NARSIRAM D. KULARIA SUTHAR, MUMBAI V. ACIT 24(3), MUMBAI

ITA 216/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9796 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: BEHARILAL
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 69C; 143(3); 133(6); 148

Judgement Text

P A G E | 1 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 216/MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10) NARSIRAM D. KULARIA SUTHER 515, LAXMI MALL, LAXMI INDUSTRIAL ESTATE, NEW LINK ROAD, ANDHERI WEST, MUMBAI MAHARASHTRA 400053 / VS. ACIT - 24 (3), 6 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, PAREL, MUMBAI 400012 ./ ./ PAN/GIR NO. AARPS9556F ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BEHARILAL, A .R. / RESPONDENT BY : SHRI SAURABH KUMAR, D .R. / DATE OF HEARING : 21/08 /2017 / DATE OF PRONOUNCEMENT : 23 /08/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 36 , MUMBAI, DATED 10 . 1 1.2016 , WHICH IN ITSELF ARISES FROM THE ASSESSMENT FRAMED BY THE A.O U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT), DATED 01.01.2015 . THE ASSESSEE ASSAILING P A G E | 2 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPE AL: - ( 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE HON'BLE CIT(A) HAS ERRED IN PASSING EX - PARTY ORDER WITHOUT PROVIDING PROPER & SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE APPELLATE. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE HON'BLE CIT(A) ERRED IN DISMISSING THE GROUND OF THE APPELLANT THAT THE REOPENING OF THE ASSESSMENT U/S.147 OF THE I.T. ACT IS ILLEGAL AND UNJUSTIFIABLE. REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE HON'BLE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER REGARDING THE ADDITION OF RS.20,61,881/ - BEING BOGUS PURCHASES U/S.69C OF THE I.T. ACT. REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. (4) WI THOUT PREJUDICE THE HON'BLE CIT (A) HAS FURTHER ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER REGARDING THE ADDITION OF RS.20,61,881/ - BY THE ASSESSING OFFICER, AS AGAINST THE ACTUAL ALLEGED PURCHASES FROM ALL THE PARTIES TOGETHER AMOUNTING TO RS.16,94,971/ - . (5) THE ORDER PASSED BY THE LEARNED CIT IS DEVOID OF ANY MERIT, ARBITRA RY, UNCALLED FOR AND BAD IN LAW, THE APPELLANT BE GIVEN SUCH RELIEF OR RELIEF'S AS PRAYED FOR. (6) APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR MODIFY THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF THE APPEAL. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF LABOUR AND WORK S CONTRACTOR HAD E - FILED HIS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME AT RS.9,08,03,790/ - , WHICH WAS PROCESSED AS SUCH U/S. 143(1) OF THE ACT . THEREAFTER THE A SSESSMENT WAS COMPLETED IN THE CASE OF THE ASSESSEE VIDE ORDER U/S. 143(3), DATED 30.12.2011 AND HIS INCOME WAS ASSESSED AT RS.9,10,53,789/ - . 3. THE OFFICE OF DIRECTOR GENERAL OF INCOME TAX DGIT (INV. ), MUMBAI HAD GATHERED INFORMATION FROM THE S ALES TAX DE PARTMENT, GOVERNMENT OF MAHARASHTRA REGARDING CASES INVOLVING BOGUS PURCHASES/HAWALA TRANSACTIONS. THAT ON VERIFICATION IT WAS REVEALED THAT THE ASSESSEE HAD P A G E | 3 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT PROCURED BOGUS PURCHASE BILLS DURING FINANCIAL YEAR 2008 - 0 9 , FROM THE FOLLOWING PARTIES: - HAWALA TIN HAWALA NAME HAWALA PAN F . Y . AMOUNT 27330137458V CHIRAG CORPORATION AAHPM6402D 2008 - 09 5,029 27410668198V SHREE OMKAR ENTERPRISES AIQPD5463N 2008 - 09 131,186 27540539456V AJINKYA MULTI TRADE PVT. LTD. AAFCA7154B 2008 - 09 519,312 27410583032V TARA ENTERPRISES AWTPS0296A 2008 - 09 576,635 27770524440V AMAR ENTERPRISES AIRPB6559J 2008 - 09 70,000 27960595291V AJAY STONE AFFPJ8944J 2008 - 09 9,049 27720524516V PRAYASH STEELAGE AKJPB8580F 2008 - 09 750,670 TOTAL 2,061,881/ - THE AFORESAID INFORMATION WAS FORWARDED BY THE OFFICE OF THE DGIT (INV.) MUMBAI TO THE A.O, WHO THEREIN ACTING UPON THE SAME REOPENED THE CASE OF THE ASSESSEE U/S. 147 OF THE ACT . THAT THE ASSESSEE ON RECEIPT OF A NOTICE U/S 148 , THEREIN V IDE HIS LE TTER DATED 06.05.2014 REQUESTED THAT HIS ORIGINAL RETURN FILED 29.09.2009 (SUPRA) MAY BE TREATED AS HAVING BEEN FILED IN COMPLIANCE THERETO. 4. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE BOGUS PURCHASES MADE FROM THE AFORESAID PARTIES MAY NOT BE DISALLOWED. THE ASSESSEE IN HIS REPLY SUBMITTED BEFORE THE A.O COPIES OF ACCOUNTS, INVOICES, DELIVERY CHALLANS AND BANK STATEMENTS OF THE ABOVEMENTIONED PARTIES. IT WAS AVERRED BY THE ASSESSEE THAT MERELY BECAUSE THE ABOVE SAI D PARTIES H AD FAILED TO DISCHARGE THEIR VAT LIABILITY CANNOT FORM A BASIS FOR CHARACTERISING THE PURCHASES MADE FROM THEM AS INGENUINE. THE A.O IN ORDER TO VERIFY THE GENUINENESS AND VERACITY OF THE AFORESAID PURCHASE TRANSACTIONS ISSUED NOTICE S U/S 133(6) TO THE AFORESAID P A G E | 4 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT PARTIES, HOWEVER , ALL OF THE SAID NOTICE S EXCEPT FOR THAT ISSUED TO M/S. CHIRAG CORPORATION (SUPRA) WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THAT IN THE CASE OF M/S CHIRAG CORPORATION THERE WAS A DENIAL BY THE PARTY OF HAVING CAR RIED OUT ANY BUSINESS WITH THE ASSESSEE . THE A.O IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX DIRECTED THE ASSESSEE T O PRODUCE THE PRINCIPAL OFFICER /PROPRIETOR/PARTNER S OF THE RESPECTIVE CONCERNS , HOWEVER , THE ASSESSEE FAILED TO COMPLY WITH THE DIRECTIONS OF THE A.O. THE A.O THUS HOLDING A CONVICTION THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS CAST UPON HIM AND PROVE THE GENUINE NESS OF THE PURCHASE TRANSACTIONS, THEREFORE , PROCEEDED WITH AND NOT FINDING FAVOUR WITH THE EXPLANATIO N TENDERED BY THE ASSESSEE , REJECTED HIS BOOKS OF ACCOUNTS BY TAKING RECOURSE TO SEC. 145(3) OF THE ACT . THE A.O FURTHER OBSERVED THAT IN THE ABSENCE OF QUANTITATIVE DETAILS OF THE VARIOUS ITEMS PURCHASED BY THE ASSESSEE , IT COULD NOT BE ESTABLISHED THAT THE MATERIAL CLAIMED BY THE ASSESSEE TO HAVE BEEN PURCHASED FROM THE AFOREMENTIONED PARTIES WAS USED IN THE JOB WORK CARRIED OUT BY HIM DURING THE YEAR UNDER CONSIDERATION. THE A.O THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS DISALLOWED THE AGGREGATE O F THE PURCHASES AMOUNTING TO RS.20,61,881/ - AND ADDED THE SAID AMOUNT TO THE RETURN ED INCOME OF THE ASSESSEE. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ASSESSMENT THEREIN CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE ASSESSEE HAD ASSAILED THE ASSESSMENT FRAMED IN HIS HANDS ON THE FOLLOWING EFFECTIVE GROUNDS O F APPEAL BEFORE THE CIT(A): - (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW THE LEARNED A.O HAS ERRED IN PASSING RE - ASSESSMENT ORDER U/S 147 OF THE I.T. ACT, REASONS ASS IGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. APPELLANT CONTENDS THAT THE ISSUANCE OF NOTICE U/S 148 OF THE I .T. ACT FOR REOPENING OF THE ASSESSMENT WAS ITSELF ILLEGAL AND P A G E | 5 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT UNJUSTIFIED AND CONSEQUENTLY THE REASSESSMENT ORDER SO PASSED LIABLE T O BE QUASHED. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW THE LEARNED A . O HAS ERRED IN MAKING ADDITION OF RS.20,61,881/ - BEING BOGUS PURCHASES U/S 69C OF THE I. T ACT. REASONS ASSIGNED BY HIM FOR DOING THE SAME ARE WRONG AND INSUFFICIENT. (3) WITH PREJUDICE THE LEARNED A.O HAS FURTHER ERRED IN MAKING THE ADDITION OF RS.20,60,881/ - AS AGAINST THE ACTUAL ALLEGED PURCHASES FROM ALL THE PARTIES TOGETHER AMOUNTING TO RS.16,94,971/ - . (4) THE ORDER PASSED BY THE LEARNED A . O IS DEVOID OF ANY MERIT, ARBITRARY, UNCALLED FOR AND BAD IN LAW, THE APPELLANT BE GIVEN SUCH RELIEF OR RELIEF'S AS PRAYED FOR........ THAT AS STANDS GATHERED FROM THE ORDER OF THE CIT(A), THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDINGS INITIALLY APPLIED FO R ADJOURNMENTS ON TWO OCCASIONS WHICH WERE ALLOWED BY THE CIT(A), HOWEVER, THEREAFTER DESPITE THE CASE HAVING BEEN ADJOURNED FROM TIME TO TIME, THE ASSESSEE FAILED TO PARTICIPATE IN THE APPELLATE PROCEEDINGS . THE CIT(A) THUS IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION PROCEEDED WITH THE MATTER AND BY PLACING RELIANCE ON A HOST OF JUDICIAL PRONOUNCEMENTS DECIDED THE APPEAL ON THE BASIS OF THE FACTS AVAILABLE ON RECORD. THE CIT(A) WHILE DISPOSING OF THE APPEAL DELIBERATED ON THE GROUND OF APPEAL S RAISED BY THE ASSESSEE IN THE MEMORANDUM OF APPEAL AND UPHELD THE VALIDITY OF THE REOPENING OF THE ASSESSMENT U/S 147 , AS WELL AS THE ADDITION OF RS.20,60,881/ - MADE BY THE A.O ON MERITS. THE CIT(A) THUS DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE ASSESSEE BE ING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS SUB MITTED BY THE LD. A.R THAT THE G ROUND OF APPEAL NO. 1 AND G ROUND OF APPEAL NO. 2 ARE NOT BEING PRESSED. THAT IN LIGHT OF THE AFORESAID CONCESSION ON THE PART OF TH E LD. A.R , THE GROUND OF APPEAL NO. 1 AND G ROUND OF APPEAL NO. 2 ARE DISMISSED AS NOT PRESSED. THE LD. A.R HAD FURTHER ASSAILED THE UPHOLDING OF THE ADDITION OF RS.20,61,881/ - BY THE CIT(A ), AS WELL AS CLAIMED THAT THE P A G E | 6 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT AGGREGATE OF THE ALLEGED BOGUS PURCHA SES WHICH AGGREGATED TO AN AMOUNT OF RS.16,94,971/ - HAD HOWEVER WRONGLY BEEN TAKEN BY THE LOWER AUTHORITIES AT RS.20,61,881/ - . IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH IT REMAINS AS A MATTER OF FACT THAT THE ASSESSEE HAD FAILED TO PUT UP AN APPEARANCE BEFORE THE CIT(A) DURING THE COURSE OF THE HEARING OF THE APPEAL, HOWEVER , THE BASIS OF THE MISTAKE IN TAKING THE AGGREGAT E OF THE ALLEGED BOGUS PURCHASES BY THE A.O AT RS. 20,61,881/ - AS AGAINST THE ACTUAL AMOUNT OF RS.16,94,971/ - , HAD CLEARLY BEEN DEMON STRATED AT LENGTH IN THE S TATEMENT OF FACTS (SOF) FORMING PART OF THE MEMORANDUM OF APPEAL FILED WITH THE CIT(A). THE LD. A.R FURTHER SUBMITTED THAT THE AVERMENTS RAISED BY THE ASSESSEE IN THE SOF IN ORDER TO DRIVE HOME HIS CONTENTION THAT THE GENUINENESS OF THE PURCHASES STOOD ESTABLISHED AND NO PART OF THE SAME COULD BE C HARACTERISED AS BOGUS PURCHASES HAD ALSO BEEN OVERLOOKED BY THE CIT(A) WHILE DISPOSING OF THE APPEAL. IT WAS THUS AVERRED BY THE LD. A.R THAT THE CIT(A) HAD ERRED IN FAILING TO APPRECIATE THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE AND HAD HUSHED THROUGH THE MATTER AND DISMISSED THE APPEAL OF THE ASSESSEE. P ER CONTRA, THE LD. D.R RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CO NSIDERATION TO THE FACTS OF THE CASE, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED VIEW THAT IT REMAINS AS A MATTER OF FACT THAT THE ASSESSEE DESPITE BEING PUT TO NOTICE HAD HOWEVER FAILED TO PARTICIPATE IN THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) DURING THE COURSE OF THE APPELLATE PROCEEDINGS. WE THOUGH FIND OUR SELVES TO BE IN AGREEMENT W ITH THE VIEW OF THE CIT(A) THAT AN OBLIGATION IS CAST UPON AN APPELLANT TO EFFECTIVELY PURSUE THE APPEAL, FAILING WHICH IT CAN SAFELY BE INFERRED THAT THE LATTER I S NOT INTERESTED IN PROSECUTING THE APPEAL, THUS, LEAVING THE FIRST APPELLATE AUTHORITY WITH NO OTHER OPTION, P A G E | 7 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT BUT TO DISPOSE OF THE APPEAL A FTER CONSIDERING THE MATERIAL AVAILABLE ON RECORD. WE ARE NOT OBLIVIOUS OF THE FACT THAT THE CIT(A) IN THE PRESENT CASE HAD NOT DISMISSED THE APPEAL FOR FAILURE ON THE PART OF THE ASSESSEE TO PROSECUTE THE SAM E, BUT RATHER HAD PROCEEDED WITH AND TAKEN UP T HE RESPECTIVE GROUNDS OF APPEAL. HOWEVER, WE FIND THAT THE CIT(A) HAD FAILED TO CONSIDER THE SOF FILED BY THE ASSESSEE , WHEREIN THE LATTER DELIBERATING ON THE RESPECTIVE GROUNDS OF APPEAL HAD DEMONSTRATED TO SOME EXTENT THE BASIS ON WHICH THE ADDITION S MADE BY THE A.O WERE BEING ASSAILED BEFORE HIM. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) SHOULD HAVE CONSIDERED THE SAID SOF FORMING PART OF THE MEM ORANDUM OF APPEAL, AND AFTER TAKING COGNIZANCE OF THE S AME SHOULD HAVE DISPOSED OF THE APPEAL. WE THUS BEING OF THE CONSIDERED VIEW THAT THE CIT(A) HAD FAILED TO PASS A SPEAKING ORDER, THEREFORE, IN ALL FAIRNESS RESTORE THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. THE CIT(A) SHALL DURING THE CO URSE OF FRESH ADJUDICATION AFFORD AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHO SHALL BE AT A LIBERTY TO APPEAR BEFORE THE CIT(A) AND ASSAIL BEFORE HIM THE ADDITIONS MADE BY THE A.O. T HAT AS WE HAVE RESTORE D THE MATTER TO THE FILE OF THE CIT(A) FOR FR ESH ADJUDICATION, THEREFORE, WE REFRAIN FROM ADVERTING TO AND ADJUDICATING UPON THE MERIT S OF THE CASE. THE GROUND OF APPEAL NO. 3 AND GROUND OF APPEAL NO. 4 ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. 8. THAT AS GROUND OF APPEAL NO. 5 AND G ROUND OF APPEAL NO. 6 BEING GENERAL IN NATURE ARE DISMISSED AS NOT PRESSED. P A G E | 8 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT 9. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 23 .08.2017 SD/ - SD/ - (R AJENDRA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 23 .08.2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 9 ITA NO. 216/MUM/2017 NARSIRAM D KULARIA VS. ACIT