Sri Motilal Jain, Kolkata V. I.T.O., Ward-35(4), Kolkata, Kolkata

ITA 1986/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9153 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2016
• Court: TRIBUNAL
• Keywords: Bogus purchase; Gift
• Section: 147; 148

Judgement Text

I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NOS. 1986, 1987 & 1988/KOL/ 2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 SHRI MOTILAL JAIN,................................. ........................................APPELLANT C/O. CHEMICAL INDIA COMPANY, 33, BRABOURNE ROAD, KOLKATA-700 001 [PAN: AEHPJ 1742 H ] -VS.- INCOME TAX OFFICER,................................ .....................................RESPONDENT WARD-35(4), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYE PASS, KOLKATA-700 107 APPEARANCES BY: SHRI V.N. PUROHIT, C.A., FOR THE ASSESSEE SHRI BANI BRATA DUTTA, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MARCH 08, 2017 DATE OF PRONOUNCING THE ORDER : MARCH 15, 2017 O R D E R THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST THREE SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF I NCOME TAX (APPEALS)- 10, KOLKATA, ALL DATED 04.07.2016 AND SINCE A COMMO N ISSUE IS INVOLVED THEREIN, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER. 2. THE SOLITARY COMMON ISSUE INVOLVED IN THESE APPE ALS OF THE ASSESSEE RELATES TO THE ADDITIONS OF RS.2,65,044/-, RS.1,56, 728/- AND RS.2,28,800/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALL EGED BOGUS PURCHASES TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2009-1 0, 2010-11 AND 2011-12 RESPECTIVELY, WHICH ARE CONFIRMED BY THE LD. CIT(AP PEALS). I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 2 OF 6 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S. CHEMICAL INDIA LIMITED. TH E RETURNS OF INCOME FOR THE YEARS UNDER CONSIDERATION WERE FILED BY HIM UNDER SECTION 139(1) DECLARING TOTAL INCOME OF RS.4,85,380/-, RS.4,80,16 0/- AND 5,55,450/- FOR A.Y. 2009-10, 2010-11 & 2011-12 RESPECTIVELY. THE S AID RETURNS WERE INITIALLY PROCESSED BY THE ASSESSING OFFICER UNDER SECTION 143(1) OF THE ACT. HE, HOWEVER, SUBSEQUENTLY REOPENED THE ASSESSM ENTS UNDER SECTION 147 AFTER RECORDING THE REASON THAT THERE WAS A SUP PRESSION OF SALES BY THE ASSESSEE DURING ALL THE THREE YEARS UNDER CONSI DERATION. HE ACCORDINGLY ISSUED NOTICES UNDER SECTION 148, IN RE PLY TO WHICH A LETTER WAS FILED BY THE ASSESSEE REQUESTING THAT THE RETUR NS FILED ORIGINALLY BY HIM UNDER SECTION 139(1) BE TREATED AS THE RETURNS FILED IN RESPONSE TO NOTICES UNDER SECTION 148. DURING THE COURSE OF PRO CEEDINGS UNDER SECTION 147, THE ASSESSING OFFICER FOUND THAT THE R ELEVANT TRANSACTIONS WERE NOT OF SUPPRESSION OF SALES BY THE ASSESSEE, B UT THERE WERE CERTAIN PURCHASES, THE GENUINENESS OF WHICH WAS IN DOUBT. H E ACCORDINGLY VERIFIED THE SAID PURCHASES AND SINCE THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE SAME, THE ASSESSING OFFICER TREA TED THE SAID PURCHASES AS BOGUS AND MADE ADDITIONS TO THAT EXTENT TO THE T OTAL INCOME OF THE ASSESSEE IN THE ASSESSMENTS COMPLETED UNDER SECTION 147/143(3) FOR ALL THE THREE YEARS UNDER CONSIDERATION. 4. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 147/143(3), APPEALS WERE PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) FOR ALL THE THREE YEARS UNDER CONSIDER ATION CHALLENGING THE VALIDITY OF THE SAID ASSESSMENTS AS WELL AS DISPUTI NG THE ADDITIONS MADE THEREIN ON ACCOUNT OF BOGUS PURCHASES ON MERITS. TH E LD. CIT(APPEALS), HOWEVER, DID NOT FIND MERIT IN THE SAID APPEALA AND PROCEEDED TO DISMISS THE SAME BY HIS APPELLATE ORDERS DATED 4 TH JULY, 2016, WHICH ARE IMPUGNED BY THE ASSESSEE IN THE PRESENT APPEALS FILED BEFORE THE TRIBUNAL. I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 3 OF 6 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS FILED BEFORE ME THE COPY OF REASONS RECORDED BY THE ASSESSING OFFICER FOR ALL THE THREE YEARS UNDER CONSIDERATION, WHICH ARE IDENTICAL EXCEPT THE AMOUNT OF SUPPRESSION OF SALES ALLEGEDLY MADE BY TH E ASSESSEE. THE SAME ARE REPRODUCED BELOW:- A.Y. 2009-10 (F.Y. 2008-09 ) 06.09.2013 IN THE INSTANT CASE, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2009-10 IN DUE TIME AND DULY PROCESSED U/S 143(1) AT RS.4,85,380/- ON 12.11.2010 AGAINST THE R ETURN INCOME OF RS.4,85,380/-. LATTER IT IS FOUND AND DET ECTED THAT AGAINST THE TAX IDENTIFICATION NO. (TIN) 27670 02475IV FOR THE F.Y 2008-09 RELEVANT TO THE AY 2009-10 THE ASSESSEE SUPPRESS HIS SALE OF RS.1,59,151/-. IN THE LIGHT OF THE ABOVE, I HAVE REASON TO BELIEV E THAT THERE HAD BEEN ESCAPEMENT OF INCOME ON RECEIPT 1,59,151/- AND SUPPRESSION OF CORRESPONDENCE INCOME ARISES OUT THAT RECEIPTS AND PAYMENT AS PER PROVISI ON OF SECTION 69(C) OF I.T. ACT, THEREFORE, ATTRACT THE S ECTION 147 OF THE I.T. ACT, 1961 FOR THE AY 2010-11. HENCE, NO TICE U/S 148 FOR INCOME ESCAPING ASSESSMENT U/S 147 OF THE I .T. ACT, 1961 TO BE ISSUED FOR SUCH ESCAPEMENT OF INCOME. A.Y. 2010-11 (F.Y. 2009-10) 06.09.2013 IN THE INSTANT CASE, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2010-11 IN DUE TIME AND DULY PROCESSED U/S 143(1) AT RS.4,80,163/- ON 03.05.2011 BY CPC AGAINS T THE RETURN INCOME OF RS.4,80,160/-. LATTER IT IS FOUND AND DETECTED THAT AGAINST THE TAX IDENTIFICATION NO. (T IN) 2767002475IV FOR THE F.Y 2009-10 RELEVANT TO THE AY 2010- 11 THE ASSESSEE SUPPRESS HIS SALE OF RS.1,56,728/-. IN THE LIGHT OF THE ABOVE, I HAVE REASON TO BELIEV E THAT THERE HAD BEEN ESCAPEMENT OF INCOME ON RECEIPT 1,56,728/- AND SUPPRESSION OF CORRESPONDENCE INCOME ARISES OUT THAT RECEIPTS AND PAYMENT AS PER PROVISI ON OF SECTION 69(C) OF I.T. ACT, THEREFORE, ATTRACT THE S ECTION 147 OF THE I.T. ACT, 1961 FOR THE AY 2010-11. HENCE, NO TICE U/S 148 FOR INCOME ESCAPING ASSESSMENT U/S 147 OF THE I .T. ACT, 1961 TO BE ISSUED FOR SUCH ESCAPEMENT OF INCOME. A.Y. 2011-12 (F.Y. 2010-11) 06.09.2013 IN THE INSTANT CASE, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2011-12 IN DUE TIME AND DULY PROCESSED U/S I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 4 OF 6 143(1) AT RS.5,55,453/- ON 23.12.2011 BY CPC AGAINS T THE RETURN INCOME OF RS.5,55,453/-. LATTER IT IS FOUND AND DETECTED THAT AGAINST THE TAX IDENTIFICATION NO. (T IN) 2767002475IV FOR THE F.Y 2010-11 RELEVANT TO THE AY 2011- 12 THE ASSESSEE SUPPRESS HIS SALE OF RS.2,28,800/-. IN THE LIGHT OF THE ABOVE, I HAVE REASON TO BELIEV E THAT THERE HAD BEEN ESCAPEMENT OF INCOME ON RECEIPT 2,28,800/- AND SUPPRESSION OF CORRESPONDENCE INCOME ARISES OUT THAT RECEIPTS AND PAYMENT AS PER PROVISI ON OF SECTION 69(C) OF I.T. ACT, THEREFORE, ATTRACT THE S ECTION 147 OF THE I.T. ACT, 1961 FOR THE AY 2010-11. HENCE, NO TICE U/S 148 FOR INCOME ESCAPING ASSESSMENT U/S 147 OF THE I .T. ACT, 1961 TO BE ISSUED FOR SUCH ESCAPEMENT OF INCOME. 6. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR TH E ASSESSEE FROM THE REASONS RECORDED BY THE ASSESSING OFFICER, THE ASSE SSMENTS WERE REOPENED ON THE GROUND THAT THERE WAS SUPPRESSION O F SALES BY THE ASSESSEE. IN THE ASSESSMENTS COMPLETED UNDER SECTIO N 147/143(3) FOR ALL THE THREE YEARS UNDER CONSIDERATION, THE ASSESSING OFFICER, HOWEVER, DID NOT MAKE ANY ADDITIONS ON ACCOUNT OF SUPPRESSED SAL ES AND ACTUALLY MADE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. ALTHOUGH T HE LD. D.R. HAS CONTENDED THAT THERE WAS A MISTAKE ON THE PART OF T HE ASSESSING OFFICER IN MENTIONING THE RELEVANT TRANSACTIONS AS SUPPRESSED SALES INSTEAD OF BOGUS PURCHASES, THE FACT REMAINS TO BE SEEN IS THA T THE ASSESSMENTS WERE REOPENED BY THE ASSESSING OFFICER FOR THE REASON TH AT THERE WAS SUPPRESSION OF SALES BY THE ASSESSEE AND THERE WAS NO ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SUCH SUPPRESSION OF SALES IN ANY OF THE THREE YEARS UNDER CONSIDERATION. THE ADDITIONS FINALLY MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE WERE ON ACCOUNT OF BOGUS PURCHASES, WHICH WAS NOT AT ALL TH E SUBJECT MATTER OF THE REASONS RECORDED BY THE ASSESSING OFFICER. 7. IN THE CASE OF CIT VS.- JET AIRWAYS (I) LIMITED [(2011) 331 ITR 236 (BOMBAY) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, THE HONBLE BOMBAY HIGH COURT HAS HELD THAT AS PER THE PROVISIONS OF SECTION 147 AMENDED WITH EFFECT FROM 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS TO ASSESS O R I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 5 OF 6 REASSESS THE INCOME, WHICH ESCAPED ASSESSMENT AND W HICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF IT IS THUS SO, HE CAN ASSESS OR REASSESS ANY OTHER INCOME, WHICH HAS ESCAPED ASSESSMENT AND WHIC H COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HOWEV ER, IF AFTER THE ISSUING OF NOTICE UNDER SECTION 148, HE ACCEPTS THE CONTENT ION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS FORMED THE REASO N TO BELIEVE, HAD ESCAPED ASSESSMENT, HAS, AS A MATTER OF FACT, NOT E SCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. 8. IN THE CASE OF RANBAXY LABORATORIES LIMITED VS. - CIT (2011) 336 ITR 136 (DELHI), THE VERY BASIS FOR INITIATION OF P ROCEEDINGS UNDER SECTION 147/148 FOR WHICH REASONS TO BELIEVE WERE RECORDED WAS, IN FACT, ESCAPING ASSESSMENT IN RESPECT OF ITEMS OF CLUB FEE S, GIFTS AND PRESENTS, ETC. AND WHILE THESE ITEMS WERE NOT DISTURBED, THE ASSESSING OFFICER PROCEEDED TO REDUCE THE CLAIM OF THE ASSESSEE FOR D EDUCTION UNDER SECTION 80HH AND 80I. THE HONBLE DELHI HIGH COURT, HOWEVER , HELD THAT IT WAS NOT PERMISSIBLE. EXPLAINING THE LEGAL POSITION IN T HIS REGARD, HONBLE DELHI HIGH COURT OBSERVED THAT IF EVEN THOUGH ASSES SING OFFICER HAD A JURISDICTION TO REASSESS THE ISSUES OTHER THAN THE ISSUES IN RESPECT OF THE PROCEEDINGS WERE INITIATED, HE WAS NOT JUSTIFIED TO DO SO WHEN THE REASONS FOR INITIATION OF THOSE PROCEEDINGS HAD CEA SED TO SURVIVE. 9. IN THE PRESENT CASE, NO ADDITIONS HAVING BEEN MA DE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE ON ACCO UNT OF SUPPRESSION OF SALES, THE VERY REASONS FOR THE INITIATION OF REASS ESSMENT PROCEEDINGS HAD CEASED TO SURVIVE AND IN MY OPINION, IT WAS NOT PER MISSIBLE TO THE ASSESSING OFFICER TO MAKE ADDITIONS TO THE TOTAL IN COME OF THE ASSESSEE IN THE REASSESSMENTS ON THE ISSUE OF BOGUS PURCHASES, WHICH WAS NOT THE SUBJECT MATTER OF REASONS RECORDED BY HIM FOR REOPE NING THE ASSESSMENT AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LIMITED (SUPRA) AND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LIMITED (SUPRA). I, THEREFO RE, DELETE THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON I.T.A. NOS. 1986, 1987 & 1988/KOL./2016 ASSESSMENT YEARS: 2009-2010, 2010-2011 & 2011-2012 PAGE 6 OF 6 ACCOUNT OF THE ALLEGED BOGUS PURCHASES IN ALL THE T HREE YEARS UNDER CONSIDERATION AND ALLOW THESE APPEALS OF THE ASSESS EE. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 15, 201 7. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 15 TH DAY OF MARCH, 2017 COPIES TO : (1) SHRI MOTILAL JAIN, C/O. V.N. PUROHIT & COMPANY, CHARTERED ACCOUNTS, DIAMOND CHAMBERS, UNIT-III, 4 TH FLOOR, SUIT NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA-700 016 (2) INCOME TAX OFFICER, WARD-35(4), KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, E.M. BYE PASS, KOLKATA-700 107 (3) COMMISSIONER OF INCOME TAX (APPEALS)-10, KOLKA TA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.