RITESH KANTILAL BAFNA, MUMBAI V. ITO WD 19(2)(2), MUMBAI

ITA 2327/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1627 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 2327/MUM/2017 ASSESSMENT YEAR : 2009-10 RITESH KANTILAL BAFNA SON & LEGAL HEIR OF LATE KANTILAL M BAFNA, 801, SHATRUNJAY DARSHAN, LOVE LANE, CROSS LANE, BYCULLA, MUMBAI [PAN : AAAPB8051G] VS. ITO, WD-19(2)(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT B Y : SHRI C. V . JAIN , AR RESPONDENT B Y : MS. KUSUM BANSAL, DR DATE OF HEARING : 26 - 06 - 201 9 DATE OF PRONOUNCEMENT : 19 - 0 8 - 201 9 O R D E R PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-30 , MUMBAI, DATED 16-02-2017. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE ASSESSING OFFICE R (AO) TO RE- OPEN THE ASSESSMENT U/S.147 R.W.S.148 OF THE INCOME TAX ACT (ACT). 2.1. THE FACTS IN BRIEF ARE THAT, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF DEALING IN IRON AND STEE L AND OTHER ITA NO. 2327/MUM/2017 : 2 : RELATED ITEMS. THE ASSESSMENT U/S.143(3) OF THE ACT WAS FRAMED BY THE AO ON 31-10-2011, ASSESSING THE INCOM E AT RS.5,18,580/- AS AGAINST THE RETURNED INCOME OF RS. 3,36,110/-. THE AO REOPENED THE CASE OF ASSESSEE U /S.147 OF THE ACT BY ISSUING NOTICE U/S.148 OF THE ACT ON 26- 02-2014 AFTER RECEIVING INFORMATION FROM DGIT(INV.) WING, M UMBAI THAT ASSESSEE IS A BENEFICIARY OF HAWALA PURCHASE ENTRIE S TO THE TUNE OF RS.11,44,23,300/- FROM SIX PARTIES THE DETA ILS WHEREOF WERE GIVEN ON PAGE NO.2 OF THE ASSESSMENT ORDER. TH EREAFTER, STATUTORY NOTICES WERE ISSUED AND DULY SERVED ON AS SESSEE, CALLING UPON TO FURNISH THE EVIDENCES TO PROVE THE GENUINENESS OF THE SAID PURCHASES. IN RESPONSE, THE ASSESSEE FU RNISHED BILLS AND VOUCHERS PERTAINING TO PURCHASES AND SALE S AND THE BOOKS OF ACCOUNT ETC IN ORDER TO PROVE THE GENUINEN ESS OF THE PURCHASES. THE AO ALSO ISSUED NOTICES U/S.133(6) O F THE ACT HOWEVER THERE WAS NO RESPONSES FROM THE SUPPLIERS AND NOTICES HAVE BEEN RETURNED BY THE POSTAL AUTHORITIE S. FINALLY, AO CAME TO THE CONCLUSION THAT THE SAID PURCHASES W ERE HAWALA PURCHASES, AND THE ASSESSEE WAS INDULGING I N SUCH ACTIVITIES TO SUPPRESS THE TRUE PROFITS AND TO REDU CE THE TAX LIABILITY. THE AO THOUGHT IT REASONABLE TO MAKE ADDITION ON PERCENTAGE BASIS BY FOLLOWING THE DECISION OF HON'B LE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH [3 56 ITR 451] (GUJ). THE AO ESTIMATED THE PROFIT ON THE SAID PUR CHASES @ 12.50% THEREBY MAKING AN ADDITION OF RS.1,43,02,913 /- BY MAKING ASSESSMENT U/S.143(3) R.W.S.147 OF THE ACT, VIDE ORDER DT.18-03-2015. 2.2. IN THE ORIGINAL ASSESSMENT PROCEEDINGS, AO HAS BASICALLY RAISED A QUERY FOR FURNISHING THE DETAILS OF SALE A ND PURCHASES ITA NO. 2327/MUM/2017 : 3 : ABOVE RS.50,000/- VIDE LETTER DT.08-09-2011 AND ALS O SOUGHT THE DETAILS OF SUNDRY CREDITORS OUTSTANDING WHICH W AS REPLIED BY ASSESSEE VIDE WRITTEN SUBMISSIONS DT.18-10-2011, WHEREIN THE ASSESSEE HAS ATTACHED PARTY-WISE PURCHASES AND SALES THE DETAILS THEREOF ARE ATTACHED AT PAGES 50 TO 52 OF T HE PAPER BOOK. WE FIND THAT IN THE DETAILS OF PURCHASES SUB MITTED BY THE ASSESSEE AS FILED AT PAGE 51, ALL THESE PARTIES , WHICH WERE STATED TO BE HAWALA PARTIES WERE DULY FURNISHED BE FORE THE AO. NOW THE ASSESSEE HAS CHALLENGED THE REOPENING PROCEEDINGS ON GROUND THAT THE SAME WAS BASED ON TH E SAME MATERIAL WHICH WAS BEFORE THE IN THE ORIGINAL ASSES SMENT PROCEEDINGS AND THUS AMOUNTED TO CHANGE OF OPINION. 3. IN THE APPELLATE PROCEEDINGS, THE CIT(A) DISMISS ED THE APPEAL OF ASSESSEE ON THIS TECHNICAL ISSUE, BY OBSE RVING AND HOLDING AS UNDER: 5.13. IN VIEW OF THE ABOVE FACTUAL AND LEGAL ANALY SIS, I AM OF THE CONSIDERED OPINION THAT THERE WAS NO INFIRMITY IN THE ACTION OF THE LD.AO, IN REOPENING THE CASE AND REOPENING IS NOT O N MERE SUSPICION AND THERE IS SPECIFIC MATERIAL RECEIVED FROM THE IN VESTIGATION WING WHICH IN TURN RECEIVED FROM THE SALES TAX DEPARTMEN T, GOVERNMENT OF MAHARASHTRA, WHICH WAS NOT VERIFIED IN THE ORIGI NAL ASSESSMENT BY THE AO. RESULTANTLY, GROUNDS RAISED AGAINST THE RE OPENING OF THE APPEAL ARE DISMISSED. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING MATE RIAL ON RECORD, WE OBSERVE THAT IN THIS CASE, THE ASSESSMEN T WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DT.31-10-20 11. WE NOTE THAT DURING THE ORIGINAL ASSESSMENT PROCEEDING S, THE AO SPECIFICALLY RAISED A QUERY VIDE LETTER DT.08-09-20 11 IN PARA 2, DIRECTING THE ASSESSEE TO FURNISH THE SALES AND PUR CHASES, WHICH WAS REPLIED BY ASSESSEE VIDE LETTER DT.18-10- 2011, GIVING PARTY-WISE SALES AND PURCHASES. WE FIND THA T ALL THE ITA NO. 2327/MUM/2017 : 4 : HAWALA PARTIES QUA WHICH THE REOPENING PROCEEDINGS WERE RESORTED TO U/S.147 R.W.S.148 OF THE ACT WERE ORIGI NALLY FURNISHED BEFORE THE AO AS IS APPARENT FROM PAGES 5 1 & 52 OF THE PAPER BOOK AND THUS, THE REOPENING IS DONE ON T HE BASIS OF SAME MATERIALS IN RESPECT OF THE SAME PARTIES, WHICH WERE EXAMINED BY THE AO BY CALLING FOR SPECIFIC DETAILS FROM THE ASSESSEE. IN OUR OPINION THE CASE OF ASSESSEE WAS R EOPENED ON THE CHANGE OF OPINION ONLY AS ALL THE PARTIES WERE VERIFIED BY THE AO DURING THE COURSE OF ORIGINAL ASSESSMENT PRO CEEDINGS. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT THIS I S A MERE CHANGE OF OPINION BY THE AO, WHICH IS NOT PERMISSIB LE UNDER THE ACT. THE CASE OF ASSESSEE IS SQUARELY COVERED BY THE DECISION OF CIT V. KELVINATOR OF INDIA LTD.[2010] 3 20 ITR 561 (SC) AND VARIOUS OTHER DECISIONS OF THE HON'BLE BOM BAY HIGH COURT AND CO-ORDINATE BENCHES. IN THIS CONNECTION, WE ARE OF THE VIEW THAT THE ASSESSMENT PROCEEDINGS ARE BAD IN LAW AND ARE QUASHED. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. 5. SINCE WE HAVE DECIDED THE ISSUE ON LEGAL GROUND, THE ISSUE RAISED IN GROUNDS, NEED NOT TO BE ADJUDICATED . 6. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.08.2019 SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 19.08.2019 TNMM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 2327/MUM/2017 : 5 : 2. / THE RESPONDENT 3. ( ) / THE CIT(A), MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI