ACIT 17(3), MUMBAI V. VASANT CONSTRUCTION COMPANY (I), MUMBAI

ITA 251/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2607 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJN EESH K ARVIND
• Assessee Lawyers: AJAY R SINGH
• Keywords: Additional evidence
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 251/MUM/2015 (ASSESSMENT YEAR:2010-11) A C I T - 7(3) VS. M/S. VASANT CONSTRUCTION ROOM NO. 137, 1 ST FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 COMPANY (I) 33/37, 1 ST FLOOR CHANDRA BHUVAN BUILDING MUMBAI 400003 PAN - AAAFV0909M APPELLANT RESPONDENT APPELLANT BY: SHRI RAJNEESH K. ARVIND RESPONDENT BY: SHRI AJAY R. SINGH DATE OF HEARING: 21.09.2016 DATE OF PRONOUNCEMENT: 28.09.2016 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-26, MUMBAI DATED 27.10.2014 FOR A.Y. 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, A FIRM ENGAGED IN BUSINESS AS GOV ERNMENT CIVIL CONTRACTOR, FILED ITS RETURN OF INCOME FOR A.Y. 201 0-11 ON 28.092010 DECLARING INCOME OF ` 58,43,650/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE A CT') AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. IN THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) ON THE BASI S OF A LIST OF 2000 DEALERS BROUGHT OUT BY THE SALES TAX DEPARTMENT OF THE GOVERNMENT OF MAHARASHTRA, WHO HAD FILED AFFIDAVITS ADMITTING THA T THEY WERE ENGAGED IN PROVIDING BOGUS BILLS, IN WHICH THE THREE PARTIES F ROM WHOM THE ASSESSEE HAD PURCHASED GOODS FIGURED THEREIN, ISSUED NOTICE UNDER SECTION 133(6) OF ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 2 THE ACT AND THEN REQUIRED THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THESE PURCHASES. THE DETAILS THEREOF ARE AS UNDER: - S.NO. NAME OF THE PARTY AMOUNT INVOLVED (IN ` ) REMARKS 1 M/S. SHYAM CORPORATION 17,83,589/- UNCLAIMED 2 M/S. SHREE YAMUNA IMPEX 28,49,990/- DECLARED THAT HIS FIRM IS CLOSED AND HE DIDT DO ANY TRANSACTION 3 M/S. DARSHAN SALES CORPORATION 17,37,105/- NO REPLY TOTAL 63,70,684/- 2.2 IN RESPONSE THERE TO THE ASSESSEE FILED COPIES OF PURCHASE BILLS, COPIES OF LEDGER ACCOUNTS, PAYMENT DETAILS FOR THES E PURCHASES, COPIES OF BANK ACCOUNT EVIDENCING PAYMENTS BY CHEQUE AND SUBM ITTED THAT THE SAID PURCHASES (SUPRA) WERE MADE THROUGH BROKERS AND THA T BROKERAGE AND TRANSPORTATION CHARGES ARE PAID BY THE SUPPLIERS OF GOODS. THE ASSESSEES ABOVE EXPLANATIONS AND EVIDENCES FURNISHED DID NOT FIND FAVOUR WITH THE AO, WHO WAS OF THE VIEW THAT SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE PARTIES FOR VERIFICATION AND RELYING ON THE ENQUIRI ES CONDUCTED BY THE SALES TAX AUTHORITIES, HELD THAT THESE PURCHASES WERE BOG US AND THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THESE PU RCHASES AMOUNTING TO ` 63,70,684/- AND DISALLOWED THE SAME. THE ASSESSMENT WAS CONCLUDED BY AN ORDER UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 21.03.2013; WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T ` 1,22,14,330/- AS AGAINST RETURNED INCOME OF ` 58,43,646/- IN VIEW OF THE DISALLOWANCE OF PURCHASES AMOUNTING TO ` 63,70,684/- BEING TREATED AS BOGUS. 3. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 21.03.20 13 FOR A.Y. 2010-11, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT(A)-26, MUMBAI CHALLENGING THE AFORESAID DISALLOWANCE OF PURCHASES AMOUNTING TO ` 63,70,684/- HELD TO BE BOGUS BY THE AO. THE LEARNED CIT(A) DISPOSED THE APPEAL VIDE ORDER DATED 27.10.2014 ALLOWING THE ASS ESSEE PARTIAL RELIEF; BY DIRECTING THE AO TO ASSESS THE ADDITIONAL INCOME ES TIMATED FROM THESE PURCHASES OF ` 63,70,684/- FROM BOGUS PARTIES @25% THEREOF. ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 3 4.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A)-26, MUMBAI DATED 27.10.2014 FOR A.Y. 2010-11, HAS PREFERRED TH IS APPEAL RAISING THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING PURCHASES FROM PART IES M/S. SHYAM CORPORATION, M/S. SHREE YAMUNA IMPEX, M/S. DARSHAN SALES CORPORATION AS GENUINE IGNORING THE FACT THAT QUANT ITATIVE DETAILS WERE NOT PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONSIDERING THE PURCHASES T O BE GENUINE WHEN THE VENDOR PARTIES HAVE BEEN CONSIDERED BOGUS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDEN CES IN VIOLATION OF RULE 46A WITHOUT GIVING OPPORTUNITY TO THE A.O. TO VERIFY THE SAME. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 4.2.1 THE LEARNED D.R. FOR REVENUE WAS HEARD IN SUP PORT OF THE GROUNDS RAISED. HE PLACED STRONG RELIANCE ON THE FINDINGS O F THE AO THAT THE TOTAL PURCHASES OF ` 63,70,684/- FROM M/S. SHYAM CORPORATION, M/S. SHREE YAMUNA IMPEX AND MS. DARSHAN SALES CORPORATION WERE BOGUS AND CONTENDED THAT THE LEARNED CIT(A) HAD ERRONEOUSLY H ELD THE SAID PURCHASES TO BE GENUINE AND IN RESTRICTING THE ADDITION TO 25 % THEREOF; BEING THE PROFITS/BENEFIT THAT THE ASSESSEE WOULD HAVE EARNED FROM OUT OF THE TRANSACTION WITH THE AFORESAID THREE PARTIES. GROUND NO. 3: 4.2.2 AT THE OUTSET, THE LEARNED D.R. WAS HEARD IN RESPECT OF GROUND NO. 3 (SUPRA) IN WHICH IT WAS CONTENDED THAT THE LEARNED CIT(A) HAD ERRED IN ADMITTING ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A OF THE I.T. RULES, 1962 WITHOUT AFFORDING THE AO ANY OPPORTUNITY TO VE RIFY AND REBUT THE SAME BEFORE ADJUDICATING THE MATTER OF BOGUS PURCHA SES AND THEREFORE THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS NOT SUSTAIN ABLE. ACCORDING TO THE ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 4 LEARNED D.R., EVEN THOUGH THE LEARNED CIT(A) HAD NO T SPECIFICALLY MENTIONED ADMISSION OF ANY ADDITIONAL EVIDENCE, IT IS CLEAR FROM THE IMPUGNED ORDER THAT THE ASSESSEE HAD INFACT ADDUCED ADDITIONAL EVIDENCES IN THE FORM OF FILING VARIOUS DOCUMENTS, INTER ALIA , IN RESPECT OF THE PURCHASES FROM THESE THREE PARTIES THAT RESULTED IN THE LEARNED CIT(A) DECIDING THE APPEAL PARTLY IN FAVOUR OF THE ASSESSE E. THE LEARNED D.R. DREW THE ATTENTION OF THE BENCH TO THE PAPER BOOK-I FILE D BY THE ASSESSEE VIDE LETTER DATED 12.08.2016 CONTAINING ITEMS AT SR. NO. 1 TO 11 CONSISTING OF PAGES 1 TO 346; WHEREIN THE ASSESSEE HAS CERTIFIED THAT ONLY ITEMS AT SR. NO. 1 TO 3 (PAGES 1 TO 80) HAVE BEEN FILED BEFORE T HE AO AND THAT ITEMS AT SR. NO. 4 TO 11 (PAGES 8 TO 346) BEEN FILED BEFORE THE LEARNED CIT(A) ONLY. IT IS ARGUED THAT THOUGH THE LEARNED CIT(A) HAD NOT PA SSED ONLY ORDER ADMITTING ADDITIONAL EVIDENCES, THE CERTIFICATE/ADM ISSION OF THE ASSESSEE IN THE PAPER BOOK-I FILED BY IT AND THE REFERENCE TO T HESE DOCUMENTS HAVING ALSO BEEN ONLY FILED BEFORE THE LEARNED CIT(A), AS ACKNOWLEDGED BY HIM BY VARIOUS MENTIONS IN HIS ORDER AT PARAS 3.3.1 TO 3.5 .4 THEREOF, WHEREIN HE HAS RECORDED THE ASSESSEES SUBMISSIONS AND DETAILS FILED BY IT BEFORE HIM, CLEARLY INDICATE THAT THE LEARNED CIT(A) HAD ADMITT ED AND ACTED FAVOURABLY UPON ADDITIONAL EVIDENCE PLACED BEFORE HIM BY THE A SSESSEE WITHOUT AFFORDING TO AO OPPORTUNITY TO REBUT THE SAME, AS I S REQUIRED BY THE PROVISIONS OF RULE 46A. IT IS PLEADED BY THE LEARNE D D.R. THAT ON THIS SHORT POINT ALONE, AS RAISED IN GROUND NO. 2 OF THIS APPE AL (SUPRA), THE ORDER OF THE LEARNED CIT(A) IS NOT SUSTAINABLE AND OUGHT TO BE SET ASIDE. 4.3 PER CONTRA, THE LEARNED A.R. FOR THE ASSESSEE S UPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) AS BEING IN OR DER IN ALL RESPECTS. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES IN RESPECT OF THE GROUND AT SR. NO. 3 RAISED IN THIS APPEAL AND P ERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ON AN APPRECIATI ON OF THE AVERMENTS OF THE LEARNED D.R. AND THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT RULE 46A OF THE INCOME TAX RULES, 1962 (IN SHO RT THE RULES) HAS A DIRECT BEARING ON THE CONTROVERSY. THEREFORE IT WOU LD ONLY BE IN THE FITNESS OF THINGS FOR US TO TAKE NOTE OF THE RULE. RULE 46A READS AS UNDER: - ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 5 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MA Y BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO A DMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDEN CE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORD ER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS TH E CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING O FFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROS S-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WIT NESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT , OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APP EAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUES T OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SE CTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 4.4.2 A PERUSAL OF THIS RULE WOULD SUGGEST THAT SUB -RULE-1 PUTS AN EMBARGO UPON THE ASSESSEE TO SEEK PERMISSION FOR PR ODUCING ADDITIONAL EVIDENCE EITHER ORAL OR DOCUMENTARY. SUCH EVIDENCE CAN ONLY BE PERMITTED TO BE PRODUCED, IF CONDITIONS ENUMERATED IN SUB-CLA USES (A) TO (D) ARE AVAILABLE. THE LEARNED COMMISSIONER HAS TO RECORD I N WRITING AS TO WHY HE HAD ADMITTED THE ADDITIONAL EVIDENCE. SUB-RULE-3 CO NTEMPLATES THAT IF ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 6 ADDITIONAL EVIDENCE IS TAKEN ON RECORD, THEN IT CAN NOT BE CONSIDERED ON MERIT, UNLESS AN OPPORTUNITY TO THE ASSESSING OFFIC ER IS BEING GIVEN TO COMMENT THE EVIDENCE OR DOCUMENTS OR TO CROSS EXAMI NE THE WITNESS PRODUCED BY THE ASSESSEE. APART FROM THAT THE LEARN ED ASSESSING OFFICER WOULD BE GIVEN AN OPPORTUNITY TO PRODUCE ANY EVIDEN CE OR DOCUMENTS OR ANY EVIDENCE IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. SUB RULE-4 IS AN EXCEPTION TO ALL OTHER S UB-RULES. THIS RULE AUTHORIZES THE CIT(A) TO DIRECT ANY PARTY FOR PRODU CTION OF ANY DOCUMENTS OR EXAMINATION OF ANY WITNESS TO ENABLE HIM TO DISP OSE OF THE APPEAL OR FOR ARRIVING AT A JUST CONCLUSION. 4.4.3 IN THE CASE ON HAND, AS CONTENDED BY THE LEAR NED D.R., WE FIND THAT THE LEARNED CIT(A) HAS INFACT ADMITTED ADDITIONAL E VIDENCE PUT FORTH BY THE ASSESSEE AS ADMITTED BY THE ASSESSEE IN CERTIFYING ITS PAPER BOOK-I (PAGE 1 TO 346) THAT ONLY DETAILS AT SR. NO. 1 TO 3 (PAGES 1 TO 80) WERE FILED BEFORE THE AO AND THAT THE DETAILS/DOCUMENTS AT SR. HO. 4 TO 11 (PAGES 86 TO 346) WERE FILED ONLY BEFORE THE LEARNED CIT(A). THE FACT THAT THE LEARNED CIT(A) ACTED ON THIS ADDITIONAL EVIDENCE FAVOURABLY IS, IN OUR VIEW, EVIDENT FROM THE MENTION OF THE SAME HAVING ALSO BEEN FILED BEFORE HIM IN APPELLATE PROCEEDINGS AT PARAS 3.3.1 TO 3.5.4 OF THE IMPUGNED ORDER WHILE RECORDING THE ASSESSEES ARGUMENTS, SUBMISSIONS AND DETAILS A ND EVIDENCES FILED. IN THE LIGHT OF THE FACTUAL MATRIX ABOVE, WE FIND THAT THE LEARNED CIT(A) HAS FAILED TO AFFORD THE AO AN OPPORTUNITY OF BEING HEA RD IN THE MATTER AND TO VERIFY AND REBUT THE SAME AND THEREFORE IN OUR VIEW , THE CONDITIONS MENTIONED IN SUB-RULE-3 OF RULE 46A OF THE RULES RE MAIN UNCOMPLIED. WE THEREFORE SET ASIDE THE FINDING OF THE LEARNED CIT( A) IN THE IMPUGNED ORDER IN RESPECT OF THE ISSUE OF PURCHASES FROM THE THREE PARTIES, VIZ., M/S. SHYAM CORPORATION, M/S. SHREE YAMUNA IMPEX AND M/S. DARSHAN SALES CORPORATION AMOUNTING TO ` 63,70,684/- AND RESTORE THE MATTER TO HIS FILE FOR FRESH CONSIDERATION AND ADJUDICATION THEREON AF TER AFFORDING THE AO DUE OPPORTUNITY UNDER RULE 46A(3) OF THE RULES. WE HOLD AND DIRECT ACCORDINGLY. GROUND NO. 3 OF REVENUES APPEAL IS AC CORDINGLY DISPOSED OFF. ITA NO. 251/MUM/2015 M/S. VASANT CONSTRUCTION COMPNAY (I) 7 5. IN VIEW OF OUR FINDINGS IN RESPECT OF GROUND NO. 3 SUPRA, THERE IS NO REQUIREMENT FOR US TO ADJUDICATE THE GROUNDS RAISED BY REVENUE AT SR. NO. 1, 2, 4 & 5. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 TH SEPTEMBER, 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -26, MUMBAI 4. THE CIT - 15, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.