ITO, Ward 33(1), Kolkata, Kolkata V. Saraf Jewels & Co., Kolkata

ITA 1581/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1847 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2016
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Assessee Lawyers: S M SURANA; SUNIL SU
• Keywords: Bogus purchase; Search and seizure; Additional evidence
• Section: 148

Judgement Text

I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1581/KOL/ 2016 ASSESSMENT YEAR: 2007-2008 INCOME TAX OFFICER,................................ ..................................APPELLANT WARD-33(1), KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 -VS.- SARAF JEWELS & CO.................................. .....................................RESPONDENT 7/1, LORD SINHA ROAD, KOLKATA-700 071 [PAN: AARFS 6807 L] & C.O. NO. 52/KOL/2016 (IN I.T.A. NO. 1581/KOL/ 2016) ASSESSMENT YEAR: 2007-2008 SARAF JEWELS & CO.................................. .....................................CROSS OBJECTOR 7/1, LORD SINHA ROAD, KOLKATA-700 071 [PAN: AARFS 6807 L] -VS.- INCOME TAX OFFICER,................................ .......................................RESPONDENT WARD-33(1), KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 APPEARANCES BY: MD. GHAYAS UDDIN, JCIT, SR. D.R., FOR THE DEPARTMEN T SHRI S.M. SURANA, ADVOCATE AND SHRI SUNIL SURANA, F CA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : MARCH 30, 2017 DATE OF PRONOUNCING THE ORDER : MAY 05, 2017 O R D E R PER SHRI P.M. JAGTAP, A.M. .: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKATA DAT ED 24.05.2016 AND I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 7 THE SAME IS BEING DISPOSED OF ALONG WITH THE CROSS OBJECTION FILED BY THE ASSESSEE BEING C.O. NO. 52/KOL/2016. THE ONLY GRIEV ANCE OF THE REVENUE AS PROJECTED IN THE GROUNDS RAISED THEREIN IS THAT THE LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.37,90,732/- MA DE ON ACCOUNT OF ALLEGED BOGUS PURCHASES BY RELYING ON THE ADDITIONA L EVIDENCE FILED BY THE ASSESSEE IN VIOLATION OF RULE 46A(3) OF THE INCOME TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS CARRYING ON THE BUSINESS AS A JEWELLER. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ORIGINALLY ON 3 1.10.2007 DECLARING TOTAL INCOME OF RS.2,92,100/-. THE SAID RETURN WAS INITIALLY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 143(1). THEREAF TER A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASES BELONG ING TO BHANWARLAL JAIN GROUP. DURING THE COURSE OF THE SAID ACTION, I NFORMATION WAS GATHERED BY THE DEPARTMENT ABOUT THE ACCOMMODATION ENTRY OF RS.12,98,396/- GIVEN TO THE ASSESSEE. ON THE BASIS OF THE SAID INFORMATION, THE ASSESSING OFFICER FORMED A BELIEF THAT THE INCO ME OF RS.12,98,396/- OF THE ASSESSEE HAS ESCAPED ASSESSMENT AND AFTER RECOR DING THE REASONS, HE REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDER ATION. IN RESPONSE TO NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTIO N 148 ON 28.03.2014, A LETTER WAS FILED BY THE ASSESSEE STATING THAT THE R ETURN ORIGINALLY FILED BY IT ON 31.10.2007 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 148. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER T O PRODUCE THE RELEVANT DETAILS AND DOCUMENTS TO PROVE THAT THE PURCHASES C LAIMED TO BE MADE BY IT FROM M/S. LITTLE DIAM OF RS.12,98,396/-, M/S. VI NTAGE JEWELLS OF RS.19,42,368/- AND M/S. SUN DIAM OF RS.5,49,968/- W ERE GENUINE AND IT WAS NOT A CASE OF ACCOMMODATION ENTRY OBTAINED BY T HE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, NEITHER THE ASS ESSEE NOR HIS AUTHORIZED REPRESENTATIVE, HOWEVER, APPEARED BEFORE HIM WITH ANY DOCUMENTS TO PROVE THE GENUINENESS OF PURCHASES MAD E FROM THE SAID I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 7 PARTIES AND KEPT ON CHALLENGING THE VALIDITY OF REO PENING ON ONE PRETEXT OR THE OTHER. HE, THEREFORE, TREATED THE PURCHASES CLAIMED TO BE MADE BY THE ASSESSEE FROM THE SAID THREE PARTIES AS BOGUS A ND ADDED THE AMOUNT OF RS.37,90,732/- TO THE TOTAL INCOME OF THE ASSESS EE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3)/147 VIDE AN ORDER DA TED 27.03.2015. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3)/147, AN APPEAL WAS FILED BY THE ASSE SSEE BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD . CIT(APPEALS) DELETED THE ADDITION OF RS.37,90,732/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR THE FOLLOWING REASON S GIVEN IN PARAGRAPH NO. 4.2 OF HIS IMPUGNED ORDER:- 4.2 IN GROUND NO. 3 TO 5 THE ASSESSEE HAS DISPUTED THE ADDITION ON MERITS. AS PER THE AO THE ASSESEE HAS M ADE BOGUS PURCHASES FOR WHICH BOGUS BILLS WERE ISSUED BY BHAW ARLAL JAIN GROUP. THE AO IN THE COURSE OF SCRUTINY FURTHE R FOUND THAT THE ASSESSEE'S TOTAL PURCHASE FROM BHAWARLAL J AIN GROUP WAS OF RS.37,90,732/- AND ASKED THE ASSESSEE TO EXP LAIN THE SAME. THE ASSESSEE IN REPLY TO THE QUERIES RAISED B Y THE AO SUBMITTED THAT THE PURCHASES WERE MADE AGAINST VALI D BILLS FOR WHICH PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQU ES. THE ASSESSEE ALSO SUBMITTED THAT THE THEY WERE NOT AWARE OF ANY BHAWARLAL JAIN GROUP AND FROM THE BILLS OF THE SELLERS PRODUCED BEFORE THE AO THERE WAS NO NAME OF BHAWARL AL JAIN. THE ASSESSEE SUBMITTED AND IT CANNOT BE PRESUMED TH AT THE SELLERS BELONGED TO BHAWARLAL JAIN GROUP. IT WAS FU RTHER SUBMITTED THAT THE PURCHASE WERE ALL ENTERED INTO D AY TO DAY STOCK REGISTER AND WERE IDENTIFIABLE BY THE SALE OF THE MATERIAL WITH REFERENCE TO SUCH PURCHASE AND THE RE MAINING MATERIAL WHICH WAS NOT SOLD WAS IDENTIFIABLE IN THE CLOSING STOCK. IT WAS FURTHER SUBMITTED THAT DAY TO DAY STO CK REGISTER WAS PRODUCED BEFORE THE AO AND THE AO HAS NOT DISPU TED THE SAME. THE ASSESSEE HAS CITED A NUMBER OF JUDGEMENTS ON THE ISSUE THAT WHEN NO SALE WAS POSSIBLE UNLESS PURCHAS E WAS MADE! NO ADDITION CAN BE MADE. I HAVE CONSIDERED THE SUBMISSIONS. I FIND THAT THE ALL THE BILLS FOR PURCHASE WERE PRODUCED BEFORE THE AO AND THE PA YMENT WAS ALSO MADE BY THE ASSESSEE BY ACCOUNT PAYEE CHEQ UE. THE I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 7 SELLERS WERE ALL ASSESSED TO CST /VAT. MOREOVER THE ASSESSEE HAS BEEN ABLE TO PROVE THAT SALE WOULD NOT HAVE BEE N POSSIBLE UNLESS THE PURCHASE WHICH HAS BEEN TREATED BY THE A O AS BOGUS WAS MADE. THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGEMENTS IN THE CASE OF CANNON INDUSTRIES REPORTE D IN 167 TTJ PAGE 82(ADINATH INDUSTRIES REPORTED IN 252 ITR PAGE 476 AND KASHIRAM TEXTILES REPORTED IN 284 ITR PAGE 61. THEREFORE THE ADDITION IS DELETED. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS:- (1) LD. CIT(A)-9, KOLKATA FAILED TO CONSIDER THE FA CT THAT THE ASSESSEE NEVER DURING ASSESSMENT PROCEEDING APPEARED BEFORE THE AO NOR COMPLIED WITH THE SHOW C AUSE NOTICES AS CALLED FOR BY THE AO TO FILE DETAILS OF PURCHASES AS PER FORMAT WRITTEN IN THE FACT OF THE ASSESSMENT ORDER. (2) LD. CIT(A)-9, KOLKATA FAILED TO CONSIDER THE FA CT THAT THE ASSESSEE DID NOT PRODUCE ALL THE BILLS TO THE A O FOR VERIFICATION. (3) LD. CIT(A)-9, KOLKATA ERRED IN ACCEPTING THE EV IDENCES PRODUCED BY THE ASSESSEE IN VIOLATION OF RULE 46A(3 ) OF THE INCOME TAX RULES, 1962. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS SPECIFICALLY GIVEN BY TH E ASSESSING OFFICER TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS TO ESTABLISH THE GENUINENESS OF THE PURCHASES CLAIMED TO BE MADE FRO M THE THREE PARTIES BY PRODUCING RELEVANT BILLS, ETC., BUT THE ASSESSEE FAILED TO DO SO. HE HAS INVITED MY ATTENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER TO POINT OUT THAT NEITHER THE ASSESSEE NOR HIS AUTHORI ZED REPRESENTATIVE EVEN APPEARED BEFORE THE ASSESSING OFFICER DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. HE CONTENDED THAT THE LD. C IT(APPEALS), HOWEVER, ALLOWED THE CLAIM OF THE ASSESSEE REGARDIN G THE GENUINENESS OF THE RELEVANT PURCHASES AND DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER BY TREATING THE SAID PURCHASES AS BOGUS BY RELYING ON THE BILLS OF I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 7 THE CONCERNED PARTIES IGNORING THE FACT THAT THE SA ID BILLS WERE NEVER PRODUCED BY THE ASSESSEE FOR VERIFICATION BEFORE TH E ASSESSING OFFICER. HE HAS CONTENDED THAT THE SAID BILLS CLEARLY CONSTITUT ED ADDITIONAL EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(APPEALS) AND THERE IS A CLEAR VIOLATION OF RULE 46A OF THE INCOM E TAX ACT, 1962 BY THE LD. CIT(APPEALS) IN GIVING RELIEF TO THE ASSESSEE B Y RELYING ON THE SAID ADDITIONAL EVIDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS SUBMITTED THAT EVEN THOUGH THERE WAS NO PERSONAL APPEARANCE O N BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE DETAILS AND DOCUMENTS CALLED FOR B Y THE ASSESSING OFFICER WERE DULY FURNISHED BY THE ASSESSEE ALONG WITH THE WRITTEN SUBMISSION FILED BEFORE THE ASSESSING OFFICER FROM TIME TO TIM E. IN THIS REGARD, HE HAS REFERRED TO THE COPY OF REASONS RECORDED PLACED AT PAGE 1A OF THE PAPER BOOK TO POINT OUT THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER WAS ONLY RELATING TO THE ALLEGED ACCOMMODATION ENTR Y OF PURCHASES TAKEN BY THE ASSESSEE TO THE TUNE OF RS.12,98,396/-. HE H AS SUBMITTED THAT THE SAID PURCHASE WAS MADE BY THE ASSESSEE FROM M/S. LI TTLE DIAN AND BILLS FOR THE SAME WERE SUBMITTED BEFORE THE ASSESSING OF FICER ON 18.03.2015 UNDER LETTER DATED 17.03.2015 (PAGE 13 TO 16 OF THE PAPER BOOK). HE HAS ALSO POINTED OUT FROM THE COPY OF THE SAID LETTER P LACED AT PAGES NO. 13 TO 16 OF THE PAPER BOOK THAT THE SAID PARTY WAS DULY H AVING GST AND CST NO. AND EVEN THE COPY OF BANK STATEMENT WAS FILED BY TH E ASSESSEE SHOWING THAT THE PAYMENTS TO THE SAID PARTIES WERE MADE BY ACCOUNT PAYEE CHEQUES. HE HAS THEN INVITED MY ATTENTION TO THE CO PY OF LETTER DATED 25.03.2015 ISSUED BY THE ASSESSING OFFICER PLACED A T PAGE NO. 40 OF THE PAPER BOOK AND SUBMITTED THAT THE INFORMATION REGAR DING PURCHASES MADE FROM OTHER TWO PARTIES, NAMELY M/S. VINTAGE JEWELLS AND M/S. SUN DIAM WAS CALLED FOR BY THE ASSESSING OFFICER ONLY AT THE FAG END OF THE I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 7 ASSESSMENT PROCEEDINGS AND THE SAME WAS IMMEDIATELY FURNISHED BY THE ASSESSEE UNDER LETTER DATED 26.03.2015. HE HAS TAKE N THROUGH THE COPY OF THE SAID LETTER DULY ACKNOWLEDGED BY THE OFFICE OF THE ASSESSING OFFICER PLACED AT PAGES 41 TO 45 OF THE PAPER BOOK TO POINT OUT THAT THE COPIES OF BILLS SHOWING RELEVANT PURCHASES MADE BY THE ASSESS EE FROM M/S. VINTAGE JEWELLS AND M/S. SUN DIAM WERE SUBMITTED BY THE ASS ESSEE. HE HAS POINTED OUT THAT THE SAID TWO PARTIES WERE ALSO HAV ING THEIR OWN GST AND CST NO. AND THE COPY OF RELEVANT BANK STATEMENT SHO WING PAYMENTS MADE BY THE ASSESSEE TO THEM BY ACCOUNT PAYEE CHEQUES WA S ALSO FILED BEFORE THE ASSESSING OFFICER. 7. KEEPING IN VIEW ALL THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE AS ABOVE, WHICH ARE DULY SUPPORTED BY THE COPIES OF SUBMISSIONS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMEN T PROCEEDINGS BEFORE THE ASSESSING OFFICER AND WHICH ARE DULY ACKNOWLEDG ED BY THE OFFICE OF THE ASSESSING OFFICER, I FIND THAT THE BILLS OF THE CONCERNED THREE PARTIES IN SUPPORT OF ITS CLAIM FOR PURCHASES MADE FROM THE SAID PARTIES WERE DULY PRODUCED/FILED BY THE ASSESSEE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER AND THE SA ME DID NOT CONSTITUTE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE TH E LD. CIT(APPEALS) FOR THE FIRST TIME AS ALLEGED BY THE LD. D.R. I, THEREF ORE, FIND NO MERIT IN THIS APPEAL OF THE REVENUE AND DISMISS THE SAME. 8. AS A RESULT OF DISMISSAL OF THE REVENUES APPEAL , THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND TH E SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 05, 2017. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 5 TH DAY OF MAY, 2017 I.T.A. NO. 1581/KOL./2016 ASSESSMENT YEAR: 2007-2008 & C.O. NO. 52/KOL/2016 (IN I.T.A. NO . 1581/KOL./2016) ASSESSMENT YEAR: 2007-2008 PAGE 7 OF 7 COPIES TO : (1) INCOME TAX OFFICER, WARD-33(1), KOLKATA, 10B, MIDDLETON ROW, 3 RD FLOOR, KOLKATA-700 071 (2) SARAF JEWELS & CO., 7/1, LORD SINHA ROAD, KOLKATA-700 071 (3) COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKA TA; (4) COMMISSIONER OF INCOME TAX ,KOLKAT A (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.