M/s. N.B. Constructions, Pune V. Income-tax Officer, Ward - 9(3), Pune

ITA 2067/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3364 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-12-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Reason to believe
• Section: 133(6); 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.2067/PUN/2017 / ASSESSMENT YEAR : 2009-10 M/S. N.B. CONSTRUCTIONS, S.NO.19/20, 5, N.B. ARCADE, PRADHIKARAN ROAD, AKURDI, PUNE 411 035 PAN : AAGFN7989K VS. ITO, WARD-9(3), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A)-9, PUNE ON 21-06-2017 IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE INITIATION OF RE-ASSESSMENT PROCEEDINGS. 3. BRIEFLY STATED, THE FACTS OF THE CASE, AS RECORDED IN ASSESSMENT ORDER, ARE THAT THE ASSESSEE FILED HIS RETURN DECLARING TOTAL INCOME OF RS.3,81,360/-. A SURVEY ACTION APPELLANT BY SHRI KISHOR PHADKE RESPONDENT BY SHRI RAJESH GAWALI DATE OF HEARING 18-02-2019 DATE OF PRONOUNCEMENT 19-02-2019 ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 2 U/S.133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D `THE ACT) WAS TAKEN UP IN THE CASE OF M/S. JAPTECH INDUSTR IES, BHOSARI, PUNE ON 26-11-2012, WHICH TRANSPIRED THAT THE ASSESSEE MADE PURCHASES DURING THE YEAR UNDER CONSIDER ATION FROM M/S. SHRUTI TRADING CORPORATION (STC), A SISTER CONCERN OF M/S. JAPTECH INDUSTRIES, PUNE. THE ASSESSING OFFICER (A O) ISSUED NOTICE U/S.148 PURSUANT TO WHICH THE ASSESSEE SUBMIT TED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS IN RESPONSE TO NOTICE U/S.148. THE ASSESSEE REQUESTED TO FURNISH THE RELE VANT DOCUMENTS ON THE BASIS OF WHICH RE-ASSESSMENT WAS INITIATED. THE AO DID NOT FURNISH THE SAME BY OBSERVING THAT INFORMATION RECEIVED FROM DDIT (INV.), UNIT-1(3), PUNE WA S CONFIDENTIAL AND THE SAME COULD NOT BE DISCLOSED TO THE ASSESSEE. THE AO NOTICED IN PARA NOS. 4 TO 6 OF THE ASSES SMENT ORDER THAT THE ASSESSEE MADE STEEL PURCHASES FROM STC. A LETTER DATED 06-08-2013 WAS ISSUED TO STC CALLING FOR INFORMATION U/S. 133(6) OF THE ACT. STC FILED LEDGER EXTRACT ACCOUNT OF THE ASSESSEE IN WHICH SALES WERE SHOWN TO THE TUNE OF RS.9,26,754/-. SINCE THE ASSESSEE COULD NOT FILE COPIES OF GOODS RECEIPT NOTE AND PURCHASE ORDER ETC., THE AO HELD TH AT SUCH PURCHASE TRANSACTIONS OF THE ASSESSEE WERE BOGUS. IT WAS ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 3 SO HELD BECAUSE MR. MUKESH MITTAL, PROPRIETOR OF M/S. JAPTEC H INDUSTRIES, BHOSARI, PUNE AND HUSBAND OF MS. POONAM MUKE SH MITTAL, PROPRIETOR OF STC HAD MADE PURCHASES FROM M/S. KRC TRADING CORPORATION AND M/S. KRC TRADING COMPANY WAS A SUSPICIOUS HAWALA DEALER. THE AO HELD THAT STC DID NOT HAVE ANY DOCUMENTARY EVIDENCE TO PROVE THAT THE MATERIAL WAS ACTUALLY SUPPLIED TO THE ASSESSEE. SINCE THE PURCHASES OF ST C WERE MADE FROM M/S. KRC TRADING COMPANY, NAMELY, A HAWALA PARTY, THE AO HELD SUCH PURCHASES TO BE NOT GENUIN E. THIS LED TO THE MAKING OF AN ADDITION OF RS.9,26,754/- IN THE HANDS OF THE ASSESSEE, BEING, THE AMOUNT OF PURCHASES S HOWN BY THE ASSESSEE FROM STC. THE LD. CIT(A) ECHOED THE ASSESSMENT ORDER ON THIS COUNT. AGGRIEVED THEREBY, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH TH E RELEVANT MATERIAL ON RECORD. THE NOTICE U/S.148 WAS ISSUED ON 31-03-2013, A COPY OF WHICH HAS BEEN PLACED AT PAGE 13 OF THE PAPER BOOK. PAGE 15 OF THE PAPER BOOK IS A COPY OF O RDER SHEET, RECORDING THE REASONS, WHICH ARE REPRODUCED AS UNDER : ORDER SHEET ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 4 DATE : 01-04-2013 THE ASSESSEE FIRM IS BUILDER & DEVELOPERS. THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.3,81,630/-. A SURVEY ACTION U/S.133A IN THE CASE OF JAPTECH INDUSTRIES, BHOSARI, PUNE WAS CARRIED OUT ON 26-11-2012 BY THE DDIT (INV.), UNIT-1(3), PUNE. IT WAS SEEN DURING THE COURSE OF SURVEY ACTION THAT M/S. N.B. CONSTRUCTIONS MADE HAWALA PURCHASES OF RS.6,68,413/- FROM M/S. KRC TRADING COMPANY. THE DDIT (INV.) UNIT-1(3), PUNE VIDE CONFIDENTIAL LETTER NO. PN/DDIT(INV.)-1(3)/SURVEYJAPTECH/INTIMATION/885/12- 13 DATED 07-02-2013 ALONGWITH COPIES OF STATEMENT RECORDED ON 26-11-2012 OF SHRI MUKESH MITTAL AND LEDGER EXTRACTS. ON GOING THROUGH THE DETAILS FORWARDED BY THE DDIT IT IS SEEN THAT THE ASSESSEE HAS MADE HAWALA TRANSACTION IN RESPECT OF PURCHASE OF RAW MATERIAL AMOUNTING TO RS.6,68,413/-. THEREFORE I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS.6,68,413/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF 147 OF THE I.T. ACT, 1961. ISSUE NOTICE U/S.148. 5. IT CAN BE SEEN FROM THE ABOVE RECORDED REASONS, WH ICH LED TO THE ISSUANCE OF NOTICE U/S.148 OF THE ACT, THAT SURVEY ACTION U/S.133A IN THE CASE OF M/S. JAPTECH INDUSTRIES TRANSPIRED THAT THE ASSESSEE MADE HAWALA PURCHASES WORTH RS.6,68,413/- FOR M/S. KRC TRADING COMPANY. IT IS ON S UCH BASIS THAT THE AO HAD FORMED BELIEF ABOUT THAT THE ESCAPEMEN T OF INCOME OF THE ASSESSEE TO THAT EXTENT. FROM NARRATION OF FACTS EXTRACTED ABOVE FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THE AO HAS PASSED THE ASSESSMENT ORDER BY OBSERVING THA T STC ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 5 MADE PURCHASES FROM M/S. KRC TRADING COMPANY. SUCH PURCHASES MADE BY STC WERE FROM HAWALA DEALER, NAMELY, M/S. KRC TRADING COMPANY, WERE NOT GENUINE. WHEN I VIEW THE REASONS RECORDED VIS-A-VIS THE ASSESSMENT ORDER, IT TRANSPIRES THAT THERE IS A LOT OF DIFFERENCE BETWEEN THE REASO NS RECORDED BY THE AO AND THE ACTUAL FACTS AS RECORDED IN THE ASSESSMENT ORDER. THE REASONS HAVE BEEN PREMISED ON THE GROUND THAT THE ASSESSEE MADE HAWALA PURCHASES FROM M/S. KRC TRADING COMPANY, ON THE OTHER HAND, THE CASE IN THE ASSESSMENT ORDER IS THAT THE ASSESSEE MADE PURCHASES FRO M STC, WHICH WERE NOT GENUINE. ANOTHER SIGNIFICANT FACTOR WHICH IS WORTH NOTING IS THAT IN THE REASONS IS THAT THERE IS REFERENCE TO HAWALA PURCHASES WORTH RS.6,68,413/- MAD E BY THE ASSESSEE FROM M/S. KRC TRADING COMPANY, AS AGAINST THAT, THE ASSESSMENT ORDER REFERS TO HAWALA PURCHASES AMOUNTING TO RS.9,26,754/-, FOR WHICH THE ADDITION WAS ALSO MADE FOR THE EQUAL SUM. IT IS TRITE THAT THE VALIDITY OF INITIATION OF REASSESSMENT IS ALWAYS CHECKED WITH REFERENCE TO THE RECORDED REASONS AND NOT OTHERWISE. THUS, IT IS APPARENT THAT THE REASONS RECORDED BY THE AO BEFORE INITIATION OF RE- ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 6 ASSESSMENT ARE VAGUE AND DO NOT LEND CREDENCE TO THE ESCAPEMENT OF INCOME AS NOTICED IN THE ASSESSMENT ORDER. 6. IT IS FURTHER OBSERVED THAT SIMILAR ISSUE WAS RAISE D IN THE CASE OF M/S. N.D. CONSTRUCTIONS, ANOTHER RELATED CONCERN O F THE ASSESSEE, IN WHICH CASE ALSO THE RE-ASSESSMENT WAS TA KEN UP ON THE SAME GROUNDS AS HAS BEEN DONE IN THE CASE UNDER CONSIDERATION. THE TRIBUNAL VIDE ORDER DATED 06-02-2019 I N ITA NO.2068/PUN/2017 HAS QUASHED THE INITIATION OF RE- ASSESSMENT PROCEEDINGS. SINCE THE FACTS ARE ADMITTEDLY SIMILAR FOR THE EXTANT ASSESSEE, RESPECTFULLY FOLLOWING THE PRECEDENT, I ALSO SET-ASIDE THE INITIATION OF RE-ASSESSMENT PROCEEDINGS AND THE PROCEEDINGS FLOWING THEREFROM. 7. ANOTHER SIGNIFICANT FACTOR WHICH IS WORTH NOTING IS THA T THE REASONS ARE DATED 01-04-2013. AS AGAINST THAT, THE NO TICE U/S. 148 OF THE ACT HAS BEEN ISSUED ON 31-03-2013 MEN TIONING THAT WHEREAS I HAVE REASONS TO BELIEVE THAT YOUR INCOME CHARGEABLE TO TAX FOR THE A.Y. 2009-10 HAS ESCAPED ASSE SSMENT ........ IT IS OBVIOUS THAT THE REFERENCE IN THE NOTICE U/.S .148 DATED 31-03-2013 CANNOT BE TO NON-EXISTING REASONS WHICH WERE ADMITTEDLY RECORDED ON 01-04-2013. ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 7 8. THERE IS ONE MORE ASPECT OF THE MATTER. I HAVE NOTICED ABOVE THAT WHEN THE ASSESSSEE REQUESTED THE AO TO FURNISH THE REASONS AND OTHER RELEVANT DOCUMENTS ON THE BASIS OF WH ICH THE REASSESSMENT WAS TAKEN UP, THE AO FAILED TO FURNISH THE SAME BY OBSERVING THAT : `INFORMATION SO RECEIVED FROM DDIT (INV.), UNIT-1(3), PUNE IS CONFIDENTIAL AND NAMES OF OTHER BENEFICIARIES HAVE BEEN MENTIONED IN THE SAID LETTER WHICH CANNOT BE DISCLOSED. IN MY CONSIDERED OPINION, THIS CAN B E NO GROUND FOR DENYING THE FURNISHING OF THE REASONS TO THE ASSESSEE ON THE BASIS OF WHICH THE REASSESSMENT WAS INITIATED , WHEN SPECIFICALLY REQUESTED FOR. 9. IN VIEW OF MY DECISION ON THE SETTING-ASIDE OF RE- ASSESSMENT PROCEEDINGS, THERE IS NO NEED TO ESPOUSE THE M ERITS OF THE ADDITION. 10. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2019 SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 19 TH FEBRUARY, 2019 ITA NO.2067/PUN/2017 M/S. N.B. CONSTRUCTIONS 8 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-9, PUNE 4. PR.CIT-5, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 18-02-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19-02-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *