Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 3945 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-02-2016
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
C
Assessment Year
2010-2011
Appeal Filed On
09-04-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMA R , AM ./ I.T.A. NO 2369 /MUM/201 4 ( / ASSESSMENT YEAR: 20 10 - 1 1 ) M/S. PARAS ORGANICS PVT. LTD. PLOT NO. D - 119, TTC IND USTRIAL AREA, NAVI MUMBAI 400 076 . / VS. D Y.COMMISSIONER OF INCOME TAX - - 10(2), MUMBAI. ./ ./ PAN/GIR NO. AABCP9468M ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BHADRESH JOSHI / RESPONDENT BY : SHRI RADHA KATYAL / DATE OF HEARING : 07/01/2016 / DATE OF PRONOUNCEMENT : 26 /02/2016 / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIREC TED AGAINST THE OR DER DATED 11/03/2014 OF COMMISSIONER OF INCOME TAX (APPEALS) - 22 , MUMBAI (HEREINAFTER CALLED AS THE C I T (A)) FOR ASSESSMENT YEAR 20 10 - 1 1 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT - (A) HAS ERRED IN CONFIRMING ACTION OF LD. AO OF ADDING COMMISSION OF RS. 9,08,111/ - U/S 40(A)(IA). 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT - (A) HAS ERRED IN CONFIRMING ACTION OF LD AO OF DISALLOWING PURCHASES OF RS. 4,23,875/ - TREATING THEM AS BOGUS. 2 ITA NO. 2369 /MUM/201 4 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INC OME ON 27.09.2010 DECLARING AN INCOME OF RS. 2,13,43,318/ - . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING BULK DRUGS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED U/S 143(2) AND 142 ( 1) OF THE ACT AND DU L Y SERVED UPON THE ASSESSEE . THE AO FRAMED THE ASSESSMENT U/ S 143 ( 3) VIDE ORDER DATED 06.03.2013 AT RS.2,26,75,300/ - BY MAKING TWO ADDITIONS FIRST RS . 9,08,111/ - ON ACCOUNT OF NON DEDUCTION OF TDS ON COMMISSIONER PAID AND SECOND RS.4,23,875/ - FOR BOGUS HAWA LA PURCHASES OF LDO . 3. THE ISSUE RAISED IN THE FIRST GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITIONS OF RS. 9,08,111/ - BY THE CIT(A) AS MADE BY THE AO U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TDS. THE LD AO ADDED THE COMMISSION OF RS. 9, 08,111/ - FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION 194H OF THE ACT AS STATED IN PARA 4 OF THE ASSESSMENT ORDER WHICH WAS ALSO CONFIRMED BY THE CIT(A) FOR THE SAME REASONS THAT EXPENSES WERE SUBJECT TO DEDUCTION OF TDS UNDER CHAPTER XVII OF THE A CT AND THE DISALLOW ANCE WAS RIGHTLY MADE U / S 40(A)(IA) OF THE ACT . 3.1. THE AO SUBMITTED BEFORE US THAT THE ISSUE IS COVERED IN FAVOR OF THE ASSESSEE BY A DECISION OF THE TRIBUNAL IN ITS OWN CASE IN ITA NO 2878/MUM/2013 AY 2009 - 10 DATED 26.10.201 5 WHEREIN A SIMILAR ISSUE WAS DECIDE D IN FAVOR OF THE ASSESSEE WITH IDENTICAL FACTS AND THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP PVT . VS CIT ITA NO 160/2015 DATED 26.08.2015.` THE LD AR ARGUED THAT THE SAID DISALLOWA NCE WAS UNCALLED FOR IN VIEW OF THE FACT THE ASSESSEE FILED BEFORE THE LOWER AUTHORITIES THE NECESSARY PROOF OF THE SAID PAYMENT BEING TAXED IN THE HANDS OF PAYEES AND ALSO THE BY FILING CERTIFICATE OF CHARTERED ACCOUNTANT TO THAT EFFECT TH E SAID PAYMENTS WERE DULY TAXED AND FINALLY 3 ITA NO. 2369 /MUM/201 4 PRAYED FOR THE DELETION OF SAME. PER CONTRA THE LD DR RELIED ON THE ORDERS OF AUTHORITIES BELOW . 3.2. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIALS ON RECORDS. WE FIND THAT THE ASSESSEE FAILED TO DEDUCT TDS FROM RS. 9 ,08,111/ - PAID TO FOUR PARTIES AS STATED IN PARA 4 OF THE ASSESSMENT ORDER AND THE AO DISALLOWED THE SAME U/S 40(A)(IA) OF THE ACT. THE ASSESSEE HAD SATISFIED THE CONDITIONS AS IMPOSED BY THE 1 ST PROVISO TO SECTION 201(1) OF THE ACT WHICH READS AS U NDER: - [ PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER OF A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT - ( I ) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; ( II ) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND ( III ) HAS PAID TH E TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME , AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED: ] THE SECOND PROVISO TO SECTION TO 40 (A)(IA) IS DECLARATORY AND CURATIVE IN NATU RE AND IT HAS RETROSPECTIVE W.E.F. 1 ST APRIL,2005 BEING THE DATE FROM WHICH THE SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY FINANCE(NO 2) ACT 2004. 3.3. IN VIEW OF THE ABOVE FACTS AND POSITION OF LAW WE ARE OF THE CONSIDERED OPINION THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF ANSAL LAND MARK TOWNSHIP PVT . VS CIT ITA NO 160/2015 DATED 26.08.2015 WHEREIN IT HAS BEEN HELD THAT THE SECOND PROVISO TO 4 ITA NO. 2369 /MUM/201 4 SECTION 40(A)(IA) OF THE ACT IS DECLARATORY AND CURATIVE IN NATURE AND HAS R ETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005 BY UPHOLDING THE DECISION OF AGRA BENCH IN THE CASE OF RAJIV KUMAR AGGARWAL VS ACIT. FURTHER WE FIND THAT SIMILAR ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSEE S OWN CASE IN THE CASE OF ITA NO 2878/MUM/2 013 AY 2009 - 10 DATED 26.10.2015. THE RELEVANT PARA IS EXTRACTED BELOW : - '2.1 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE CERTIFICATE OF THE ACCOUNTANT UNDER FIRST PROVISO TO SUBSECTION (1) OF SE CTION 201 CERTIFYING FURNISHING OF RETURN OF INCOME AND PAYMENT OF TAX, ETC. WE REMAND THIS ISSUE TO THE FILE OF THE ID. ASSESSING OFFICER TO EXAMINE THE FACTUAL MATRIX AND THEN DECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD. EVEN OTHERWISE, INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) WITH EFFECT FROM 01/04/2003 IS DECLARATORY AND CURATIVE IN NATURE WITH RETROSPECTIVE EFFECT FROM 01/04/2005, INSERTED BY FINANCE (NO.2) ACT 2004, THUS, THE ASSESSING OFFICER IS DIR ECTED TO EXAMINE THE CLAIM OF THE ASSESSEE WHETHER THE SAID AMOUNT HAS BEEN INCLUDED AS INCOME OF THE PAYEE. THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES.' WE THEREFORE RESPECTFULLY FOLLOWING THE DECISIONS OF THE DELHI HIGH COURT AND OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE, SE T ASIDE THE ISSUE TO THE FILE OF THE AO TO EXAMINE THE MATTER AND DECIDE ACCORDINGLY AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE . 3.4 THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 4. T HE SECOND GROUND IS AGAINST THE CONFIRMATION OF ADDITIONS OF RS. 4,23,875/ - ON ACCOUNT OF HAWAL A PURCHASES. THE FACTS ARE THAT THE INVESTIGATION WING OF THE DEPARTMENTS PASSED ON SOME INFORMATION THAT M/S VINAV TRADING COMPANY AND M/S MAHALAXMI CORPORATION ISSUED BOGUS BIL LS TO THE ASSESSEE WITHOUT SUPPLYING MATERIALS WHICH WAS PART OF HAWALA SCANDAL . THE VAT DEPARTMENT OF GOVT . OF MAHARASHTRA UNEARTHED THE SAID SCANDAL FOLLOWING INVESTIGATIONS INTO THE DEFAULT OF VAT SET OFF CREDITS 5 ITA NO. 2369 /MUM/201 4 AND ALL THESE HAWALA COMPANIES ADM ITTED TO HAVE INDULGED INTO HAWALA TRANSACTIONS AND THEN THIS INFORMATION WAS PASSED ON TO THE INVESTIGATION WING OF THE DEPARTMENTS FOLLOWING WHICH THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE AO AFTER REJECTING THE REPLY DATED 27.02.2013 OF T HE ASSESSEE PARTLY MADE ADDITION OF RS. 4,23,875/ - IN RESPECT O F THE BILL OF PURCHASE FROM M/S. MAHALAXMI CORPORATION ON THE GROUND THAT THE ASSESSEE COULD NOT P ROVE THE SUPPLY OF MATERIALS FROM THE SAID SUPPLIERS THEREBY CONCLUDING THE SAME TO BE HAWALA TRANSACTION WHILE ACCEPTING SUBMISSION OF THE ASSESSEE THAT NO SUCH ALLEGED PURCHASES WERE MADE FROM M/S VINAV TRADING CO. 4.1. THE APPEAL OF THE ASSESSEE WAS DISMISSED ON THIS ISSUE BY THE CIT(A) BY OBSERVING THAT ASSESSEE COULD NOT PROVE THE SUPPLY O F MATERIALS , LORRY RECEIPT TO PROVE THE PAYMENT OF FREIGHT AND OTHER RECORDS AND MERE PAYMENT BY CHEQUE WAS NOT SUFFICIENT PROOF .MOREOVER THE SAID COMPANY WAS NOT A REGULAR SUPPLIER TO THE ASSESSEE 4.2. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE WHO LE ADDITION WAS BASED UPON THE SUSPICION AND CONJECTURES ON THE BASIS OF INFORMATION BY THE VAT DEPARTMENT , GOVT OF MAHARASHTRA. THE COUNSEL SUBMITTED THAT THE PAYMENT WAS MADE BY CHEQUE WHICH WAS ACKNOWLEDGED BY THE SUPPLIER, THE MATERIALS WAS RECEIVED WHICH WAS DULY R EFLECTED IN THE STOCK REGISTER, DELIVERY CHALLAN , BANK STATEMENT , COPY OF LEDGER ACCOUNT, SUMMARY OF LDO PURCHASED AND CONSUMED DURING THE YEAR AND COMPARATIVE ANALYSIS FOR VARIOUS YEAR S FOR CONSUMPTION WHICH WERE FILED AS PAGE NO . 11 TO 35 OF THE PAPER BOOK . IT WAS SUBMITTED BY THE LD AR THAT ALL THESE RECORDS ADEQUATELY PROVED THE SUPPLY OF MATERIALS HAVING BEEN RECEIVED ACTUALLY AND THEREFORE THE ADDITION MADE OF RS. 4,23,875/ - FOR ALLEGED BOGUS PURCHASES WERE BASED ON THE SUSPI CION , CONJECTURES AND SURMISES AND BE 6 ITA NO. 2369 /MUM/201 4 DELETED. THE LD DR ON THE OTHER HAND RELIED ON THE ORDER OF LOWER AUTHORITIES . 4.3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORDS. WE FIND FROM THE ORDER OF AUTHORITIES BELOW THAT VAT DEPARTMENTS CONDUCTED SEARCH ON VARIOUS DEALERS AND FOUND THAT THEY WERE ENGAGED IN HAWALA TRANSACTIONS SUCH GIVING BILLS WITHOUT SUPPLYING MATERIALS AND THE VARIOUS HAWALA DEALERS HAD ADMITTED TO HAVE SUPPLIED THE BILLS TO VARIOUS COMPANIES INCLUDING THE ASSESSEE. DURING THE COURSE OF SCRUTINY THE SHOW CAUSE WAS GIVEN TO THE ASSESSEE IN RESPECT TWO HAWAL A OPERATORS NAMELY M/S VINAV TRADING CO AND M/S MAHALAXMI CORPORATION OUT OF WHICH THE ASSESSEE ADMITTED TO HAVE MADE SOME PURCHASES FROM M/S MAHALAXMI C ORPORATION AND DENIED TO HAVE ANY DEALING WITH FORMER WHICH WAS ACCEPTED BY THE ASSESSEE. THE LD.AR PRODUCED BEFORE US THE VARIOUS RECORDS SUCH AS COPIES OF STOCK REGISTER, COPIES OF INVOICE AND DELIVERY CHALLAN, BANK STATEMENT EVIDENCING THE PAYMENT, COPY OF LEDGER ACCOUNT, SUMMARY OF LDO PURCHASED AND CONSUMED DURING THE YEAR AND COMPARATIVE ANALYSIS FOR VARIOUS YEAR FOR CONSUMPTION WHICH WERE FILED AS PAGE NO 11 TO 35 OF THE PAPER BOOK WHICH SHOWS THAT THE MATERIALS WAS ACTUALLY RECEIVED. THE AO ADDED TH E SAME AS BOGUS PURCHASE WITHOUT CARRYING ANY FURTHER VERIFICATION ESPECIALLY WHEN HE ACCEPTED THE SUBMISSION OF THE ASSESSEE M/S VINAV TRADING CO AND REJECTING THE PLEA FOR THE OTHER WITHOUT BRINGING ON RECORDS ANY OTHER INDEPENDENT EVIDENCE SUCH AS SPECI FIC CONFIRMATION FROM M/S MAHALAXMI AND CROSS EXAMINATION BY THE ASSESSEE. IN OUR OPINION THE ASSESSEE HAD EXPLAINED THE PURCHASE MADE FROM MAHALAXMI CORPORATION WITH ALL THE SUPPORTING RECORDS WHICH PROVED THAT THE ASSESSEE HAD RECEIVED THE MATERIALS AS E VIDENCED BY THE DELIVERY CHALLAN AND OTHER RECORDS. IN VIEW OF THE ABOVE FACTS , THE ADDITIONS OF RS. 4,23,875/ - AND AO IS DIRECTED ACCORDINGLY. 7 ITA NO. 2369 /MUM/201 4 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY , 201 6 SD SD ( AMIT SHUKLA ) ( R AJESH KUMAR ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 26 . 02 .201 6 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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