Mr. Melwyn Camara, Panaji V. Income tax Officer, Ward -1(1), Panaji

ITA 215/PAN/2023

• RSA Number: 21524114 RSA 2023
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Next Hearing Date: 02-06-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 13-12-2023

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI [THROUGH VIRTUAL HEARING] BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A.No.200/PAN./2023 ALONG WITH Stay Application No.1/PAN./2024 Assessment Year 2016-2017 Mrs. Moureen Camara, Ionic Apartments, 1 st Floor, Albamar Road, Tiswadi, Panaji, Goa. PIN – 403 001. PAN AABAS8153Q vs. National Faceless Appeal Centre [“NFAC”], Govt. of India, Ministry of Finance, I.T. Department, Delhi (Appellant) (Respondent) I.T.A.No. 215/PAN./2023 ALONG WITH Stay Application No.3/PAN./2024 Assessment Year 2016-2017 Mr. Melwyn Camara, Dias Building, Near GPO, Panaji, Goa - 403 001. PAN ABMPC9039L vs. The Income Tax Officer, Ward-1(1), Aaykar Bhawan, Plot No.5, EDC Complex, Patto Plaza, Panaji, Goa. (Appellant) (Respondent) For Assessee : Shri D.E. Robinson For Revenue : Shri Sridhar Dora, Sr. DR Date of Hearing : 03.06.2024 Date of Pronouncement : 07.06.2024 ORDER PER BENCH : These twin assessees appeals, for assessment year 2016-2017, arise against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s as many Din and Order Nos. ITBA/NFAC/S/250/2023-24/1057640303(1) and 1058226174(1), 2 I.T.A.Nos.200 & 215/PAN./2023 dated 02.11.2023 and 24.11.2023; involving proceedings u/s.147 r.w.s.144 and 143(3) of the Income Tax Act, 1961 (in short “the Act”); respectively. They have also filed their stay applications S.A.No.1 & 3/PAN./2024 seeking to restrain the department from recovering the consequential outstanding demand(s) of Rs.30,13,680/- and Rs.13,10,588/-; respectively. Heard the assessees as well as the department at length. Case files perused. 2. It emerges at the outset with the able assistance coming from both the sides that these twin assessees’ have raised a common/identical substantive ground challenging learned lower authorities action making sec.69C addition(s) of Rs.58,91,080/- in case of Mrs. Moureen Camara after invoking sec.5A of the Act as per the Portuguese Civil Code, 1939 in light of the corresponding addition of unaccounted imports added in her husband Mr. Melwyn Camara’s hands. We further clarify that although the assessees’ and more particularly the former taxpayer in ITA.No.200/PAN./2023; questions validity of sec.148/147 proceedings. She also challenges “transfer” of the Assessing Officer’s jurisdiction u/sec.127 r.w.s.129 of the Act. Learned counsel has not argued these pleadings during the course of hearing on 03.06.2024. 3 I.T.A.Nos.200 & 215/PAN./2023 2.1. Faced with this situation, we proceed to deal with the above identical sole substantive issue raised in both these appeals that the learned lower authorities have erred in law and on facts in making sec.69C r.w.s.115BBE unexplained/ unaccounted import expenditure addition(s) of Rs.58,91,080/- during the course of assessment(s) dated 27.12.2018 in case of Mr. Melwyn Camara, followed by his consequential latter assessment dated 20.09.2021 in the hands of Mrs. Moureen Camara. It is in this factual backdrop that we proceed to decide this sole issue in the succeeding paragraphs. 3. Both the learned representatives at this stage take us to the former assessee Mr. Melwyn Camara’s appeal ITA.No.215/PAN./2023 wherein the learned NFAC has affirmed the Assessing Officer’s action as under : “8.1. Ground No.(1) : Unexplained Expenditure under Sec.69C towards purchases amounting to Rs.89,79,665. The Assessing Officer observed that there was imported goods from China to the extent of Rs.89,79,665 and the said amount was not included in the purchases and the corresponding custom duty was also not included in the purchases amounting to Rs.28,02,495. The turnover is not exceeding the threshold limit of 44AD and the income does not undergo any change as the said income was considered by the Assessing for computing the total 4 I.T.A.Nos.200 & 215/PAN./2023 income. Hence, even though the assessee claimed that the payment was not made towards purchases as the goods were found to be defective and the said goods were to be returned to the supplier and hence it was not included in purchases, the fact remains that there is a transaction in relation to that business which is not a recorded transaction and it is in relation to raw materials supplied by a concern in China. The quantum consists of bill of lading of + custom duty. The said amount of purchases figuring as payable in the books of supplier from China is stated to be 123000 $ as at the end of the financial year 2015-16. But the confirmation letter from the supplier alone cannot be a conclusive evidence to show that the said amount was not paid to the supplier. The appellant has to substantiate the fact with copy of letter of credit and invoice and custom duty charged towards the said product and the arrangement between the parties to procure the goods. The appellant has not "produced the primary documents. Normally bills have to be cleared against acceptance. The transaction between India banker and China banker and the correspondence between the parties as to how the goods were to be returned. Thus, no documentation is produced for expenditure which is found not recorded in the books of accounts. Further, customs duty paid cannot be reimbursed and it is a payment made 5 I.T.A.Nos.200 & 215/PAN./2023 for importing the goods. Further no contract could be concluded without making part payment towards the product for a consideration of 123000 $. Hence, it is a concluded transaction which consists of two components, Principal value of good imported + payment to the government. Entire transaction is omitted to be recorded in the books without there being any reason. In view of the above factual matrix, the Assessing Officer has rightly treated this transaction to the extent of the value of the goods as unexplained expenditure and the addition made towards purchase of Rs.89,79,665 as unexplained expenditure is upheld. This ground is “Dismissed”. 4. Learned counsel vehemently argued during the course of hearing that both the lower authorities herein have erred in law and on facts in making the impugned addition in assessees’ hands. He invited our attention to the assessees’ detailed paper book running into 69 pages; and more particularly, the corresponding import related documents from pages 38 to 48 that these tax payers had not made any actual payment to the Hong-kong/China based furniture supplier. He referred to the concerned supplier’s clarification submitted during the course of hearing that the imported furniture items herein deserve to be returned as well once they failed to satisfy the quality bench-works. Learned counsel lastly contended that the customs duty component herein amounting to 6 I.T.A.Nos.200 & 215/PAN./2023 Rs.28,02,495/- paid through banking channel; added in the course of assessment and deleted in the NFAC’s order, has to be granted a deduction on netting basis against the foregoing sole substantive addition as per law. 5. The Revenue has drawn strong support from the NFAC’s foregoing detailed discussion affirming sec.59C r.w.s.115BBE addition made in the course of assessment(s) herein. 6. We have given our thoughtful consideration to the foregoing rival stands and find no merit in assessees cases. We make it clear first of all that there is no dispute inter alia on the clinching facts herein that the assessee had not recorded the impugned furniture import expenditure in the books of account. We wish to reiterate here that the furniture supplier herein is China based and therefore, we fail to comprehend as to how the assessee could get such huge imports items on credit without proving any past business relation even if it is accepted that no actual payment had been made. There is further no issue that custom duty (supra) stood duly paid on imports. These assessees’ explanation herein fails to satisfy the test of human probabilities going by Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC) and CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC). 7 I.T.A.Nos.200 & 215/PAN./2023 7. We thus see no reason to accept the impugned identical sole substantive ground(s) raised in both these appeals. We further wish to make it clear that it was the bounden duty of the assessee only to plead and prove all the relevant facts including the import agreement conditions so as to buttress the point that in case of any eventuality of quality defect on the furniture items ought to be returned to the China based supplier. No such explanation, much less a satisfactory one, has come from the assessees’ side all along. We thus affirm the learned lower authorities action deleting the impugned addition. 8. The assessees’ alternative prayer that we ought to grant relief of the foregoing custom duty component against the impugned addition(s) also carries no substance in light of the fact that the learned NFAC has already granted sufficient relief(s) to this effect in lower appellate proceedings. Coupled with this sec.69C proviso also bars such addition. The assessees instant alternative prayer is declined in very terms. Ordered accordingly. 9. These twin assessees’ appeals I.T.A.Nos.200 & 215/PAN./2023 are dismissed in above terms. Their respective stay applications S.A.Nos.1 & 3/PAN./2024 are stand rejected in same terms. A copy of this common order be placed in the respective case files. 8 I.T.A.Nos.200 & 215/PAN./2023 Order pronounced in the open Court on 07.06.2024 Sd/- Sd/- [R.K. PANDA] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 07 th June, 2024 VBP/- Copy to 1. The applicant 2. The respondent 3. The Pr. CIT, Panaji concerned. 4. D.R. ITAT, Panaji Bench, Panaji. 5. Guard File. //By Order// //True Copy // Sr. Private Secretary, ITAT, Pune Benches, Pune.