ORYX FISHERIES P.LTD, MUMBAI V. DCIT CIR 7(1), MUMBAI

ITA 2263/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3017 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 21-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MAHAPATRA
• Keywords: Income from undisclosed sources; Onus to prove
• Section: 143(3); 133(6)

Judgement Text

ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI . , , BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 2 2 6 3 /MUM/20 1 3 (ASSESSMENT YEAR :200 9 - 1 0 ) ORYX FISHERIES PVT LTD , D - 2, MIDC AREA, 16 TH ROAD, ANDHERI (EAST), MUMBAI - 400 093 .: PAN: AA AC O 5150 C VS DCIT 7(1), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 (APPELLANT (RESPONDENT) APPELLANT BY : SHRI PRAKASH JOTWANI RESPONDENT BY : SHRI S K MAHAPATRA /DATE OF HEARING : 20 - 0 7 - 201 5 / DATE OF PRONOUNCEMENT : 19 - 10 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSSEE A GAINST IMPUGNED ORDER DATED 03. 12 . 201 2 , PASSED BY CIT(A) - 13 , MUMBAI , FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 2009 - 10, MAINLY ON THE FOLLOWING GROUNDS : - 1 (A) T HE L EARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 62,39,059/ - BY THE ASSESSING OFFICER, BEING ALLEGED NON - GENUINE PURCHASES TRANSACTIONS FROM TWO PARTIES. (B) THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE APPELLANT COMPANY HAS NOT DISCHARGED THE ONUS TO PROVE THAT THE TRANSACTIONS WITH THE TWO PARTIES WERE GENUINE. ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 2 2. THE LEARNED CIT(A) HAS ERRED IN NOT DELETING THE INCORRECT AMOUNT OF PURCHASE MADE FROM GAUSIYA SEA FOODS RS. 26,85,258/ - (INSTEAD OF THE CORRECT AMOUNT OF RS. 16,82,685/ - ), AND INSTEAD ONLY DIRECTING THE AO TO VERIFY THE SAME AND THEN TO CONSIDER THE AMOUNT OF DISALLOWANCE. 2. THE BRIEF FACTS QUA THE ISSUE RAISED IN THE GROUNDS OF APPEAL ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF FISH AND FISHERIES PRODUCTS. THE AO, IN ORDER TO VERIFY THE GENUINENESS OF THE EXPENSES AND PURCHASES, CALL ED FOR THE INFORMATION FROM VARIOUS PARTIES U/S 131(6). FROM SUCH EXERCISE, IT WAS FOUND THAT IN THE CASE OF THE TWO PARTIES, THE DETAILS OF WHICH ARE AS UNDER : - (I) GAUSIYA SEA FOODS RS. 26,85,258/ - (II) OM SAI FISHERIES RS. 35,33,801/ - RS. 62,39,059/ - T HE NOTICES RETURNED UNSERVED ON THE ADDRESSES FURNISHED BY THE ASSESSEE. WHEN CONFRONTED WITH THIS INFORMATION, THE ASSESSEE INFORMED THE AO THAT , THESE PARTIES MIGHT HAVE LEFT FROM THE ADDRESS AVAILABLE WITH THE ASSESSEE . SINCE THE ASSESSEE COULD NOT PR OVIDE NEW ADDRESS, AO HELD THAT, GENUINENESS OF THE TRANSACTIONS CARRIED OUT WITH THESE TWO PARTIES ARE NOT GENUINE TRANSACTION AND ACCORDINGLY , HE ADDED THE ENTIRE SUM OF PURCHASES SHOWN BY THE ASSESSEE FROM THESE TWO PARTIES TOTALING TO RS. 62,39,059/ - . 3. BEFORE THE CIT( A), THE ASSES SEE S UBMITTED THAT IT WAS ENGAGED IN THE BUSINESS OF FISH ERY PRODUCTS , WHICH INVOLVED EXPORT AS WELL AS LOCAL SALES OF SUCH PRODUCTS. FOR T HE PURPOSE OF MANUFACTURING AND SALE OF SUCH PRODUCTS, ASSE S SEE USED TO PROCURE RAW MATERIALS AND FISH PRODUCTS FROM NEARBY FISHERIES LENDING CENTERS AND HAD FIXED CERTAIN FISHERMEN AND A GENTS TO ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 3 BUY THE RAW FISH FROM FISHING BOATS AND CONSEQUENTLY SUPPLY TO THE COMPANY. SINCE THE ENTIRE PROCEDURE IS CARRIED OUTSIDE THE PREMISES OF THE ASSESSEE COMPANY, THEREFORE, SUPPL IER DID NOT COME FORWARD WITH ANY DOCUMENT TO THE COMPANY RELATING TO THE SUPPLIER. THE COPY OF PURCHASE DOCUMENT ARE PREPARED BY THE COMPANY ITSELF ON THE BASIS OF AGREED QUANTITY OF GOODS SUPPLIED AND DULY ACCEPTED BY THE SUPPLIERS, A COPY OF WHICH IS GI VEN TO THEM FOR THEIR RECORD. THE ASSESSEE IN THE CASE OF M/S OM SAI FISHERIES FROM WHOM PURCHASES OF RS. 35,50,801/ - WAS MADE, THE ASSESSEE SUBMITTED PURCHASE VOUCHER AND CONFIRMATION FROM THE PARTY, WHICH WAS SUBMITTED BEFORE THE AO ONLY. ALL THE PAYMEN TS WERE MADE TO THE PARTY THROUGH ACCOUNT PAYEE CHEQUES AND TO CORROBORATE THE SAME, THE BANK STATEMENT OF THE ASSESSEE WAS ALSO SUBMITTED TO THE AO. THUS, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. IN RESPECT OF THE PURCHASES OF RS. 26,85,258/ - MADE FROM GAUSIYA SEA FOODS, THE ASSESSEE SUBMITTED THAT THE ACTUAL PURCHASES MADE FROM THIS PARTY WERE RS. 16,82,212/ - AND NOT RS. 26,85,258/ - AS TAKEN BY THE AO. IN THE CASE OF THIS PARTY ALSO, THE ASSESSEE HAD SUBMITTED A PURCHASE VOUCHER AND CONFIRMAT ION FROM THE PARTY AND ALSO THE EVIDENCE SHOWING THAT THE PAYMENTS WERE MADE THROUGH CHEQUES AND BANK STATEMENT OF THE ASSESSEE WAS ALSO SUBMITTED. THUS, THE GENUINENESS OF THE TRANSACTION FROM BOTH THE PARTIES CANNOT BE DOUBTED. HOWEVER, THE LD. CIT(A) UP HELD THE ORDER OF THE AO AND HELD THAT PAYMENT BY CHEQUE ITSELF DOES NOT PROVE THAT THE PURCHASE TRANSACTION IS GENUINE. THE ONUS WAS UPON THE ASSESSEE TO PROVIDE CORRECT ADDRESSES, THEREFORE, IN ABSENCE OF ANY CORROBORATIVE INDEPENDENT EVIDENCE , THE ADDIT ION HAS RIGHTLY BEEN MADE BY THE AO. 4. BEFORE US, THE LD. COUNSEL SHRI PRAKASH JOTWANI, FIRST DREW OUR ATTENTION TO THE BILLS RAISED BY THESE PARTIES, AS APPEARING IN THE PAPER - BOOK AND ALSO THE CONFIRMATION OF LEDGER ACCOUNT SIGNED BY THESE PARTIES. ONCE THE PAYMENT HAS BEEN MADE AGAINST THE BILLS AND THE CONFIRMATION OF AMOUNT HAVE BEEN GIVEN THEN THE ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 4 GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED ESPECIALLY, WHEN THE AMOUNT HAS BEEN PAID FOR THE PURCHASE THROUGH ACCOUNT PAYEE CHEQU ES DULY DEBITED FROM THE ASSESSEES BANK ACCOUNT. THE ASSESSEE HAD MADE TOTAL PURCHASES OF RS . 3.32 CRORES FOR WHICH MOST OF THE EVIDENCES WERE GIVEN. LOOKING TO THE NATURE OF ASSESSEES BUSINESS AND THE PURCHASES MADE FROM UNORGANIZED SECTORS, IT IS VERY DIFFICULT TO GIVE THE ADDRESSES OF SUPPLIERS, AS IN MOST OF THE CASES, SUCH ADDRESSES ARE NOT PERMANENT AND EVEN THE FISH SUPPLY FROM SUCH SUPPLIERS ARE ALSO NOT PERMANENT. FURTHER, THE SALES OF THE ASSESSEE HAVE BEEN ACCEPTED AND THE OVERALL PROFIT IS HIG H. IN SUCH A CASE WHEN SALES AND GP I S NOT DISTURBED THEN PURCHASES CANNOT BE DOUBTED. PURELY BY WAY OF ALTERNATIVELY ARGUMENT HE SUBMI TTED THAT , AT THE MOST IF ANY ADVERSE VIEW IS TO BE DRAWN , THEN THE ADDITION SHOULD BE RESTRICTED TO PROFIT SHOWN BY TH E ASSESSEE , WHICH IN THIS YEAR IS AT 22.9% AND FOR THE EARLIER YEAR 23.5% , THEREFORE, DISALLOWANCE IF AT ALL SHOULD BE MADE ON THE BASIS OF GROSS PROFIT. 5. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ONUS LIE D HEAVILY UPON THE ASSESSEE TO SHOW THAT PURCHASES MADE BY THE ASSESSEE ARE GENUINE AND IN ABSENCE OF ANY CROSS VERIFICATION, SUCH A TRANSACTION OF PURCHASE CANNOT BE SAID TO BE A GENUINE , ESPECIALLY IN WAKE OF ENQUIRY BY THE AO U/S 133(6). 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AND MATERIAL PLACED BEFORE US. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FISHERIES PRODUCTS WHICH INCLUDED EXPORT AND LOCAL SALES. THE ADDITION HAS BEEN MADE BY THE AO ON ACCOUNT OF PURCHASES MADE FROM TWO PARTIES NAMELY , GAUSIYA SEA FOODS AND OM SAI FISHERIES. OUT OF THE SAID PURCHASES MADE , IT HAS BEEN POINTED OUT THAT, SO FAR AS THE AMOUNT OF PURCHASE MENTIONED IN THE CASE OF GAUSIYA SEA FOODS , THE ACTUAL P URCHASE AMOUNT IS RS. 16,82,212/ - AND NOT RS. ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 5 26,85,258/ - . THE SAID ADDITION HAS BEEN MADE SOLELY ON THE GROUND THAT NOTICE U/S 133(6) COULD NOT BE SERVED ON THE PARTIES AT THE MENTIONED ADDRESS AND THE ASSESSEE COULD NOT PROVIDE THE NEW ADDRESS TO THE A O. FROM THE PERUSAL OF THE ENTIRE MATERIAL PLACED ON RECORD, WE FIND THAT THE ASSESSEE HAS MADE PURCHASES OF RS. 2 LAKHS AND MORE FROM MORE THAN 38 PARTIES, NONE OTHER PURCHASES HAVE BEEN DOUBTED EXCEPT FOR THESE TWO. ALL THE TRANSACTIONS OF THE PURCHASES MADE BY THE ASSESSEE INCLUDING THE IMPUGNED TWO PURCHASES ARE THROUGH ACCOUNT PAYEE CHEQUES AND DULY SUPPORTED BY BILLS AND VOUCHERS . THIS FACT ALONE GOES TO SHOW THAT SOURCE OF PURCHASES ARE FROM THE BOOKS OF ACCOUNT. THE ASSESSEES CONSUMPTION OF MAT ERIALS, SALES , OPENING AND CLOSING STOCK HAS BEEN ACCEPTED. EVEN THE BALANCING FIGURE OF TRADING ACCOUNT I.E. GROSS PROFIT HAS ALSO NOT BEEN DISTURBED. ONCE ALL THE FIGURES OF DEBIT AND CREDIT SIDE OF THE TRADING ACCOUNT LIKE, OPENING STOCK, MATERIALS CONS UMED, PRODUCTS SOLD, CLOSING STOCK AND THE BALANCING FIGURE OF GROSS PROFIT HAS NOT BEEN DISTURBED , THEN PURCHASES ALSO CANNOT BE DOUBTED UNLESS IT IS FO U ND THAT PURCHASES HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT F R OM UNDISCLOSED SOURCES. ONCE IT IS NOT DOUBTED THAT PURCHASES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES FROM THE DISCLOSED SOURCE S IN THE BOOKS OF ACCOUNTS THEN SUCH PURCHASES CANNOT BE TREATED AS NON - GENUINE OR ADDED AS A WHOLE AS UNEXPLAINED INCOME OR EXPENDITURE. AT THE MOST I F THE AO HA D SOME DOUBT ABOUT THE GENUINENESS OF THE PURCHASES IN SUCH KIND OF CASES, THEN R ECOURSE C OULD HAVE BEEN TAKEN TO REJECT THE BOOKS OF ACCOUNTS AND APPLY SOME GP RATE ON SUCH PURCHASES . HERE IN THIS CASE, SUCH AN EXERCISE HAS NOT BEEN DONE. THE ASSESSEES GROSS PROFIT DURING THE YEAR WAS AT 2 2 .29% WHICH IS QUITE COMPARABLE WITH THE GROSS PROFIT OF THE EARLIER YEARS WHICH W AS AROUND 23.15 % TO 23.5% , L OOKING TO THE FACT THAT THE ASSESSEES SALES TURNOVER THIS YEAR IS ALMOST DOUBLE. EVEN THOUGH THE ASSESSEE CO ULD NOT PROVIDE NEW ADDRESSES OF THE SUPPLIERS FOR THE REASON THAT THEY HAVE SHIFTED TO SOME OTHER PLACE, IT WAS INCUMBENT UPON THE AO TO ANALYSE OTHER ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 6 CORROBORATIVE EVIDENCE TO SEE WHETHER THE PURCHASES AS SUCH ARE GENUINE OR NOT OR HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT OR AT THE MOST HE CAN WORK OUT THE PROFIT ELEMENT ON SUCH PURCHASES FOR MAKING THE ADDITION . HERE IN THIS CASE, THE ASSESSEE HAS TRIED TO PROVE THE GENUINENESS OF THE PURCHASES , FIRSTLY, BY PRODUCING THE CONFIRMATION OF THE ACCOUNTS F R O M THE SAID PARTIES FILED EARLIER AT THE STAGE OF THE ASSESSMENT PROCEEDINGS ; SECONDLY, A LL THE DETAILS OF PAYMENT MADE THROUGH ACCOUNT PAYEE CHEQUES DULY DEBITED FROM THE ACCOUNT OF THE ASSESSEE AND CREDITED TO THE ACCOUNTS OF THE SUPPLIERS WERE SHOWN ; AND LAST LY, IN CASE OF ONE SUPPLIER, THE ASSESSEE HAD ALSO FILED A COPY OF ITS BANK STATEMENT TO SHOW THE CORRESPONDING CREDIT ENTRIES. THUS, UNDER THESE FACTS AND CIRCUMSTANCES THE ENTIRE PURCHASE AMOUNT CANNOT BE ADDED AS INCOME FROM UNDISCLOSED SOURCES. HOWEVER, IN SUCH CASES, AT THE MOST, THE GROSS PROFIT ELEMENT ON SUCH PURCHASES C OULD BE ADDED , AS CONTENDED BY THE LD. COUNSEL . ACCORDINGLY, WE DIRECT THE AO TO APPLY THE GROSS PROFIT OF 21.29% FOR THE PURCHASE AGGREGATIN G TO RS. 52,36,013/ - . AFTER VERIF YING THE CONTENTION OF THE ASSESSEE THAT, ACTUAL PURCHASE TRANSACTION FROM GAUSIYA SEA FOODS W AS ONLY RS. 16,82,212/ - . THUS , THE ADDITION WOULD BE RESTRICTED ON GROSS PROFIT ON SUCH PURCHASES. ACCORDINGLY, THE GROUNDS RAISED ARE TREATED AS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER , 2015. SD/ - SD/ - ( . ) ( ) ( D. KARUNAKARA RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH OCTOBER , 2015 ORYX FISHERIES PVT LTD ITA NO. 2263 /M UM /201 3 7 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 2 0 , MUMBAI. 4 ) THE CIT M C - 7 MUMBAI. 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS