SKY GEM, MUMBAI V. PR. CIT- 33, MUMBAI

ITA 2308/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8187 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 12-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI LD
• Assessee Lawyers: SUCHEK ANCHALIYA LD
• Keywords: Bogus purchase; Difference of opinion; Accommodation entries; Change of opinion
• Section: 143(3); 133(6); 13; 263; 63; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2308/MUM/2019 ( / ASSESSMENT YEAR: 2014-15) SKY GEM CC-2081, BHARAT DIAMOND BOURSE BKC, BANDRA(E), MUMBAI-400 051 / VS. PR . C IT - 33 C-12, 5 TH FLOOR, PRATYAKSHKAR BHAVAN BKC BANDRA (E), MUMBAI-400 051. !' ./ ./PAN/GIR NO. AAYFS-8765-J ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ASSESSEE BY : SHRI SUCHEK ANCHALIYA-LD. AR REVENUE BY : SHRI S.C.TIWARI- LD. CIT DR / DATE OF HEARING : 13/01/2021 / DATE OF PRONOUNCEMENT : 13/01/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. BY WAY OF THIS APPEAL, THE ASSESSEE CHALLENGES T HE VALIDITY OF REVISIONAL JURISDICTION U/S 263 AS EXERCISED BY LEA RNED PR. COMMISSIONER OF INCOME-TAX-33, MUMBAI [IN SHORT REF ERRED TO AS PR.CIT], FOR ASSESSMENT YEAR [IN SHORT REFERRED T O AS AY] 2014- 15, VIDE ORDER DATED 29/03/2019. THE EFFECTIVE GROU NDS TAKEN BY THE ASSESSEE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER U/S 263 OF THE A CT WITHOUT FULLY APPRECIATING THE FACTS OF THE CASE. 2 2. THE LEARNED CIT ERRED IN SETTING ASIDE THE ASSES SMENT ORDER U/S 263 OF THE ACT EVEN THOUGH THE IMPUGNED TRANSACTIONS WERE CONF IRMED BY THE CONCERNED PARTIES IN RESPONSE TO NOTICE U/S 133(6). AT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ID CIT, BIKANER ERRED IN NOT RECORDING OWN SATISFACTION IN RESPECT OF ASS ESSMENT ORDER PASSED BY THE ID AO IS ERRONEOUS SO AS IT PREJUDICIAL THE INT EREST OF REVENUE AS PER PROVISION OF SECTION 263 OF THE ACT. 3. THE ACTION OF LEARNED CIT IS NOTHING BUT CHANGE OF OPINION, WHICH CANNOT BE A GROUND FOR INVOKING THE PROVISIONS OF SEC.263 AS A CONSCIOUS DECISION SUPPORTED BY REASONS AND WITH FULL APPLICATION OF M IND BY THE AO CANNOT SAID TO BE ERRONEOUS. 4. THE LEARNED CIT ERRED IN NOT CONSIDERING THE SUB MISSION OF THE APPELLANT VIDE ITS LETTER DATED 09.07.2018. 5. THE LEARNED CIT ERRED IN HIS OBSERVATION THAT TH E LEARNED AO WRONGLY MADE ADDITION ON ADHOC BASIS @3% OF THE ALLEGED BOG US PURCHASES WITHOUT ANY JUSTIFICATION AND REASON WHICH IS FACTUALLY INC ORRECT IN AS MUCH AS THE LEARNED AO IN HIS ORDER VIDE PARA 8.8 ON PAGE 10 HA S, DISCUSSED AND STATED THE REASONS WHY HE WAS ADOPTING 3% ADDITION. 6. THE LEARNED CIT ERRED IN IGNORING VARIOUS JUDICI AL PRONOUNCEMENTS ESPECIALLY OF THE JURISDICTIONAL HON. ITAT, MUMBAI ON THIS ISSUE. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING SUBMISSIONS M ADE BY ASSESSEE DURING ASSESSMENT PROCEEDINGS AS WELL AS D URING REVISIONAL PROCEEDINGS. THE JUDICIAL PRECEDENTS AS CITED DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN DIAMOND MANUFACTURING & TRA DING, WAS ASSESSED U/S. 143(3) ON 21/12/2016 WHEREIN IT HAS B EEN SADDLED WITH ADDITION OF RS.7.40 LACS ON ACCOUNT OF ESTIMAT ED ADDITION OF 3% ON ALLEGED BOGUS PURCHASES. DURING ASSESSMENT PR OCEEDINGS, PURSUANT TO RECEIPT OF INFORMATION AS RECEIVED FROM SALES TAX DEPARTMENT, IT TRANSPIRED THAT THE ASSESSEE MADE AG GREGATE PURCHASES OF RS.246.98 LACS FROM AN ENTITY NAMELY M /S PRIME STAR, AN ALLEGED ENTRY PROVIDER BELONGING TO BHANWA RLAL JAIN GROUP. 3 ACCORDINGLY, THE ASSESSEE WAS DIRECTED TO SUBSTANTI ATE THESE TRANSACTIONS. 3.2 IN DEFENSE OF PURCHASE TRANSACTIONS, THE ASSESS EE SUBMITTED PURCHASE INVOICES, LEDGER CONFIRMATIONS, COPY OF IT R-V OF THE SUPPLIER, ITS AUDITED FINANCIAL STATEMENTS, BANK ST ATEMENTS HIGHLIGHTING PAYMENT THROUGH BANKING CHANNELS. IT W AS SUBMITTED THAT GOODS PURCHASED FROM THIS PARTY WAS ONE TO ONE IDENTIFIED AND SOLD LOCALLY AS WELL AS EXPORTED OUTSIDE INDIA. THE ASSESSEE ALSO PLEADED THAT ONLY THE PROFIT MARGINS EMBEDDED IN TH ESE TRANSACTIONS COULD BE TAXED. 3.3 THE LD. AO, AFTER PERUSAL OF DOCUMENTARY EVIDEN CES AS WELL AS ASSESSEES SUBMISSIONS IN THE LIGHT OF LEDGER CO NFIRMATION RECEIVED FROM THE SUPPLIER IN RESPONSE TO NOTICE U/ S 133(6), ESTIMATED ADDITION OF 3% AGAINST THESE PURCHASES AN D ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4.1 SUBSEQUENTLY, LEARNED PR.CIT, UPON PERUSAL OF C ASE RECORDS AND INVOKING THE PROVISIONS OF SEC.263 OPINED THAT THE ORDER WAS PASSED WITHOUT MAKING PROPER ENQUIRY ON CERTAIN POI NTS AND THEREFORE THE SAME WOULD REQUIRE EXERCISE OF REVISI ONAL JURISDICTION U/S. 263. IT WAS OPINED BY LD. PR.CIT THAT LD. AO W RONGLY ESTIMATED THE ADDITIONS @3% WITHOUT ANY JUSTIFICATION. THE LD . AO DID NOT CARRY OUT SUFFICIENT INVESTIGATION, MOVEMENT OF STO CK AS WELL AS QUANTITATIVE DETAILS WERE NOT VERIFIED. HENCE, THE ORDER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE WHICH WOULD REQUIRE INVOCATION OF REVISIONAL JURISDICTION U/S 263. 4.2 ACCORDINGLY, A SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 02/08/2017. THE ASSESSEE DEFENDED THE ASSESSMENT ORDER, 4 INTER-ALIA, BY SUBMITTING THAT GROSS PROFIT REFLECT ED ON SUSPICIOUS PURCHASES WAS MORE THAN NORMAL GROSS PROFIT AND THE REFORE, THE ESTIMATION OF 3% WAS JUSTIFIED. HOWEVER, REJECTING THE SAME, LD. PR. CIT DIRECTED LD. AO TO PASS FRESH ASSESSMENT ORDER AFTER CONSIDERING THE GENUINENESS OF THE PURCHASES AS WEL L AS SALES SINCE THE ENTITIES CONTROLLED BY BHANWARLAL JAIN GR OUP WERE MERELY ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US CHALLENGING THE VALIDITY OF REVISIONAL JURISDICT ION AS EXERCISED BY LD. PR.CIT U/S 263. 5. UPON PERUSAL OF ASSESSMENT ORDER, WE FIND THAT I SSUE OF SUSPICIOUS PURCHASES WAS UNDER DUE CONSIDERATION OF LD.AO. THE REQUISITE PURCHASE DETAILS AS TO PURCHASES MADE FRO M M/S PRIME STAR WERE CALLED-FOR BY LD. AO FROM THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS. THE NOTICE U/S 133(6) WA S ISSUED TO CONFIRM THE TRANSACTIONS. THE ASSESSEE SUBMITTED VA RIOUS DETAILS AS WELL AS DOCUMENTARY EVIDENCES IN THE SHAPE OF PU RCHASE INVOICES, LEDGER CONFIRMATIONS, COPY OF ITR-V OF TH E SUPPLIER, ITS AUDITED FINANCIAL STATEMENTS, BANK STATEMENTS HIGHL IGHTING PAYMENT THROUGH BANKING CHANNELS. IT WAS ALSO SUBMITTED THA T GOODS PURCHASED FROM THIS PARTY WAS ONE TO ONE IDENTIFIED AND SOLD LOCALLY AS WELL AS EXPORTED OUTSIDE INDIA. THE AUDITED FINA NCIAL STATEMENTS WERE PLACED ON RECORD WHICH CONTAINED QUANTITATIVE DETAILS OF THE GOODS BEING DEALT WITH BY THE ASSESSEE. THE GOODS P URCHASED FROM THIS PARTY WERE CORRELATED WITH THE SALES MADE BY THE ASSESSEE. 5 6. AFTER CONSIDERING ALL THESE EVIDENCES AS WELL AS SUBMISSIONS, LD. AO ESTIMATED AN ADDITION AGAINST THE SAME @3%. IT IS NOTABLE THAT THE SALES WERE NOT DOUBTED AND THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL. THEREFORE, THERE WAS N O OPTION BUT TO ESTIMATE THE ADDITIONS TO ACCOUNT FOR UNACCOUNTED P ROFIT WHICH MAY HAVE GENERATED BY THE ASSESSEE IN THESE SUSPICIOUS TRANSACTIONS. THE ACTION OF LD. AO IN ESTIMATING THE ADDITION COU LD NOT BE SAID TO BE ARBITRARY OR PERVERSE, IN ANY MANNER. THERE WAS DUE APPLICATION OF MIND BY LD. AO ON THE STATED ISSUE. MERELY BECAU SE, LD. PR.CIT DID NOT AGREE WITH THE AFORESAID ESTIMATION, THE SA ME COULD NOT BE SOLE GROUND TO INVOKE REVISIONAL JURISDICTION U/S 2 63 PARTICULARLY WHEN THERE IS DUE APPLICATION OF MIND TO THE ISSUE BY LD. AO. ONCE A POSSIBLE VIEW HAS BEEN TAKEN BY LD. AO, THE REVIS IONAL JURISDICTION U/S 263 WOULD NOT BE VALID. MERELY BEC AUSE THE INQUIRIES WERE NOT DONE IN A PARTICULAR MANNER, THE SAME WOUL D NOT MAKE ASSESSMENT ORDER EXPOSE TO REVISIONAL JURISDICTION U/S 263. 7. THEREFORE, ON THE FACTS AND CIRCUMSTANCES, WE A RE INCLINED TO QUASH THE REVISIONAL ORDER DATED 29/03/2019. WE ORD ER SO. 8. RESULTANTLY, THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON 13 TH JANUARY, 2021. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 13/01/2021 SR.PS, JAISY VARGHESE 6 / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./% ( 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.