Assistant Commissioner of Income Tax, Circle - 6(3)(2), Mumbai V. M/s Jeevandeep Prakashan Private Limited, Mumbai

ITA 2693/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8662 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMATHA
• Keywords: Bogus purchase; Difference of opinion; Change of opinion
• Section: 143(3); 143(2); 148

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL F BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO.2693/MUM/2019 (ASSESSMENT YEAR 2010 - 11 ) ACIT CIRCLE 6(3)(2), AAYAKAR B HAVAN, M.K. ROAD , MUMBAI - 400020. VS. M/S JEEVANDEEP PRAKASHAN PVT. LTD., PLOT NO. 7, INDUSTRIAL ESTATE, OFF BA ROAD, OPPOSITE LALBAUG, MUMBAI - 400012 , PAN: AABCJ0182E A PPELLANT RESPONDENT REVENUE BY : MISS SAMATHA ( SR. D R) ASSESSEE BY : SHRI PRASHANT SHAH (DR) DA TE OF HEARING : 21 .07 .2020 DATE OF PRONOUNCEMENT : 21 .07 .2020 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME - TAX APPEALS ( L D. CIT(A) - 12, MUMBAI DATED 14.01.2019 FOR ASSESSMENT YEAR 2020 - 11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMP ANY ENGAGED IN THE BUSINESS OF P UBLICATION OF EDUCATIONAL BOOKS, F ILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2020 - 11 DECLARING INCOME OF RS. 1.60 CRORE. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 14.03.2013 ACCEPTING THE RETURN INCOME. SUBSEQUENTLY, CASE WAS REO PENED UNDER SECTION 147. THE ASSESSING OFFICER REOPENED THE CASE ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), MUMBAI, ITA NO. 2693 MUM 2019 - M/S JEEVANDEEP PRAKASHAN PVT. LTD. 2 WHO IN TURN RECEIVED INFORMATION FROM THE SALES TAXES DEPARTMENT GOVERNMENT OF MAHARASHTRA THAT CERTAIN DEALERS WERE ENGAGE D IN PROVIDING THE ACCOMMODATION ENTRY WITHOUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE IS ONE OF THE BENEFICIARIES OF SUCH ACCOMMODATION ENTRY. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER MADE HIS OPINION ABOUT THE RE - OPENING OF THE CASE. NOTI CE UNDER SECTION 148 DATED 30.09.2010 WAS SERVED UPON THE ASSESSEE. REASONS OF RE - OPENING WERE PROVIDED TO THE ASSESSEE ON 22.07.2015. THE ASSESSING OFFICER AFTER SERVING NOTICE UNDER SECTION 143(2) AND 142( 1 ) PROCEEDED FOR RE - ASSESSMENT. DURING THE RE - ASS ESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS. 4,00,878/ - FROM ADINATH TRADING COMPANY, WHOSE NAME WAS LISTED IN THE LIST OF BOGUS ENTRY PROVIDER. THE ASSESSING OFFICER ISSUED SHOW - CAUSE NOTICE WHY THE PURCHASES SHOWN FRO M HAWALA TRADERS SHOULD NOT BE TREATED AS BOGUS AND TO BRING TO TAX. THE ASSESSEE FILED ITS REPLY DATED 23.02.2016. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER (THE CONTENTS OF REPLY ARE NOT RECORDED IN THE ASSESSMENT ORDER). THE ASSESSING OFFICER ON THE BASIS OF ON THE BASIS OF VARIOUS DECISIONS OF HIGHER COURTS AS MENTIONED IN PARAGRAPH - 9 OF THE ASSESSMENT ORDER , TOOK HIS VIEW THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THE UNDISCLOSED SUPPLIER . THE ASSESSING OFFICER DISALLOWED THE ENTIRE P URCHASES OF RS. 4,00,878/ - IN ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 ON 10.03.2016. ITA NO. 2693 MUM 2019 - M/S JEEVANDEEP PRAKASHAN PVT. LTD. 3 3. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION WAS RESTRICTED TO 12.5% OF THE PURCHASES. THE LD. CIT(A) RESTRICTED THE PURCHASES ON THE BASIS OF DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. SIMITH P. SHETH (356 ITR 451). THE LD CIT(A) HELD THAT SAVIN G OF VAT AND OTHER INCIDENTAL CHARGES CAN BE BROUGHT TO TAX IN S UCH PURCHASES . A GGRIEVED BY THE ORDER LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. T HOUGH THE REVENUE HAS RAISED AS MANY AS SEVEN GROUNDS OF APPEAL, HOWEVER , IN OUR VIEW THE SOLE AND SUBSTANTIAL GROUND OF APPEAL IS THAT IF THE LD CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF BOGUS PURCHASES TO THE EXTENT OF 12.5% . 4. W E HAVE HEARD THE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE S AND THE LEARNED AUTHORISED REPRESENTATIVE (LD AR FOR THE ASSESSEE AND ALSO CAREFULLY PERUSED THE ORDER OF THE TAX AUTHORITIES BE LOW. T HE LD . DR FOR THE REVENUE S UPPORTED THE ORDER OF ASSESSING OFFICER . THE LD. DR SUBMITS THAT THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT MADE FULL - FLEDGED INVESTIGATION ABOUT THE MODUS OPERANDI OF THE HAWALA TRADERS WHO W ERE ENGAGED IN PROVIDING BOGUS ENTRY WITHOUT ACTUAL DELIVERY OF THE GOODS. THE ASSESSEE IS ONE OF THE BENEFICIARIES OF SUCH BOGUS BILL. THE LD. DR FOR THE REVENUE SUBMITS THAT THE ENTIRE PURCHASES SHOULD BE DISALLOWED AS THE ASSESSEE FAILED TO PROVE THE GE NUINENESS OF THE PURCHASES. ITA NO. 2693 MUM 2019 - M/S JEEVANDEEP PRAKASHAN PVT. LTD. 4 5. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT DURING THE PERIOD UNDER REFERENCE, THE ASSESSEE PURCHASES DIARY FOR DISTRIBUTION TO ITS CUSTOMER. THE ASSESSEE IS REGULARLY PURCHASING THE SIMIL AR DIARIES IN EARLIER YEARS I.E IN FINA N CIAL YEAR ( F Y ) 2008 - 09 & 20 10 - 11 AND IN SUBSEQUENT F Y 2011 - 1 2 . THE DIARIES WERE PURCHASED FOR INCREASING THE MARKET SHARE AND BUSINESS RELATIONSHIP WITH CUSTOMERS. THE ASSESSEE PRODUCED THE BILLS , S A MPLE DIARY, LEDGER AC COUNT WITH BANK STATEMENT HIGHLIGHTING THE PAYMENT MADE TO THE PARTIES. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ONLY ON SATISFACTION OF THE ASSESSING OFFICER. THE RE - OPENING WAS BASED MERELY ON THE INFORMATION OF DGIT(INV.), WITHOUT ARRIVING AT OWN SATISFACTION, WAS MERELY A CHANGE OF OPINION. THE ASSESSING OFFICER HAS NOT DISCUSSED THE DOCUMENTARY EVIDENCES FURNISHED BY ASSESSEE. T HE ASSESSING OFFICER MADE ADDITIONS ON THE BASIS OF THIRD PARTY INFORMATION , WITHOUT REFERENCE TO THE ASSESSEE. T HE ASSESSING OFFICER MADE ADDITION WITHOUT MAKING ANY INDEPENDENT INQUIRY. THE LD. AR OF THE ASSESSEE PRAYED FOR DISMISSAL OF APPEAL. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE ORDER OF LOWER AUTHORITIES. WE HAVE NOTED THAT AFTER RE - OPENING OF TH E ASSESSMENT, THE ASSESSING OFFICER PROCEEDED FOR RE - OPENING. THE ASSESSEE FIELD ITS REPLY TO THE SHOW - CAUSE NOTICE ISSUED BY ASSESSING OFFICER, VIDE ITS REPLY DATED 23.02.2016. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS ITA NO. 2693 MUM 2019 - M/S JEEVANDEEP PRAKASHAN PVT. LTD. 5 NOT REFERRED THE CONTENTS OF REPL Y FILED BY ASSESSEE. THE ASSESSEE IN THE STATEMENT OF FACT BEFORE LD CIT(A) CLAIMED THAT EVIDENCES WITH REGARDS TO LEDGER ACCOUNT S AND THE PAYMENTS THROUGH BANKING CHANNEL WERE PROVIDED TO THE ASSESSING OFFICER. W E HAVE SEEN THAT T HE ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT INVESTIGATION. THE BOO KS OF ACCOUNT OF ASSESSEE WERE NOT REJECTED. THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING ON THE DOCUMENTARY EVIDENCES FURNISHED BY ASSESSEE. WE HAVE FURTHER NOTED THAT THE ASSESSEE HAS SHOWN RETURN INCOME OF RS. 1.60 CRORE. THE ALLEGED BOGUS PURCHASES IS ONLY TO THE EXTENT OF RS. 4,00,000/ - ONLY. THE ASSESSEE HAS CATEGORICALLY STATED THAT THE PURCHASES WERE MADE IN THE FORM OF DIARY FOR DISTRIBUTION TO THE CUSTOMERS. A T THE WORST IT MAY BE A CASE OF INFLATING EXPENSES. T HE ASSESSING OFFICER HAS NOT VERIFIED AND EXAMINED THE FACT THAT THE DIARIES WERE DISTRIBUTED ON NOT. THE LD. CIT(A) AFTER CONSIDERING THE CONTENTION OF ASSESSEE RESTRICTED THE ADDITION TO THE EXTE NT OF 12.5% OF THE ALLEGED BOGUS PURCHASES BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. SIMITH P. SHETH (SUPRA). WE HAVE NOTED THAT DESPITE FURNISHING SUFFICIENT EVIDENCE IN THE FORM OF LEDGER ACCOUNTS AND PAYMENT THROUGH BANK ING CHANNEL, THE ASSESSING OFFICER HAS NOT BROUGHT ANY ADVERSE MATERIAL AGAINST THE ASSESSEE. IN OUR THE LD CIT(A) HAS BROUGHT THE ELEMENT AVOIDANCE OF VAT AND OTHER CHARGES TO TAX , EMBEDDED IN SUCH BOGUS PURCHASES. CONSIDERING THE PECULIAR FACTS OF THE PRESENT CASE, WE DO ITA NO. 2693 MUM 2019 - M/S JEEVANDEEP PRAKASHAN PVT. LTD. 6 NOT FIND ANY INFIRMI TY IN THE ORDER PASSED BY LD CIT(A), WHICH WE AFFIRMED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/07 /2020. SD / - SD/ - M. BALAGANESH PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 21.07 .2 020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI DATE INITIALS 1. DRAFT DICTAT ED ON 21.07.20 THROUGH MOBILE PHONE (DICTATION SHEET IS ENCLOSED WITH MAIN FILE . 21.07 .20 2. DRAFT PLACED BEFORE AUTHOR 21.07 .20 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO THE SR.PS 6. KEPT FOR PRONOUNCEMENT 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE A.R. FOR SIGNATURE OF THE ORDER 9. DATE OF DISPATCH OF THE ORDER