BERMACO INDUSTRIES LTD, NAVI MUMBAI V. DCIT CC 47, MUMBAI

ITA 2200/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84609 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S J SINGH
• Keywords: Depreciation; Search and seizure; Principle of natural justice; Corroborative evidences; Retraction
• Section: 143(3); 80HHC; 153A; 234B; 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NOS. 2200 & 2201/MUM/2013 ASSESSMENT YEARS: 2006-07 & 2009-10 M/S. BERMACO INDUSTRIES LTD. D-73/1, TTC INDL AREA, MIDC ROAD TURBHE NAVI MUMBAI- 400 705 PAN:AAACB 2727 N VS. DCIT CC 47 MUMBAI (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI S.J. SINGH DATE OF HEA RING : 1 1 . 12 . 2014 DATE OF ORDER : 22 . 12 .2014 PER AMIT SHUKLA, JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ASSESS EE AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE 04.01.2013, PA SSED BY THE LD.CIT-38, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PA SSED U/S 153A READ WITH SECTION 143(3) FOR THE A.YS. 2006-07 & 20 09-10. 2. WE WILL FIRST TAKE UP APPEAL FOR THE A.Y. 2006-0 7, ITA NO. 2200/MUM/2013, WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED:- 1)THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/ S. 153A R.W.S. 143(3) OF THE ACT WH ICH ARE ILLEGAL AND BAD IN LAW. 2) THE ORDER PASSED BY THE LEARNED CIT(A) IS IN VIO LATION OF PRINCIPLES OF NATURAL JUSTICE AND IS PASSED WITHO UT GIVING A PROPER OPPORTUNITY OF HEARING TO THE APPELLANT. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 2 3) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER WHICH IS ILLEGAL AND BAD IN LAW. THE ORDER PA SSED BY THE LEARNED CIT(A) PURPORTEDLY ON 04.01.2013 AFTER THE CONCLUSION OF HEARING ON 11.12.2012, WHICH HAS BEEN SERVED ON 09. 03.2013 IS ILLEGAL. 4) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN NOT HOLDING THAT THE ASSESSMENT ORDER WAS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND WAS PASSED WITHOUT GIVING A PROPER OPPORTUNITY OF H EARING TO THE APPELLANT. 5) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS I) IN CONFIRMING THE DISALLOWANCE OF RS. 2,50,000/- ON ACCOUNT OF DIMINUTION IN VALUE OF INVESTMENT. (II) IN NOT HOLDING THAT THE DISALLOWANCE OF RS. 2, 50,000/ ON ACCOUNT OF DIMINUTION IN VALUE OF THE INVESTMENT IS BAD IN LAW AS THE ADDITION IS NOT BASED ON THE MATERIAL FOUND DUR ING THE COURSE OF SEARCH AND THAT IT PERTAINED TO NON-ABATED ASSES SMENT YEAR. 6) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS I) IN CONFIRMING THE ADDITION OF RS. 54,195/- BY IN VOKING THE PROVISIONS OF SECTION 14A OF THE ACT. (II) IN NOT HOLDING THAT THE ADDITION OF RS. 54,195 /- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT IS BAD IN LAW AS THE ADDITION IS NOT BASED ON THE MATERIAL FOUND DURING THE COURSE OF THE SEARCH AND THAT IT PERTAINED TO NON-ABATED ASSE SSMENT YEAR. 7) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS I) IN CONFIRMING THE DISALLOWANCE OF RS. 1,04,462/ - ON ACCOUNT OF PERSONAL USAGE ELEMENT ESTIMATED AT 10% OF TOTAL AM OUNT OF DEPRECIATION AND OTHER EXPENSES INCURRED ON CAR. II) IN NOT HOLDING THAT THE DISALLOWANCE OF RS. 1,0 4,462/- ON ACCOUNT OF PERSONAL USAGE ELEMENT ESTIMATED AT 10% OF TOTAL AMOUNT OF DEPRECIATION AND OTHER EXPENSES INCURRED ON CAR IS BAD IN LAW AS THE ADDITION IS NOT BASED ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH AND THAT IT PERTAINED TO NON-A BATED ASSESSMENT YEAR. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 3 8) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT GIVING THE CREDIT FOR TAXES PAID BY/ DEDUCTED FOR THE APPE LLANT WHILE COMPUTING THE TAX LIABILITY OF THE APPELLANT. 9) THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE INTEREST LEVIED BY THE ASSESSING OFFICER U/S. 2 34A, 234B AND 234C OF THE ACT. 3. AT THE OUTSET, THE LEARNED COUNSEL SUBMITTED THA T THE GROUND NO. 1 TO 4 ARE GENERAL IN NATURE HENCE SAME ARE NOT PRESS ED AND THEREFORE, GROUND NO. 1 TO 4 ARE NOT ADJUDICATED UPON AND TREA TED AS DISMISSED. 4. REGARDING ISSUES RAISED, IN GROUND NO. 5, 6 AND 7, LEARNED COUNSEL SUBMITTED THAT IN THIS CASE, ORIGINAL RETURN OF INC OME WAS FILED ON 27.11.2006 AND THE SAID RETURN OF INCOME HAD ATTAIN ED FINALITY. SEARCH AND SEIZURE ACTION U/S 132(1) WAS CARRIED OUT ON 31 .10.2009 AND THEREFORE THE ASSESSMENT FOR THE A.Y. 2006-07 CANNO T BE SAID TO HAVE BEEN ABATED. THE DISALLOWANCES WHICH HAS BEEN CHALL ENGED VIDE GROUND NOS. 5 TO 7, ARE ROUTINE DISALLOWANCES FOR WHICH NO MATERIAL WHATSOEVER WAS FOUND DURING THE COURSE OF SEARCH, HENCE SUCH A DISALLOWANCE CANNOT BE MADE IN THE ASSESSMENT COMPLETED U/S 153A . IN SUPPORT OF THIS CONTENTION, HE STRONGLY RELIED UPON THE DECISI ON OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAI STEEL (INDIA) VS. ACIT REPORTED IN (2013) 259 CTR (RAJ) 281, WHEREIN IT HAS BEEN HELD THAT, IF NO INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH AND THE ASSESSMENT FOR THE ASSESSMENT YEAR COVERED WITHIN S IX YEARS HAS ATTAINED FINALITY AND HAS NOT BEEN ABATED, THEN NO ADDITION CAN BE MADE BY THE AO AND THE ASSESSMENT MADE EARLIER HAVE TO BE REITERATED. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE DECISI ON OF KARNATAKA HIGH COURT IN THE CASE OF M/S. CANARA HOUSING DEVELOPMENT COMPANY ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 4 VS. DCIT ITA NO. 38 OF 2014 JUDGMENT AND ORDER DATED 25.07.2014 WHEREIN THE HONBLE HIGH COURT HAS TAKEN A CONTRARY VIEW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT MATERIAL ON RECORD AND THE DECISIONS RELIED UPON BY THE PARTIES. IN THIS CASE, RETURN OF INCOME WAS FILED ON 27.11.2006. THE SAID RETURN OF INCOME HAD ATTAINED FINALITY, IN OTHER WORDS, THE A SSESSMENT STOOD COMPLETED. A SEARCH AND SEIZURE ACTION TOOK PLACE O N 31.10.2009 AND ON THAT DATE, THE ASSESSMENT FOR A.Y. 2006-07 DID NOT GET ABATED AS IT WAS NOT PENDING. IT IS AN UNDISPUTED FACT, THAT NO MATE RIAL WHATSOEVER WAS FOUND RELATING TO THE ROUTINE DISALLOWANCE AS HAVE BEEN RAISED VIDE GROUND NOS. 5 TO 7. IN SUCH A CASE, WHETHER THESE D ISALLOWANCES CAN BE MADE OR CONFIRMED SANS ANY INCRIMINATING MATERIAL F OUND DURING THE COURSE OF SEARCH. IT HAS COME TO OUR NOTICE THAT HO NBLE JURISDICTIONAL HIGH COURT (NAGPUR BENCH) IN THE CASE OF CIT VS. M/S. MURALI AGRO PRODUCTS LTD. ITA NO. 36 OF 2009 JUDGMENT AND ORDER DATED 29.10.2010 HAVE DEALT THE SIMILAR ISSUE, WHEREIN FOLLOWING OBS ERVATION WAS MADE. IN THE PRESENT CASE, AS CONTENDED BY SHRI MANI, LE ARNED COUNSEL FOR THE ASSESSEE, THE ASSESSMENT FOR THE ASSESSMENT YEAR 1998- 99 WAS FINALIZED ON 29-12-2000 AND SEARCH WAS CONDU CTED THEREAFTER ON 3-12-2003. THEREFORE, IN THE FACTS OF THE PRESENT CASE, INITIATION OF PROCEEDINGS UNDER SECTION 153A WOULD NOT AFFECT THE ASSESSMENT FINALIZED ON 29-12-2000. ONCE IT IS HELD THAT THE ASSESSMENT FINALIZED ON 2 9.12.2000 HAS ATTAINED FINALITY, THEN THE DEDUCTION ALLOWED UNDER SECTION 80HHC OF THE INCOME-TAX ACT AS WELL AS THE LOSS COMPUTED UNDER THE ASSESSMENT DATED 29.12.2000 WOULD ATTAIN FINALITY. IN SUCH A CASE, THE AO WHILE PASSING THE INDEPENDENT ASSESSME NT ORDER UNDER SECTION 153A READ WITH SECTION 143(3) OF THE I.T. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/ REASSESSMENT ORD ER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERE D IN THE COURSE OF THE PROCEEDINGS UNDER SECTION 153A OF THE INCOME -TAX ACT ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALI SED ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 5 ASSESSMENT/REASSESSMENT WERE CONTRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153 A PROCEEDINGS. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DUR ING THE 1S3A PROCEEDING WHICH WOULD SHOW THAT THE RELIEF UNDER S ECTION 80HHC WAS ERRONEOUS. IN SUCH A CASE, THE A.O. WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTI ON 143(3) COULD NOT HAVE DISTURBED THE ASSESSMENT ORDER FINAL IZED ON 29.12.2000 RELATING TO SECTION 80 HHC DEDUCTION AND CONSEQUENTLY THE C.I.T. COULD NOT HAVE INVOKED JURI SDICTION UNDER SECTION 263 OF THE ACT. THUS, JURISDICTIONAL HIGH COURT HELD THAT THE ASSES SMENT WHICH HAS ATTAINED FINALITY CANNOT BE DISTURBED UNLESS MATERI AL HAS BEEN DISCOVERED DURING THE COURSE OF SEARCH OR PROCEEDINGS U/S 153A , THE RELIEF GRANTED EARLIER OR INCOME WHICH HAS BEEN ASSESSED GAVE TO B E ACCEPTED. THUS WE HOLD THAT THE DISALLOWANCES WHICH HAS BEEN CONFI RMED BY THE LD.CIT(A) CANNOT BE UPHOLD. THUS GROUND NO. 5 TO 7 ARE TREATED AS ALLOWED. 7. IN GROUND NO. 8 THE ASSESSEE HAS CONTENDED THAT CREDIT OF TAXED PAID AND DEDUCTED BY THE ASSESSEE HAS NOT BEEN GIVE N, WHILE COMPUTING THE TAX LIABILITY OF THE ASSESSEE. ACCORDINGLY, THE AO IS DIRECTED TO EXAMINE THE ISSUE AND GIVE CREDIT TO THE TAXES PAID /DEDUCTED BY THE ASSESSEE WHILE COMPUTING THE TAX LIABILITY. 8. IN GROUND NO. 9 RELATES TO LEVY OF INTEREST UNDE R VARIOUS SECTIONS. LEARNED COUNSEL ADMITTED THAT IT IS CONSEQUENTIAL A ND THEREFORE, THE SAID GROUND IS TREATED AS INFRUCTUOUS. 9. ACCORDINGLY, APPEAL OF THE ASSESSEE IS TREATED A S PARTLY ALLOWED. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 6 10. NOW WE WILL TAKE UP APPEAL FOR THE A.Y. 2009-10 , ITA NO. 2201/MUM/2013 WHEREIN FOLLOWING GROUNDS HAVE BEEN R AISED:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/S. 153A R.W.S. 143(3) OF THE ACT WHI CH ARE ILLEGAL AND BAD IN LAW. 2. THE ORDER PASSED BY THE LEARNED CIT(A) IS IN VIO LATION OF PRINCIPLES OF NATURAL JUSTICE AND IS PASSED WITHOUT GIVING A PROPER OPPORTUNITY OF HEARING TO THE APPELLANT. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER WHICH IS ILLEGAL AND BAD IN LAW. THE ORDER P ASSED BY THE LEARNED CIT(A) PURPORTEDLY ON 04.01.2013 AFTER THE CONCLUSION OF HEARING ON 11.12.2012, WHICH HAS BEEN SERVED ON 09. 03.2013 IS ILLEGAL. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT HOLDING THAT THE ASSESSMENT ORDER WAS IN VIOLATION OF PRINC IPLES OF NATURAL JUSTICE AND WAS PASSED WITHOUT GIVING PROPER OPPORT UNITY OF HEARING TO THE APPELLANT. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ADDITION OF RS. 27,80,33,410/- ON ACCOUNT OF AL LEGED BOGUS BILLS/ PURCHASES MADE FOR CONSTRUCTION. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE / DISALLOWANCE OF RS. 95,807/- ON ACCOUNT OF PE RSONAL USAGE ELEMENT ESTIMATED AT 10% OF TOTAL AMOUNT OF DEPRECI ATION AND OTHER EXPENSES INCURRED ON CAR. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT GIVING THE CREDIT FOR TAXES PAID BY/DEDUCTED FOR THE APPEL LANT WHILE COMPUTING THE TAX LIABILITY OF THE APPELLANT. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE INTEREST LEVIED BY THE ASSESSING OFFICER U/S. 2 34A AND 234B OF THE ACT. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 7 11. AT THE OUTSET, LEARNED COUNSEL SUBMITTED THAT G ROUND NO. 1 TO 4 ARE NOT PRESSED AND ACCORDINGLY THE SAME IS DISMISS ED AS NOT PRESSED. 12. IN GROUND NO. 5 THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.27,80,33,410/- ON ACCOUNT OF ALLEGED BOGUS BILLS /PURCHASES MADE FOR CONSTRUCTION. 13. THE BRIEF FACTS QUA THE ISSUE ARE THAT, DURING THE COURSE OF THE SEARCH AND SEIZURE ACTION CARRIED OUT IN THE CASE O F BERMACO GROUP OF CASES ON 31.10.2009, THE DIRECTOR SHRI VIREN AHUJA, WHO HAS A KEY PERSON OF THE GROUP WAS CONFRONTED WITH THE VARIOUS INCRIMINATING DOCUMENTS AND STATEMENT WAS RECORDED ON OATH U/S 13 2(4). HE WAS REQUIRED TO EXPLAIN THE EXPENSES CLAIMED BY THE ASS ESSEE AND ALSO THE ADDRESSES OF THE PARTIES FROM WHOM PURCHASES WERE M ADE. HE ACCEPTED THAT PURCHASES CLAIMED BY THE ASSESSEE COMPANY FROM THE THREE PARTIES NAMELY, M/S. AAKRUTI ENGINEERS & CONTRACTORS, M/S. RIDDHI SIDDHI MARKETING AND M/S. MODEL INDUSTRIES ARE BOGUS IN NA TURE. AS PER THE BOOKS PURCHASES FROM THESE PARTIES WAS AT RS.27,80, 33,410/-. THE RELEVANT QUESTION AND ANSWER AS PER THE STATEMENT O F SHRI VIREN AHUJA, HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER AS WE LL AS IN THE APPELLATE ORDER. THE ASSESSING OFFICER AFTER DETAIL ANALYSIS OF THE TRANSACTION AND THE DATE WISE EVENTS, HELD THAT THE SE TRANSACTION ARE BOGUS. SUCH A FINDING OF THE AO WAS BASED ON INQUIR Y AND ALSO BY PROVING THAT ENTIRE TRANSACTIONS SHOWN BY THE ASSES SEE WAS BOGUS. THE AO HELD THAT ASSESSEE HAD RECEIVED ADVANCE FROM COR E PROJECTS ON 18.05.2007 FOR RS. 20 CRORES FOR SALE OF THE PROPE RTY. BEFORE THAT, IT HAD PURCHASED AND EVEN PAID THE AMOUNT FOR THE PROPERTY THE M/S. PATEL PUNIT BUILDERS PVT. LTD. THE AO PREPARED A SEPARATE P&L ACCOUNT RELATING TO THIS SPECIFIC TRANSACTION WHICH HAS BEE N INCORPORATED IN DETAIL ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 8 IN THE ASSESSMENT YEAR AS WELL AS IN THE APPELLATE ORDER AND HELD THAT ASSESSEES EXPLANATION IS FALSE. THE LD.CIT(A) HAS ALSO CONFIRMED THE SAID PURCHASES AFTER INCORPORATING THE DETAIL FINDI NG OF THE AO AND ALSO AFTER ANALYZING THE ISSUE AT LENGTH BY HIMSELF. THE RELEVANT FINDING OF THE LD.CIT(A) IS AS UNDER:- THE FACTS OF THE CASE, THE STAND TAKEN BY THE A.O IN THE ASSESSMENT ORDER AND THE GROUNDS OF APPEAL RAISED B Y THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. THE BASIC ISSUE THAT WAS INVESTIGATED INTO DURING THE SEARCH & SEIZURE P ROCEEDINGS AND THEREAFTER WAS WHETHER OR NOT THE PURCHASES/EXP ENSES DEBITED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT W ERE GENUINE. THE INVESTIGATION WAS NOT VAGUE BUT SPECIFIC WITH R EFERENCE TO CERTAIN ALLEGED SUPPLIERS OF MATERIALS AND THE AMOU NTS INVOLVED WERE VERY HUGE I.E. RS.27,80,33,410/-. IN ALL, THRE E ENTITIES WERE IDENTIFIED AND SPECIFIC ISSUES WERE PUT TO THE DIRE CTOR OF THE COMPANY SHRI VIREN AHUJA. IT WAS REQUIRED THAT THE APPELLANT PROVIDED ALL THE REQUISITE INFORMATION AND ENABLED THE DEPARTMENT TO EXAMINE THE ALLEGED SUPPLIERS OF THE MATERIALS I N CASE A STAND WERE TO BE TAKEN BY THE APPELLANT THAT THE ENTIRE E XPENDITURE WAS GENUINE AND NO ELEMENT OF BOGUS EXPENDITURE/PURCHAS ES WERE INVOLVED AS REGARDS THE SUPPLIERS IDENTIFIED BY THE DEPARTMENT. HOWEVER, THE DIRECTOR OF THE APPELLANT COMPANY SHRI VIREN AHUJA IN THE STATEMENT RECORDED ULS.132( 4) OF THE ACT, U NEQUIVOCALLY ADMITTED THAT THE EXPENDITURE WAS NOT GENUINE. IN T HE STATEMENT RECORDED DATED 01.11.2009/02.11.2009, SHRI VIREN AH UJA FURTHER ADMITTED THE FOLLOWING: 'Q.21 I AM SHOWING THE BILLS OF AAKRUTI ENGINEERS & CONTRACTORS AMOUNTING TO RS.9,00,25,170/- AND RIDDHI SIDDHI MAR KETING AMOUNTING TO RS.10,48,30,512/- AND MODEL INDUSTRIES AMOUNTING TO RS.1,71,77,728/-. TOTALLY AMOUNTING TO RS.21,20, 33,410/- PERTAINING TO FY.2008-09 FOR BERMACO INDUSTRIES LTD . PLEASE PRODUCE THE SUPPORTING EVIDENCES AND PROVE THE GENU INENESS OF THE PURCHASES. ANS. ON SEEING THE BILLS, I DO THINK, THE SAME NOT TO BE IN ORDER AND CONFIRM THAT THE PURCHASES ARE BOGUS FOR THE F Y. 2008-09 FOR BERMACO INDUSTRIES LTD. THE CASH SO GENERATED H AVE BEEN PARTLY USED FOR MAKING INVESTMENT IN SOME ASSETS AN D OTHER UNACCOUNTED PAYMENTS. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 9 Q.22 HOW DO YOU KNOW THE ABOVE PARTIES? ANS. I KNOW THEM THROUGH AN INTERMEDIARY. I HAVE GI VEN CHEQUE TO THEM AGAINST THE BILLS GIVEN BY THEM. LATER ON, I HAVE GOT BACK THE CASH FROM THEM, AFTER PAYING A COMMISSION OF 5. 5. %. 'Q.23 WHAT DID YOU DO WITH THE ABOVE CASH? ANS. THE CASH SO GENERATED HAVE BEEN PARTLY FOR MAK ING INVESTMENTS IN SOME ASSETS AND PARTLY FOR MAKING OT HER UNACCOUNTED PAYMENTS. Q.24 DID YOU RECEIVE ANY GOODS/SERVICES FROM THE AB OVE 3 PARTIES? ANS. NO, AS I HAVE ALREADY TOLD YOU, NO GOODS / SER VICES WERE RECEIVED FROM ABOVE 3 PARTIES. WE HAVE GOT BACK THE CASH LESS THE COMMISSION. ' 9.1 IN THE EVENT, THE APPELLANT WAS IN A POSITION T O ESTABLISH THE GENUINENESS OF THE TRANSACTIONS, THE SAME OUGHT TO HAVE BEEN DONE WITHOUT SUCH AN ADMISSION AND WITHOUT ANY FURT HER DELAY. THE STATEMENTS RECORDED FROM THE DIRECTOR OF THE AP PELLANT ON VARIOUS DATES, AS TABULATED IN THE ASSESSMENT ORDER CLEARLY INDICATE THAT THERE WAS NO ELEMENT OF COERCION AT A LL. APPELLANT HAD ADMITTED THAT THE TRANSACTIONS WERE NOT GENUINE AND THE EXPENDITURE WERE NEVER INCURRED AND THEREBY FORECLO SED THE REQUIREMENT OF ANY FURTHER ENQUIRY AND INVESTIGATIO N BY THE DEPARTMENT. IT WAS OPEN FOR THE APPELLANT TO PRODUC E THE PARTIES WITH ALL THE REQUISITE EVIDENCES SO THAT THE INVEST IGATION COULD HAVE BEEN CARRIED OUT IMMEDIATELY. NO SUCH ATTEMPT WAS MADE EITHER IMMEDIATELY AFTER THE SEARCH & SEIZURE PROCE EDINGS OR DURING THE ASSESSMENT PROCEEDINGS. A SPECIFIC OPPOR TUNITY WAS ALSO GIVEN BY THE AO BY ISSUE OF A SHOW CAUSE NOTIC E DURING THE ASSESSMENT PROCEEDINGS. FURTHER, THERE IS NO EVIDEN CE OF COERCION OR DURESS THAT HAS BEEN ESTABLISHED TO SUP PORT THE RETRACTION OF THE APPELLANT. THEREAFTER, HE RELIED UPON THE VARIOUS DECISION ON THE PROPOSITION THAT IF THE ASSESSEE HAS VOLUNTARILY ACCEPTED THE TRANSACTI ON TO BE NOT GENUINE AND THE AMOUNT HAS BEEN QUANTIFIED AND DISCLOSURE H AS BEEN MADE U/S 132(4), THEN RETRACTION BY THE ASSESSEE CANNOT BE A CCEPTED, UNLESS ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 10 THERE ARE VERY STRONG EVIDENCE IN SUPPORT OF SUCH R ETRACTION. ACCORDINGLY HE CONFIRMED SAID ADDITION. 14. BEFORE US, LEARNED COUNSEL SHRI VIJAY MEHTA SUB MITTED THAT, THE PREMISES IN QUESTION WAS PURCHASED FROM M/S. PATEL PUNIT BUILDERS PVT. LTD AND SOLD TO M/S. CORE PROJECT TECHNOLOGY LTD. T HE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE ON 18.05.2007 AND PURC HASE CONSIDERATION WAS MADE ON 19.05.2007. EVEN IF THE PURCHASE OF MAT ERIAL FOR THE CONSTRUCTION IN THE SAID PROPERTY IS TREATED TO BE BOGUS, THE SAME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE, BECAU SE ASSESSEE WAS ONLY INTERMEDIARY AND THE ULTIMATE BUYER WAS M/S. C ORE PROJECT & TECHNOLOGY. IF ANY ADDITION WAS CALLED FOR THEN SAM E SHOULD HAVE BEEN MADE IN THEIR HANDS. LOOKING TO THE DATES AND SEQUE NCE OF EVENTS IT CANNOT BE HELD THAT HOW ASSESSEE CAN CARRY OUT RENO VATION IN SUCH A BUILDING. IN ANY CASE THE PROFIT EARNED BY THE ASSE SSEE CAN BE SAID TO BE HAVE SPENT ON RENOVATION. 15. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE AO AS WELL AS LD.CIT(A). 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALS O ON THE PERUSAL OF THE FINDINGS OF THE AO AS WELL AS LD.CIT(A), WE FIN D THAT THE ASSESSING OFFICER HAS NOT ONLY RELIED UPON THE ADMISSION OF T HE DIRECTOR, MR. VIREN AHUJA AT THE TIME OF STATEMENT U/S 132(4), BUT ALSO HAS ANALYZED THE NATURE OF TRANSACTION AND CARRIED OUT INQUIRY TO FI ND OUT THAT THE CLAIM OF PURCHASES MADE FOR CONSTRUCTION WERE BOGUS. ONCE TH E EVIDENCES AND MATERIALS ARE INDICATING THE NON GENUINENESS OF THE EXPENDITURE, THE ONUS IS HEAVILY UPON THE ASSESSEE TO PROVE THE CONT RARY ON THE BASIS OF CONCRETE MATERIAL OR EVIDENCE. HERE IN THIS CASE ON US HAS NOT BEEN DISCHARGED BY THE ASSESSEE AT ALL AND NOT ONLY, THA T IT HAS BEEN ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 11 CATEGORICALLY ADMITTED BY THE ASSESSEE WHEN IT WAS CONFRONTED DURING THE COURSE OF SEARCH THAT, THE PAYMENTS RELATING TO PURCHASES ARE BOGUS. ON THESE FACTS, WE DO NOT FIND ANY MERITS IN THE CO NTENTION RAISED BY THE LEARNED COUNSEL, ACCORDINGLY THE FINDING OF THE LD. CIT(A) IS UPHELD AND THE ADDITION OF RS.27,80,33,410/- IS CONFIRMED. 17. IN GROUND NO. 6 THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.95,807/- ON ACCOUNT OF PERSONAL USER OF VEHICLE EXPENSES, ESTIMATED @10%. THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS.95,807/- ON ACCOUNT OF PERSONAL USER OF THE CAR OUT OF TOTAL E XPENSES CLAIMED INCLUDING DEPRECIATION. THE ASSESSEE COULD NOT JUST IFY THE CLAIM OF THE EXPENDITURE WHOLLY FOR THE PURPOSE OF ITS BUSINESS. THE LD.CIT(A) TOO HAS CONFIRMED THE SAID ADDITION. 18. AFTER HEARING BOTH THE PARTIES, AND THE FACTS D ISCUSSED BY THE AO AND LD.CIT(A), WE FIND THAT NO SUBSTANTIAL MATERIAL HAS BEEN PLACED BEFORE US, TO REBUT THE FINDING OF THE AO AS WELL A S LD.CIT(A). ACCORDINGLY THE DISALLOWANCE MADE BY THE AO AND CON FIRMED BY THE LD.CIT(A) APPEARS TO QUITE REASONABLE AND UPHELD. 19. GROUND NO. 9 RELATES TO GIVING OF CREDIT OF TAX ES PAID OR TAX DEDUCTED WHILE COMPUTING TAX LIABILITY. THE AO IS D IRECTED TO EXAMINE THIS ISSUE AND GIVE PROPER CREDIT OF SUCH TAXES PAI D BY THE ASSESSEE, WHILE COMPUTING TAX LIABILITY. 20. IN GROUND NO. 8 THE ASSESSEE HAS CHALLENGED THE LEVY OF INTEREST U/S 234A AND 234B. IT HAS BEEN ADMITTED BY THE LEAR NED COUNSEL THAT IT IS PURELY CONSEQUENTIAL. ACCORDINGLY THE SAID GROUN D IS TREATED AS INFRUCTUOUS. ITA NOS. 2200 & 2201/MUM/2013 M/S. BERMACO INDUSTRIES LTD ASSESSMENT YEARS: 2006-07 & 2009-10 12 21. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR THE A.Y. 2006-07 PARTLY ALLOWED WHEREAS FOR THE A.Y. 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY DECEMBER, 2014. SD/- SD/- (N.K. BILLAIYA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22.12.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.