Deputy Commissioner of Income-tax, V. M/s. Satyam Developers, Navi Mumbai

ITA 1226/PUN/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3022 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Period of limitation
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1226 /P U N/201 5 / ASSESSMENT YEAR : 20 1 0 - 11 DY. COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL ....... / APPELLANT / V/S. M/S. SATYAM DEVELOPERS, SHOP NO. 4 & 5, SATYAM ARCADE, PLOT NO. 26, SECTOR 21, KAMOTHE, NAVI MUMBAI 410210 PAN : AAXFS3242F / RESPONDENT . / CO NO. 32 /PUN/201 8 / ASSESSMENT YEAR : 20 1 0 - 11 M/S. SATYAM DEVELOPERS, SHOP NO. 4 & 5, SATYAM ARCADE, PLOT NO. 26, SECTOR 21, KAMOTHE, NAVI MUMBAI 410210 PAN : AAXFS3242F ....... / APPELLANT / V/S. DY. COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL / RESPONDENT ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 2 4 - 05 - 2018 / DATE OF PRONOUNCEMENT : 25 - 0 5 - 201 8 2 ITA NO . 1226/PUN/2015 & CO NO. 32/PUN/2018, A.Y. 2010 - 11 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - I, THANE DATED 27 - 03 - 2015 FOR ASSESSMENT YEAR 20 1 0 - 11. THE ASSESSEE HAS FILED CROSS OBJECTIONS (CO) SUPPORTING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A CIVIL CONTRACTOR, BUILDER AND DEVELOPER. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 24 - 09 - 2010 DECLARING TOTAL INCOME OF RS.33,04,060/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, STATUTORY NOTICE U/S. 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED TO THE ASSESSEE ON 27 - 09 - 2011 AND THE SAME WAS DULY SERVED. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES FROM THE DEALERS WHOSE NAMES WERE APPEARING IN THE LIST OF HAWALA DEALERS CIRCULATED BY THE STATE SALES TAX DEPARTMENT. THE ASSESSING OFFICER HELD THAT THE PURCHASES MADE BY THE ASSESSEE FROM SUSPICIOUS DEAL ERS ARE BOGUS AND THUS MADE ADDITION OF RS.2,62,94,453/ - AS UNEXPLAINED EXPENDITURE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 21 - 03 - 2013, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). DURING THE FIRST APPELLATE PROCEEDINGS , THE ASSESSEE DID NOT PRESS APPEAL IN RESPECT OF DISALLOWANCE AMOUNTING TO RS. 1,76,51,232/ - . HOWEVER, IN RESPECT OF BALANCE AMOUNT OF RS.86,43,221/ - , THE LD. AR POINTED THAT THE PURCHASES WERE MADE FROM FOUR PARTIES NAMELY : (I) RAMESHWAR STEEL CO. 3 ITA NO . 1226/PUN/2015 & CO NO. 32/PUN/2018, A.Y. 2010 - 11 (RS.50, 05,111/ - ), (II) STAR CERAMIC S (RS.7,77,289/ - ), (III) R.K. ENTERPRISES (RS.26,10,988/ - ) , AND (IV) RATNADEEP ELECTRICAL & HARDWARE STORES (RS.2,49,833/ - ) . THE ASSESSEE FURNISHED CONFIRMATION LETTERS FROM RAMESHWAR STEEL CO. AND STAR CERAMIC S . THE COMMISSIO NER OF INCOME TAX (APPEALS) BY PLACING RELIANCE ON THE ASSESSMENT ORDER IN THE CASE OF M/S. SHIV SHRADDHA DEVELOPERS FOR ASSESSMENT YEAR 2010 - 11 WHEREIN THE THREE PARTIES I.E. RAMESHWAR STEEL CO., STAR CERAMIC S AND R.K. ENTERPRISES WERE HELD TO BE GENUINE , DELETED THE ADDITION OF RS.86,43,221/ - . AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPEAL. 3. SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING ADDITION OF RS.86,43,221/ - . THE ASSESSEE HAS FAILED TO SHOW GENUINENESS OF THE TRANSACTIONS WITH RAMESHWAR STEEL CO., STAR CERAMIC S , R.K. ENTERPRISES AND RATNADEEP ELECTRICAL & HARDWARE STORES. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED RELIEF MERELY BY PLACING RELIANCE ON THE ASSESSMENT ORDER OF M/S. SHIV SHRADDHA DEVELOPERS. NO OPPORTUNITY WAS GIVEN TO THE ASSESSING OFFI CER TO VERIFY THE GENUINENESS OF THESE PARTIES. THE ASSESSEE HAS NOT FURNISHED ANY DETAIL OF TRANSPORTATION OF GOODS, THEREFORE, NO RELIEF SHOULD HAVE BEEN GRANTED TO THE ASSESSEE. 4. ON THE OTHER HAND SHRI SHARAD SHAH APPEARING ON BEHALF OF THE ASSESS EE VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE DEPARTMENT HAS ALREADY GIVEN CLEAN CHIT TO THE AFORESAID THREE PARTIES IN ASSESSMENT PROCEEDINGS IN THE CASE OF M/S. SHIV SHRADDHA DEVELOPERS FOR THE A SSESSMENT YEAR 2010 - 11. THE ADDITIONS HAVE BEEN MADE ON THE GROUND THAT THE ASSESSEE HAS MADE 4 ITA NO . 1226/PUN/2015 & CO NO. 32/PUN/2018, A.Y. 2010 - 11 BOGUS PURCHASES FROM HAWALA DEALERS . O NCE, THE DEPARTMENT HAS ACCEPTED THAT THE PARTIES ARE GENUINE , NO ADDITION IN RESPECT OF PURCHASES MADE FROM SUCH PARTIES SHOULD BE SUSPECTED. THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS FROM RAMESHWAR STEEL CO. AND STAR CERAMICS. THE LD. AR HOWEVER FAIRLY ADMITTED THAT THE ASSESSEE COULD NOT PRODUCE RATNADEEP ELECTRICAL & HARDWARE STORES NOR ANY CONFIRMATION HAS BEEN R ECEIVED FROM THE SAID PART Y. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . THE SOLITARY ISSUE RAISED IN THE APPEAL BY THE DEPARTMENT IS AGAINST DELETING ADDITION OF RS.86,43,2 21/ - BY THE COMMISSIONER OF INCOME TAX (APPEALS) ALLEGED TO BE BOGUS PURCHASES . DURING ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE PURCHASES FROM 21 PARTIES. THE SUBSTANTIAL NUMBER OF PARTIES (17) FIGURED IN THE LIST OF SUSPICIOUS HAWALA DEALERS. THE NAME OF THE FOUR PARTIES I.E. RAMESHWAR STEEL CO., STAR CERAMIC S , R.K. ENTERPRISES AND RATNADEEP ELECTRICAL & HARDWARE STORES DID NOT FORM PART OF THE LIST OF HAWALA DEAL ERS CIRCULATED BY THE SALES TAX DEPARTMENT. THE C OMMISSIONER OF INCOME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE IN RESPECT OF ABOVE SAID FOUR PARTIES. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT IN THE CASE OF M/S. SHIV SHRADDHA DEVELOPERS , THE ASSESSING OFFICER HAD ACCEPTED THREE PARTIES I.E. RAMESHWAR STEEL CO., STAR CERAMIC S AND R.K. ENTERPRISES AS GENUINE PARTIES AND PURCHASES MADE FROM THEM WERE ACCEPTED. FOLLOWING PARITY OF REASONING, THE COMMISSIONER OF INCOME TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE. 6. WE FIND THAT THE ASS ESSEE HA D FILED CONFIRMATIONS REGARDING TRANSACTIONS ENTERED INTO WITH RAMESHWAR STEEL CO. AND STAR CERAMIC S . 5 ITA NO . 1226/PUN/2015 & CO NO. 32/PUN/2018, A.Y. 2010 - 11 THE CONFIRMATIONS ARE AT PAGE S 1 TO 6 OF THE PAPER BOOK. THOUGH, NO CONFIRMATION HAS BEEN RECEIVED FROM R.K. ENTERPRISES AT THE SAME TIME, THE N AME OF SAID DEALER DOES NOT APPEAR IN THE LIST OF HAWALA DEALERS. THUS, THE TRANSACTIONS WITH THE PARTIES WHICH HAVE ALREADY BEEN CLEARED BY THE DEPARTMENT FROM CLOUD OF SUSPICION OF BEING HAWALA DEALERS HAS BEEN RIGHTLY DELETED BY THE COMMISSIONER OF INC OME TAX (APPEALS). AS REGARDS, TRANSACTIONS WITH RATNADEEP ELECTRICAL & HARDWARE STORES AMOUNTING TO RS.2,49,833/ - IS CONCERNED , WE FIND THAT NO MATERIAL HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO SUBSTANTIATE THAT THE TRANSACTIONS WITH THE SAID PART Y W AS ACTUALLY CARRIED OUT. THE ASSESSEE NEITHER FILED ANY CONFIRMATION NOR THERE IS ANY TRAIL OF PROCUREMENT OF GOODS. THUS, WE ARE OF VIEW THAT THE TRANSACTIONS AMOUNTING TO RS.2,49,833/ - WITH RATNADEEP ELECTRICAL & HARDWARE STORES DESERVES TO THE DISALLO WED. ACCORDINGLY, WE MODIFY THE IMPUGNED ORDER AND RESTRICT THE RELIEF GRANTED TO THE ASSESSEE TO RS. 83,93,388/ - . 7. IN THE RESULT, THE APPEAL BY THE REVENUE IS PARTLY ALLOWED IN THE TERMS AFORESAID. CO NO. 32/PUN/2018 8 . THE ASSESSEE HAS FILED CROSS OBJECTIONS WITH THE DELAY OF 308 DAYS. THE ASSESSEE HAS FILED AN APPLICATION SUPPORTED BY AN AFFIDAVIT CITING REASONS FOR DELAY IN FILING OF CROSS OBJECTIONS BEYOND THE PERIOD OF LIMITATION. THE REASON GIVEN BY THE ASSESSEE FOR DELAY IN FILING OF T HE CROSS OBJECTIONS IS THAT THE APPEAL PAPERS WERE HANDED OVER TO ONE MR. NAGIN PATEL, INCOME TAX P RACTITIONER AND HE FAILED TO HANDED OVER THE PAPERS TO THE CHARTERED ACCOUNTANT TO WHOM APPEAL WAS ENTRUSTED FOR DEFENDING THE ASSESSEE BEFORE THE TRIBUNAL. A P ERUSAL OF THE AFFIDAVIT DOES NOT INSPIRE 6 ITA NO . 1226/PUN/2015 & CO NO. 32/PUN/2018, A.Y. 2010 - 11 CONFIDENCE IN THE REASONS GIVEN BY ASSESSEE FOR CONDONING INORDINATE DELAY OF 308 DAYS IN FILING OF CROSS OBJECTIONS . THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN EXPLAINING DELAY IN FILING OF CROSS OBJECTI ONS. THE REASON GIVEN BY ASSESSEE IS VAGUE AND SANS DETAILS. ACCORDINGLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED IN LIMINE , BEING BARRED BY LIMITATION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECT IONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 25 TH DAY OF MA Y, 2018 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 25 TH MA Y, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - I, THANE 4. / THE CIT - I, THANE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE