DCIT 25(1), MUMBAI V. OM GAGANGIRI DEVELOPMENT CORPORATION, MUMBAI

ITA 1322/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3064 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AIRIJA JAIKARAN
• Assessee Lawyers: SANDEEP D GHELANIAR
• Keywords: Unexplained expenditure; Opportunity of being heard; Principle of natural justice
• Section: 69C; 69

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -CBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/1322/MUM/2014, /ASSESSMENT YEARS: 2010-11 DCIT-25(1) PRATYAKSHAKAR BHAVAN, ROOM NO.202, 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051. VS. M/S. OM GAGANGIRI DEVELOPMENT CORPORATION, B-102, ARLANTA BUILDING, MITAGAR ROAD, DAHISAR (W), MUMBAI-400 068. PAN:AAAFO 1526 B ( /APPELLANT ) ( / RESPONDENT) REVENUE BY : SHRI AIRIJA JAIKARAN - DR ASSESSEE BY : SHRI SANDEEP D. GHELANI-AR / DATE OF HEARING : 14.09.2016 / DATE OF PRONOUNCEMENT: 21.09.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 02/12/2013 OF THE CIT ( A) 35, MUMBAI, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL RAISING VARIOUS G ROUNDS. ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. RETURN OF INCO ME, DECLARING TOTAL INCOME AT RS. 1.83 CRORES WAS FILED ON 03/09/2010. THE AO COMPLETED TH E ASSESSMENT UNDER SECTION 143 (3) OF THE ACT ON 30/01/2013 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 2.20 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION MADE BY THE AO ON THE BASIS OF INFORMATION GATHERED BY HIM FROM THE OFFICIAL WEBSI TE OF SALES TAX DEPARTMENT GOVERNMENT OF MAHARASHTRA. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO DIRECTED THE ASSESSEE TO FURNISH THE LIST OF THE PERSONS FROM WHOM PURCHASES HAD BEEN MADE. OUT OF THE LIST NINE PARTIES, FROM WHOM IT HAD MADE PURCHASES, WERE APPE ARING IN THE LIST OF SUSPICIOUS DEALERS WHO INDULGED IN ISSUING ONLY BILLS WITHOUT ANY GOOD S OR MATERIALS FOR A COMMISSION AS PER THE WEBSITE OF THE MAHARASHTRA GOVERNMENT . THE ASSESSE E WAS ASKED TO SHOW CAUSE AS TO WHY THE ALLEGED PURCHASES AGGREGATING RS.37.29 LAKHS SH OULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. AFTER CONSIDERING THE SUBMISSION OF TH E ASSESSEE, THE AO MADE AN ADDITION OF RS.37.29 LAKHS ON ACCOUNT OF UNEXPLAINED EXPENDITUR E, INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT. 3. DURING THE COURSE OF HEARING BEFORE US,IT WAS BROUG HT OVER NOTICE THAT WHILE DECIDING THE APPEAL FOR THE AY.2011-12, IN ASSESSEE OWN CASE THE TRIBUNAL HAD DEALT WITH THE IDENTICAL 1322/M/14 OM GAGANGIRI DEVELOPMENT CORPN. 2 ISSUE (ITA/5687/MUM/2014, DATED 30/06/ 2016). WE FI ND THAT THE TRIBUNAL HAS DEALT THE ISSUE AS UNDER: 2.BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN BUSINESS OF BUILDERS AND DEVELOPERS FILED RETURN OF INCOME FOR RELEVANT AY ON 16.09.201 1. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. WHILE FRAMING ASSESSMENT ORDER, THE ASSES SING OFFICER (AO) ASKED THE ASSESSEE TO FURNISH THE LIST OF THE PERSONS FROM WHOM THE ASSES SEE PURCHASED THE MATERIAL. THE ASSESSEE SUBMITTED THE LIST OF PERSONS FROM WHOM THE PURCHAS ES WERE MADE ON RECEIPT OF THE LIST OF SUCH PERSON, THE AO ASKED THE ASSESSEE THAT OUT OF THE L IST SUBMITTED BY ASSESSEE, THE NAME OF 9 PERSONS ARE APPEARING IN THE LIST SUSPICIOUS DEALER S WHO INDULGE IN ISSUING ONLY BILLS WITHOUT SUPPLYING ANY GOODS OR MATERIALS FOR A COMMISSION A S PER THE OFFICIAL WEBSITE OF THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE ALLEGED PURCHASES FROM 9 PARTIES AGGREGATING TO RS. 1,41,57 ,197/- SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. THE ASSESSEE SUBMITTED ITS REPLY AND C ONTENDED THAT THE ASSESSEE HAS ACTUALLY PURCHASED BUILDING MATERIAL FROM THE SUPPLIER AND T HE ASSESSEE HAS RECEIVED THE MATERIAL AT SITE WHICH IS VISIBLE ON THE DELIVERY CHALLANS. AGAINST THE SUPPLY, THE ASSESSEE HAS MADE THE PAYMENT WHICH IS DULY REFLECTED FROM LEDGER ACCOUNT. THE CO NTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO AND THE AO MADE THE ADDITION OF AGGREGATE AMOUNT OF THE PURCHASE OF TOTAL RS. 1,41,57,197/- TREATING AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT, IN THE ASSESSMENT ORDER DATED 17.02.2014. AGGRIEVED BY THE ORDER OF AO, THE ASSES SEE FILED THE PRESENT APPEAL BEFORE THE CIT(A), WHEREIN THE ENTIRE ADDITION WAS DELETED BY CIT(A) IN ITS ORDER DATED 30.06.2014, AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US . 3.WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE. LD DR FOR REVENUE ARGUED THAT NO CONFIRMATION WAS FILED BY THE ASSESSEE. THE ASSESSEE HAS OBTAINED ACCOMMODATI ON BILLS ONLY NO PURCHASES WAS MADE AND FURTHER RELIED UPON THE ORDER OF AO. LD. AR OF ASSE SSEE ARGUED THAT AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE REVENUE HAS N OT DISPUTED USE OF THE BUILDING MATERIAL. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HO NBLE JURISDICTIONAL HIGH COURT IN CIT VS. NIKUNJ EXIMP ENTERPRISES (P) LTD. [2015] 372 ITR 61 9 (BOM) AND THE DECISION OF CO-ORDINATE BENCH IN ITA NO. 6727/MUM/2012 IN DCIT VS. RAJEEV G. KALATHIL (WHICH IS AUTHORED BY LD. AM). 4.WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDING ASKED THE ASSESSEE TO FURNISH THE LIST OF THE PERSONS FROM WHOM PURCHASES (BUILDI NG MATERIAL) WERE MADE. THE ASSESSEE SUBMITTED THEIR LIST AND DETAILS OF THE PARTIES FRO M WHOM ASSESSEE MADE THE PURCHASES. THE AO FURTHER NOTICED THAT OUT OF THOSE PARTIES, THE NAME S OF 9 PARTIES WERE APPEARING IN THE LIST OF SUSPICIOUS DEALERS WHO INDULGED IN ISSUING ONLY BIL LS WITHOUT SUPPLY OF GOODS OR MATERIAL FOR COMMISSION, IN THE WEBSITE OF SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT HE HAS ACTUALLY PURCHASED VARIOUS BUILDING MATERIALS FROM THE SUPPLIER. THE DELIVERY CHALLANS CONTAINED THE SIGNATURE ALONG WITH SEAL AT THE TIME OF DELIVERY OF GOODS. THE ASSESSEE MADE TH E PAYMENTS AGAINST THE SUPPLIES TO THE PARTIES WHICH ARE DULY REFLECTED IN THEIR RESPECTIV E LEDGER ACCOUNTS. THE ASSESSEE FURTHER CONTENDED THAT FOR ASSESSMENT YEAR 2010-11. THE SIM ILAR ADDITIONS WERE MADE IN THE SCRUTINY ASSESSMENT PROCEEDING UNDER SECTION 143(3). THE ASS ESSEE PREFERRED APPEAL BEFORE COMMISSIONER OF INCOME TAX APPEALS, WHEREIN THE ADD ITIONS WERE DELETED, COPY OF THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS WAS ALSO FILED. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO, AND AO MADE THE ADDITION OF AGGREGA TE OF THE PURCHASES OF RS. 1,41,57,197/- TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69 C OF THE ACT. BEFORE FIRST APPELLATE AUTHORITY(FAA), THE ASSESSEE REPEATED THE CONTENTION AS SUBMITTED BEFORE THE AO AND FURTHER RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF NIKUNJ EXIM ENTERPRISES PRIVATE LIMITED 372 ITR 619 (BOMBAY). AFTER CONSIDE RING THE CONTENTION OF ASSESSEE, LD CIT APPEALS COMES TO THE CONCLUSION THAT AO MADE THE AD DITION ON THE BASIS THAT THE 9 PARTIES 1322/M/14 OM GAGANGIRI DEVELOPMENT CORPN. 3 APPEAR IN THE LIST SUSPICIOUS DEALERS, IN SALE TAX DEPARTMENT OF GOVT. OF MAHARASHTRA. THE AO ISSUED NOTICE UNDER SECTION 133 (6) OF THE ACT, TO THESE 9 PARTIES WHICH WERE RETURN UNANSWERED. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DING SUBMITTED PURCHASE INVOICES WITH SIGNATURE OF THE RECIPIENT ALONG WITH COPY OF DELIV ERY CHALLAN AND COPIES OF THE BANK STATEMENT FROM WEIRD THE PAYMENTS WERE MADE TO THESE 9 PARTIE S ALONG WITH DELIVERY CHALLAN WITH THE SIGNATURE OF SITE SUPERVISOR. THE LD. CIT FURTHER C ONCLUDED THAT IN THE CASE OF ASSESSEE, THE PROJECT WAS SUPERVISED BY A PROJECT MANAGEMENT CONS ULTANT (PMC) VIZ. YASH CONSULTANTS AND THE SIGNATURE OF YASH CONSULTANTS SUPERVISOR ARE A LSO AVAILABLE ON THE PURCHASE BILLS. THE PERCENTAGE OF THE SALES PER PROJECTS SHOWN BY THE A SSESSEE IS 24.33%, WHICH CANNOT BE TAKEN TO BE TO LOW PROFIT RATIO. THE AO HAVE NOT FOUND AND A NY REASON TO QUESTION THE VARIOUS EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM. THE ISSUE THA T NOTICES UNDER SECTION 133 (6) RETURN UNSERVED BEING ENOUGH TO DISBELIEVE THE ACCOUNTS AN D OTHER EVIDENCE PRODUCED BY THE ASSESSEE, HAS ALREADY BEEN DECIDED BY JURISDICTIONAL HIGH COU RT IN CASE OF NIKUNJ EXIM ENTERPRISE PRIVATE LIMITED(SUPRA), AND ACCEPTED THE ARGUMENTS ADVANCED BEFORE HER AND ALLOWED THE APPEAL OF THE ASSESSEE. THE CO-ORDINATE BENCH OF TH IS TRIBUNAL IN ITA NO. 6727/MUM/2012 IN DCIT VERSUS RAJEEV G. KALATHIL (SUPRA) HELD AS UNDE R: 5.1 NOW THE ISSUE BEFORE US IS WHETHER THE AFORESA ID CASE OF THE ASSESSSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DE CISIONS CITED BY THE LD. COUNSEL. IN THE CASE OF ITA NO.6727/MUM/2012 (AY-2009-10) DA TED 20.08.2014 WE FIND THAT THE SIMILAR ADDITION WAS MADE ON THE BASIS OF INFOR MATION AVAILABLE ON WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, WH ICH WAS DELETED BY THE TRIBUNAL. THE RELEVANT PARA 2.4 IS EXTRACTED AS BEL OW. 2.4. 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING PO INT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INI TIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TR ANSPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSE E WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. WWW.TA XGURU.IN ITA/6727/MUM/2012/RGK 4 (SUPRA) IS CONCERNED, WE FIND THAT IN THAT MATTER C ASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF G OODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRA IL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE, CONSIDERING THE PECULIA R FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE IS NO SUFFICIENT EVIDENCE ON FI LE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND N O.1 AGAINST THE AO.' FURTHER THE COORDINATE BENCH IN CASE OF PRATAP U. P UROHIT, THE CO-ORDINATE BENCH OF ITAT, MUMBAI, HOLDING AS UNDER: 13. IN SUMMARY, WE ARE OF THE OPINION, CONSIDERING THE ORDERS OF THE TRIBUNAL IN MANY CASES OF ADDITIONS INVOLVING THE SALES TAX DEP ARTMENT, THE DISCLOSURE OF BLACK-LISTED SUPPLIERS AND WHEN THE ASSESSING OFFIC ER FAILED TO DISCHARGE THE ONUS AS DISCUSSED ABOVE, THE ADDITIONS MADE U/S 69C AMOUNTI NG TO RS. 12,01,91,407/- OUT OF TOTAL ADDITION OF RS. 13.03 CRS IS REQUIRED TO BE D ELETED. CIT(A) IS DIRECTED TO EXAMINE THIS ISSUE AND PASS A SPEAKING ORDER ON THE ISSUES RELATING TO THE ASPECTS OF GP AND THE OTHER INDEPENDENT ADDITION OF RS. 1,00,8 6,929/- AFTER GATHERING RELEVANT FACTS FROM THE SURVEY STATEMENTS, IF ANY. CIT (A) S HALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINC IPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE PARTLY ALLOWED FO R STATISTICAL PURPOSES. 5.NOW, ON COMING TO THE FACTS OF THE PRESENT CASE, WE FIND THAT AO HAD MADE THE ADDITION AS 9 OF THE PARTIES, WHO WERE DECLARED AS A HAWALA DEALE R BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE AO MADE THE ADDITION OF AGGREGATE VALUE OF THE PURCHASES FROM THOSE IMPUGNED SUPPLIER INSTEAD OF MAKING ANY INVESTIGATION, IF ANY SUCH PAYMENT WERE 1322/M/14 OM GAGANGIRI DEVELOPMENT CORPN. 4 CREDITED TO THEIR ACCOUNTS OR THE SAME WAS WITHDRAW N IMMEDIATELY. THE BOOKS OF ACCOUNT OF ASSESSEE WERE NOT REJECTED BY AO. THE SALES OF ASSE SSEE WERE NOT DISPUTED. USE OF BUILDING MATERIAL WAS ALSO NOT DISPUTED. THE PROOF OF DELIVE RY OF THE PURCHASED GOODS/MATERIAL IS NOT DISPUTED BY AO. THE CIT(A) CONSIDERED ALL THE MATER IAL FACT BEFORE HER. THUS, CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE STATED IN THE PR ESENT APPEAL, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY CIT(A). HENCE T HE APPEAL FILED BY REVENUE IS DISMISSED. RESPECTFULLY,FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL, WE DISMISS THE GROUND RAISED BY THE AO. AS A RESULT, APPEAL FILED BY THE AO IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2016. 21 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21.09.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.