INTERNATIONAL TRANSMISSION LTD, MUMBAI V. DCIT CIR 10(3), MUMBAI

ITA 2771/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4092 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGHDR
• Assessee Lawyers: V G GINDE
• Keywords: Bogus purchase

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI I BENCH BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAM LAL NEGI,JUDICIAL MEMBER /.ITA NO.2771/MUM/2014, /ASSESSMENT YEAR-2010-11 INTERNATIONAL TRANSMISSION LTD. 501, 5 TH FLOOR, VASUDEO CHAMBERS MULUND-GOREGAON LINK ROAD, OPP. D-MART, BHANDUP(W) MUMBAI-400 078. PAN:AAACI 0975 M VS DY. CIT-CIRCLE-10(3) 473, AAYAKAR BHAVAN M.K. MARG MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : SHRI V.G. GINDE / REVENUE BY : SHRI PRADEEP KUMAR SINGH-DR / DATE OF HEARING : 19.01.2016 / DATE OF PRONOUNCEMENT : 03.02.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.03/02/2014 OF THE CIT(A)-2 2,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFACTURING OF INTERNATIONAL TRANSMI- SSION PRODUCTS,FILED ITS RETURN OF INCOME ON 28.09. 2010,DECLARING TOTAL INCOME OF RS.2,55, 71, 146/-.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESS MENT ON 18.01.2013,U/S.143(3) OF THE ACT, DETERMINING THE INCOME OF THE ASSESSEE AT RS.4.03 C RORES. 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMING THE DISALLOWANCE OF RS.1.47 CRORES.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESS EE HAD PURCHASED GOODS FROM SENDOZ STEEL (SS)AND RONAK INDUSTRIES(RI).AS PER THE INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT PURCHASES MADE BY THE ASSESSEE,FROM BOTH THE PARTIES,WERE NOT GENUINE.HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PUR CHASES FROM SS AND RI SHOULD NOT BE TREATED AS BOGUS.AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE,THE AO ADDED A SUM OF RS.1.47 CRORES TO THE TOTAL INCOME OF THE ASSESSEE AND HELD THAT THE SUPPLIERS HAD PROVIDED BILLS ONLY AND HAD NOT SUPPLIED THE GOODS AND THAT THE ASSESSEE HA D PROVED THE GENUINENESS OF THE TRANSACTIONS BY FURNISHING DELIVERY CHALLANS,INWARD REGISTER ETC . 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM, IT WAS ARGUED THAT PURC HASES WERE GENUINE.THE ASSESSEE FILED COPIES OF SALES BILLS AND PURCHASE ORDER FROM KEC I NTERNATIONAL LTD.(KIL),COPY OF SALES BILLS AND PURCHASE ORDER FROM GAMMON INDIA LTD.(GIL),COPIES O F LEDGER OF SS AND RI ALONG WITH THE COPIES OF PURCHASE BILLS,DELIVERY CHALLANS AND GOOD S INWARD REGISTERS.IT WAS CLAIMED THAT THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS,THAT ST EEL AND ALUMINIUM WERE PURCHASED TO COMPLETE THE PURCHASE ORDER/WORK ORDERS FROM KIL AN D GIL.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DOCUMENTS AND THE ASSESSMENT OR DER,HE HELD THAT THE ASSESSEE HAD PURCHASED ALUMINIUM FROM RI AND STEEL FROM SS,THAT COPY OF CO NTRACT/WORK ORDER WAS FURNISHED DURING THE APPELLATE PROCEEDINGS,THAT THAT THE WORK ORDER OF K IL WAS OF RS.5.89 CRORES,THAT WORK ORDER OF GIL WAS OF RS.4.01 CRORES,THAT THAT GIL HAD GIVEN A NOTHER ORDER WORTH RS.5.24 CRORES,THAT THE ITA/2771/M/14,AY.10-11-INTL. TRANSMISSION LTD. 2 ASSESSEE HAD PURCHASED GOODS FROM RI BETWEEN 06.02. 2010 TO 24.02.2010,THAT THE MATERIALS WERE DELIVERED FROM ASSESSEES PONDHA FACTORY,THAT COPY OF LORRY RECEIPT AND DELIVERY CHALLANS WERE NOT FURNISHED IN SUPPORT OF ACTUAL DELIVERY OF GOOD S,THAT INVOICES IN THE CASE OF KIL WERE RAISED ONLY ON 31.03.2010,THAT INVOICES OF GIL WERE RAISED ONLY IN THE MONTHS OF DECEMBER,2009 TO JANUARY, 2010,THAT THERE WAS NO POSSIBILITY OF ALUM INIUM BEING USED FOR THE TRANSMISSION MATERIAL SUPPLIED BY SS,THAT IN THE CASE OF KIL RAW MATERIAL WAS PURCHASED IN THE MONTH OF FEBRUARY THAT THE GOODS WERE CLAIMED TO BE MANUFACT URED IN MARCH,THAT CONSIDERING THE TIME GAP IT WAS NOT POSSIBLE FOR THE ASSESSEE TO MANUFACTURE THE SAME,THAT THE ASSESSEE HAD NOT PURCHASED ANY GOODS FROM RI IN EARLIER YEARS,THAT PAYMENTS TO THE SUPPLIERS WERE MADE AFTER SIX MONTHS,THAT OVER ALL PICTURE SHOWED THAT THE PURCHASES FROM THE RI WAS BOGUS,THAT THE ASSESSEE PURCHASED GOODS FROM SS IN THE AY.S.2009-10 AND 2011-12,THAT PURCHASES FROM SS WERE MADE FROM OCTOBER 2009 TO FEBRUARY 2011,THAT THERE WAS NO EVI DENCE THAT PAYMENTS WERE MADE TO THE LORRIES CARRYING GOODS TO THE FACTORY OF THE ASSESS EE,THAT ENTIRE PURCHASE MADE FROM SS AND RI WAS TO BE TREATED BOGUS.FINALLY,HE CONFIRMED THE AD DITION MADE BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR)OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAD PRODUCED ALL THE CHALL ANS BEFORE THE TAX AUTHORITIES, THAT THE INWARD REGISTER WAS MADE AVAILABLE TO THE AO/FAA, THAT THE TRANSPORTATION CHARGES WERE PAID BY THE SELLER, THAT THE IT AND VAT RETURNS OF SS WERE FILE D BY THE ASSESSEE, THAT SALES WERE ACCEPTED BY THE DEPARTMENT, THAT THE DELIVERY CHALLAN WITH REGA RD TO KIL AND GIL WERE FURNISHED DURING THE ASSESSMENT/APPELLATE PROCEEDINGS, THAT NO INVESTIGA TION WAS MADE WITH REGARD TO THE TURNOVER OF THE ASSESSEE, THAT THE GOODS FROM SS WERE PURCHASED FOR TWO AY.S. HE REFERRED TO PAGE NOS. 26, 27,62-78,79-91 AND 24-51 OF THE PAPER BOOK. HE RELI ED UPON THE CASE OF SHRI HIRALAL CHUNILAL JAIN(ITA/4547/MUM/2014 AY.S2009-10,2010-11 DT.1.1.2 016).THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF FAA AND STATED THAT REC EIPTS FROM TRANSPORTERS WERE NOT PRODUCED IN CASE OF SS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED RAW MATERIAL FROM SS AND RI,THAT IT HAD SUPPLIED GOODS TO KIL AND GIL,THAT THE SALES TAX DEPARTMENT HAD IN FORMED THAT THE SUPPLIERS OF RAW MATERIAL WERE PROVIDING HAWALA ENTRIES,THAT THE AO MADE THE ADDITION TO THE INCOME OF THE ASSESSEE TREATING THE TRANSACTIONS WITH SS AND RI AS BOGUS P URCHASES,THAT THE FAA HAD CONFIRMED THE ADDITION,THAT THE ASSESSEE HAD FURNISHED VARIOUS DO CUMENTS BEFORE THE AO AND THE FAA. WE FIND THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNT N OR HAD DOUBTED THE SALES MADE BY THE ASSESSEE TO KIL AND GIL.WHILE GOING THROUGH THE PAGE NOS.26- 27, WE FIND THAT SS HAD DELIVERED THE GOODS AT THE WORKPLACE OF THE ASSESSEE AND THE NUMB ER OF TEMPO IS ALSO MENTIONED IN IT. SIMILAR IS THE POSITION ABOUT OTHER PURCHASES MADE FROM SS( PG.NO.28-51 OF THE PB).WE FIND THAT THE LEDGER ACCOUNT OF RI AND SS SHOW THAT PURCHASES WER E REGULARLY MADE FROM BOTH OF THEM. IT IS ALSO FOUND THAT RI HAD MADE FREE DELIVERY AT POND HA FACTORY OF THE ASSESSEE. IT IS ALSO A FACT THAT ALL THE PAYMENTS WERE MADE THROUGH THE BANKING CHANNELS AND AO HAS NOT BROUGHT EVIDENCE THAT MONEY HAS TRAVELLED BACK TO ASSESSEES ACCOUNT .PAGE NO.62-78 OF THE PAPER BOOK PROVIDE DETAIL OF VEHICLE NOS., CHALLAN NOS., NAMES OF SUPP LIER OF GOODS, PARTICULARS OF MATERIAL, NET WEIGHT OF THE GOODS ETC.WE HAVE ALSO GONE THROUGH THE RETU RN OF INCOME AND SALES TAX RETURN FILED BY SS.THE ASSESSEE HAS ALSO PLACED ON RECORD THE AGREE MENT ENTERED WITH KIL AND GIL. IGNORING ALL THESE DOCUMENTARY EVIDENCES,THE AO HAD MADE THE ADD ITION SOLELY RELYING ON THE INFORMATION SUPPLIED BY THE SALES TAX DEPARTMENT.WE DO NOT KNOW AS TO WHETHER THE STATEMENTS OF THE DIRECTORS/PARTNERS OF SS AND RI WERE RECORDED OR NO T BY THE SALES TAX AUTHORITIES. IT IS ALSO NOT ITA/2771/M/14,AY.10-11-INTL. TRANSMISSION LTD. 3 KNOWN AS TO WHETHER THEY HAD ALLEGED THAT THE ASSES SEE HAD PURCHASED THE GOODS FROM THEM. AS THE AO HAD FAILED TO CARRY OUT ANY INVESTIGATION AB OUT ALLEGED BOGUS PURCHASES AFTER RECEIVING INFORMATION FROM SALES TAX DEPARTMENT,SO WE ARE OF THE OPINION THAT HIS ORDER CANNOT BE ENDORSED. WE FIND THAT THE FAA HAD RAISED CERTAIN OBJECTIONS LIKE SUPPLY OF GOODS FOR A PARTICULAR PERIOD, ABSENCE OF DELIVERY CHALLANS OR IMPOSSIBILITY OF PR ODUCTION OF FINISHED GOODS. BUT,HE HAD NOT GIVEN REASONS FOR ARRIVING AT SUCH CONCLUSIONS.THE ASSESSEE HAD PRODUCED ALL THE DELIVERY CHALLANS ALONG WITH THE INWARD REGISTER.THE SUPPLIE RS OF THE RAW MATERIAL HAD SPECIFICALLY MENTIONED THAT DELIVERY WAS MADE AT THE WORK PLACE AND THAT THEY DID NOT CHARGE TRANSPORTATION CHARGES FROM THE ASSESSEE. IT IS A FACT THAT THE GO ODS MANUFACTURED BY THE ASSESSEE WERE SUPPLIED TO PARTIES WHO ARE IN THE FIELD OF TRANSMISSION BU SINESS.THE AO/FAA HAVE NOT MADE ANY ENQUIRY WITH THE RECIPIENT OF THE FINISHED GOODS. IN OUR OP INION,THE INFORMATION RECEIVED FROM SALES TAX WAS A GOOD STARTING POINT FOR MAKING FURTHER INVEST IGATION,BUT IT WAS NOT TAKEN TO THE LOGICAL END. IF THE EVIDENCES PRODUCED BY THE ASSESSEE ARE VAGUE AGAINST THE CONCLUSIONS DRAWN BY THE AO/ FAA IT BECOMES CLEAR THAT THE ASSESSEE HAD DISCHARG ED THE BURDEN CAST UPON IT. THEREFORE, REVERSING THE ORDER OF THE FAA WE DECIDED THE EFFEC TIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE.HERE,WE WOULD LIKE TO REFER TO THE ORDER O F RAJEEV G. KALATHIL (ITA NO. 6727/ MUM/2012,DT.20.8.2014) WHEREIN IN SIMILAR CIRCUMST ANCES THE TRIBUNAL HAS HELD AS UNDER : 2.4.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US.WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLAR ED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END.BUT,HE LEFT THE JOB AT INITIAL POINT ITSELF.SUS PICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE.HE COULD HAVE CALLED FOR THE DETAILS OF TH E BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FRO M THEIR ACCOUNT.WE FIND THAT NO SUCH EXERCISE WAS DONE.TRANSPORTATION OF GOOD TO THE SIT E IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE.THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK.AS FAR A S THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED,WE FIND THAT IN THAT MATTER CAS H WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS.BUT, IN THE CASE BEFORE US,THERE IS NOTHING,IN THE ORDER OF THE AO,ABOUT THE CASH TRAIAL.SECONDLY,PROO F OF MOVEMENT OF GOODS IS NOT IN DOUBT. THERERFORE,CONSIDERING THE PECULIAR FACTS AND CIRCU MSTANCES OF THE CASE UNDER APPEAL,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER F ROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAK EN BY THE AO.SO,CONFIRMING THE ORDER OF THE FAA,WE DECIDE GROUND NO.1 AGAINST THE AO. RESPECTFULLY,FOLLOWING THE ABOVE DECISION,WE REVERS E THE ORDER OF THE FAA AND DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD FEBRUARY, 2016. 3 , 2016 SD/- SD/- ( /RAM LAL NEGI) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 03.02. 2016 . . . .. . JV.SR.PS. ITA/2771/M/14,AY.10-11-INTL. TRANSMISSION LTD. 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.