MANOJ ISHWAR CHOUDHARY, MUMBAI V. PR CIT 24, MUMBAI

ITA 1788/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8945 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT SINGH ARNEJA
• Keywords: Bogus purchase
• Section: 143(3); 147; 263; 2

Judgement Text

1 ITA NO.1788/MUM/2016 SD/- SD/- IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.1788/MUM/2016 (ASSESSMENT YEAR 2009-10) MANOJ ISHWAR CHOUDHARY 601, B/A WING, MORYA HOUSE VEER INDL. ESTATE, OSHIWARA LINK ROAD, ANDHERI (W) MUMBAI 400 053 PAN : ADEPC1565F VS PR.COMMISSIONER OF INCOME-TAX-24 MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI AMIT AGRAWAL RESPONDENT BY SHRI RANJIT SINGH ARNEJA DATE OF HEARING 25-09-2017 DATE OF PRONOUNCEMENT 27 -10-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF PRINCIPAL COMMISSIONER OF INCOME-TAX-24, MUMBAI DATED 20-01-2 016 U/S 263 OF THE INCOME-TAX AC6, 1961 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 25-09-2009 DECLARING TOTAL INCOME OF RS.9,73,141/-. SUBSEQUENTLY, THE C ASE WAS REOPENED U/S 147 2 ITA NO.1788/MUM/2016 SD/- SD/- FOR THE REASON THAT THE ASSESSEE IS A BENEFICIARY O F BOGUS BILLS ISSUED BY HAWALA DEALERS AS PER THE LIST PREPARED BY MAHARASHTRA SAL ES-TAX DEPARTMENT. THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 ON 2 3-03-2015 BY MAKING ADDITIONS OF RS.1,52,061 BEING 12.5% OF PROFIT ON T OTAL BOGUS PURCHASES MADE FROM HAWALA OPERATORS. 3. THE PRINCIPAL COMMISSIONER OF INCOME-TAX-24, MUMBAI PROPOSED TO REVISE THE ASSESSMENT ORDER PASSED BY THE AO, AS IN HIS OP INION, THE SAME WAS ERRONEOUS, INSOFAR AS IT WAS PREJUDICIAL TO THE INT EREST OF THE REVENUE BECAUSE THE AO HAS FAILED TO CONDUCT NECESSARY ENQUIRIES AN D ALSO APPLIED HIS MIND ON THE ISSUE OF BOGUS PURCHASES. THE PRINCIPAL COMMIS SIONER OF INCOME-TAX FURTHER OBSERVED THAT THE AO HAS BROUGHT OUT CLEAR FACTS IN THE ASSESSMENT ORDER TO THE EFFECT THAT PURCHASES FROM M/S VIJAY S AGAR TRADING PVT LTD IS BOGUS IN NATURE, HOWEVER, MADE ADDITIONS ONLY TO TH E PROFIT ELEMENT EMBEDDED IN THE PURCHASES WITHOUT CONDUCTING ENQUIR Y WITH REGARD TO CREDITS OUTSTANDING IN THE PARTIES ACCOUNT. THE PRINCIPAL COMMISSIONER OF INCOME-TAX FURTHER OBSERVED THAT THERE IS A DIFFERENCE OF RS.1 3,500 IN THE RETURN OF INCOME FILED BY THE ASSESSEE INSOFAR AS COMMISSION INCOME SHOWN FROM M/S BOMBAY DYEING MFG CO LTD WHEN COMPARED TO THE TDS CERTIFIC ATE ISSUED BY THE PARTY AND INCOME SHOWN BY THE ASSESSEE IN ITS BOOKS OF AC COUNT. THE AO NOT ONLY FAILED TO EXAMINE THE ISSUE BUT ALSO FAILED TO APPL Y HIS MIND ON THE ISSUE IN THE 3 ITA NO.1788/MUM/2016 SD/- SD/- RIGHT PERSPECTIVE, THEREFORE, PRINCIPAL COMMISSIONE R OF INCOME-TAX OPINED THAT THE ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS , ON THESE GROUNDS, INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REV ENUE. 3. THE ASSESSEE, IN RESPONSE TO SHOW CAUSE NOTICE SUBM ITTED THAT THE ISSUE OF PURCHASE FROM HAWALA DEALERS AND TAXATION OF SUC H PURCHASES HAS BEEN CONSIDERED BY THE AO IN THE ASSESSMENT PROCEEDINGS WHICH IS EVIDENT FROM THE FACT THAT THE AO HAS ESTIMATED 12.5% NET PROFIT ON PURCHASES FROM M/S VIJAY SAGAR TRADING PVT LTD. INSOFAR AS, DIFFERENCE IN C OMMISSION INCOME RECEIVED FROM M/S BOMBAY DYEING & MFG CO LTD, THE ASSESSEE A DMITTED THAT THERE IS A DIFFERENCE OF RS.13,500, HOWEVER, SUCH DIFFERENCE I S ON ACCOUNT OF DEBIT NOTE ISSUED BY THE PARTY BUT THE SAME CANNOT BE RECONCIL ED IMMEDIATELY. THE ASSESSEE FURTHER SUBMITTED THAT THE AO HAS CONSIDER ED ABOVE TWO ISSUES AT THE TIME OF ASSESSMENT ITSELF, THEREFORE, THE ASSESSMEN T ORDER PASSED BY THE AO CANNOT BE CONSIDERED AS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PRINCIPAL COMMISSIONER OF INCOME- TAX, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALSO AND BY RELYING UPO N CERTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF MALABAR INDUSTRIAL CO LTD VS CIT 243 ITR 83 (SC) AN D HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS JAWAHAR BHATTACHARJEE R EPORTED IN 341ITR 434 (GAUHATI)(HC)(FB) OBSERVED THAT THE ASSESSMENT ORDE R PASSED BY THE AO IS 4 ITA NO.1788/MUM/2016 SD/- SD/- ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE, AS THE AO HAS FAILED TO CONDUCT NECESSARY ENQUIRY WITH REGARD TO THE CREDIT OUTSTANDING IN THE NAME OF THE PARTY, WHO WAS DECLARED AS HAWAL A DEALER ENGAGED IN PROVIDING BOGUS PURCHASE BILLS. THE PRINCIPAL COMM ISSIONER OF INCOME-TAX FURTHER OBSERVED THAT THE ASSESSEE IS UNABLE TO REC ONCILE DIFFERENCE OF RS.13,000 IN COMMISSION RECEIVED FROM M/S BOMBAY DY EING & MFG CO LTD, WHICH FACT HAS NOT BEEN EXAMINED BY THE AO. WITH T HESE OBSERVATIONS, HE DIRECTED THE AO TO RE-ASSESS THE INCOME OF THE ASSE SSEE DE NOVO AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE PRINCIPAL COMMISS IONER OF INCOME-TAX. THE LIMITED ISSUE CAME UP FOR OUR CONSIDERATION IS WHET HER THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 147 IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS NARRATED BY THE PRIN CIPAL COMMISSIONER OF INCOME-TAX IN HIS ORDER DATED 20-01-2016. THE PRI NCIPAL COMMISSIONER OF INCOME-TAX HAS TAKEN UP TWO ISSUES IN REVISION PROC EEDINGS. THE FIRST ISSUE BEING CREDITS APPEARING IN THE NAME OF VIJAY SAGAR TRADING PVT LTD, A FIRM DECLARED AS HAWALA DEALER BY THE MAHARASHTRA SALES- TAX DEPARTMENT AND THE 5 ITA NO.1788/MUM/2016 SD/- SD/- ASSESSEE IS BENEFICIARY OF BOGUS PURCHASE BILLS FRO M THE SAID PARTY. WE FIND THAT IN THE ASSESSMENT PROCEEDINGS, THE AO HAS CONS IDERED PURCHASES MADE FROM THE SAID PARTY AND HAS ESTIMATED PROFIT AT 12. 5% ON TOTAL PURCHASES MADE FROM VIJAY SAGAR TRADING PVT LTD. THE PRINCIPAL CO MMISSIONER OF INCOME-TAX HAS NOT DISPUTED THE FACT THAT THE AO HAS CONSIDERE D THE ISSUE OF PURCHASES FROM THE SAID PARTY. HOWEVER, WAS OF THE OPINION T HAT THE AO OUGHT TO HAVE ADDED SUNDRY CREDITORS APPEARING IN THE NAME OF THE ASSESSEE. WE DO NOT FIND ANY REASONS IN CONCURRING WITH THE FINDINGS OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX FOR THE REASON THAT ONCE THE AO HAS CONS IDERED THE ISSUE IN THE ASSESSMENT PROCEEDINGS, THE PRINCIPAL COMMISSIONER OF INCOME-TAX DOES NOT HAVE ANY JURISDICTION TO REVISE THE ASSESSMENT ORDE R ON THE GROUND THAT THE AO HAS NOT CONDUCTED NECESSARY ENQUIRY AND ALSO NOT AP PLIED HIS MIND. IN THIS CASE, THE AO HAS EXAMINED THE ISSUE OF PURCHASE FRO M THE PARTY AND AFTER CONSIDERING THE FACTS DECIDED TO ESTIMATE NET PROFI T OF 12.5% ON TOTAL PURCHASES. THEREFORE, WE ARE OF THE VIEW THAT THE PRINCIPAL COMMISSIONER OF INCOME-TAX IS INCORRECT IN HOLDING THAT THE AO HAS NOT CONDUCTED PROPER ENQUIRY ON THE ISSUE. AS REGARDS THE DIFFERENCE IN COMMISSION INCOME RECEIVED FROM M/S BOMBAY DYEING & MFG CO LTD, THOUGH THE ASS ESSEE CLAIMS THAT DIFFERENCE IS ON ACCOUNT OF DEBIT NOTE ISSUED BY TH E PARTY, FAILED TO RECONCILE THE DIFFERENCE BETWEEN TDS CERTIFICATE ISSUED BY TH E PARTY AND COMMISSION 6 ITA NO.1788/MUM/2016 SD/- SD/- INCOME ACCOUNTED IN HIS BOOKS OF ACCOUNT. WE NOTIC E THAT THIS ISSUE HAS NOT BEEN EXAMINED BY THE AO IN THE ASSESSMENT PROCEEDIN GS. THEREFORE, WE ARE OF THE VIEW THAT THE PRINCIPAL COMMISSIONER OF INCOME- TAX WAS RIGHT IN ASSUMING JURISDICTION IN RESPECT OF DIFFERENCE IN COMMISSION INCOME SHOWN FROM M/S BOMBAY DYEING & MFG CO LTD. 5. IN THIS VIEW OF THE MATTER AND CONSIDERING THE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE PRINCIPAL COM MISSIONER OF INCOME-TAX IS INCORRECT IN ASSUMING JURISDICTION IN RESPECT OF TH E FIRST ISSUE, I.E. ADDITION TOWARDS SUNDRY CREDITORS APPEARING IN THE NAME OF V IJAY SAGAR TRADING PVT LTD. WE FURTHER OBSERVE THAT INSOFAR AS THE SECOND ISSUE , I.E. DIFFERENCE IN COMMISSION INCOME IS CONCERNED, THE PRINCIPAL COMMI SSIONER OF INCOME-TAX IS RIGHT IN REVISING THE ASSESSMENT ORDER PASSED BY TH E AO. HENCE, WE MODIFY THE DIRECTIONS OF THE PRINCIPAL COMMISSIONER OF INCOME- TAX U/S 263 OF THE ACT SO AS TO REVERSE THE FINDINGS OF THE PRINCIPAL COMMISSION ER OF INCOME-TAX IN RESPECT OF FIRST ISSUE AND UPHOLD THE REVISION ORDER PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME-TAX U/S 263 OF THE ACT IN RE SPECT OF SECOND ISSUE, I.E. DIFFERENCE IN COMMISSION INCOME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017. 7 ITA NO.1788/MUM/2016 SD/- SD/- (D.T. GARASIA) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI