DHARMIK EXIM P. LTD, MUMBAI V. DCIT 9(1), MUMBAI

ITA 1403/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1161 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 10-04-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 17-02-2011
• Court: TRIBUNAL
• Assessee Lawyers: KRUPA P TOPRANI ALONGWITH SHRI
• Keywords: Bogus purchase; Additional evidence; Assessment record
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY , JM ITA NO. 1403 / MUM/20 1 1 ( ASSESSMENT YEAR : 2000 - 01 ) M/S. DHARMIK EXIM PVT. LTD., 106, RUBY INDUSTRIAL ESTATE CHINCHOLI BUNDER ROAD EXTN. OFF L INK ROAD, MALAD (W), MUMBAI 400 064 VS. DCIT 9(1), MUMBAI 400 021 PAN/GIR NO. AAACD3656N APPELLANT ) .. RESPONDENT ) ASSESSEE BY MS. KRUPA P TOPRANI ALONGWITH SHRI PANKAJ R. TOPRANI REVENUE BY SHRI VIKASH KUMAR AGARWAL DATE OF HEARING 10 / 04 /201 7 DATE OF PRONOUNCEME NT 12 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 19, MUMBAI DATED 14/01/2010 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. FROM THE RECORD, WE FOUND THAT AO HAS LEVIED PENALTY IN RESPECT OF THE ADDITIONS MADE ON ACCOUNT OF BOGUS PURCHASES. 4. LEARNED AR PLACED ON RECORD THE ORDER OF THE TR IBUNAL WHEREIN ADDITIONS SO MADE WAS RESTORED BY TRIBUNAL TO THE FILE OF THE AO FOR DECIDING AFRESH. THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER: - ITA NO. 1403/MUM/2011 M/S. DHARMIK EXIM PVT. LTD., 2 4. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE HONBLE HIGH COURT DATED 9 - 1 - 2012. FACTS IN BRIEF ARE THAT IN THE COURSE OF ORIGINAL ASSESSMENT ADDITION WAS MADE ON ACCOUNT OF BOGUS PURCHASES. IN AN APPEAL FILED BEFORE THE TRIBUNAL, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO T HE FILE OF THE AO FOR DECIDING AFRESH. IN THE SECOND ROUND THE AO AGAIN CONFIRMED THE ADDITION ON ACCOUNT OF BOGUS PURCHASE. THE CIT(A) DELETED 75% OF SUCH BOGUS PURCHASES AND CONFIRMED THE ADDITION WITH RESPECT TO 25% OF THE PURCHASES. IN THE SECOND ROUND BOTH ASSESSEE AND REVENUE WERE IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 9 - 9 - 2010 CONFIRMED THE DISALLOWANCE OF ENTIRE PURCHASE THERE BY ALLOWING REVENUES APPEAL AND DISMISSING THE ASSESSEES GROUNDS ON THE ISSUE OF BOGUS PURCHA SE. ASSESSEE APPROACHED TO THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT VIDE ORDER DATED 9 - 1 - 2012 AFTER OBSERVING THAT, IT IS THE CASE OF THE ASSESSEE THAT THE PERMANENT ACCOUNT NUMBERS OF THE 8 PARTIES WERE IN FACT FURNISHED DURING THE COURSE OF ASS ESSMENT PROCEEDING, RESTORED THE APPEAL BACK TO THE FILE OF THE TRIBUNAL FOR FRESH CONSIDERATION. AS PER THE DIRECTION OF THE HONBLE HIGH COURT SINCE THE ASSESSEE HAS FURNISHED PERMANENT ACCOUNT NUMBER OF 8 PARTIES FROM WHO PURCHASE HAVE BEEN MADE BY THE ASSESSEE THE ISSUE WITH REGARD TO DISALLOWING THE PURCHASE MADE BY THE ASSESSEE FROM THESE EIGHT PARTIES AMOUNTING TO RS.3.79 CRORES REQUIRES TO BE EXAMINED BY THE TRIBUNAL. 5. FROM THE RECORD, WE FOUND THAT BEF.ORE THE HON'BLE BOMBAY HIGH COURT THE ASSE SSEE HAS FILED THE FOLLOWING AFFIDAVITS WHICH READS AS UNDER: AFFIDAVIT I, GUI MELWANI, INDIAN INHABITANT, DIRECTOR OF THE APPELLANT COMPANY, HAVING OFFICE AT 106 RUB Y.INDUSFRI.AL ESTATE, CHINCHOLI BUNDER EXTN., MALAD(WEST), MUMBAI - 400 064 DO HEREBY SO LEMNLY AFFIRM AND STATE AS UNDER: 1. THAT DURING THE PREVIOUS YEAR ENDED 31.03.2000, RELEVANT FOR A.Y. 2000 - 01, THE APPELLANT WAS ENGAGED IN THE BUSINESS OF EXPORT OF STEEL UTENSILS AND ALLIED PRODUCTS, PRESSURE COOKERS, TERRY TOWELS, TOOTH PASTE AND MA N OTHER SMALL ITEMS TO INDONESIA, PANAMA, FIJI, AND OTHER COUNTRIES, AND IT HAD CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE INCOME - TAX ACT, 1961. 2. DURING THE SAID ASSESSMENT YEAR, THE APPELLANT HAD MADE THE TRADING PURCHASES OF RS.L4,29,18,015/ - OUT OF WHICH RS.3,79,00,113/ - WAS FROM THE FOLLOWING 8 (EIGHT) PARTIES: ITA NO. 1403/MUM/2011 M/S. DHARMIK EXIM PVT. LTD., 3 S.NO. NAME OF THE PARTY AMOUNT OF PURCHASE 1 M/S PRADEEP SALES RS.32,57,740/ - 2 M/S CHIRAG ENTERPRISES RS.60,00,000/ - 3 M/S J .M. TRADING RS.47,42,100/ - 4 M/S VIJAY INTERNATIONAL RS.5,53,500/ - 5 M/S SHRADHA ENTERPRISES RS.52,41,595/ - 6 M/S CHEM CORPORATION RS.27,14,624/ - 7 M/S KOTHARI PRODUCTS RS.84,74,754/ - 8 M/S SAMARTH ENTERPRISES RS.69,15,800/ - T OTAL R S.3,79,00,113/ - 3. RESPONDENT NO.1 DISALLOWED THE SAID PURCHASES ON THE GROUND THAT THE APPELLANT COULD NOT PROVE THE GENUINENESS THEREOF AS CONFIRMATION FROM THE SAID PARTIES WERE OBTAINED ON THE LEDGER AC COUNT COPIES WITHOUT GIVING THEIR PERMANENT ACCOUNT NUMBERS. 4. HON'BLE COMMISSIONER OF INCOME - TAX (APPEALS) - IX, VIDE HIS ORDER DATED 20.2.2004 GAVE RELIEF OF 75 PERCENT OF THE SAID TOTAL PURCHASES FROM THE 8 PARTIES. 5. HON'BLE TRIBUNAL VIDE ITS ORD ER DATED 6.2.2007 RESTORED THE ISSUE IN RESPECT OF THE PURCHASES FROM THE AFORESAID 8 PARTIES TO THE FILE OF THE 2ND RESPONDENT. 6. DURING THE COURSE OF 2ND ROUND OF PROCEEDINGS BEFORE THE 2ND RESPONDENT, THE APPELLANT'S AUTHORISED REPRESENTATIVE VIDE TH EIR LETTER '6.1 I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT DISPUTED THAT THE APPELLANT'S OWN AUDITOR IN AUDIT REPORT SUBMITTED ALONG WITH THE APPELLANT'S RETURN OF INCOME AND IN THE PRESCRIBED FORM NO.3CB VIDE NOTE NO.3 HAS REPORTED THAT THE APPELLANT HAD PAID EXCESSIVE REMUNERATION IN EXCESS OF LIMITS PRESCRIBED UNDER THE COMPANY'S ACT AMOUNTING TO RS.36,40,038/- FOR WHICH THE APPELLANT MADE AN APPLICATION TO THE CENTRAL GOVERNMENT AND THE APPROVAL WAS AWAITED. HAD THE AFORESAID EXCESSIVE REMUNERATION BEEN CONSIDERED AS RECOVERABLE, FROM THE DIRECTORS, LOANS AND ADVANCES WOULD HAVE BEEN DIFFERENT THAN THE STATED FIGURES IN THE FINAL ACCOUNT. THE APPELLANT FURNISHED A COPY OF SANCTIONED LETTER GRANTED BY THE CENTRAL GOVERNMENT FOR EXCESSIVE REMUNERATION OF RS.36,40,038/ - PAID TO THE MANAGING DIRECTOR, SHRI SATISH RAO. 6.2 DURING THE COURSE OF REMAND PROCEEDINGS, THE L/ \ O VIDE LETTER NO. DCIT5(2)/APPEAL/CIT(A)/11 - 12 DATED 11.10.2011 SUBMITTED A REPORT ON THE ADDITIONAL EVIDENCES ITA NO. 1403/MUM/2011 M/S. DHARMIK EXIM PVT. LTD., 4 SUBMITTED BY THE APPELLANT, THE RELEVANT PART OF WHICH MAY BE REPRODUCED AS UNDER: - 'BEFORE PROCEEDING FURTHER, FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, RELEVANT PART OF PROVISION OF SECTION 309 OF COMPANIES ACT 1962 IS REPRODUCED AS UNDER: (5A) IF ANY DIRECTOR DRAWS OR RECEIVES, DIRECTLY OR INDIRECTLY, BY WAY OF REMUNERATION ANY SUCH SUMS IN EXCESS OF THE LIMIT PRESCRIBED BY THIS SECTION OR WITHOUT THE PRIOR SANCTION OF THE CENTRAL GOVERNMENT, WHERE IT IS REQUIRED, HE SHALL REFUND SUCH SUMS TO THE COMPANY AND UNTIL SUCH SUM IS REFUNDED, HOLD IT IN TRUST FOR THE COMPANY. (5B) THE COMPANY SHALL NOT WAIVE THE RECOVERY OF ANY SUM REFUNDABLE TO IT DATED 24.12.2007 (EXHIBIT 'D' PAGE 60 TO 71 OF THE APPEAL PAPER BOOK) FUR NISHED TO THE 2ND RESPONDENT CONFIRMATION LETTERS FROM THE SAID PARTIES ALONGWITH THEIR PERMANENT ACCOUNT NUMBERS WHICH WERE WRITTEN IN HAND. HOWEVER, 2ND RESPONDENT DID NOT CONSIDER THE SAID CONFIRMATION LETTERS EVEN THOUGH HE PASSED THE ORDER ON THE 'SAI D DATE AS A RESULT WHEREOF, HE AGAIN MADE ADDITION IN RESPECT OF THE SAID PURCHASES. 7. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A), SHE VIDE HER ORDER DATED 24.1 0.2008 GAVE RELIEF OF 75% OF THE TOTAL PURCHASES FROM THE SAID 8 PARTIES. 8. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL IN ITS ORDER DATED 9TH SEPTEMBER, 2010 GAVE FINDING ON PAGE 11 OF ITS ORDER (PAGE 117 OF THE APPEAL PAPER - BOOK) THAT THE ASSESSEE HAS MADE NO ATTEMPTS TO UTILISE THE OPPORTUNITY AFFORD ED BY THE TRIBUNAL, WITHOUT CONSIDERING THE FRESH CONFIRMATION LETTERS FILED BY THE APPELLANT'S AUTHORISED REPRESENTATIVE BEFORE THE 2ND RESPONDENT VIDE THEIR LETTER DATED 24.12.2007. 9. WHATEVER HAS BEEN STATED ABOVE IS TRUE TO MY OWN KNOWLEDGE. SOLEM NLY AFFIRMED AT MUMBAI THIS 21 ST DAY OF DECEMBER, 2011. 6. AFTER CONSIDERING THE ASSESSEE'S AFFIDAVIT, THE HON'BLE HIGH COURT RESTORED THE MATTER BACK TO THE FILE OF THE TRIBUNAL FOR FRESH CONSIDERATION BY CONSIDERING THE ASSESSEE'S PLEA THAT THE ASSES SEE HAS FURNISHED PAN OF EIGHT PARTIES FROM WHOM PURCHASES HAVE BEEN MADE BY THE ASSESSEE. HOWEVER, DETAILS OF SUCH PAN NO. OF EIGHT PARTIES DO NOT FIND ANY MENTIONED IN THE ORDERS OF THE LOWER AUTHORITIES NOR IN THE ORDERS OF THE TRIBUNAL PASSED ON EARLIE R OCCASIONS. GENUINENESS OF PURCHASE CAN BE VERIFIED ONLY AFTER EXAMINING THE ASSESSMENT RECORDS OF THESE PARTIES AS PER PAN NO. ITA NO. 1403/MUM/2011 M/S. DHARMIK EXIM PVT. LTD., 5 DETAILS FILED THROUGH AFFIDAVIT, BEFORE HONBLE HIGH COURT. FOR THIS PURPOSE BOTH THE ID. AR AND ID. DR FAIRLY CONCEDED THAT T HE MATTER MAY BE RESTORED TO THE FILE OF THE A.O. FOR RE - EXAMINING THE ALLEGED PURCHASES IN THE LIGHT OF THE FACT THAT ALL THE EIGHT PARTIES FROM WHOM PURCHASES WAS MADE ARE HAVING PAN. 7. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR DECIDING THE GENUINENESS OF THE PURCHASES MADE FROM EIGHT PARTIES HAVING PAN AS SUPPLIED BY THE ASSESSEE BEFORE THE HON'BLE HIGH COURT AS PER THE AFFIDAVIT DATED 31.12.2011, AS REPRODUCED ABOVE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE AND REVENUE FOR A.Y.2000 - 01 ARE ALLOWED FOR STATISTICAL PURPOSES. 8. AS THE ISSUE IN THE A.Y.2001 - 02 ARE SAME WHICH RELATES TO BOGUS PURCHASES, SAME IS ALSO RESTORED BACK TO THE FILE OF AO FOR DECIDING AFRESH IN TERMS INDICATED IN A.Y.2000 - 01. 5. AS THE QUANTUM ADDITION ITSELF HAS BEEN RESTORED BACK TO THE FILE OF THE AO, WE ALSO RESTORE THE PENALTY SO IMPOSED ON THE SAID ADDITION TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER DECIDING THE QUANTUM APPEAL IN TERMS OF THE DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 19/08/2015. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 12 / 04 /2017 S D/ - ( SAKTIJIT DEY ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 12 / 04 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FIL E. //TRUE COPY//