The DCIT, Circle-9, Surat V. M/s. Nageshwar Enterprise, Surat

ITA 147/AHD/2011

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9818 (ITAT-SURAT)
• Duration Of Justice: 8 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: P M JAGASHETH
• Keywords: Unexplained investment

Judgement Text

DCIT CIRCLE-9, SURAT V. NAGESHWAR ENTERPRISE /I.T.A. NO. 147/AHD/2011/A.Y.07-08 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.147/AHD/2011: ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE -9, SURAT VS. M/S. NAGESHWAR ENTERPRISE I.C. GROUND, A.K. ROAD SURAT PAN: AAJFS 3952 J APPELLANT RESPONDENT ASSESSEE BY SHRI P. M. JAGASHETH, CA REVENUE BY MS. ANUPAMA SINGLA, SR. D.R. DATE OF HEARING 02.05.2019 DATE OF PRONOUNCEMENT 03.05.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V, SURAT (IN SHORT THE CIT (A)) DATED 28.10.2010 PERTAINING TO ASSESSMENT YEAR 2007-08, WHICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DATED 31.12.2009 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -9, SURAT (IN SHORT THE AO). 2. GROUND NO. 1 RELATES TO DELETION OF ADDITION OF RS. 32,57,962 MADE BY THE AO ON ACCOUNT OF UNACCOUNTED INVESTMENT MADE IN PURCHASES IGNORING THE FACT THAT ADDITION WAS MADE BASED IN PEAK WORKING GIVEN BY THE ASSESSEE AND GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS. 35,13,067 MADE ON ACCOUNT OF GROSS PROFIT ADDITION. DCIT CIRCLE-9, SURAT V. NAGESHWAR ENTERPRISE /I.T.A. NO. 147/AHD/2011/A.Y.07-08 PAGE 2 OF 4 3. FACTS APROPOS OF ABOVE GROUNDS OF APPEAL ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT OF METALLIC POLYESTER/ YARN AND MANUFACTURING JARI /KASAB. AN INFORMATION WAS RECEIVED FROM DRI IN WHICH IT WAS STATED THAT THE ASSESSEE IT HAS INDULGED IN UNDER INVOICING WHICH HAS RESULTED IN UNDER VALUATION OF IMPORT VALUE. IN A STATEMENT ON OATH RECORDED FROM SHRI RAJESH GANDHI HAS ADMITTED THIS UNDER VALUATION. ACCORDINGLY, SHOW-CAUSE NOTICE WAS ISSUED TO HIM BY DRI. HOWEVER, THE SAID STATEMENT WAS RETRACTED LATER. BUT THE AO DID NOT ACCEPT THE EXPLANATION AND MADE ADDITION BASED ON PEAK WORKING AT RS. 32,57,962 AS UNACCOUNTED INVESTMENT. IT WAS REVEALED THAT THE ASSESSEE HAS IMPORTED GOODS WORTH RS. 5,17,58,483 FOR THE YEAR UNDER CONSIDERATION. OUT OF SUCH PURCHASES, THE ASSESSEE HAS HAD SHOWN PURCHASES OF RS. 1,66,27,806 IN THE BOOKS OF ACCOUNTS. THUS, THE ASSESSEE HAD MADE UNRECORDED PURCHASES OF RS. 3,51,30,677 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AGAINST UNRECORDED SALES WERE MADE AS THERE WERE UNRECORDED PURCHASES. THOUGH THE ASSESSEE HAS STRONGLY DENIED HAVING ANY SUCH UNACCOUNTED TURNOVER, HOWEVER, THE AO HAS ESTIMATED GROSS PROFIT OF 10% AND MADE ADDITION OF RS. 35,13,067 ON THIS ACCOUNT. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). HOWEVER, LD. CIT (A) DELETED THE ENTIRE ADDITION ON THE GROUND THAT THAT NO ADDITION CAN BE MADE MERELY BASED ON ADMISSION STATEMENT OF PARTNER OF THE APPELLANT FIRM UNTIL AND UNLESS THERE IS CORROBORATING EVIDENCES OR FINDINGS. THE PRIMARY ONUS IS ON THE REVENUE TO PROVE THAT SUCH INVESTMENT/ EXPENDITURE WERE DCIT CIRCLE-9, SURAT V. NAGESHWAR ENTERPRISE /I.T.A. NO. 147/AHD/2011/A.Y.07-08 PAGE 3 OF 4 IN FACT WAS MADE. IT WAS FURTHER HELD THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO THE ALLEGED PAYMENTS. 5. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. SR. D.R. RELIED ON THE ORDER OF THE AO. IT WAS CONTENDED THAT THERE WAS UNDER INVOICING OF AS PER STATEMENT OF PARTNER. HOWEVER, THE STATEMENT WAS RETRACTED. THEREFORE, CIT (A) OUGHT TO HAVE UPHELD THE ADDITION MADE BY THE AO. 6. PER CONTRA, THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE ASSESSEE SUBMITTED THAT THE ADDITION WAS MADE BASED ON STATEMENT MADE BEFORE THE DRI BY THE PARTNER. HOWEVER, THE CESTAT HAS DROPPED THE PROCEEDING VIDE THEIR ORDER NO. CASE NO. C/916/2009 DATED 25.02.2019( COPY FILED AT PB 1 TO 19). THEREFORE, CIT (A) HAS RIGHTLY DELETED THE ADDITION MADE BASED ON STATEMENT BEFORE DRI WHICH WAS RETRACTED BY THE SAID PARTNER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ADDITION MADE ON THE SHOW-CAUSE NOTICE ISSUED BY THE DRI. HOWEVER, SAID STATEMENT WAS RETRACTED BY THE PARTNER OF THE ASSESSEE-FIRM. THAT THE AO HAS BASED HIS FINDINGS INFLUENCED SOLELY ON DRI. THERE IS NO EVIDENCE WHATSOEVER BROUGHT ON RECORD WHICH COULD SUGGESTS THAT THE ASSESSEE HAS ACTUALLY DONE UNDER INVOICING BY MAKING IMPORT IN PURCHASES. THEREFORE, IN OUR CONSIDERED OPINION, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, NO ADDITION CAN BE MADE ON THE ACTION OF THIRD PARTY I.E. THE DRI. FURTHER, THE CESTAT, WEST ZONE BENCH MUMBAI, VIDE ITS FINAL ORDER NO. A/85365-85368/2019 DATED DCIT CIRCLE-9, SURAT V. NAGESHWAR ENTERPRISE /I.T.A. NO. 147/AHD/2011/A.Y.07-08 PAGE 4 OF 4 25.02.2019 HAS ALSO DROPPED THE PROCEEDING INITIATED AGAINST THE ASSESSEE-FIRM. THEREFORE, WE DO NOT FIND ANY MERITS IN THE REVENUE APPEAL. ACCORDINGLY, SAME IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.05.2019. SD/- SD/- (H. S. SIDHU) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 3 RD MAY,2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / /TRUE COPY / / ASSISTANT REGISTRAR, SURAT