BHAVANA TRADING COMPANY , MUMBAI V. ITO 19(1)(2), MUMBAI

ITA 1240/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7110 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMANI
• Keywords: Bogus purchase; Opportunity of being heard

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 1240/MUM/2020 (ASSESSMENT YEAR 2009-10) BHAVANA TRADING COMPANY 5B, TAPIA MANSION BLOCK C GRANT ROAD EAST MUMBAI-400 004. PAN : AAAFB0301P VS. ITO-19(1)(2) MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI K.C. SELVAMANI DATE OF HEARING 24.08.2021 DATE OF PRONOUNCEMENT 25.08.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A) DATED 12.12.2019 AND PERTAINS TO ASSESSMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE & LAW, THE LEARNED CIT(A) AND THE ASSESSING OFFICER ERRED BY MAKING AN ADDITIO N & CONFIRMING ADDITION (RESPECTIVELY) AT 100% OF VALUE OF ALLEGED BOGUS PURC HASES AT 100% AMOUNTING TO RS. 1,42,03,397/-. 2. ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHAS ES ARE SIMPLY MADE ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV) FO RWARDED BY SALES TAX DEPARTMENT AND NO INDEPENDENT EFFORTS HAVE BEEN TAKEN B Y THE A.O. EXCEPT FOR ISSUANCE OF NOTICE U/S.133(6). MATERIAL COLLECT ED AT THE BACK OF THE ASSESSEE HAS BEEN USED AGAINST HIM WITHOUT PROVIDIN G IT WITH THE SAME. 3. ADDITION HAS BEEN CONFIRMED BY THE CIT(A) BY COMPLETELY IGNORING SUBMISSIONS LIKE PURCHASE INVOICES, STATEMENT OF PURC HASE AND SALE DETAILS, PAYMENT BY ACCOUNT'S PAYEE CHEQUES AND LEDGER ACCOUN TS. ALSO SALES ARE NOT DOUBTED AND HENCE THE ADDITION BE DELETED. 4. LEARNED A.O HAS WRONGLY MADE ADDITION AT THE RATE OF 100% OF ALLEGED BOGUS PURCHASES WITHOUT GIVING SUFFICIENT OPPORTUNITIE S TO PRESENT THE MATTER. ALSO, THE CIT(A) HAS PASSED AN ORDER BY COMP LETELY IGNORING THE ADJOURNMENT REQUEST FILED ON 05-12-2019. BHAVANA TRADING COMPANY 2 5. BOMBAY HC IN THE CASE OF PCIT VS RISHABHDEV TACHNOCABLE LTD. ITA 1330/2017 (FEBRUARY 2020) HAS HELD THAT IN CASE OF B OGUS PURCHASES, ONLY PROFIT ELEMENT CAN BE ADDED. ALSO AS PER SEVERAL HIGH COURT AND ITAT DECISIONS IT HAS BEEN HELD THAT IN CASE OF BOGUS PURC HASES, AN ADDITION CAN BE MADE ONLY TO THE EXTENT OF PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. HOWEVER, THE CIT(A) AND AO HAVE PASSED JUDGMENT IN CO MPLETE ISOLATION OF SUCH CASE LAWS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN AUTO PARTS, AUTO ACCESSORIES AND AUTOMOBILE GOODS. PURSUANT TO INFORMATION FROM MAHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE HAS ALLEGEDLY MADE PURCHASES OF RS. 1.42 CRORES FROM SEVERAL PARTIES W HO HAVE ISSUED FALSE BILLS, THE ASSESSMENT WAS REOPENED. THE ASSESSING OFFICER DID NOT REFER IN THE EARLIER PART OF HIS ORDER THAT NOTICES WERE ISSUED TO ALLEG ED BOGUS PARTIES. HOWEVER, IN PARAGARPH 9 WHILE NOTING THAT FROM THE ABOVE DISCUS SIONS FOLLOWING FACTS EMERGES THAT THE NOTICE UNDER SECTION133(6) WERE I SSUED TO THE SELLERS WHICH WERE RETURNED BACK AS UNSERVED. THE ASSESSING OFFI CER PROCEEDED TO MAKE 100% DISALLOWANCE WITHOUT DOUBTING THE SALES. 4. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE. 5. WE NOTE THAT UPON ASSESSEES APPEAL LEARNED CIT( A) CONFIRMED THE ASSESSING OFFICERS ORDER. IN THE SAID ORDER SHE DI D NOT GIVE ADEQUATE OPPORTUNITY TO THE ASSESSEE SHE PROCEEDED TO DISTIN GUISH THE HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF M/S. MOHOMMAD HA JI ADAM & CO. DATED 11.2.2019 BY HOLDING THAT THE SAID DISCUSSION WAS NOT BASED ON THIS LINE OF ARGUMENT, WHICH IN OUR CONSIDERED OPINION IS AN UT TER CONTEMPT OF HON'BLE JURISDICTIONAL HIGH COURT DECISION. BY NO STRETCH O F IMAGINATION WE CAN COUNTENANCE THE SAME. MOREOVER, THE FACT THAT LEARN ED CIT(A) HAS NOT GIVEN PROPER OPPORTUNITY TO THE ASSESSEE IS EVIDENT FROM THE FOLLOWING PARAGRAPH NOTED BY LEARNED CIT(A) HERSELF :- 4.1 THE APPEAL WAS FILED ON 30.04.2015 VIDE FORM 3 5. THE ADDRESS MENTIONED THEREIN IS SHOP NO. SB, TAPIA MANSION BLOC K C, JALBHAI STREET, OPP. RAILWAY BAKERY, GRANT ROAD (EAST), MUMBAI-400004 . NOTICES DATED BHAVANA TRADING COMPANY 3 23.09.2016 AND 13.09.2019 WERE ISSUED TO THE APPELLA NT THROUGH INDIA POST AND ITBA TO PROVIDE AN OPPORTUNITY OF BEING HEARD. 4.2 DURING THE APPELLATE PROCEEDING, SHRI DINESH R. S HAH C.A. APPEARED ON 18.11.2016 AND WRITTEN SUBMISSION WAS FILED. THE MAT TER WAS ADJOURNED TO 06.12.2016. AGAIN SHRI DINESH R. SHAH C.A. APPEARED ON 06.12.2016 AND SEEKING TIME TO FURNISH DETAILS. THE CASE WAS ADJOURN ED TO 03.01.2017. THERE WAS NO COMPLIANCE. 6. FROM THE ABOVE IT IS APPARENT THAT LEARNED CIT(A ) HAS MISLED HERSELF ERRONEOUSLY DISTINGUISHED HON'BLE JURISDICTIONAL HI GH COURT DECISION AND HAS NOT GIVEN PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND HAS UPHOLD 100% DISALLOWANCE ON BOGUS PURCHASES WITHOUT ANYTHI NG BROUGHT ON RECORD REGARDING DOUBTFULNESS OF THE SALES. IN THIS VIEW O F THE MATTER IN OUR CONSIDERED OPINION THE ISSUE NEEDS TO BE REMITTED T O THE FILE OF LEARNED CIT(A). LEARNED CIT(A) IS DIRECTED TO PASS A FRESH ORDER DE NOVO AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 25.8.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAM IM YAHYA) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI; DATED : 25/08/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI