DHARMIK EXIM P. LTD, MUMBAI V. ACIT RG 9(1), MUMBAI

ITA 232/MUM/2009

• Counselvise Citation: 23219914 RSA 2009
• Duration Of Justice: 6 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 13-04-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 12-01-2009
• Court: TRIBUNAL
• Keywords: Bogus purchase; Additional evidence; Assessment record
• Section: 80HHC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI . , . . , BEFORE SHRI D.MANMOHAN, VICE PRESIDENT & SHRI R.C.SHARMA , A M ./ ITA NO S . 232/MUM/2009 &1297/MUM/2012 ( / ASSESSMENT YEAR S :2000 - 01 & 2001 - 02 ) M/S DHARMIK EXIM PVT. LTD., 106, RUBY INDUSTRIES ESTATE, CHINCHOLI BUNDER ROAD EXTN., OFF. LINK ROAD, MALAD (W), MUMBAI - 64 VS. ACIT, RANGE - 9(1), MUMBAI ./ ./ PAN/GIR NO. : A A AC D 3656 N ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 151 /MUM/2009 ( / ASSESSMENT YEAR : 2000 - 01 ) D CIT, RANGE - 9(1), MUMBAI VS. M/S DHARMIK EXIM PVT. LTD., 106, RUBY I NDUSTRIES ESTATE, CHINCHOLI BUNDER ROAD EXTN., OFF. LINK ROAD, MALAD (W), MUMBAI - 64 ./ ./ PAN/GIR NO. : A AACD 3656 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : MR. PANKAJ R.TOPRANI /REVENUE BY : MR. SANJEEV JAIN / DATE OF HEARING : 14 TH AUGUST , 2015 / DATE OF PRONOUNCEMENT : 19 TH AUGUST , 2015 / O R D E R PER R.C.SHARMA ( A .M.) : THESE ARE THE CROSS APPEALS FILE D BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2000 - 01 & 2001 - 02. IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. COMMON GROUNDS HAVE BEEN TAKEN BY ASSESSEE IN BOTH THE ASSESSMENT YEARS WHICH PERTAINS TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. IN THE A.Y.2000 - 01, T HE ASSESSEE IS AGGRIEVED FOR ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. THE REVENUE IN ITS APPEAL IS AGGRIEVED FOR DELETION OF 75% OF THE BOGUS PURCHASES. WE FOUND THAT ORIGINALLY APPEAL OF THE AS SESSEE AND REVENUE WAS DISPOSED OFF BY THE TRIBUNAL VIDE ORDER DATED 9 - 9 - 2010, WHEREIN APPEAL FILED BY THE REVENUE WITH REGARD TO DELETION OF 75% OF BOGUS PURCHASES WAS ALLOWED WHEREAS APPEAL FILED BY THE ASSESSEE WAS ALLOWED IN PART WITH REGARD TO VALIDIT Y OF REOPENING. HOWEVER, ADDITION WITH REGARD TO BOGUS PURCHASES WAS CONFIRMED BY THE TRIBUNAL . 3. THE MATTER FURTHER TRAVELLED TO THE HONBLE BOMBAY HIGH COURT, WHEREIN THE HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 9 - 1 - 2012 SET ASIDE THE ORDER OF THE ITAT INSOFAR AS IT RELATES TO DISALLOWANCE OF PURCHASES AMOUNTING TO RS.3.79 CRORES AND RESTORED THE MATTER BACK TO THE FILE OF ITAT FOR FRESH CONSIDERATION OF THE ISSUE. THE PRECISE OBSERVATION OF THE HONBLE HIGH COURT WAS AS UNDER : - 1. WHETHER THE ITA T WAS JUSTIFIED IN DISALLOWING THE PURCHASES MADE BY ASSESSEE FROM A PARTIES AMOUNTING TO R S .3.79 CRORES, IS THE QUESTION RAISED IN THIS APPEAL. THE ITAT HAS DISMISSED THE APPEA L FILED BY THE ASSESSEE MAINLY ON THE GROUND THAT THE ASSESSEE FAILED TO FURNIS H THE PERMANENT ACCOUNT NUMBERS OF THE 8 PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHASES. IT IS THE CASE OF THE ASSESSEE THAT THE PERMANENT ACCOUNT NUMBERS OF THE 8 PARTIES WERE IN FACT FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDING. TH E ASSESSEE HAS ALSO FILED AN AFFIDAVIT AND STATED ON OATH THAT THE PURCHASES MADE WERE FROM GENUINE PARTIES WHOSE PERMANENT ACCOUNT NUMBERS HAVE BEEN SET OUT IN THE SAID AFFIDAVIT. SINCE THE ASSESSEE HAS FURNISHED THE PERMANENT IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 3 ACCOUNT NUMBERS OF THE 8 PA RTIES FROM WHOM THE PURCHASES HAVE BEEN MADE BY THE ASSESSEE, WE SET ASIDE THE ORDER OF ITAT IN SO FAR AS IT RELATES TO DISALLOWING PURCHASES AMOUNTING TO RS.3.79 CRORES AND RESTORE THE MATTER TO THE FILE OF ITAT FOR FRESH CONSIDERATION OF THE ISSUE. IN VIEW OF THE ABOVE DIRECTION GIVEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN RESPECT OF ASSESSMENT YEAR 2000 - 01, WE ARE IN SESIN OF THE MATTER. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE HONBLE HIGH COURT DATED 9 - 1 - 2012. FACTS IN BRIEF ARE THAT IN THE COURSE OF ORIGINAL ASSESSMENT ADDITION WAS MADE ON ACCOUNT OF BOGUS PURCHASES. IN AN APPEAL FILED BEFORE THE TRIBUNAL, THE TRIBUNAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH. IN THE SECOND ROUND THE AO AGAIN CONFIRMED THE ADDITION ON ACCOUNT OF BOGUS PURCHASE. THE CIT(A) DELETED 75% OF SUCH BOGUS PURCHASES AND CONFIRMED THE ADDITION WITH RESPECT TO 25% OF THE PURCHASES. IN THE SECOND ROUND BOTH ASSE SSEE AND REVENUE WERE IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 9 - 9 - 2010 CONFIRMED THE DISALLOWANCE OF ENTIRE PURCHASE THERE BY ALLOWING REVENUES APPEAL AND DISMISSING THE ASSESSEES GROUNDS ON THE ISSUE OF BOGUS PURCHASE. ASSESS EE APPROACHED TO THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT VIDE ORDER DATED 9 - 1 - 2012 AFTER OBSERV ING THAT, IT IS THE CASE OF THE ASSESSEE THAT THE PERMANENT ACCOUNT NUMBERS OF THE 8 PARTIES WERE IN FACT FURNISHED DURING THE COURSE OF ASSESSMENT PR OCEEDING , RESTORED THE APPEAL BACK TO THE FILE OF THE TRIBUNAL FOR FRESH CONSIDERATION. AS PER THE DIRECTION OF THE HONBLE HIGH COURT SINCE THE IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 4 ASSESSEE HAS FURNISHED PERMANENT ACCOUNT NUMBER OF 8 PARTIES FROM WHO PURCHASE HAVE BEEN MADE BY THE ASSESSEE THE ISSUE WITH REGARD TO DISALLOWING THE PURCHASE MADE BY THE ASSESSEE FROM THESE EIGHT PARTIES AMOUNTING TO RS.3.79 CRORES REQUIRE S TO BE EXAMINED BY THE TRIBUNAL. 5. FROM THE RECORD, WE FOUND THAT BEF.ORE THE HON'BLE BOMBAY HIGH COURT THE ASSESSEE HAS F ILED THE FOLLOWING AFFIDAVITS WHICH READS AS UNDER: AFFIDAVIT I, GUI MELWANI, INDIAN INHABITANT, DIRECTOR OF THE APPELLANT COMPANY, HAVING OFFICE AT 106 RUB Y.INDUSFRI.AL ESTATE, CHINCHOLI BUNDER EXTN., MALAD(WEST), MUMBAI - 400 064 DO HEREBY SOLEMNLY AFF IRM AND STATE AS UNDER: 1. THAT DURING THE PREVIOUS YEAR ENDED 31.03.2000, RELEVANT FOR A.Y. 2000 - 01, THE APPELLANT WAS ENGAGED IN THE BUSINESS OF EXPORT OF STEEL UTENSILS AND ALLIED PRODUCTS, PRESSURE COOKERS, TERRY TOWELS, TOOTH PASTE AND MAN OTHER SMA LL ITEMS TO INDONESIA, PANAMA, FIJI, AND OTHER COUNTRIES, AND IT HAD CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE INCOME - TAX ACT, 1961. 2. DURING THE SAID ASSESSMENT YEAR, THE APPELLANT HAD MADE THE TRADING PURCHASES OF RS.L4,29,18,015/ - OUT OF WHICH RS. 3,79,00,113/ - WAS FROM THE FOLLOWING 8 (EIGHT) PARTIES: S.NO. NAME OF THE PARTY AMOUNT OF PURCHASE 1 M/ S PRADEEP SALES RS.32,57,740/ - 2 M/ S CHIRAG ENTERPRISES RS.60,00,000/ - 3 M/ S J .M. TRADING RS.47,42,100/ - 4 M/ S VIJAY INTERNATIONAL RS.5,53,500/ - 5 M/ S SHRADHA ENTERPRISES RS.52,41 ,595/ - 6 M/ S CHEM CORPORATION RS.27,14,624/ - 7 M/ S KOTHARI PRODUCTS RS.84, 74, 754/ - 8 M/ S SAMARTH ENTERPRISES RS.69,15,800/ - TOTAL RS.3,79,00,113/ - 3. RESPONDENT NO. 1 DISALLOWED THE SAID PURCHASES ON THE GROUND THAT THE APPELLANT COULD NOT PROVE THE GENUINENESS THEREOF AS CONFIRMATION FROM THE SAID PARTIES WERE OBTAINED ON THE LEDGER ACCOUNT COPIES WITHOUT GIVING THEIR PERMANENT ACCOUNT NUMBERS. 4. HON'BLE COMMISSIONER OF INCOME - TAX (APPEALS) - IX, VIDE HIS ORDER DATED 20.2.2004 GAVE RELIEF OF 75 PERCENT OF THE SAID TOTAL PURCHASES FROM THE 8 PARTIES. IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 5 5. HON'BLE TRIBUNAL VIDE ITS ORDER DAT ED 6.2.2007 RESTORED THE ISSUE IN RESPECT OF THE PURCHASES FROM THE AFORESAID 8 PARTIES TO THE FILE OF THE 2ND RESPONDENT. 6. DURING THE COURSE OF 2ND ROUND OF PROCEEDINGS BEFORE THE 2ND RESPONDENT, THE APPELLANT'S AUTHORISED REPRESENTATIVE VIDE THEIR LE TTER '6.1 I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS NOT DISPUTED THAT THE APPELLANT'S OWN AUDITOR IN AUDIT REPORT SUBMITTED ALONG WITH THE APPELLANT'S RETURN OF INCOME AND IN THE PRESCRIBED FORM NO.3CB VIDE NOTE NO.3 HAS REPORTED THAT THE APPELLANT HAD PAID EXCESSIVE REMUNERATION IN EXCESS OF LIMITS PRESCRIBED UNDER THE COMPANY'S ACT AMOUNTING TO RS.36,40,038/- FOR WHICH THE APPELLANT MADE AN APPLICATION TO THE CENTRAL GOVERNMENT AND THE APPROVAL WAS AW AITED. HAD THE AFORESAID EXCESSIVE REMUNERATION BEEN CONSIDERED AS RECOVERABLE, FROM THE DIRECTORS, LOANS AND ADVANCES WOULD HAVE BEEN DIFFERENT THAN THE STATED FIGURES IN THE FINAL ACCOUNT. THE APPELLANT FURNISHED A COPY OF SANCTIONED LETTER GRANTED BY TH E CENTRAL GOVERNMENT FOR EXCESSIVE REMUNERATION OF RS.36,40,038/ - PAID TO THE MANAGING DIRECTOR, SHRI SATISH RAO. 6.2 DURING THE COURSE OF REMAND PROCEEDINGS, THE L/ \ O VIDE LETTER NO. DCIT5(2)/APPEAL/CIT(A)/11 - 12 DATED 11.10.2011 SUBMITTED A REPORT ON TH E ADDITIONAL EVIDENCES SUBMITTED BY THE APPELLANT, THE RELEVANT PART OF WHICH MAY BE REPRODUCED AS UNDER: - 'BEFORE PROCEEDING FURTHER, FOR THE SAKE OF CONVENIENCE AND READY REFERENCE, RELEVANT PART OF PROVISION OF SECTION 309 OF COMPANIES ACT 1962 IS REP RODUCED AS UNDER: (5A) IF ANY DIRECTOR DRAWS OR RECEIVES, DIRECTLY OR INDIRECTLY, BY WAY OF REMUNERATION ANY SUCH SUMS IN EXCESS OF THE LIMIT PRESCRIBED BY THIS SECTION OR WITHOUT THE PRIOR SANCTION OF THE CENTRAL GOVERNMENT, WHERE IT IS REQUIRED, HE SHA LL REFUND SUCH SUMS TO THE COMPANY AND UNTIL SUCH SUM IS REFUNDED, HOLD IT IN TRUST FOR THE COMPANY. (5 B ) THE COMPANY SHALL NOT WAIVE THE RECOVERY OF ANY SUM REFUNDABLE TO IT DATED 24.12.2007 (EXHIBIT 'D' PAGE 60 TO 71 OF THE APPEAL PAPER BOOK) FURNISHED TO THE 2ND RESPONDENT CONFIRMATION LETTERS FROM THE SAID PARTIES ALONGWITH THEIR PERMANENT ACCOUNT NUMBERS WHICH WERE WRITTEN IN HAND. HOWEVER, 2ND RESPONDENT DID NOT CONSIDER THE SAID CONFIRMATION LETTERS EVEN THOUGH HE PASSED THE ORDER ON THE 'SAID DATE AS A RESULT WHEREOF, HE AGAIN MADE ADDITION IN RESPECT OF THE SAID PURCHASES. IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 6 7. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A), SHE VIDE HER ORDER DATED 24.1 0.2008 GAVE RELIEF OF 75% OF THE TOTAL PURCHASES FROM THE SAID 8 PARTIES. 8. WHEN T HE MATTER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL IN ITS ORDER DATED 9TH SEPTEMBER, 2010 GAVE FINDING ON PAGE 11 OF ITS ORDER (PAGE 117 OF THE APPEAL PAPER - BOOK) THAT THE ASSESSEE HAS MADE NO ATTEMPTS TO UTILISE THE OPPORTUNITY AFFORDED BY THE TRIBUNAL, WITHOUT CONSIDERING THE FRESH CONFIRMATION LETTERS FILED BY THE APPELLANT'S AUTHORISED REPRESENTATIVE BEFORE THE 2ND RESPONDENT VIDE THEIR LETTER DATED 24.12.2007. 9. WHATEVER HAS BEEN STATED ABOVE IS TRUE TO MY OWN KNOWLEDGE. SOLEMNLY AF FIRMED AT MUMBAI THIS 21 ST DAY OF DECEMBER, 2011. 6. AFTER CONSIDERING THE ASSESSEE'S AFFIDAVIT, THE HON'BLE HIGH COURT RESTORED THE MATTER BACK TO THE FILE OF THE TRIBUNAL FOR FRESH CONSIDERATION BY CONSIDERING THE ASSESSEE'S PLEA THAT THE ASSESSEE HAS FURNISHED PAN OF EIGHT PARTIES FROM WHOM PURCHASES HAVE BEEN MADE BY THE ASSESSE E. HOWEVER, DETAILS OF SUCH PAN NO. OF EIGHT PARTIES DO NOT FIND ANY MENTIONED IN THE ORDERS OF THE LOWER AUTHORITIES NOR IN THE ORDERS OF THE TRIBUNAL PASSED ON EARLIER OCCAS IONS. GENUINENESS OF PURCHASE CAN BE VERIFIED ONLY AFTER EXAMINING THE ASSESSMENT RECORDS OF THESE PARTIES AS PER PAN NO. DETAILS FILED THROUGH AFFIDAVIT, BEFORE HONBLE HIGH COURT. FOR THIS PURPOSE BOTH THE ID. AR AND ID. DR FAIRLY CONCEDED THAT THE MATT ER MAY BE RESTORED TO THE FILE OF THE A.O. FOR RE - EXAMINING THE ALLEGED PURCHASES IN THE LIGHT OF THE FACT THAT ALL THE EIGHT PARTIES FROM WHOM PURCHASES WAS MADE ARE HAVING PAN. 7. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE O F THE A.O. FOR DECIDING THE GENUINENESS OF THE PURCHASES MADE FROM EIGHT PARTIES HAVING PAN AS SUPPLIED BY THE ASSESSEE BEFORE THE HON'BLE IT A NO S . 232 & 151/2009 & ITA NO.1297/MUM/2012 7 HIGH COURT AS PER THE AFFIDAVIT DATED 31.12.2011, AS REPRODUCED ABOVE . ACCORDINGLY, THE APPEAL OF THE ASSESSEE AND RE VENUE FOR A.Y.2000 - 01 ARE ALLOWED FOR STATISTICAL PURPOSES. 8. AS THE ISSUE IN THE A.Y.2001 - 02 ARE SAME WHICH RELATES TO BOGUS PURCHASES, SAME IS ALSO RESTORED BACK TO THE FILE OF AO FOR DECIDING AFRESH IN TERMS INDICATED IN A.Y.2000 - 01. 9 . IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE AS WELL AS APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19/08 / 201 5 . 19/08 /201 5 SD/ - SD/ - ( . ) ( D.MANMOHAN ) ( . . ) ( R.C.SHARMA ) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED 19/08 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APP LIC ANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI