 SIDDHANT DIAMONDS PRIVATE LIMITED ASSESSMENT YEAR- 2009-10 3 DURING THE COURSE OF PROCEEDINGS, LD. AO ESTIMATED THE ADDITIONS AGAINST THESE PURCHASES @12.5% WHICH RESULTED INTO AN ADDITION OF RS.90,812/- IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME ON LE GAL GROUND AS WELL AS ON MERITS WITH PARTIAL SUCCESS BEFORE LD. C IT(A) VIDE IMPUGNED ORDER DATED 21/11/2017 WHEREIN LD. CIT(A) WHILE UPH OLDING THE INVOCATION OF REASSESSMENT PROCEEDINGS, RESTRICTED THE ADDITIONS TO 8%. STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, MS. MRUGAKSHI JOSHI , WHILE DRAWING OUR ATTENTION TO THE DOCUMENTS PLAC ED IN THE PAPER- BOOK CONTESTED THE ADDITIONS AS SUSTAINED BY LOWER AUTH ORITIES WHICH WERE CONTROVERTED BY LD. DEPARTMENTAL REPRESENTATIV E, MS.N.HEMALATHA. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING CITED CASE LA WS. SO FAR AS THE LEGALITY OF REASSESSMENT PROCEEDINGS ARE CONCERNED, WE FIND THAT ORIGINAL RETURN FILED BY THE ASSESSEE HAS BEEN PROC ESSED U/S 143(1) AND THEREFORE, THE ONLY REQUIREMENT TO BE FULFILLED TO INITIATE THE REASSESSMENT PROCEEDINGS WAS THAT LD. AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. IN THE PRESENT CASE, THE REOPENING HAS BEEN INITIATED UPON RECEIPT OF CONCRETE INFORMATION FROM INVESTIGATION WING WHICH SUGGESTED ESCAPEMENT OF INCOME IN THE HANDS O F THE ASSESSEE. THEREFORE, WE CONCUR WITH THE STAND OF LD. FIRST AP PELLATE AUTHORITY IN THIS REGARD AND DISMISS THIS GROUND OF ASSESSEES APPEAL . 6. SO FAR AS THE MERITS OF THE CASE ARE CONCERNED, THE MAIN STRESS OF LD. ARS ARGUMENT IS THAT THE PURCHASES WERE MADE B Y THE ASSESSEE ITA.NO.1103/MUM/2018 SIDDHANT DIAMONDS PRIVATE LIMITED ASSESSMENT YEAR- 2009-10 4 FROM THE SAID ENTITY AND THE SAME WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND THE SUPPLIER, BY WAY OF AN AFFIDAVIT, CONFIRMED THE TRANSACTIONS AND THEREFORE THE ADDITIONS WERE NOT J USTIFIED. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF B USINESS. THE TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. THE ASSESSEE RECONCILED QUANTITATIVE DETAILS ALSO TO SO ME EXTENT. HOWEVER, AT THE SAME TIME, THE ASSESSEE REFLECTED PURCHASES FROM AN ENTITY WHICH WAS BEING CONTROLLED BY BHANWARLAL JAIN GROUP. THE SEARCH / SURVEY ACTION ON THE SAID GROUP ON 03/10/2013 BY DGIT (INV.) REVEALED THAT THE SAID GROUP CONSISTING OF NUMEROUS BUSINESS ENTITIES , NUMBERING MORE THAN 70, WAS ENGAGED IN PROVIDING ACCOMMODATION PURCHASES BILLS & ACCOMMODATION LOANS & ADVANCES. IT WAS FOUND OUT THAT THE EMPLOYEES / THEIR RELATIVES ETC. OF THE SAID GROUP WERE MERELY NAME LENDING DIRECTORS / PARTNERS / PROPRIETORS OF NUMEROUS CONCERNS WHICH WERE OPERATING UNDER THE CONTROL OF SAID GROUP. THE STATEMENTS OF CONCERNED PERSONS REVEALED THAT THE FIRMS WERE INDULGING IN ACCOMMODA TION BILLS WITHOUT DOING ANY ACTUAL BUSINESS AND THOSE PERSONS HAD NO KNOWLEDGE ABOUT THE BUSINESS BEING CARRIED OUT BY THE SAID CONCERNS . IN SUCH A SCENARIO, AFFIDAVIT OF THE PARTNER WHICH IS FILED AFTER CONSI DERABLE PERIOD OF TIME COULD NOT BE RELIED UPON MUCH IN THE GIVEN CIRCUMST ANCES. THE COMPLETE ONUS TO PROVE THE TRANSACTIONS BY CONCLUSIVE EVIDEN CES WAS ON THE ASSESSEE. THEREFORE, IN SUCH A SCENARIO, THE ACTION OF LD. CIT(A) IN ESTIMATING THE IMPUGNED ADDITIONS @8% WAS QUITE JUS TIFIED AND DO NOT CALL FOR ANY INTERFERENCE FROM OUR SIDE IN ANY MANN ER. SO FAR AS THE ITA.NO.1103/MUM/2018 SIDDHANT DIAMONDS PRIVATE LIMITED ASSESSMENT YEAR- 2009-10 5 RELIANCE OF LD. AR ON CERTAIN JUDICIAL PRONOUNCEMEN TS IS CONCERNED, WE FIND THAT THE SAME HAVE BEEN RENDERED ON PECULIAR F ACTS OF EACH CASE AND THEREFORE, COULD NOT BE RELIED UPON BLINDLY WIT HOUT CONSIDERING THE FACTUAL MATRIX OF EACH CASE. THIS GROUND OF ASSESSE ES APPEAL STAND DISMISSED. 7. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 05.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI