UTTAMCHAND JAIN, MUMBAI V. CIT 15, MUMBAI

ITA 1410/MUM/2014

• Counselvise Citation: 141019914 RSA 2014
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: H N BAFNA
• Keywords: Application of stay
• Section: 143(3); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI , BEFORE SHRI H.L.KARWA, PRESIDENT & SHRI R.C.SHARMA, AM S A NO. 318 / MUM/20 1 4 (ARISING OUT OF ITA NO . 1410 /MUM/2014) ( ASSESSMENT YEAR: 2009 - 2010 ) UTTAMCHAND JAIN, 81/83B, 3 RD KUMBHARWADA, MUMBAI - 400 004 VS. CIT - 15, MUMBAI - 400 007 PAN/GIR NO. : A CPPJ 9067 P ( APP LICANT ) .. ( RESPONDENT ) AND ITA NO.1410/MUM/2014 ( ASSESSMENT YEAR:2009 - 2010 ) UTTAMCHAND JAIN, 81/83B, 3 RD KUMBHARWADA, MUMBAI - 400 004 VS. CIT - 15, MUMBAI - 400 007 PAN/GIR NO. : A CPPJ 9 067 P ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI H.N.BAFNA /REVENUE BY : SHRI LOVE KUMAR DATE OF HEARING : 9 TH JAN.,2015 DATE OF PRONOUNCEMENT : 9 TH JAN.,2015 O R D E R PER R.C.SHARMA ( A .M.) : TH IS STAY APPLICATION AROSE OUT OF THE APPEAL FILED BY THE ASSESSEE BEFORE ITAT IN ITA NO. 1410 /M UM /2014 , IN THE MATTER OF ORDER PASSED U/S. 263 OF THE I.T. ACT FOR THE A.Y.2009 - 10. SA NO. 318 /20 1 4 & ITA NO. 1410 /14 2 2 . TH E ASSESSEE HAS FILED THIS STAY APPLICATION FOR STAY OF DEMAND IN RESPECT OF APPEAL FILED BEFORE THE TRIBUNAL ON 28 - 2 - 2014 IN ITA NO.1410/MUM/2014. THE STAY APPLICATION WAS PLACED BEFORE THE BENCH FOR HEARING ON 26 - 12 - 2014. DURING THE COURSE OF HEARING OF T HE STAY APPLICATION, THE BENCH OBSERVED THAT NO DEMAND HAS BEEN RAISED IN THE ORDER PASSED BY CIT U/S.263 OF THE ACT; THEREFORE, THERE IS NO QUESTION OF STAYING ANY DEMAND. ACCORDINGLY, THE BENCH THOUGHT IT APPROPRIATE TO DISPOSE THE APPEAL ON MERIT. ACCOR DINGLY, THE STAY APPLICATION ALONG WITH MAIN APPEAL WAS ADJOURNED TO 9 - 1 - 2015 AND BOTH PARTIES WERE DIRECTED TO ARGUE ON MERITS. ACCORDINGLY, MAIN APPEAL WAS HEARD ON MERIT ON 9 - 1 - 2015. 3 . FACTS IN BRIEF ARE THAT ASSESSMENT FRAMED U/S. 143(3) OF THE ACT , D ATED 23 - 12 - 2011 WAS REVISED BY CIT U/S.263 OF THE ACT VIDE ORDER DATED 13 - 2 - 2014 ON THE PLEA THAT ORDER PASSED BY THE AO WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE CIT OBSERVED THAT THERE WERE SUNDRY CREDITORS OF RS. 4,76,44,724/ - , HOWEVER, ASSESSEE DID NOT FURNISH DETAILS OF THESE CREDITORS ALONG WITH NAME AND FULL ADDRESS OF THE CLIENTS. THE CIT FURTHER OBSERVED THAT NOTICES WERE SERVED ON THE RESPECTIVE ENTERPRISES BUT THE DATE, PLACE AND MANNER OF SERVICE WAS NOT REFLECTED ON AN Y OF THE COPIES OF THE NOTICES AVAILABLE ON RECORD. FURTHERMORE, ALL THE NINE PARTIES ON WHOM NOTICES U/S.133(6) OF THE ACT HAD BEEN SHOWN TO BE SERVED, WERE APPARENTLY HAVING SIMILAR SEALS. IN RESPECT OF ALL THE SIMILAR REPLIES FILED SA NO. 318 /20 1 4 & ITA NO. 1410 /14 3 BY ALL THE PARTIES, T HE CIT OBSERVED THAT THE DETAILS OF MATERIALS SUPPLIED/SOLD WAS NOT INDICATED BY ANY OF THESE NINE PARTIES. THE CIT ALSO OBSERVED THAT HOW THE REPLIES OF THESE PARTIES WERE DELIVERED IN THE OFFICE OF THE ITO WAS NOT INDICATED. WHETHER THE SE REPLIES WERE HA NDED OVER BY THE ASSESSEE OR BY THE RESPECTIVE PARTIES IS NOT KNOWN I NSOFAR AS NONE OF THESE REPLIES BEARS ANY DATE NOR THE MODE OF DELIVERY TO THE AO . THE C IT ALSO OBSERVED THAT ALL THE COVERING LETTERS ARE ON THE SIMILAR STATIONARY WHICH HAVE BEEN TYPED AND PRINTED ON THE SAME COMPUTER/PRINTER SET UP AND BEARS THE SAME LANGUAGE. THUS, ALL THESE DID NOT APPEAR TO BE GENUINE. AS PER CIT, WITHOUT MAKING FURTHER ENQUIRY OR VERIFICATION THE ORDER WAS PASSED BY THE AO WITHOUT APPLICATION OF MIND . AS PER THE CIT , THE AO HAS MERELY MADE PERFUNCTORY EXAMINATION OF THE ISSUE AND HAS NOT LOOKED INTO THE GENUINENESS OF THE SUNDRY CREDITORS IN THE MANNER IN WHICH THE AO IS EXPECTED TO DO. THE CIT FURTHER OBSERVED THAT A LL THIS APPEARS TO BE DEVOID OF NORMAL FUNCTIONIN G OF AN OFFICE IF NOT AKIN TO BEING COLLUSIVE. THE CIT ALSO OBSERVED THAT GLARING DISCREPANCIES AND FEATURES HAVE BEEN REFLECTED IN THE NOTICES AND SO - CALLED REPLIES HAVE NOT ATTRACTED THE ATTENTION OF THE AO. IN VIEW OF THESE FACTS, THE CIT OBSERVED THAT IT IS ABUNDANTLY CLEAR THAT THE NOTICES U/S.133(6) OF THE ACT HAVE NOT BEEN SERVED EITHER BY POST OR THROUGH THE NOTICE SERVER. SERVICE BY POST/NOTICE SERVER WERE UTMOST NECESSARY IN THIS CASE IN ORDER TO ASCERTAIN IDENTITY, ADDRESS AND EXISTENCE OF THE CO NCERNED PARTIES. THIS IS AT LEAST REQUIRED TO ASCERTAIN GENUINENESS OF CREDITORS. THIS HAS NOT SA NO. 318 /20 1 4 & ITA NO. 1410 /14 4 BEEN DONE. THE REPLIES PLACED ON THE FILE OF THE AO ARE ALSO NOT IN THE NORMAL ROUTE NOR FOUND ANY PLACE ON THE ORDERSHEET AND ARE OF SUSPICIOUS NATURE AND ARE I NCOMPLETE. THESE DO NOT APPEAR TO BE PRIMA FACIE GENUINE. THE MANNER IN WHICH SIGNATURES HAVE BEEN MADE ALSO MAKE THESE DOUBTFUL ENTITIES. ALL THESE FACTORS HAVE BEEN NOTICED AND AS THE AO HAS FAILED TO MAKE ANY ENQUIRIES AND EXAMINATION INTO FACTS, THE CI T CONSIDERED THE ASSESSMENT ORDER TO BE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. 4 . IT WAS ARGUED BY THE LD. AR THAT ALL THE DETAILS ASKED BY THE AO WERE FURNISHED BEFORE HIM. AS PER THE LD. AR THE CONFIRMATION WAS ALSO FILED, HOW EVER, HE FAILED TO REPLY THE BENCHS QUERY AS TO HOW I N RESPECT OF DIFFERENT PARTIES, TO WHOM NOTICE U/S.133(6) OF THE ACT WAS ALLEGED TO BE ISSUED , WAS SERVED ON THEM, WHETHER DIRECTLY TO THESE PAR TIES OR BY THE ASSESSEE HIMSELF, NOR THE AR COULD REPLY AS TO HOW THE REPLIES WERE FILED BEFORE THE AO. 5 . ON THE OTHER HAND, IT WAS THE CONTENTION OF THE LD. DR THAT THE SUM AND SUBSTANCE OF CITS ORDER IS THAT NO ENQUIRY WAS MADE BY THE AO WITH REGARD TO GENUINENESS OF THE SUNDRY CREDITORS AMOUNTING TO RS. 4.76 CRORES. 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE CIT PASSED U/S.263 OF THE ACT AS WELL AS THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT, DATED 23 - 12 - 2011. WE FOUND THAT RETURN OF INCOME FILED AT RS. 6,31,990/ - W AS ASSESSED AT RS. 6,59,130/ - AFTER MAKING ADDITION OF RS. 27,474/ - ON ACCOUNT OF DISALLOWANCE AT 15% SA NO. 318 /20 1 4 & ITA NO. 1410 /14 5 IN VARIOUS EXPENSES. THE ASSESSEE WAS CARRYING BUSINESS AS DEALER IN FERROUS AND NON - FERROUS METALS. THE AO HAS NOT MADE ANY ENQUIRY WITH REGARD TO THE HUGE SUNDRY CREDITORS STANDING IN THE BOOKS OF ACCOUNT AMOUNTING TO RS. 4,76,44,724/ - . EVEN THE MANNER IN WHICH THE NOTICES ALLEGED TO BE ISSUED U/S.133(6) OF THE ACT, MODE OF ITS REPLY, MODE OF DELIVERY IN THE OFFICE OF THE DEPARTMENT, WAS FOUND TO BE NON - GENU INE BY THE CIT. ALL THESE INDICATE THAT THE AO HAS NOT MADE PROPER ENQUIRY WITH REGARD TO THESE SUNDRY CREDITORS. THE CIT FURTHER OBSERVED THAT THE INFORMATION RECEIVED FROM DGIT(INV.) AND SALES TAX DEPARTMENT ALSO SUPPORTS HIS VIEW THAT NO ENQUIRY WITH RE GARD TO THE GENUINENESS OF THESE CREDITORS WERE MADE. ACCORDINGLY, THE ORDER OF THE AO WAS SET ASIDE TO BE DONE AFRESH AFTER G IVING OPPORTUNITY TO THE ASSESSEE AND EXAMINING THE GENUINENESS OF SALE AND PURCHASE AND GENUINENESS OF THE CREDITORS. 7 . IN VIEW OF THE ABOVE DISCUSSION, IT IS QUITE CLEAR THAT ORDER PASSED BY THE AO WAS WITHOUT MAKING ANY ENQUIRY AND WITHOUT APPLICATION OF MIND , WHICH RENDERED THE ORDER OF AO NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, W E DO NO T FIND ANY INFIRMITY IN THE ORDER OF TH E CIT PASSED U/S.263 OF THE ACT, SETTING ASIDE THE ORDER OF AO FOR FRESH EXAMINATION. 8 . IN VIEW OF THE ABOVE, AS WE HAVE DISMISS ED THE APPEAL OF THE ASSESSEE ON MERITS , THEREFORE, THE STAY APPLICATION FILED BY THE AS SESSEE HAS NO LEGS TO STAND, AND THE SAME IS ALSO HEREBY DISMISSED. SA NO. 318 /20 1 4 & ITA NO. 1410 /14 6 9 . IN THE RESULT, STAY APPLICATION ALONG WITH APPEAL OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9TH JAN., 201 5 . 9TH JAN., 201 5 SD/ - SD/ - ( ) ( H.L.KARWA ) ( ) ( R.C.SHARMA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED 09/01/ 201 5 /PKM , 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 FILE. //TRUE COPY//