INCOME TAX OFFICER 25(3)(3), MUMBAI V. RAJIV I GANDHI, MUMBAI

ITA 1150/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3220 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 28-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAKSHMI NAYAKLD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 143(2); 44AB; 145(3); 131; 148

Judgement Text

ITA NO.1150/MUM/2018 RAJIV ISHWARLAL GANDHI ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND SHRI HONBLE MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1150/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) IT O - 25(3) (3) R.NO.606, 6 TH FLOOR PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (EAST), MUMBAI-400 051 / VS. RAJ IV ISHWARLAL GANDHI 4, BAJAJ SOCIETY, BAJAJ ROAD VILE PARLE (WEST) MUMBAI 400 057 !' ./ ./PAN/GIR NO. AADPG-3967-F ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : MS. JYOTI LAKSHMI NAYAK-LD.DR / DATE OF HEARING : 24/02/2020 / DATE OF PRONOUNCEMENT : 11/03/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-37, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. ITA NO.1150/MUM/2018 RAJIV ISHWARLAL GANDHI ASSESSMENT YEAR :2011-12 2 CIT(A)-37/IT-490/ITO-25(3)(3)/2016-17 DATED 04/12/2017 QUA DELETION OF CERTAIN ADDITIONS ON ACCOUNT ALLEGED BOGUS PURCHASES. 2. NONE APPEARED FOR ASSESSEE AND NO VALID ADJOURNM ENT APPLICATION WAS ON RECORD. THE PERUSAL OF ORDER SHEET ENTRIES W OULD REVEAL THAT THE ASSESSEE HAS NOT MADE ANY REPRESENTATION ON MULTIPL E OCCASIONS. THEREFORE, THE MATTER WAS PROCEEDED WITH EX-PARTE QUA THE ASSESSEE. THE LD. DR POINTED OUT FACTUAL ERRORS COMMITTED BY LEARNED FIRST APPELLATE AUTHORITY WHILE GRANTING THE RELIEF TO TH E ASSESSEE. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS ADVANCED BY LD. DR AND ALSO PERUSED THE ORDERS OF LOWER AUTHORITIES. OUR ADJUDI CATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PA RAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT ASSESSEE BEIN G RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN DEALING IN PHARM ACEUTICAL ITEMS UNDER PROPRIETORSHIP CONCERN NAMELY M/S CHEMIPACK CORPORA TION, WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S. 143(3) R .W.S. 147 ON 29/02/2016, WHEREIN THE INCOME WAS DETERMINED AT RS .175.36 LACS AFTER SOLD ADDITION OF RS.164.81 LACS ON ACCOUNT OF SUSPI CIOUS PURCHASES, AS AGAINST RETURNED INCOME OF RS. 10.55 LACS FILED BY THE ASSESSEE ON 29/09/2011. THE ORIGINAL RETUNE WAS PROCESSED U/S 1 43(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION) / SALES TAX DEPARTMENT, IT TRANSPIRED THAT ASSESSEE OBTAINED BOGUS BILLS AGGREGATING TO RS.164.81 LACS FROM 4 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN OPENING PARA OF THE QUANT UM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS RE-OPENED AS PER D UE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S. 148 ON 05/01/2016 WHIC H WAS FOLLOWED BY ITA NO.1150/MUM/2018 RAJIV ISHWARLAL GANDHI ASSESSMENT YEAR :2011-12 3 NOTICES U/S. 143(2) & 142(1) WHEREIN THE ASSESSEE W AS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.3 SUMMONS U/S. 131 WERE ISSUED TO STATED ENTITIES TO CONFIRM THE TRANSACTIONS BUT THE SAME WERE RETURNED BACK BY POS TAL AUTHORITIES. THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS AND ALSO COULD NOT FURNISH LATEST WHEREABOUTS OF THE SUPPLIERS. 3.4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 2009-10 IN THE CASE OF THE ASSESSEE, SUMMONS U/S 131 WERE ISSU ED TO ONE OF THE SUPPLIERS I.E. M/S FAIR CHEM AND THE STATEMENT OF P ROPRIETOR OF THAT ENTITY NAMELY SHRI AJAY YASHWANT GHADI WAS RECORDED WHO CA TEGORICALLY DENIED HAVING SUPPLIED ANY GOODS TO THE ASSESSEE. T HE RELEVANT PORTION OF THE STATEMENT HAS ALREADY BEEN EXTRACTED IN PARA -7 OF THE QUANTUM ASSESSMENT ORDER. UPON PERUSAL OF SAID STATEMENT, A N OPINION WAS FORMED THAT THE ASSESSEE OBTAINED MERE ACCOMMODATIO N ENTRIES FROM THE SAID ENTITY WHICH WAS FURTHER FORTIFIED BY THE FACT THAT THERE WERE IMMEDIATE CASH WITHDRAWALS FROM THE BANK ACCOUNT OF THAT ENTITY. 3.5 THE ASSESSEE FAILED TO SUBMIT ANY LEDGER ACCOUN T, COPY OF SALE / PURCHASES REGISTER, COPY OF BANK STATEMENT, STOCK R EGISTER, DELIVERY CHALLANS, TRANSPORT RECEIPTS / DETAILS, OCTROI DETA ILS AS CALLED FOR BY LD. AO TO VERIFY THE AUTHENTICITY OF THE TRANSACTIONS. 3.6 KEEPING IN THE VIEW THE FACTUAL MATRIX, THE BOO KS WERE REJECTED U/S 145(3) AND ENTIRE PURCHASES WERE DISALLOWED AND ADD ED BACK TO THE INCOME OF THE ASSESSEE. 4.1 THE LD. CIT(A) NOTICED THAT THERE WAS NO CHANGE IN METHOD OF ACCOUNTING AND THE BOOKS WERE DULY AUDITED U/S 44AB . THE BOOKS OF ACCOUNTS WERE ACCEPTED FOR AY 2010-11. NO ADVERSE R EMARKS WERE ITA NO.1150/MUM/2018 RAJIV ISHWARLAL GANDHI ASSESSMENT YEAR :2011-12 4 GIVEN BY THE AUDITOR AS TO MAINTENANCE OF STOCK REG ISTER. HENCE, THE REJECTION OF BOOKS U/S 145(3) WAS NOT JUSTIFIED. 4.2 AFTER CONSIDERING THE RATIO OF VARIOUS JUDICIAL PRONOUNCEMENTS, IT WAS NOTED IN PARA 5.9 THAT LD. AO FAILED TO MAKE AN Y INVESTIGATION AND COMPLETED THE ASSESSMENT ON MERE SUSPICION. IT WAS INCUMBENT ON THE PART OF LD. AO TO VERIFY THE PAYMENT DETAILS FROM T HE BANK ACCOUNT OF THE ASSESSEE AS WELL AS PAYEE TO ASCERTAIN WHETHER THER E WAS IMMEDIATE CASH WITHDRAWAL FROM THE BANK ACCOUNT. NO SUCH EXER CISE WAS STATED TO BE CARRIED OUT. THEREFORE, A CONCLUSION WAS DRAWN T HAT THE ASSESSEE FULFILLED THE ONUS CASTED UPON HIM. IT WAS ALSO OBS ERVED THAT THE TRIBUNAL, IN ASSESSEES APPEAL FOR AY 2009-10 VIDE ITA NO.741 7/MUM/2016 ORDER DATED 09/06/2017, RESTRICTED THE ADDITIONS TO 10% O F SUSPICIOUS PURCHASES. FOLLOWING THE SAME, THE ADDITIONS WERE R ESTRICTED TO 10%. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFO RE US. 5. AFTER DUE CONSIDERATION OF FACTUAL MATRIX AS ENU MERATED HEREINABOVE, WE FIND THAT LD. CIT(A) HAS MADE AN ER ROR IN NOTING THE CORRECT FACTUAL MATRIX. AS PER ASSESSMENT ORDER, SU MMONS U/S 131 WERE ISSUED TO ALL THE SUPPLIERS BUT THE SAME WERE RETUR NED BACK BY POSTAL AUTHORITIES. THE ASSESSEE FAILED TO PROVIDE THE LAT EST ADDRESSES OF THE SUPPLIERS AND ALSO FAILED TO PRODUCE ANY OF THE SUP PLIERS. THE ASSESSEE FAILED TO SUBMIT ANY LEDGER ACCOUNT, COPY OF SALE / PURCHASES REGISTER, COPY OF BANK STATEMENT, STOCK REGISTER, DELIVERY CH ALLANS, TRANSPORT RECEIPTS / DETAILS, OCTROI DETAILS AS CALLED FOR BY LD. AO TO VERIFY THE AUTHENTICITY OF THE TRANSACTIONS. IN THE ABOVE BACK GROUND, NO OPTION WOULD BE LEFT WITH LD. AO BUT TO REJECT THE BOOKS A ND DISALLOW THE PURCHASES. THE OBSERVATION THAT MERELY BECAUSE THE BOOKS WERE ITA NO.1150/MUM/2018 RAJIV ISHWARLAL GANDHI ASSESSMENT YEAR :2011-12 5 ACCEPTED IN AY 2010-11 AND THEREFORE THE BOOKS COUL D NOT BE REJECTED, IS ALSO WITHOUT ANY SUBSTANCE SINCE IT WAS INCUMBEN T ON THE ASSESSEE TO MAINTAIN ADEQUATE RECORDS FOR EACH OF THE YEAR SEPA RATELY. THE LD. AO HAD ALSO NOTED THAT THERE WERE IMMEDIATE CASH WITHD RAWAL FROM THE BANK ACCOUNTS. THE DECISION OF TRIBUNAL AS RELIED UPON B Y LD. CIT(A), IS STATED TO HAVE BEEN RECALLED SUBSEQUENTLY. THEREFORE, CONS IDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES, WE DEEM IT FIT TO SET-A SIDE THE IMPUGNED ORDER AND RESTORE THE MATTER BACK TO THE FILE OF LD . CIT(A) FOR RE- ADJUDICATION IN THE LIGHT OF FINDINGS GIVEN BY LD. AO. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE HIS CLAIM FAILING WHICH LD . CIT(A) SHALL BE AT LIBERTY TO RE-ADJUDICATE THE SAME ON THE BASIS OF M ATERIAL ON RECORD. 6. THE APPEAL STANDS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH MARCH, 2 020. SD/- SD/- (SAKTIJIT DEY) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/03/2020 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , -% . , . , / DR, ITAT, MUMBAI 6. - /01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.