ACIT 20 (1), MUMBAI V. INDUSTRIAL EXPORTS, MUMBAI

ITA 2083/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7327 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Onus to prove
• Section: 143(3); 133(6); 147; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M. BALAGANESH , ACCOUNTANT MEMBER ITA NO. 2083 / MUM . /2016 ( ASSESSMENT YEAR : 20 0 6 07 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 20(1), MUMBAI . APPELLANT V/S INDUSTRIAL EXPORTS D 2, DALAL ESTATE, MUMBAI PAN AAAF16935Q . RESPONDENT REVENUE BY : SHRI SUHAS KULKARNI ASSESSEE BY : SHRI DEVENDRA JAIN DATE OF HEARING 11 .0 2 .201 9 DATE OF ORDER 26.04.2019 O R D E R PER SAKTIJIT DEY. J.M. T HE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 5 TH JANUARY 201 6 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 32 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 0 6 07 . 2 . T HE REVENUE HAS FILED THE PRESENT APPEAL BEING AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN DELETING THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 2 INDUSTRIAL EXPORTS 3 . BRIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF EXPORTING STAINLESS STEEL UTENSILS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) R/W SECTION 147 OF THE INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ) ON 4 TH MAY 2009, ACCEPTING THE INCOME RETURNED BY T HE ASSESSEE AT ` 5,51,059. SUBSEQUENTLY, ON THE BASIS OF ENQUIRY CONDUCTED UNDER SECTION 133(6) OF THE ACT CERTAIN INFORMATION CAME TO THE POSSESSION OF THE ASSESSING OFFICER INDICATING THAT THE FOLLOWING PURCHASES MADE BY THE ASSESSEE ARE NON GENUINE: 1 . P.K. TRADING CO. ` 1,53,56,091 2. MAHAVIR TRADING CO. ` 47,56,763 3. MAHAVIR IMPEX ` 76,53,525 4. GALLANT TRADERS ` 49,54,275 4 . ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2007 08, IT WAS FOUND THAT THE PURCHASES MADE FROM P.K. TRADING CO. COULD NOT BE VERIFIED AS THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT COULD NOT BE SERVED. AS REGARDS OTHER PARTIES, THE ASSESSING OFFICER OBSERVED THAT NO TRANSACTION HAD TAKEN PLACE DURING THE YEAR UNDER CONSIDERATION. THEREFORE, HE CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE FROM P.K. TRADING CO., AMOUNTING TO ` 3 INDUSTRIAL EXPORTS 1,53,42,868 BY PRODUCING THE CONCERNED PARTY. IN RESPONSE, A SSESSEE MADE SUBMISSIONS CLAIMING THAT THE PURCHAS ES MADE FROM THE CONCERNED PARTY IS GENUINE. H OWEVER, SINCE THE ASSESSEE COULD NOT PRODUCE THE CONCERNED PARTY, THE ASSESSING OFFICER TREATED THE PURCHASES MADE FROM P.K. TRADING CO. NON GENUINE AND ADDED BACK TO THE INCOME OF THE AS SESSEE UNDER SECTION 69 C OF THE ACT. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 5 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) FOUND THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNI SHED THE STOCK REGISTER INCLUDING QUANTITATIVE DETAILS TO DEMONSTRATE THAT THE GOODS PURCHASED FROM P.K. TRADING CO. HAVE BEEN EXPORTED AND THE ASSESSEE HAS ALSO CLAIMED DUTY DRAWBACK OF ` 15.57 LAKH ON SUCH EXPORTS. HE FURTHER FOUND THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEA R 2007 08, SIMILAR DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES MADE FROM ANOTHER PARTY WAS DELETED BY THE TRIBUNAL ON THE REASONING THAT WHEN THE EXPORT SALES ARE ACCEPTED , THE PURCHASE CANNOT BE DISBELIEVED. ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , LEARNED COMMISSIONER (APPEALS) SHOULD NOT HAVE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER SIMPLY RELYING UPON THE DECISION OF THE TRIBUNAL 4 INDUSTRIAL EXPORTS AS THE PARTY FROM WHICH THE ASSESSEE HAS PURCHASED GOODS IN THE IMPUGNED ASSESSMENT YEAR IS DIFFERENT. FURTHER, HE SUBMITTED, PURCHASES MADE HAVE NOT BEEN PROVED BY THE ASSESSEE THROUGH PROPER DOCUMENTARY EVIDENCES. THEREFORE, HE SUBMITTED , THE ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER TO VERIFY ASSESSEES CLAIM. 7 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , UNDER SIMILAR FACTS AND CIRCUMSTANCES THE TRIBUNAL HAS D ELETED THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES IN ASSESSMENT YEAR 2007 08 IN ASSESSEES OWN CASE. HE SUBMITTED , IN THE IMPUGNED ASSESSME NT YEAR ALSO THE ASSESSEE HAD FURNISHED ALL EVIDENCES TO PROVE THE GENUINENESS OF PURCHASES MADE AND EXPOR T SALES EFFECTED. HE SUBMITTED , QUANTITATIVE TALLY ALONG WITH THE STOCK REGISTER WAS FURNISHED BEFORE THE ASSESSING OFFICER TO CO RELATE THE PURCHASES AND SALES. THEREFORE, HE SUBMITTED , THE ADDITION MADE WAS RIGHTLY DELETED BY THE LEARNED COMMISSIONER (AP PEALS). 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS EVIDENT , THE ASSESSING OFFICER HAS DISBELIEVED THE PURCH ASES MADE FROM P.K. TRADING CO. AS NON GENUINE BECAUSE THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT TO VERIFY S UCH PURCHASES RETURNED BACK UNSERVED. FURTHER, THE ASSESSEE ALSO FAILED TO PRODUCE EITHER THE CONCERNED PARTY OR ANY OTHER CLINCHING EVIDENCE TO PROVE THAT PURCHASES WERE MADE FROM P.K. TRADING CO . THOUGH, IT MAY BE A 5 INDUSTRIAL EXPORTS FACT THAT THE ASSESSEE WAS ABLE TO CO RELATE THE QUANTUM OF PURCHASES WITH THE EXPORT SALES THROUGH STOCK REGISTER AND QUANTITATIVE DETAILS, HOWEVER, IT ONLY GOES TO PROVE THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM SOME SOURCE. BUT , THAT DOES NOT PROVE THAT THE ASSESSEE HAD PURCHASED THE G OODS FROM P.K. TRADING CO. MORE SO, WHEN THE PURCHASES FROM THE SAID SOURCE REMAINED UN VERIFIED DUE TO UNAVAILABILITY OF THE SAID PARTY IN THE GIVEN ADDRESS. THEREFORE, THE CLAIM OF THE ASSESSEE THAT THE GOODS WERE PURCHASED FROM P.K. TRADING CO. IS UNACC EPTABLE. I N THESE CIRCUMSTANCES , THE ONLY LOGICAL CONCLUSION WOULD BE, THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM UNDECLARED SOURCES, POSSIBLY GREY MARKET, AND ATTEMPTED TO REGULARIZE THEM BY OBTAINING ACCOMMODATION BILLS FROM P.K. TRADING CO . THAT BEING THE CASE, TO SOME EXTENT, THERE IS POSSIBILITY OF SUPPRESSION OF TRUE PROFIT BY THE ASSESSEE. L EARNED COMMISSIONER (APPEALS) SIMPLY RELYING UPON THE DECISION OF THE TRIBUNAL I N ASSESSMENT YEAR 2007 08 AND THE FACT THAT EXPORT SALES MADE BY THE ASSESS EE HAVE BEEN PROVED , HAS DELETED THE ADDITION. 9 . IN OUR VIEW, THE ISSUE WHETHER A PARTICULAR PURCHASE IS GENUINE OR NOT IS A PURELY FACTUAL ISSUE AND HAS TO BE DECIDED ON THE BASIS OF FACTS INVOLVED IN EACH ASSESSMENT YEAR. THEREFORE, THE DECISION OF THE T RIBUNAL IN ASSESSEES OWN CASE FOR ANOTHER ASSESSMENT YEAR , WHERE THE DISPUTE RELATED TO PURCHASE MADE FROM SOME OTHER PARTY , CANNOT 6 INDUSTRIAL EXPORTS BE CONSIDERED AS PRECEDENT FOR TREATING THE PURCHASE MADE IN THE IMPUGNED ASSESSMENT YEAR TO BE GENUINE. IN OUR CONSIDERED OPINION, THE BURDEN TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE DECLARED SOURCE LIES ENTIRELY UPON THE ASSESSEE. THAT BEING THE CASE, WE ARE INCLINED TO RESTORE THE MATTER TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. THE ASSESSEE MUST FURNISH COGENT DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE P.K. TRADING CO . WE MAY FURTHER ADD , IN CASE THE ASSESSEE FAILS TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE DECLARED SOURCE, THE ENTIRE PURCHASES CANNOT BE ADDED TO T HE INCOME OF THE ASSESSEE, BUT, ONLY THE PROFIT ELEMENT EMBEDDED THEREIN, ESTIMATED AT A REASONABLE RATE, MAY BE CONS IDERED FOR ADDITION. THIS IS DUE TO THE REASON THAT SALES EFFECTED BY THE ASSESSEE HAVE BEEN ACCEPTED. WITH THE ABOVE OBSERVATIONS, THE ISS UE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. GROUND RAISED IS ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 26.04 . 20 1 9 SD/ - M. BALAGANESH ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 26. 0 4 .2019 7 INDUSTRIAL EXPORTS 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