, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, M UMBAI BEFORE S/SHRI D. KARUNAKAR RAO, (AM) AND AMIT SHUKLA, (JM) . , , ./I.T.A. NO.1608/MUM/2013 ( ! / ASSESSMENT YEAR :2002-2003) DY. COMMISSIONER OF INCOME TAX, 17(1), 1 ST FLOOR, R NO.113, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI MUMBAI. / VS. SMT. NEENA M LEKHI, PROP. OF BAGGIT, 204, 205, NARAYAN UDYOG BHAVAN, DR.AMBEDKAR ROAD, LALGAUG, MUMBAI-400012 ( '# / APPELLANT) .. ( $%'# / RESPONDENT) ' ./ &' ./PAN/GIR NO. :AAAPL6095N '# ( / REVENUE BY SHRI AKHILENDRA YADAV $%'# ) ( / ASSESSEES BY SHRI M S MATHURIA * ) + / DATE OF HEARING : 1.12.2014 ,-! ) + /DATE OF PRONOUNCEMENT : 14.01.2015 / O R D E R PER AMIT SHUKLA, (JM) THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST ORDER DATED 26.12.2012, PASSED BY THE LD. CIT(A)-17, MUM BAI, UNDER SECTION 143(3) R.W.S.147 OF THE INCOME TAX ACT, 19 61 (THE ACT) FOR THE ASSESSMENT YEAR 2002-03. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 0,40,875/- MADE BY AO ON ACCOUNT OF BOGUS PURCHASES; I.T.A. NO.1608/MUM/2013 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ACCEPTING ADDITION AL EVIDENCE IN CONTRAVENTION OF RULE 46A. WITHOUT GRANTING AN O PPORTUNITY TO THE AO 3. BRIEF FACTS OF THE CASE ARE THAT THE INFORMATION W AS RECEIVED FROM ITO 14(3)(2) THAT ACCOMMODATION BILLS WERE ISS UED BY THE VARIOUS PARTIES TO THE ASSESSEE, WHO WAS PROPRIETO R OF M/S BAGGIT. THE INFORMATION STATED THAT SURVEY U/S 133A WAS CON DUCTED ON 13.2.2009 IN THE CASES OF FOLLOWING PERSON : I) SHRI RAKESHKUMAR M GUPTA, PROPO.OF M/S MANOJ MI LLS; II) SMT. HEMA R GUPTA OF M/S SHREE RAM SALES AND SYNTHETICS AND III) SHRI MOHIT R GUPTA PROP. OF M/S ASTHA SILK INDUSTRIES; DURING WHICH IT WAS FOUND THAT THE ABOVE SAID PERSO NS WERE RUNNING THE ACTIVITIES OF ISSUING ACCOMMODATION BILLS TO V ARIOUS PARTIERS IN MUMBAI AND ALSO TOOUTSIDE PARTIES. NO TRADING OR B USINESS ACTIVITIES WERE CONDUCTED BY THE ASSESSEE OR BY THE GROUP CONC ERNS. AS PER THE STATEMENT GIVEN BY SHRI RAKESHKUMAR M GUPTA, PROP.OF M/S MANOJ MILLS, IT WAS ADMITTED THAT HE HAS BEEN EARNI NG 1% COMMISSION ON THE AMOUNT OF BOGUS SALES BILLS ISSU ED BY HIM. THE MODUS OPERANDI AS EXPLAINED WAS THAT, HE USE TO IS SUE SALES BILLS AS PER THE REQUIREMENTS OF THE VARIOUS PARTIES AND REC EIVED CHEQUES FOR THE AMOUNT AS PER THE BILLS, WHICH WAS DEPOSITED IN THE BANK ACCOUNT AND THE SAME AMOUNT OF CASH WAS RETURNED TO THE PAR TY CONCERNED AFTER DEDUCTING HIS COMMISSION CHARGES. THE AO NO TED THAT THE I.T.A. NO.1608/MUM/2013 3 ASSESSEE HAS ALSO MADE PURCHASES FROM FOLLOWING PE RSONS: I) SHRI RAKESHKUMAR M GUPTA, PROPO.OF M/S MANOJ MILLS; RS.6,00,750/- II) SMT. HEMA R GUPTA PROP. OF M/S SHREE RAM SALES AND SYNTHETICS AND RS.4,40,125/- BASED ON THESE INFORMATION, THE CASE OF THE ASSESS EE WAS REOPENED U/S 147 FOR ASSESSING THOSE PURCHASES AS INCOME OF THE ASSESSEE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE FURNISHED COPIES OF PURCHASE BILLS FROM THESE PARTI ES AND ALSO SUBMITTED THE COPIES OF THE BANK ACCOUNT REFLEC TING THE PAYMENT TO THE AFORESAID PARTIES. IT WAS ALSO STATED THAT THES E PURCHASES HAVE BEEN DULY RECORDED IN THE BOOKS OF ACCOUNT AS THE A SSESSEE WAS ENGAGED IN THE BUSINESS OF MAKING DESIGNER LADIES H AND BAGS FOR WHICH SHE HAD TO PURCHASE FABRICS AS MAIN RAW MATE RIAL. THE ENTIRE PURCHASES OF RS.10,40,875/- WAS MADE FROM THESE TWO PARTIES ONLY, WHICH HAVE BEEN USED FOR MANUFACTURING OF BAGS. TH E MANUFACURING AND SALE HAS NOT BEEN DISPUTED. THE AO RECORDED THE STATEMENT OF SHRI RAKESHKUMAR M GUPTA AND HELD THAT THE PURCHAS ES SHOWN BY THE ASSESSEE FROM THESE PARTIES IS BOGUS AND ACCO RDINGLY HE ADDED A SUM OF RS.10,40,875/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN THE FIRST APPELLATE PROCEEDINGS, THE LD. CIT( A) REQUIRED THE ASSESSEE TO GIVE EVIDENCE REGARDING THE GENUINENESS OF PURCHASES, PROOF OF DELIVERY, TRANSPORT RECEIPT ETC. THE DETAI LS OF PURCHASES, PROOF I.T.A. NO.1608/MUM/2013 4 OF DELIVERY, TRANSPORT RECEIPT ETC HAVE BEEN INCORP ORATED BY THE LD. CIT(A) IN THE APPELLATE ORDER AT PARA 7.6, WHICH A RE REPRODUCED HEREINBELOW : S.NO. NAME OF THE PARTY DATE OF PURCHASE ANDS ITEMS DEILS BILL NO. AND AMOUNT MODE OF DELIVERY OF HE GOODS G R NO. AND DATE 1 MANOJ MUILLS 5/7/2001 FANCY MATERIAL 278, RS.1,22,000/- DELIVERY AT SHOP 692; 5.7.2001 2 MANOJ MUILLS 20/9/2001 FANCY GARMENT FABRICS 382, RS.1,35,000/- DELIVERY AT SHOP 1110; 20.9.2001 3 MANOJ MUILLS 30/9/2001 POLYSTER BLEND FABRICS WITH GLITTER 399, RS.50,500/- DELIVERY AT SHOP 1842; 30.9.2001 4 MANOJ MUILLS 6/10/2001 PEACH SKIN 410,RS.53,750/- DELIVERY AT SHOP 2165; 6.10.2001 5 MANOJ MUILLS 16/10/2001 GLITTER FABRICS WITH STITCH 432, RS.20,700 DELIVERY AT SHOP 2534;16.10.2001 6 MANOJ MUILLS 15/3/2002 SYNTHETIC GLITTER FABRICS 777, RS.1,26,000/- DELIVERY AT SHOP 3164;15.3.2002 7 MANOJ MUILLS 26/03/2002, GLITTER STITCH MATERIAL 802, RS.92,800/- DELIVERY AT SHOP 3201; 26.3.2002 8 SHREE RAM SALE S AND SYNTHETICS 25/09/2001, GLITTER STITCH MATERIAL 326, RS.1,03,125/- DELIVERY AT SHOP 1521;25.9.2001 9 SHREE RAM SALES AND SYNTHETICS 06/11/2001 FANCY GLITTER FABRIC 376, RS.2,82,000/- DELIVERY AT SHOP 2537;6.11.2001 10 SHREE RAM SALES AND SYNTHETICS 25/09/2001, GLITTER STITCH FABRICS 447, RS.1,03,125/- DELIVERY AT SHOP 2665;21.12.2001 THE LD. CIT(A) FURTHER REQUIRED THE ASSESSEE TO PR ODUCE THE STOCK REGISTER TO PROVE THE CONSUMPTION OF RAW MATERIAL FOR THE PURPOSE OF THE MANUFACTURING. IN RESPONSE THE STOCK REGISTER W AS PRODUCED AND WAS EXAMINED BY THE LD. CIT(A) IN DETAIL AND OBSERV ED THAT THE CIT(A) HAS WIDE POWERS AND CAN DIRECT THE ASSESSEE TO PRODUCE ANY I.T.A. NO.1608/MUM/2013 5 INFORMATION OR MATERIAL FOR DECIDING THE CASE AND R ULE 46A DOES NOT PLACE ANY BAR ON THE RIGHT OF THE ASSESSEE TO PROD UCE ADDITIONAL EVIDENCE AS DIRECTED BY THE FIRST APPELLATE AUTHORI TY. ACCORDINGLY, HE HELD THAT THE DOCUMENTS AS PRODUCED BEFORE HIM GOE S TO SHOW THAT THE ASSESSEE HAS ACTUALLY CONSUMED THE MATERIAL FOR THE PURPOSE OF THE MANUFACTURING AND WITHOUT ANY PURCHASE NO MANU FACTURING COULD HAVE BEEN DONE. THUS, HE DELETED THE ADDITION MADE BY THE AO. 5. BEFORE US THE LD. DR SUBMITTED THAT THE LD. CI T(A) HAS VIOLATED THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962( THE RULES) AND COULD HAVE GIVEN AN OPPORTUNITY TO THE AO TO VERIFY AND EXAMINE THE RECORD PRODUCED BY THE ASSESSEE, BECAUS E THERE WAS PRIMA FACIE STRONG CASE AGAINST THE ASSESSEE THAT ALL THE PURCHASES WERE BOGUS IN THE WAKE OF SURVEY CONDUCTED IN THE CASE OF THE PARTIES FROM WHOM PURCHASES WERE MADE BY THE ASSES SEE. THUS, THE ENTIRE MATTER SHOULD BE RESTORED BACK TO THE FILE O F THE AO FOR PROPER EXAMINATION AND ENQUIRY. 6. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT, FIRST OF ALL, THE ASSESSEE HAD NOT PRODUCED A NY ADDITIONAL EVIDENCE BUT HAS PRODUCED THE BILLS AND GR NUMBER S REQUIRED BY THE LD. CIT(A) AND ALSO STOCK REGISTER. THESE DOC UMENTS WERE FURNISHED BY THE ASSESSEE AS REQUIRED BY THE LD.CI T(A) TO BE PRODUCED BEFORE HIM AND ONCE ANY MATERIAL OR EVIDEN CE HAS BEEN I.T.A. NO.1608/MUM/2013 6 PRODUCED AT THE BEHEST AND DIRECTION OF LD.CIT(A), THEN THE SAME DOES NOT CONSTITUTE ANY ADDITIONAL EVIDENCE FOR THE PURPOSE OF RULE 46A. OTHERWISE ALSO IN SIMILAR CASE, WHERE PURCHASE S WERE MADE FROM THE SAME PARTIES, CO-ORDINATE BENCH OF THE TRI BUNAL HAS DELETED THE ADDITION. IN SUPPORT THIS CONTENTION, THE LD. C OUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE M UMBAI BENCH IN THE CASE OF JITENDRA HARSHADKUMAR & CO. V/S DCIT IN I.T.A. NO. 3141/MUM/ 2012 (AY-2005-06) DATED 31.10.2013. THUS THIS ISSUE IS SQUARELY COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT RECORD AND ALSO GONE THROUGH THE IMPUGNED ORDER. T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LADIES BAGS/PURSES AND FOR THIS PURPOSE, THE ASSESSEE HAS PURCHASED RAW MA TERIAL FROM VARIOUS PARTIES. THE ASSESSEE HAD MADE AGGREGATE PU RCHASES OF RS.10,40,875/- FROM SHRI RAKESHKUMAR M GUPTA AND SMT. HEMA R GUPTA, WHO WERE THE PERSONS IN WHOSE CASE SURVEY H AD TAKEN PLACE AND DURING THE COURSE OF SURVEY THEY HAVE ADMITTED THAT THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY GIVIN G BOGUS SALE BILLS. SOLELY ON THIS BACKGROUND THE AO HAS TREATED THE SAID PURCHASES AS BOGUS AND IN THE NATURE OF ACCOMMODATI ON ENTRY OF SALE BILLS. THE LD. CIT(A) REQUIRED THE ASSESSEE TO SUBSTANTIATE THE PURCHASES BY PROVING THROUGH MODE OF DELIVERY AND T RANSPORT I.T.A. NO.1608/MUM/2013 7 RECEIPTS. HE ALSO REQUIRED THE ASSESSEE TO FURNISH THE STOCK REGISTER TO EXAMINE, WHETHER RAW MATERIAL PURCHASED HAS BEEN CONSUMED OR NOT. HE ALSO ASKED THE ASSESSEE TO PRODUCE BANK S TATEMENT TO SEE WHETHER ANY CASH HAS BEEN WITHDRAWN AFTER MAKING TH E PAYMENT THROUGH CHEQUE FOR THE PURCHASES MADE FROM THESE P ARTIES. ON PERUSAL AND EXAMINATION OF THESE RECORDS, HE FOU ND THAT, FIRSTLY NO CASH HAS BEEN WITHDRAWN FROM THE BANK ACCOUNT FOR M AKING THE CASH PAYMENT TO THE ALLEGED PURCHASERS TO SHOW THAT IT W AS FOR THE PURPOSES OF ACCOMMODATION ENTRIES; SECONDLY, THE PU RCHASE BILLS WERE DULY SUPPORTED BY GR NOS. AND MODE OF DELIVER Y AND; LASTLY, STOCK REGISTER REFLECTED THE CONSUMPTION OF MATERIA L BOUGHT BY THE ASSESSEE. ON THESE THREE COUNTS, HE HELD THAT THE PURCHASES CANNOT BE SAID TO BE NON-GENUINE. IT IS FURTHER SEEN THAT THE TRIBUNAL IN THE CASE OF JITENDRA HARSHADKUMAR & CO (SUPRA) HAS CATEGORICALLY NOTED THAT SHRI RAKESHKUMAR GUPTA WHEN CONFRONTED WITH H IS STATEMENT MADE EARLIER, HAS CATEGORICALLY REBUTTED HIS STATEM ENT IN THE COURSE OF CROSS-EXAMINATION THAT HE WAS ALSO MAKING GENUINE S ALES. THE TRIBUNAL AFTER CONSIDERING THIS ADMISSION AND REF ERRING TO THE SERIES OF OTHER DECISIONS RENDERED ON ACCOUNT OF SIMILAR PURCHASES MADE FROM THE SAID PARTIES, DELETED THE SAID ADDITION. THUS, ON THESE FACTS, WE HOLD THAT THE DELETION OF ADDITION ON ACCOUNT OF BOGUS PURCHASES BY THE LD. CIT(A) IS FACTUALLY CORRECT AND NO INTER FERENCE IS CALLED FOR. I.T.A. NO.1608/MUM/2013 8 8. REGARDING VIOLATION OF RULE 46A AS RAISED BY TH E DEPARTMENT, WE ARE OF THE OPINION THAT, IF THE FIRST APPELLATE AUTHORITY IN EXERCISE OF HIS POWERS HAS DIRECTED THE ASSESSEE TO PRODUCE ANY EVIDENCE, INFORMATION OR MATERIAL NOT PRODUCED OR CONSIDERED BY THE AO, THEN THERE IS NO VIOLATION OF RULE 46A. THE RULE 46A PR OVIDES THAT, WHEN THE ASSESSEE ON ITS OWN FILE ANY ADDITIONAL EVIDEN CE, THEN THE LD. CIT(A) HAS TO FOLLOW THE PROVISIONS OF THE SAID RU LE. THERE IS NO FETTER ON THE POWERS OF THE FIRST APPELLATE AUTHOR ITY TO CALL FOR ANY FRESH INFORMATION OR MATERIALS FOR ADJUDICATING TH E LIS BEFORE HIM. THUS, IN THIS CASE, THERE IS NO VIOLATION OF RULE 46A, AS THE ADDITIONAL EVIDENCES WERE FILED ON THE DIRECTION OF THE LD. C IT(A). ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 14TH JAN, 2015 . ,-! . /014TH JAN, 2015 - ) 5* 6 SD SD ( . / D. KARUNAKAR RAO) ( / AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER * MUMBAI: 14TH JAN,2015. . . ./ SRL , SR. PS I.T.A. NO.1608/MUM/2013 9 ' # $%& '&($ / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. ( ) / THE CIT(A)- CONCERNED 4. / CIT CONCERNED 5. 895 $: , + : , * / DR, ITAT, MUMBAI CONCERNED 6. 5 ;* / GUARD FILE. / BY ORDER, TRUE COPY < & (ASSTT. REGISTRAR) + : , * /ITAT, MUMBAI