KAMLESH MANOHAR KANUNGO (PROP. M/S.TRISON IMPEX), MUMBAI V. DCIT CEN CIR 1(4), MUMBAI

ITA 2059/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4873 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITRA
• Keywords: Bogus purchase; Search and seizure; Tangible material
• Section: 143(3); 133A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2059 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) KAMLESH MANOHAR KANUNGO PROP. M/S. TRISON IMPEX) C/O D.C. BOTHRA & CO., C.A. (FORMERLY KNOWN AS M/S. D.C. BOTHRA & CO.), 297, TARDEO ROAD WILLE MANSION, OPP. BANK OF INDIA NANA CHOWK, MUMBAI 400 007 PAN ABBPK9675R . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1( 4 ), MUMBAI . RESPONDENT ASSESSEE BY : SHRI RAJKUMAR SINGH REVENUE BY : SHRI S.K. MITRA DATE OF HEARING 11 . 1 2 .201 8 DATE OF ORDER 08.02.2019 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 30 TH JANUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 47 , MUMBAI , FOR THE ASSESSMENT YEAR 20 0 9 10 . 2 . IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 2 KAMLESH MANOHAR KANUNGO 3 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. HE CARRIES ON BUSINESS OF TRADING IN FERROUS AND NON FERROUS METAL S THROUGH HIS PROPRIETARY CONCERN M/S. TRISON IMPEX. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 19 TH AUGUST 2009, DECLA RING TOTAL INCOME OF ` 6,02,999. THE ASSESSMENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 20 TH DECEMBER 2011, DETERMINING THE TOTAL INCOME AT ` 1,95,37,050. AFTER COMPLETION OF THE ORIGINAL ASSESSMENT AS AFORESAID, PROCEEDINGS UNDER SECTION 153C OF THE ACT WAS INITIATED AGAINST THE ASSESSEE ON THE BASIS OF INFORMATION / MATERIAL FOUND IN A SEARCH AND SEIZURE OPERATION CONDUCTED IN CASE OF TIRUPATI GROUP OF COMPANIES ON 29 TH APRIL 2011. AN ASSESSMENT OR DER UNDE R SECTION 143(3) R/W SECTION 153 C OF THE ACT WAS PASSED FOR THE IMPUGNED ASSESSMENT YEAR ON 27 TH MARCH 2014, DETERMINING THE TOTAL INCOME AT ` 6,03,000, AFTER SET OFF OF LOSS. WHEN THE MATTER STOOD THUS, THE ASSESSING OFFICER RECEIVED INFORMATION F ROM DGIT (INV.), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS PROVIDED BY THREE PARTIES AGGREGATING TO ` 3,83,07,709. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND ULTIMATELY PASSED AN ASSESSMENT ORDER UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT BY MAKING ADDITION OF ` 11,99,031, ON ACCO UNT OF NON GENUINE PURCHASES. THOUGH, THE ASSESSEE CHALLENGED 3 KAMLESH MANOHAR KANUNGO THE RE OPENING OF ASSESSMENT IN AN APPEAL FILED BEFORE THE LEARNED COMMISSIONER (APPEALS), HOWEVER, HE WAS UNSUCCESSFUL. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4 . THE LEARNED AU THORISED REPRESENTATIVE SUBMITTED , A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 26 TH DECEMBER 2012. IN COURSE OF SUCH SURVEY OPERATION, CERTAIN DOCUMENTS WERE IMPOUNDED ON THE BASIS OF WHICH A STATEMENT W AS RECORDED FROM THE ASSESSEE SPECIFICALLY ON THE PURCHASES EFFECTED FROM CERTAIN PARTIES. HE SUBMITTED , IN THE SAID STATEMENT THE ASSESSEE HAD F URNISHED ALL THE DETAILS RELATING TO SUCH PURCHASES AND ALSO STATED THAT THE PURCHASES WERE MADE THROUGH BROKER S. HE SUBMITTED , IN CASE OF THE ASSESSEE NOT ONLY THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BUT SUBSEQUENTLY , ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS ALSO COMPLETED UNDER SECTION 153C OF THE ACT. THEREFORE, HE SUBMITTED , RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IS INVALID , SINCE , THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND CORRECTLY ALL MATERIAL FACTS RELATING TO HIS ASSESSMENT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THOUGH INFORMATION RELATING TO THE BOGUS PURCHASE S W AS AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE PROCEEDINGS UNDER SECTION 153C OF THE ACT , STILL THE ASSESSING 4 KAMLESH MANOHAR KANUNGO OFFICER DID NOT MAKE A NY ADDITION WHILE COMPLETING THE ADDITION , THOUGH , ON THE BASIS OF SAME INFORMATION HE MADE ADDITION IN ASSESSMENT YEAR S 2007 08 AND 2008 09. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HA S FURNISHED FULL DETAILS OF THE PURCHASES MADE DURING THE YEAR AND THE ASSESSING OFFICER HAS EXAMINED THEM WHILE COMPLETING THE ASSESSMENT. THUS, HE SUBMITTED , RE OPENING OF ASSESSMENT IS INVALID, AS THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO THE ASSESSMENT. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) BHOR INDUSTRIES LTD. V/S ACIT, [2004] 267 ITR 161 (BOM.); II ) IPCA LABORATORIES LTD. V/S GJANAND MEENA, [2002] 124 TAXMAN 556; III ) CIT V/S FORAMER FRANCE, [2003] 129 TAXMAN 072 (SC); IV ) FORAMER V/S CIT, [2001] 119 TAXMAN 061 (ALL.); AND V ) ACIT V/S ICICI SECURITIES PRIMARY DEALERSHIP LTD., [2012] 348 ITR 299 (SC). 5 . T HE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 6 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE REASONS RECORDED BY THE ASSESSING OFFICER WHILE RE OPENING THE ASSESSMENT, AFTER COMPLETION OF THE ORIGINAL ASSESSMENT, THE A SSESSING OFFICER RECEIVED SPECIFIC INFORMATION 5 KAMLESH MANOHAR KANUNGO FROM THE DGIT (INV.), MUMBAI, THAT PURCHASES WORTH ` 3,83,07,709, CLAIMED TO HAVE BEEN MADE FROM THREE PARTIES ARE NOT GENUINE. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER HAS RE OPENED THE ASSESSM ENT UNDER SECTION 147 OF THE ACT . THUS, IT IS EVIDENT, THE ASSESSING OFFICER HAD TANGIBLE MATERIAL BEFORE HIM TO FORM THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS ALSO SEEN FROM RECORD THAT CHALLENGING THE RE OPENING OF ASSESSMENT ASSESSEE HAD RAISED OBJECTIONS BEFORE THE ASSESSING OFFICER. HOWEVER, BEFORE COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER HAS DISPOSED OFF THE OBJECTIONS OF THE ASSESSEE THROUGH A SEPARATE WELL REASONED ORDER. AS REGARDS THE CONTENTION OF THE ASSES SEE THAT THERE BEING NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS RELATING TO THE ASSESSMENT THE RE OPENING OF ASSESSM ENT AFTER FOUR YEARS IS INVALID, I MUST OBSERVE , NON FURNISHING OF ACCURATE / CORRECT DETAILS REL ATING TO PURCHASES MADE TANTAMOUNT TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND CORRECTLY ALL MATERIAL FACTS RELATING TO HIS ASSESSMENT. THAT BEING THE CASE, THE RE OPENING OF ASSESSMENT CANNOT BE HELD TO BE INVALID. THOUGH, I RESPECTFULLY AGREE WITH THE PROPOSITION LAID DOWN IN THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE, HOWEVER, THOSE DECISIONS WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. THE CONTENTION OF THE ASSESSEE THAT IN SPITE OF HAVING INFORMATI ON BEFORE HIM, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF BOGUS PURCHASE IN THE 6 KAMLESH MANOHAR KANUNGO ASSESSMENT COMPLETED UNDER SECTION 153C OF THE ACT IS IRRELEVANT CONSIDERING THE FACT THAT THE INTENT AND PURPOSE OF SECTION 153C OF THE ACT IS DIFFERENT FRO M SECTION 148 OF THE ACT. IN VIEW OF THE AFORESAID, I HOLD THAT THE ASSESSING OFFICER HAS VALIDLY RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. ACCORDINGLY, GROUND NO.1 IS DISMISSED. 7 . IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) ON ACCOUNT OF BOGUS PURCHASE. 8 . AS DISCUSSED EARLIER, IN THE RE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE OF ` 3,83,07,709, FROM THREE PA RTIES. AS OBSERVED BY THE ASSESSING OFFICER, THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES THROUGH PROPER DOCUMENTARY EVIDENCES. THEREFORE, HE TREATED THE PURCHASES AS NON GENUINE. HOWEVER, HE RESTRICTED THE ADDITION ON ACCOUNT OF NON GENUI NE PURCHASES BY APPLY ING GROSS PROFIT RATE OF 3.13% WHICH WORKED OUT TO ` 11,99,031. 9 . WHIL E CONSIDERING ASSESSEES APPEAL ON THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER, LEARNED COMMISSIONER (APPEALS) ENHANCED THE GROSS PROFIT RATE TO 5% RESULTIN G IN ADDITION OF ` 19,15,386. 7 KAMLESH MANOHAR KANUNGO 10 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , WHILE DECIDING IDENTICAL ISSUE ON ACCOUNT OF NON GENUINE PURCHASES, THE TRBUNAL HAS RESTRICTED THE ADDITION TO 2% IN ASSESSMENT YEAR 2007 08, 2008 09 AND 2011 12. THUS, HE SUBM ITTED , THE ADDITION SHOULD BE RESTRICTED TO 2% OF THE ALLEGED NON GENUINE PURCHASES. 11 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 12 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. FROM THE FACTS ON RECORD, IT IS EVIDENT, THE ASSESSEE HAS NOT FURNISHED COGENT EVIDENCE TO CONCLUSIVELY PROVE THE GENUINENESS OF PURCHASES MADE OF ` 3,83,07,709, FROM THREE PARTIES. WHILE THE ASSESSING OFFICER HAS MADE ADDITION ON ACCOUNT OF NON GENUINE PURCHASES BY RESTRICTING IT TO THE GROSS PROFIT RATE OF 3.13% , LEARNED COMMISSIONER (APPEALS) SIMPLY RELYING UPON HIS ORDER PASSED IN ASSESSEES OWN CASE OF ASSESSMENT 2011 12, HAS ENHANCE T HE ADDITION BY ESTIMATING THE GROSS PROFIT RATE @ 5%. NOTABLY, WHILE DECIDING ASSESSEES APPEALS FOR ASSESSMENT YEAR 2007 08, 2008 09 AND 2011 12, IN ITAS NO.3242, 3243 AND 3244/MUM./2016, DATED 28 TH FEBRUARY 2017, THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 2% OF THE NON GENUINE PURCHASES. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE AS REFERRED 8 KAMLESH MANOHAR KANUNGO TO ABOVE, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 2% OF THE NON GENUINE PURCHASES. THIS GROUND IS PARTLY ALLOWED. 13 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.02. 2019 SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.02.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI