SPAN CORPORATION, MUMBAI V. CIT (A)-44, MUMBAI

ITA 3042/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7748 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 26-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAN
• Assessee Lawyers: BHARAT K PATEL
• Keywords: Cost of acquisition
• Section: 69C; 143(3); 142(1); 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH H MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , I.T.A. NO. 3042 /MUM /20 1 6 ( / ASSESSMENT YEAR : 20 1 0 - 11 ) M/S SPAN CORPORATION, C/O BHARAT K PATEL AND CO., 402, RISHIKESH APT, OPP N K HIGH SCHOOL, V ROAD, MALAD (W), MUMBAI - 4000 64 / VS. COMMISSIONER OF INCOME - TAX - RANGE - 44, C - 11, 6 TH FLOOR, ROOM NO.60 4, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E0, MUMBAI - 400051 ./ PAN : ABBFS1301E ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI BHARAT K PATEL / RESPONDENT BY : SHRI M C OMI NINGSHAN / DATE OF HEARING : 23 .3.2017 / DATE OF PRONOUNCEMENT : 29. 3. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A) - 44, MUMBA I DATED 25.2.2016 FOR THE ASSESSMENT YEAR 20 1 0 - 11 . 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE FOLLOWING ADDITIONS/ DISALLOWANCES: 2 I.T.A. NO. 3042 /MUM/201 6 1 ) ADDITIONS OF RS.70,1478/ - U/S 69C FOR PURCHASES MADE FROM M/S OM TRADING CO. DUE TO NOT PROVIDING THE ADDRESS OF M/S OM TRADING CO. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS; 2 ) THE LD. CIT(A) FURTHER ERRED IN DISREGARDING HE EVIDENCES PRODUCED DURING T HE REMAND PROCEEDINGS, AND CONCLUDED BUY UPHOLDING THE SAID ADDITION O0F RS.7,01,478/ - ; 3 ) THE HONBLE TRIBUNAL BE PLEASED TO V A CATE THE ABOVE ADDITIONS/DISALLOWANCES 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.9.2 010 DECLARING TOTAL INCOME AT RS.17,92,992/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY STATUTORY NOTICES U/S 143(2) A N D 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLE D FOR PARTY - WISE DETAILS OF PURCHASES , WHICH WERE FURNISHED BY T HE ASSESSEE WHICH INCLUDED THE PURCHA SES OF RS.7,01,478/ - FROM M/S OM TRADING COMPANY. THE ASSESSEE DID NOT PROVIDE ADDRESS OF THE SAID PARTY TO THE AO AND THEREFORE THE SAME COULD NOT B E VERIFIED AS A RESULT OF WHICH THE SAME WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S 69C OF THE INCOME TAX ACT, 1961 . THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 28.3.2013 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.74,67,430 / - . AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA , WHO AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO BY OBSERVING AND HOLDING AS UNDER: 3 I.T.A. NO. 3042 /MUM/201 6 7 . 2. I HAVE STUDIED THE ASSESSMENT ORDER AS W E LL AS THE REMAND REPO R T. I HAVE ALSO CAREFULLY GONE THROUGH T HE WRITTEN SUBMISSIONS MADE BY TH E AR. IT IS SEEN FROM THE ASS ES SMENT ORDER THAT T HE APPELLANT HAD NOT SUBMITTED THE A DDRESS OF M /S OM TRADING CO . BEFORE THE AO. DURING TH E ASSESS MENT PRIMARY OWNERS OF PROVIDING DE TAILS REGARDING GENUINE NE SS OF TRANS ACT ION WAS ON THE APPELLANT. ADDRESS WAS ONE O F THE NECESSARY FACTOR WHICH WAS REQUIRED TO BE SUBMITTED BY TH E APPELLANT BEFORE THE AO. SINCE I WAS NOT ONE DURING T HE ASSESSME NT NO DE TAILS OR EVIDENCED FOR THE SAME CAN BE ENTERTAINED AT THIS STAGE BECAUSE TO DO SO WILL BE VIOLATE THE PROVISION S O F RULE 46A OF THE INCOME TAX RULES, 1962. IN VIEW OF THIS, GROUNDS OF APPEAL NO.6 IS DISMISSED AND ADDITION OF RS.7,01,478/ - IS C ONFIRMED. 4 . THE LD. AR VEHEMENTLY SUBMITTED THAT, THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND THE AO VIDE HIS LETTER DATED 6.8.2015 SUBMITTED THE SAME TO THE LD. CIT(A) WHICH WAS NOT CONSIDERED BY THE LD.CIT(A) . T HE LD.AR SUBMITTED T HAT ALL THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND MATERIAL IN FACTS WAS RECEIVED AND DULY ENTERED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. FINALLY, THE LD.AR SUBMITTED THAT TOTAL ADDITION OF PURCHASES WAS MADE WITHOUT ANY REASONS AND THE SUPPLI ERS WERE NOT HAWALA DEALERS . T HE LD.AR SUBMITTED THAT AT THE MOST CERTAIN PERCENTAGE OF THESE PURCHASES COULD BE APPLIED TO BRING TH E INCOME TO TAX AS AGAINST THE ENTIRE PURCHASES WHICH INCLUDED THE PROFIT ELEMENT PLUS PURCHASE COST OF THE PRODUCT WHICH W AS AGAINST THE SCHEME OF TAXATION . 5. THE LD. DR REITERATED THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A) WHILE OPPOSING THE SUBMISSIONS OF THE ASSESSEE AND RELIED ON THE ORDERS OF AUTHORITIES BELOW. 4 I.T.A. NO. 3042 /MUM/201 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATE RIAL PLACED BEFORE US INCLUDING THE CASE LAW RELIED UPON BY BOTH THE PARTIES. WE FIND THAT THE AO DISALLOWED THE ENTIRE PURCHASES OF RS.7,01,478/ - MADE FROM M/S OM TRADING CO. DUE TO FAILURE TO PRODUCE THE ADDRESS OF SUPPLIER AND THE NECESSARY VERIFICAT ION COULD NOT BE CARRIED OUT FOR WANT OF DETAILED ADDRESS OF THE SUPPLIER. WE ALSO FIND THAT THE REMAND REPORT WAS CALLED FOR BY THE FAA BEFORE PASSING THE APPELLATE ORDER . ON PERUSAL OF THE REMAND REPORT FILED AT PAGES 4 AND 5 OF THE PAPER BOOK WE FIND THAT THE ASSESSEE FILED THE NECESSARY TRANSPORTATION BILLS AND VOUCHERS BEFORE THE AO AND THE PAYMENTS WERE ALSO MADE THROUGH HDFC BANK WHICH WERE NOT CONSIDERED BY THE LD.CIT(A). IT WAS ALSO MENTIONED IN THE BILLS SUPPLIER WAS NOT AVAILABLE ON THE ADDRESS AS THE LETTER ISSUED U/S 133(6) WAS RETURNED UNSERVED. IN OUR CONSIDERED OPINION, THE UPHOLDING OF THE ENTIRE PURCHASES MADE FROM THE PARTY SPECIFICALLY WHEN THERE IS NO DOUBT AS TO THE SALES MADE BY THE ASSESSEE WHEN THE PROPER RECORD, STOCK REGISTER W ERE MAINTAINED BY THE ASSESSEE, THE DISALLOWANCE AND ADDITION CANNOT BE SUSTAINED. AT THE MOST, THE PERCENTAGE ADDITION OF SAID PURCHASES COULD BE MADE TO ASSESSEE THE PROFIT EARNED BY THE ASSESSEE ON THESE PURCHASES. WE, THEREFORE, SET ASIDE THE ORDER O F THE FAA AND DIRECT THE AO TO DELETE THE ADDITION OF RS.7,01,478 / - AND THE ADDITION AT THE RATE OF 10% OF THE TOTAL PURCHASES I.E.RS.7,01,478/ - WHICH WORKS OUT TO RS.70 , 147/ - IS DIRECTED TO BE MADE . 5 I.T.A. NO. 3042 /MUM/201 6 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 29TH MARCH, 2017 . SD SD ( /MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 29. 3 .2017 SR.PS:SRL: / 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