HARCOH ENTERPRISES, MUMBAI V. CIT 14, MUMBAI

ITA 137/MUM/2014

• Counselvise Citation: 13719914 RSA 2014
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 263

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI H BENCH , , , BEFORE S/SH. JOGINDER SINGH ,JUDICIA L MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 137 /MUM/201 4 , / ASSESSMENT YEAR - 200 5 - 06 M/S. HARCOH ENTERPRISES C/O., KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR 192, DR. D.N. ROAD MUMBAI - 400 001. PAN: AAAFH 0508 C VS T HE CIT - 14 6 TH FLOOR, EARNEST HOUSE NARIMAN POINT MUMBAI - 400 021. ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI SUNIL HIRAWAT / REVENUE BY :SHRI G.M. DOSS - DR / DATE OF HEARING : 18 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 18 - 0 6 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 25.11 . 20 13 OF THE CIT - 14 , MUMBAI ,THE ASSESSEE HAS RAISED FOLLOWING GRO UNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME - TAX HAD ERRED IN SETTING ASIDE THE ASSESSMENT ORDER U/S.263 OF THE INCOME - TAX ACT, 1961 EVEN THOUGH THE ORDER U/S.143(3) PASSED BY THE LEARNED ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNDER THE FACTS AND CIRCUMSTANCES OF THE MATTER, HE OUGHT NOT TO HAVE SET ASIDE THE ASSESSMENT U/S.263 OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME - TAX HAD FAILED TO APPRECIATE THAT THE LEARNED ASSESSING OFFICER HA S ALREADY VERIFIED THE PURCHASES MADE FROM M/S.S.S. TEXTILES AND M/S.BAJRANG TEXTILES AND THEREFORE ASSUMING JURISDICTION U/S.263 OF THE ACT IS BAD - IN - LAW. 3. THE LEARNED CIT HAS PASSED THE ORDER U/S.263 WITHOUT FULLY CONSIDERING THE SUBMISSIONS OF THE A PPELLANT WHERE INTERALIA THE APPELLANT HAD RELIED ON THE FOLLOWING DECISIONS: - (A) GABRIEL INDIA LTD. (1993) 203 ITR 108 (BOM) (B) MRS.KHATIZA S. OOMERBHOY V.ITO (2006) 100 ITD 173 (MUM) (C) MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 109 TAXMAN 66 (SC) (D) SUNIL LAMBA V. DY. CIT (2003) 131 TAXMAN 35 (DELHI) (MAG.) (E) BHAVAL SYNTHETICS (INDIA) LTD. V. CIT (2003) 130 TAXMAN 178 (JODH.) (MAG.) (F) ANIL SHAH V. CIT (2007) 162 TAXMAN 39 (MUM) (MAG.) 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT, THE TIME OF HEARING OF THE APPEAL, SO AS TO ENABLE THE HON. ITAT TO DECIDE THIS APPEAL ACCORDING TO LAW. ITA/ 137 /MUM/201 4 ,AY. 0 5 - 06 - H ARCOH 2 ASSESSEE, - FIRM FILED ITS RETURN OF INCOME O N 26.6.05 DECL ARING TOTAL INCOME AT RS.NIL AFTER SETTING OFF BROUGHT FORWARD LOSSES OF RS.11,22,753/ - . THE ASSESSING OFFICER ( AO ) COMPLETED THE ASSESSMENT ON 26.7.07 U/S. 143(3) OF THE ACT DETERMINING THE INCOME OF THE ASSESSEE AT RS.70 , 47 , 710/ - . THE MATTER TRAVELLED U PTO ITAT AND WAS RESTORED BACK TO THE AO VIDE I TS ORDER DATED VIDE 31. 0 5. 20 10 . I N PURSUANCE OF THE DIRECTION OF THE T RIBUNAL THE AO PASSED AN ORDER O N 16.12.2011 AND DETERMINED THE TOTAL INCOME AT RS.NIL AFTER SETTING OFF BROUGHT FORWARD LOSSES. 2. THE C IT ISSUED NOTICE U/S. 263 OF THE ACT TO THE ASSESSEE ON 3.12.12. IN HI S NOTICE HE MENTIONED THAT IN THE ORIGINAL ASSESSMENT ADDITION AMOUNTING TO RS. 20.25 LACS AND RS. 36.61 LACS WERE MADE WITH REGARD TO BOGUS PURCHASES FROM M/S. S . S TEXTILES (SST) AND FRO M M/S. BAJRANG TEXTILE (BT) RESPECTIVELY, THAT THE ADDITIONS MADE BY THE AO WERE DELETED BY THE CIT, THAT THE DEP ARTMENT HAD PREFERRED AN APPEAL BEFORE THE T RIBUNAL , THAT IN THE ORIGINAL ASSESSMENT AO HAD ISSUED NOTICE U/S. 133(6) TO BOTH THE PARTIES, THAT THE NOTICES REMAINED UNSERVED AND AO HAD TREATED THE PURCHASES AS BOGUS PURCHASES, THAT THE F IRST APPELLATE AUTHORITY (F AA ) HAD STATED THAT ABOVE TWO PARTIES HAD ATTENDED THE OFFICE OF THE AO AND HAD FURNISHED REQUISITE DETAILS, THAT THE PAYMENTS WERE MA DE THROUGH A CCOUNT PAYEE CHEQUES, THAT THE T RIBUNAL HELD THAT ASSESSEE HAD FURNISHED THE PERMANENT ACCOUNT NUMBERS (PAN) OF THE SUPPLIERS, THAT THE AO SHOUL D HAVE CARRIED OUT VERIFICATION, THAT MATTER WAS NOT PROPERLY EXAMINED ABOUT THE PURCHASES. HE FURTHE R OBSERVED THAT THE GIST OF THE ITAT ORDER WAS THAT AS THE AO HAD PAN OF THE SUPPLIERS HE SHOULD HAVE VERIFIED THE PURCHASES AND SUBSEQUENT SALES, THAT IN THE FRESH ASSESSMENT PROCEEDINGS THE AO HAD TAKEN COPIES OF JOURNAL, LEDGERS AND RETUR NS OF INCOME, T HAT NO INDEPENDE NT VERIFICATION HAD BEEN DONE, IT HAD NOT MADE ENQUIRIES ABOUT THE CHEQUE PAYMENTS, THAT THE DIRECTION OF THE T RIBUNAL REGARDING VERIFICATION OF PURCHASES HAD BEEN MISSED OUT BY THE AO, THAT THE ORDER OF THE AO WAS ERRONEOUS AND PREJUDICIA L TO THE INT EREST OF THE REV ENUE. 2.1 IN RESPONSE TO THE NOTICE OF THE CIT THE ASSESSEE CONTENDED THAT THE AO HAD COMPLETED THE ASSESSMENT AFTER PERUSAL OF ALL THE FACTS ON RECORD, THAT HE HAD CONDUCTED ENQUIRY ABOUT THE PURCHASES. THE ASSESSEE RELIED UPON VARIOUS CASE LAWS AS APPEARING IN THE G ROUNDS OF APPEAL . 3. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE CIT HELD THAT THE AO HAD NOT MADE ANY DIRECT ENQUIRY FROM SST AND BT, THAT THE AO HAD ON PERUSAL OF THE SAME OLD MATERIAL ALREADY AVAILABLE ON RE C ORD DECIDE D THE ISSUE , THAT HE SHOULD HAVE SUMMONED THE PARTIES AND SHOUL D HAVE EXAMINED BT AND SST. ACCORDINGLY , HE DIRECTED THE AO TO DECIDE THE ISSUE AS PER LAW AFTER CROSS EXAMINING THE ABOVE MENTIONED TWO PARTIES . 4. DURING THE HEARING BEFORE US THE A UTHORISED R EPRESENTATIVE (AR) REFERRED TO THE REPLY FILED BEFORE THE AO ON 12.12.11. HE FURTHER STATED THAT SST A N D BT HAD CONFIRMED THE SALE OF CLOTH TO THE ASSESSEE, THAT BOTH THE PARTIES WERE ASSESSED TO TAX, THE SALES MADE BY THEM TO THE ASSESSEE H AD BEEN DULY REFLECTED IN THEIR RETURNS OF INCOME. THAT THE ENTIRE PURCHASE WERE DULY SUPPORTED BY B I LLS AND VOUCHERS , THAT THE PAYMENT TO SST AND BT HAD BEEN MADE BY ACCOUNT PAYEE CHEQUES, THAT CORRESPONDING SALES MADE BY THE ASSESSEE HAD BEEN SHOWN IN TH E RETURN OF INCOME FILED BY IT. THE ASSESSEE FURNISHED THE FOLLOWING DOCUMENTS BEFORE THE CIT : I ) DETAILS OF PAYMENT MADE TO SST AND BT W ITH DETAILS OF CL EARING OF CHEQUE ; II ) STATEMENT SHOWING DETAILS OF PURCHASE AND CORRESPONDING SALES ; ITA/ 137 /MUM/201 4 ,AY. 0 5 - 06 - H ARCOH 3 III ) COPIES OF REPLY SUBMIT TED TO THE AO IN RESPONSE TO SUMMONS ISSUED ON 12.5.08; IV ) THAT THE ORDER OF AO WAS NEITHER ERRONEOUS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE . DEPARTMENTAL REPRESENTATIVE ( DR ) SUPPORTED THE ORDER OF THE CIT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE AO HAD MADE ADDITION FOR THE PURCHASES MADE FROM SST AND BT ALLEGING THAT THE PURCHASE MADE FROM THEM WERE NOT GENUINE, THAT THE MATTER TRAVELLED UPTO T RIBUNAL WHO DIREC TED THE AO TO MAKE PROPER VERIFICATION, THAT THE CIT INITIATED PROCEEDING U/S. 263, THAT THE FAA IN HIS ORDER HAD SPECIFICALLY MENTIONED THAT THE AO HAD MAINTAINED THREE FOLDERS, THAT DURING THE REMAND PROCEEDINGS THE AO HAD ISSUED SUMMONS U/S. 131 TO THE PARTIES , THAT BOTH THE PARTIES VIDE THEIR LETTER DT.16.5. 20 08 HAD RESPONDED TO THE SUMMONS ISSUED BY AO , THAT THE AO HAD REC EIVED THE DETAILS ON THE SAME DAY , THAT THEY HAD GIVEN THE AO NEW ADDRESS ES FOR FUTURE CORRESPONDENCE, THAT THE AO HAD NOT MADE ANY COMMENTS IN RESPECT OF THOSE TWO PARTIES H AVING ATTENDED BEFORE HIM AND F URNISHED THE DETAILS AND DOCUMENTS, THAT THERE WAS NO DOUBT ABOUT THE GENU INENESS OF THE PURCHASES. WE FI ND THAT WHILE PASSING THE REVISIONARY ORDER THE CIT HAS NOT TAKEN COGNIZANCE O F THE FOLDERS MAINTAINED BY THE AO ABOUT WHICH THE FAA HAS MADE ENQUIRIES DURING APPELLATE PROCEEDINGS. IN OUR OPINION THE TRIBUNAL HAD NOT DIRECTED THE AO TO ISSUE SUMMONS TO S S T AND BT AS HELD BY THE CIT. THE AO HAD MADE PROPER ENQUIRIES DURING THE REMAN D PROCEEDINGS. THEREFORE, IN OUR OPINION THE ORDER PASSED BY HIM WAS NEITHER ERRONEOUS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, REVERSING THE ORDER OF CIT WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE . AS A RESULT,APPEAL FILED BY ASSESSEE THE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE ,2015. 18 , 2015 SD/ - SD/ - ( / JOGINDER SINGH ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, / DATE: 18 .6. 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. T HE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.