The ITO, Ward-3(3)(2)., Surat V. M/s. Heena Exports, Surat

ITA 1502/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1901 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA NAIR
• Keywords: Bogus purchase; Search and seizure; Corroborative evidences; Accommodation entries
• Section: 147; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURATBENCH, SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.1502/AHD/2017 / ASSTT. YEAR: 2007-08 ITO, WARD - 3(3)(2) SURAT. VS. M/S.HEMA EXPORTS 14/B, GODWARI NIWAS L.H. ROAD VARACHHA ROAD SURAT. PAN : AACFH 5738 G / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT.SMITA NAIR, SR.DR ASSESSEEBY : SHRI SUCHEKANCHALIYA, CA / DATE OF HEARING : 16/11/2018 / DATE OF PRONOUNCEMENT: 09/01/2019 / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD.CI T(A)-3, SURAT DATED 20.3.2017 FOR THE ASSTT.YEAR 2007-08. 2. SOLE ISSUE FOR ADJUDICATION INVOLVED IN THE GROU NDS OF APPEAL MEMO IS THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION O F RS.1,47,69,472/- WHICH WAS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASED UN EARTHED DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT. 3. BRIEF FACTS EMERGING OUT FROM ORDERS OF THE REVE NUE AUTHORITIES ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM. ASSESSMENT YEA R INVOLVED IS 2006-07. ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FROM TH E ASSESSMENT YEAR2005-06 ITA NO.1502/AHD/2017 2 ONWARDS. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF BHANWARLAL JAIN GROUP ON 3.10.2013. THIS GROUP WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES FOR BOGUS PURCHASES TO VARIOU S PARTIES. ON THE BASIS OF INFORMATION GATHERED DURING THE COURSE OF SEARCH, I T WAS NOTICED THAT THE ASSESSEE FIRM HAS TAKEN BOGUS ACCOMMODATION ENTRIES FOR A TOTAL TRANSACTIONS AMOUNTING TO RS. 1,47,69,742/-, FROM ONE A2 JEWELLS , WHICH WAS ONE OF THE SISTERS CONCERN OF BHANWARLAL GROUP OF CASES. SINCE THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FROM THE ASSTTYEAR 2005-06 ONW ARDS, IT WAS NOT POSSIBLE FOR THE AO TO CROSS-VERIFY THESE TRANSACTI ONS ENTERED INTO WITH THE FIRM VIZ. A2 JEWELLERS. THEREFORE, ON THE BASIS OF INFORMATION RECEIVED FROM THE SEARCH PARTY, ID.AO DECIDED TO REOPEN THE ASSES SMENT UNDER SECTION 147 AND ISSUED NOTICES UNDER SECTION 148. SINCE ASSESSE E HAS NOT COMPLIED WITH VARIOUS NOTICES ISSUED FROM TIME TO TIME AND NOR SU BMITTED ANY DETAILS, THE ID.AO PROCEEDED TO FINALISE THE ACCOUNTS UNDER SECT ION 144 OF THE ACT. HOWEVER, THEREAFTER, THE ASSESSEE VIDE LETTER DATED 2.1.2015 SUBMITTED THAT ASSESSEE-FIRM WAS CLOSED DOWN IN THE ASSESSMENT YEA R 2004-05 AND FIRM'S PAN ACCOUNT WAS SURRENDERED, AND THEREFORE, THE FIR M WAS NOT REQUIRED TO FILE ANY RETURN FROM THE ASSTTYEAR 2005-06 ONWARDS. ASSE SSEE HAS ALSO FILED DEED OF DISSOLUTION OF THE FIRM TO SUPPORT ITS CASE. HOW EVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT SINCE GENUINENESS OF PURCHASES ENTRIES TAKEN BY THE ASSESSEE FROM M/S .A2 JEWELLS WAS REMAINED UNEXPLAINED, SUCH INCOME WAS LIABLE TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, HE MADE AN ADDITION OF RS 1, 47,69,472/-. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE LD.CIT(A ). BEFORE THE ID.CIT(A), IT WAS CONTENDED BY THE ASSESSEE THAT NE CESSARY DETAILS WITH REGARD TO DEED OF DISSOLUTION AND SURRENDER OF PAN ACCOUNT S HAD BEEN FURNISHED BEFORE THE AO. IT WAS FURTHER SUBMITTED THAT THE AS SESSEE-FIRM HAD NO TRANSACTION WITH THE ALLEGED FIRM VIZ. A2 JEWELL. I T WAS ONUS UPON THE ITA NO.1502/AHD/2017 3 ASSESSEE DEPARTMENT TO PROVE THAT ASSESSEE HAD MADE BOGUS PURCHASES OF SUCH FIRMS. ADDITION MADE BY THE AO WAS MERELY ON T HE BASIS OF INFORMATION RECEIVED FROM THE SEARCH-PARTY WITHOUT ANY CORROBORATIVE EVIDENCES. THE LD.CIT(A) CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE MATERIAL FURNISHED HAS DELETED THE ADDITION. AGGRIEVED REVENUE IS NOW BEFORE THE TRIBUNAL. 5. BEFORE US, THE ID.DR SUPPORTED THE ORDER OF THE ID.AO, AND REITERATED SUBMISSIONS MADE IN THE STATEMENT OF FACTS, WHICH I NTER ALIA PLEADS THAT THE LD.CIT(A) HAS NOT APPRECIATED THE FACTS THAT THE IM PUGNED ORDER WAS PASSED BASED ON INFORMATION THAT ASSESSEE HAS MADE. 6. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSES SEE RELIED UPON THE ID.CIT(A) AND SUBMITTED THAT THERE IS NO MATERIAL E VIDENCE BEFORE THE ID.AO TO PROVE THAT THE ASSESSEE HAS ENGAGED IN BOG US PURCHASES AS ALLEGED BY THE DEPARTMENT. THE LD.CIT(A) HAS CONSIDERED THI S ASPECT ON THE FACTS ON RECORD AND ARRIVED AT A JUST CONCLUSION, WHICH D ESERVES TO BE UPHELD. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE ID.AO HAS BASED ITS ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM THE SEARCH PARTY AND THE LD.CIT(A) HAS DELETED THE IMPUGNED ADDITION. IT IS PERTINENT TO TAKE NOTE OF HIS FINDING ON THIS ISSUE, WHICH READS AS UNDER: I HAVE PERUSED THE ASSESSMENT ORDERS AND SUBMISSIO N OF THE AR AND HEARD HIM. THE ISSUE IS OF ALLEGED BOGUS PURCHASES MADE BY THE APPELLANT FIRM FROM M/S A2JEWELS DURING FY 2006-07. THE MAIN CONTENTION OF AR IS THAT THE APPELLANT BEING A FIRM WAS DISSOLVED IN 2004-05. THIS WAS THE CONTENTION FILED BEFORE ID.AO TOO. THE ID.AO HAS DEALT IT IN HIS PARA 4 REPRODUCED ABO VE. THE ID.AO BRUSHES ASIDE THE DISSOLUTION DEED AND LETTER DATED 08.09.2004 OF THE APPELLANT REQUESTING CANCELLATION OF PAN ON THE GRO UND THAT PAN STILL ITA NO.1502/AHD/2017 4 CONTINUES TO BE IN THE NAME OF FIRM. HE ALSO REASON S OUT THAT THE EXPLANATION IS GIVEN AFTER 10 MONTHS OF NOTICE. I D ON'T SEE ANY MERIT IN THIS CONCLUSION OF ID.AO. THE DISSOLUTION DEED AND LETTER FOR CANCELLATION OF PAN ARE EVIDENCES ENOUGH TO PROVE T HE FIRM WAS DISSOLVED. IF THE PAN STILL CONTINUES IN NAME OF FIRM, THEN ITS THE LOOKOUT OF THE CONCERNED AUTHORITY AND NO FAULT LIE S WIT- APPELLANT FIRM. TO BRUSH ASIDE THE ABOVE, EVIDENCES, THE ID.AO OUGH T TO HAVE MADE SOME VERIFICATIONS AND ESTABLISHED THAT THE ABOVE A RE EITHER BOGUS OR FORGERIES OR CREATION OF AN AFTERTHOUGHT. NO SUCH E FFORTS ARE MADE BY A.O. IN VIEW OF THIS THE LOGIC GIVEN BY ID.AO COMES ACROSS AS FACETIOUS AND FLIPPANT. FURTHER THE ID.AO HAS NOT FOUND OR DI SCUSSED A SINGLE POSITIVE EVIDENCE TO INDICATE THAT THE FIRM EXISTED AND CONTINUED TO DO BUSINESS IN THE FY 2006-07. UNFORTUNATELY THE ID.AO HAS NOT EVEN SHARED WITH ASSESSEE OR IN THE ASSESSMENT ORDER THE EXACT DETAILS /DOCUMENTARY EVIDENCES HE HAS ON THE BASIS OF WHICH HE HAS RE-OPENED ASSESSMENT AND RELYING ON WHICH HE IS MAKING THE IM PUGNED ASSESSMENT. FURTHER THE ID.AO MENTIONS THE ASSESSEE DID NOT CO- OPERATE AND HAS NOT PRODUCED BOOKS, BILLS, BANK STATEMENTS TO SUPPORT I TS CONTENTION. THE ID.AO APPEARS TO BE CONFUSED HERE; IT IS CONTENTION OF THE ID.AO THAT THE APPELLANT FIRM EXISTED AND CONDUCTED BUSINESS I N FY 2006-07 AND SO IT IS ON ID.AO TO FIND OUT THESE MATERIALS TO SU PPORT HIS CONTENTION. AS FAR AS APPELLANT IS CONCERNED THE ABSENCE OF ABO VE ACTUALLY CORROBORATES ITS STAND. THE REQUEST LETTER TO ITO WARD- 9(2) FOR CANCELLATI ON OF PAN CARD DATED 08.09.2004 AND THE DISSOLUTION DEED DATED 16. 08.2004 OF FIRM MAKE IT CLEAR THAT THE APPELLANT FIRM WAS DISSOLVED ON 16.08.2004. THERE IS NO QUESTION OF MAKING ANY ASSESSMENT ORDER IN THE HANDS OF APPELLANT FIRM FOR THE PERIOD SUBSEQUENT TO ITS DIS SOLUTION I.E. 16.08.2004. ACCORDINGLY THE ORDER U/S 147 R.W.S. 14 4 DTD. 17.03.2015 MADE BY ITO WARD- 3(3)(2), SURAT IN APPELLANTS CASE IS HEREBY CANCELLED. AS A RESULT, THE APPEAL IS ALLOWED. 8. A PERUSAL OF THE FINDING OF THE LD.CIT(A) WOULD INDICATE THAT THE LD.AO ON PRESUMPTIVE BASIS MADE THE ADDITION, WHICH IS NO T JUSTIFIABLE. THE ASSESSEE WAS PARTNERSHIP FIRM AND DISSOLVED IN F.Y.2004-05. THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCE AS DISSOLUTION DEED OF THE FIRM AND EVIDENCE ITA NO.1502/AHD/2017 5 OF SURRENDERING THE PAN NUMBER OF THE FIRM. THE AS SESSEE HAS EVIDENCES WHICH DEMONSTRATED THAT THE ASSESSEE FIRM WAS DISSO LVED IN F.Y.2004-05 RELEVANT TO A.Y.2005-06. THE AO HAS NOT DISPROVED THE EXISTENCE OF ABOVE MATERIAL FACTS AND NOT ESTABLISHED WITH RELEVANT MA TERIAL THAT THE ASSESSEE HAS CARRIED OUT THE ALLEGED BUSINESS TRANSACTIONS DURIN G THE YEAR UNDER CONSIDERATION. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO REASON TO DEVIATE FROM THE FINDING OF THE LD.CIT(A) ON THIS ISSUE, AND DO NOT FIND MERIT IN THE APPEAL OF THE DEPARTMENT. ORDER OF THE LD.CIT(A), IS THUS UPHELD AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 9 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV ) JUDICIAL MEMBER ( AMARJIT SINGH ) ACCOUNTANT MEMBER