HARESH RASIKLAL SHAH, MUMBAI V. INCOME TAX OFFICER 19(1)(5), MUMBAI

ITA 2256/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0839 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V H JARIWALA
• Keywords: Bogus purchase; Search and seizure; Accommodation entries; Borrowed satisfaction
• Section: 143(3); 142(1); 133(6); 143(1); 143(2)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 2256/MUM/2018 (ASSESSMENT YEAR 2007-08 ) HARESH RASIKLAL SHAH 1/160 MULJI NIWAS, FLAT NO.1, OPP: MADHAV BAUG TEMPLE, C.P. TANK ROAD, MUMBAI- 400004. PAN: AAJPS7696B VS. ITO - 19(1)(5) ROOM NO. 215, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007. APPELLANT RESPONDE NT APPELLANT BY : SHRI V. H. JARIWALA (AR) RESPONDENT BY : SHRI MANOJ KUMAR SINGH (DR) DATE OF HEARING : 08.08.2019 DATE OF PRONOUNCEMEN T : 20.08.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(A)-51, MUMBAI DATED 22.01.2018 FOR ASSESSMENT YEAR 2007-08 , WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER DATED 219.03.2015 PASSED UNDER SECTION 143(3) R.W.S 147 OF THE INCOME-TAX ACT (FOR SHORT THE ACT). THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW LEARNED CIT (A) ERRED IN UPHOLDING REOPENING U/S 147 OF I.T. AC T, 1961. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW LEARNED CIT (A) ERRED IN CONCLUDING THAT IMPUGNED PURCHASES ARE BOGUS/ NOT GENUINE. 3. LEARNED CIT (A) ERRED IN OBSERVING THAT THE SUPPLIE R WAS NOT FOUND AT THE STATED ADDRESS AND THAT HE DID NOT RESPOND TO N OTICE U/ S 133(6) OF ITA NO. 22 56 MUM 2018-HARESH RASIKLAL SHAH. 2 I.T. ACT, 1961 AND CONSEQUENTLY ERRED IN DRAWING ER RONEOUS CONCLUSION THAT IMPUGNED PURCHASES ARE BOGUS/ NOT GENUINE. 4. LEARNED CIT (A) ERRED IN OBSERVING THAT BASIC ONUS CAST ON ASSESSEE WAS NOT DISCHARGED AND CONSEQUENTLY ERRED IN DRAWIN G ERRONEOUS CONCLUSION. 5. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW LEARNED CIT (A) ERRED IN HOLDING THAT OPPORTUNITY TO CROSS EXAM INE WAS NOT REQUIRED TO BE PROVIDED ALTHOUGH IT WAS AO. WHO WAS RELYING ON THE STATEMENT OF CERTAIN PERSON/ S AND COPIES OF THOSE STATEMENTS WERE NOT P ROVIDED TO APPELLANT ALTHOUGH STATEMENTS AND CROSS EXAMINATION WAS DEMAN DED IN THE COURSE OF PROCEEDINGS BEFORE AO. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURER AND EXPORTER OF DIAMON DS, JEWELLERY AND PEARLS. THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 DECLARING TOTAL INCOME AT RS. 5,61,780/-. T HE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY, THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INF ORMATION RECEIVED FROM DGIT (INVESTIGATION), MUMBAI THAT ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF RS. 8,47,09 8/-, RECEIVED FROM VARIOUS BOGUS CONCERN CONTROLLED BY BHANWARLAL JAIN GROUP, WHEREIN A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT BY INV ESTIGATION WING OF REVENUE ON 03.10.2013. THEREFORE, THE ASSESSING OFF ICER ON THE BASIS OF SUCH INFORMATION MADE A BELIEF FOR RE-OPENING THE A SSESSMENT. AFTER SERVING THE NOTICES UNDER SECTION 143(2) AND 142(1) THE ASSESSING OFFICER PROCEEDED FOR REASSESSMENT. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED ACCOMMODATION ITA NO. 22 56 MUM 2018-HARESH RASIKLAL SHAH. 3 ENTRIES IN THE FORM OF BOGUS PURCHASES PURCHASED FR OM KOTHARI & CO. FOR RS. 8,47,098/-. THE ASSESSING OFFICER CONFRONTE D THIS FACT TO THE ASSESSEE. THE ASSESSEE FILED ITS REPLY AND STATED T HAT THE ASSESSEE HAS MADE PURCHASES BY MAKING PAYMENT THROUGH BANKING CH ANNEL. THE ASSESSEE ALSO FURNISHED THE BOOKS OF ACCOUNT AND CO NFIRMATION OF THE PARTIES. THE ASSESSEE FURTHER STATED THAT THE PURCH ASES MADE FROM KOTHARI & CO. (SUPRA) WAS DULY RECEIVED AND EXPORTE D. THE COPY OF EXPORT BILL AND INVOICES WITH SUPPORTING DOCUMENTAR Y EVIDENCE WERE FURNISHED. THE CONTENTION OF ASSESSEE WAS NOT ACCEP TED BY ASSESSING OFFICER. THE ASSESSING OFFICER AFTER DETAILED DISCU SSION ABOUT THE MODUS OPERANDI OF HAWALA OPERATORS AND CONSIDERING THE SUBMISSION OF THE ASSESSEE MADE DISALLOWANCE OF 8% OF THE IMPUGNED PU RCHASE. THE ASSESSING OFFICER MADE ADDITION/DISALLOWANCE ON THE BASIS OF BENIGN ASSESSMENT PROCEDURE (BAP). THE ASSESSING OFFICER A LSO OBSERVED THAT BAP WAS ALSO APPLICABLE FOR THOSE DIAMONDS MERCHANT S, WHO WERE SHOWING A PROFIT MARGIN OF 8% OF THE TURNOVER. THE ASSESSING OFFICER ON THE BASIS OF BAP TOOK HIS VIEW THAT MARGIN IN TH E MARKET FOR A PETTY DEALER IS ALSO 8% AND THE SAME MARGIN IS BEING SHOW N FROM THE GREY MARKET. ON APPEAL BEFORE CIT(A) THE ACTION OF ASSE SSING OFFICER IN REOPENING WAS CONFIRMED, HOWEVER, ON ADDITIONS ON A CCOUNT OF DISALLOWANCE OF BOGUS THE ASSESSING OFFICER WAS DIR ECTED TO REDUCE THE PROFIT MARGIN ALREADY SHOWN BY THE ASSESSEE IN ITS BOOKS IN RESPECT OF ITA NO. 22 56 MUM 2018-HARESH RASIKLAL SHAH. 4 ALLEGED HAWALA PURCHASES FROM THE PROFIT MARGIN COM PUTED BY ASSESSEE. AGGRIEVED FURTHER THE ASSESSEE HAS FILED PRESENT AP PEAL BEFORE THIS TRIBUNAL. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHOR ISED REPRESENTATIVE (AR) FOR THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS RELIED B Y THE LOWER AUTHORITIES. WE HAVE SEEN THAT THE ASSESSEE HAS NO T CHALLENGED THE QUANTUM OF ADDITIONS/ DISALLOWANCES RATHER CHALLENG ED THE VALIDITY OF REOPENING AND DENIAL OF THE OPPORTUNITY OF CROSS EX AMINATION BY THE ASSESSING OFFICER. THE LD. AR OF THE ASSESSEE ALSO SUBMITS THAT THE REASONS OF RE-OPENING HAVE NO LIVE LINK TO THE ASSE SSEE. AT THE TIME OF REASONS RECORDED, THE ASSESSING OFFICER HAS NOT APP LIED HIS MIND. REASONS TO BELIEVE THAT ISSUE SOLELY BASED ON THE I NFORMATION RECEIVED FROM THIRD PARTY. REASON IS NOTHING BUT A BORROWED SATISFACTION. THE APPROVAL BY JOINT COMMISSIONER WAS GIVEN IN A MECHA NICAL WAY AND WITHOUT APPLICATION OF MIND. 4. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSEE RELIED UPON THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN SMT. KALP ANASHANTILAL HARIA VS. ACIT ( WP(L) NO. 3063 OF 2017), HONBLE BOMBAY HIGH COURT IN PCIT VS. SHODIMAN INVESTMENTS PVT. LTD. IN ITA NO. 1297 OF 2015, CIT VS. S. GOYANKA LIME AND CHEMICALS LTD. [2 31 TAXMAN 73 ITA NO. 22 56 MUM 2018-HARESH RASIKLAL SHAH. 5 (MP)] AND PIONEER TOWN PLANNERS PVT. LTD. VS. DCIT (ITA NO. 132/DEL/2018. 5. ON THE OTHER HAND THE LD DR FOR THE REVENUE SUPPORT ED THE ORDER OF THE AUTHORITIES BELOW. THE LD. DR FURTHER SUBMITS THAT THE ASSESSEE HAS NOT RAISED SUCH GROUND OF APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON VARIOUS CASE LAW REFERRED BY LOWER AUTHORITIES. WE HAVE NOTED THAT THE LD. CIT(A) PASSED THE IMPUGNED ORDER AND ALSO NOTED THAT HEARING OF THE APPEAL WAS FIXED ON 18.12.2017. ON 18.12.2017, NONE APPEARED ON BEHALF OF ASSESSEE. THE CASE WAS AGAIN FIXED FOR 28 .12.2017 AND AGAIN NONE APPEARED ON BEHALF OF ASSESSEE, HOWEVER, WRITT EN SUBMISSIONS WERE FILED IN TAPAL WITH THE REQUEST TO DECIDE THE APPEA L ON THE BASIS OF WRITTEN SUBMISSION. NOW BEFORE US, THE LD. AR OF TH E ASSESSEE VEHEMENTLY SUBMITTED THAT NO FAIR AND PROPER OPPORT UNITY WAS GIVEN TO THE ASSESSEE. CONSIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT HIS SUBMISSION REGARDING THE APPROVAL BY JCIT IN VA LIDITY OF REASONS RECORDED WAS NOT ADJUDICATED BY LD. CIT(A) AND OTHE R CONTENTION IS RAISED FOR THE FIRST TIME BEFORE US, THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) TO DEC IDE ALL THE ISSUES AND THE CONTENTIONS RAISED BY THE ASSESSEE AFRESH. NEEDLES TO SAY THAT BEFORE ITA NO. 22 56 MUM 2018-HARESH RASIKLAL SHAH. 6 PASSING THE ORDER AFRESH, THE LD. CIT(A) SHALL GRAN T OPPORTUNITY TO THE ASSESSING OFFICER BY SERVING NOTICE OF HEARING. THE ASSESSEE IS ALSO DIRECTED TO FULLY CO-OPERATE AND NOT TO SEEK ADJOUR NMENT WITHOUT ANY VALID REASONS AND TO FILE ALL HIS EVIDENCE IN HIS P OWER AND POSSESSION WITHOUT ANY DELAY BEFORE THE LD. CIT(A). IN THE RES ULT, GROUND NO.1 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7. AS WE HAVE RESTORED THE GROUND NO.1 TO THE FILE OF LD. CIT(A), THEREFORE, DISCUSSION ON OTHER GROUNDS OF APPEAL HAVE BECOME A CADEMIC. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COU RT ON 20/08/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 20.08.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI