BIO-VET INDUSTRIES, MUMBAI V. DCIT 25(1), MUMBAI

ITA 3084/MUM/2009

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8351 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-05-2016
• Assessment Year: 1998-1999
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASYHARZAIN V P
• Keywords: Bogus purchase; Unexplained expenditure; Business income; Rectification of order; Opportunity of being heard; Principle of natural justice
• Section: 69C; 143(3); 80IB; 69; 154

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5327/ MUM/2007 ( / ASSESSMENT YEAR : 1998-99) ./ I.T.A. NO.3084/ MUM/2009 ( / ASSESSMENT YEAR : 1998-99) M/S BIO-VET INDUSTRIES, SHANTIVILLA, NR. ST. LAWRENCE SCHOOL, DEVIDAS LANE, BORIVALI (W), MUMBAI 400 103. / V. DCIT 25(1), C-11, PRATYASHA KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI. ./ PAN : AADFB 3600 L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : MR. ASYHARZAIN V.P. DR / DATE OF HEARING : 02-02-2017 / DATE OF PRONOUNCEMENT : 27-02-2017 / O R D E R PER BENCH : THESE TWO APPEALS, FILED BY THE ASSESSEE, BEING IT A NO. 5327/MUM/2007 AND ITA NO. 3084/MUM/2009 BOTH FOR AS SESSMENT YEAR 1998-99, ARE DIRECTED AGAINST TWO SEPARATE APPELLAT E ORDERS DATED 30-05-2007 AND 02-04-2009 RESPECTIVELY BOTH PASSED BY THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS)- XXV, MUMBAI (HEREINAFTER CALL ED THE CIT(A)), FOR THE ASSESSMENT YEAR 1998-99, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM TWO SEPARATE ORDERS DATED 28-02-2006 AND 28-03-2008 ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 2 RESPECTIVELY PASSED BY THE LEARNED ASSESSING OFFICE R (HEREINAFTER CALLED THE AO) U/S 143 (3) AND SECOND ORDER U/S 271(1)(C) OF THE INCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT) BOTH FOR ASSESSMENT YEAR 1998-99. 2. FIRST, WE SHALL TAKE UP THE QUANTUM APPEAL OF TH E ASSESSEE IN ITA NO. 5327/MUM/2007 FOR ASSESSMENT YEAR 1998-99 WHEREBY T HE FOLLOWING GROUNDS OF APPEAL ARE RAISED BY THE ASSESSEE IN THE MEMO OF THE APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL). 1. THE ORDER PASSED BY CIT(A) ON 30.05.2007 UPHOLD ING THE REJECTION OF APPLICATION U/S.154 MADE BY THE APPELLA NT IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTIC E. 2. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS MISTAKE APPARENT FROM RECORD IN AS MUCH AS IDENTICAL ADDITION WAS CONSIDERED AS BUSINESS INCOME BY THE A.O. AND AS SUCH THE DEDUCT ION U/S.80LB WAS ADMISSIBLE. 3. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE A. O. WAS DIRECTED TO RECOMPUTED THE DEDUCTION U/S.80LB AS PER THE PROV ISIONS OF THE ACT AND AS SUCH IT COULD NOT BE SAID THAT THERE WAS MISTAKE APPARENT FROM RECORD. IT IS THEREFORE PRAY THAT THE ORDER PASSED BY CIT(A) M AY PLEASE BE CANCELLED AND THE A.O. BE DIRECTED TO ALLOW THE DEDUC TION U/S.80LB IN RESPECT OF THE ADDITION OF RS.2,46,555/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED BY THE A.O. ON 28 TH FEBRUARY, 2006 WHEREIN ADDITIONS TO THE INCOME WERE MADE ON ACCOUNT OF BOGUS PURCHASES AND HAWALA COMMISSIONS, BASED UPON THE INFORMATION RECEIVED FROM THE I.T.O. , WARD 9(3)(2) WHO COMPLETED ASSESSMENT IN THE CASE OF M/S SUBHEKSHA E XPORTS LTD. FOR ASSESSMENT YEAR 1998-99. IT WAS STATED IN THE INTI MATION RECEIVED BY THE AO FROM ITO, WARD 9(3)(2), MUMBAI THAT IN THE COURSE O F ASSESSMENT PROCEEDINGS OF M/S SUBHEKSHA EXPORTS LTD., SHRI CHANDRAKANT THA KKER, DIRECTOR OF THE SAID COMPANY M/S SUBHEKSHA EXPORTS LTD.,, FILED AN AFFIDAVIT ADMITTING THAT ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 3 HE WAS ISSUING ACCOMMODATION BILLS FOR PHARMACEUTIC AL RAW MATERIAL TO INTERESTED PARTIES AND PAYMENT RECEIVED AGAINST THE BILLS ISSUED WAS RETURNED TO THE PARTY AFTER DEDUCTING COMMISSION FOR THE SER VICES RENDERED. A LIST OF PARTIES TO WHOM THE ACCOMMODATION BILLS WERE ISSUED BY SUBHEKSHA EXPORTS LIMITED WAS ALSO FURNISHED BY SHRI CHANDRAKANT THAK KER AND IN THE LIST, THE NAME OF THE ASSESSEE WAS ALSO THERE AND THE ACCOMMO DATION BILLS FOR RS. 4,31,100/- WAS STATED TO BE ISSUED BY THE SAID SUBH EKSHA EXPORTS LIMITED TO THE ASSESSEE. ON BEING ASKED, THE ASSESSEE SUBMITT ED THAT IT HAD MADE PURCHASES OF RS. 2,06,100/- FROM SUBHEKSHA EXPORTS LIMITED VIDE BILL DATED 10-12-1997 AND 24-12-1997 WHEREIN THE RAW MATERIAL PURCHASED WAS 50 KG. CALCIAM-D. PENTHONATE USP AND 60 KG OF RIBOFLAVINE FEED GRADE WHICH WAS USED IN THE MANUFACTURE OF SPECTRO BE AND SPECTRO MIX. THUS, THE ASSESSEE HAD ADMITTED PURCHASES TO THE TUNE OF RS. 2,06,100/ - ONLY FROM M/S SUBHEKSHA EXPORTS LTD. AS AGAINST SALE OF RS. 4,31, 100/- SHOWN BY M/S SUBHEKSHA EXPORTS LTD. TO THE ASSESSEE. THE A.O. I SSUED SUMMONS ON 23- 02-2006 TO SUBHEKSHA EXPORTS LIMITED WHICH WERE SER VED THROUGH AFFIXTURE BY INSPECTOR AS M/S SUBHEKSHA EXPORTS LTD. HAVE LEF T THE PLACE AND THEIR WHEREABOUTS WERE NOT KNOWN TO THE LOCAL PARTIES. TH E HEARING WAS FIXED FOR 27-02-2006 WHICH WAS NOT ATTENDED BY ANYBODY ON BEH ALF OF SUBHEKSHA EXPORTS LIMITED. THE A.O. OBSERVED THAT IN THE AFF IDAVIT FILED BY SHRI CHANDRAKANT THAKKER , IT HAS BEEN ADMITTED THAT THE COMPANY ONLY ISSUED HAWALA/ACCOMMODATION BILLS AND THERE WAS NO ACTUAL DELIVERY OF GOODS. THE A.O. OBSERVED THAT THE ASSESSEE OBTAINED HAWALA BIL LS FROM SUBHEKSHA EXPORTS LIMITED TO THE TUNE OF RS. 4,31,000/- AGAIN ST WHICH PAYMENT OF RS. 2,06,100 WAS MADE AS PURCHASES TO THE TUNE OF RS. 2 ,06,100/- WERE ACCOUNTED IN THE BOOKS OF ACCOUNTS OF SUBHAKSHA EXP ORTS LIMITED , WHILE THE BALANCE PAYMENT OF RS. 2,25,000/- WAS ALLEGEDLY MA DE OUTSIDE THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THEREFORE THE PURCHASE S TO THE TUNE OF RS. 2,25,000/- WERE NOT ACCOUNTED FOR IN THE BOOKS OF A CCOUNTS OF THE ASSESSEE, WHICH IS REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSEE U/S 69 OF THE ACT ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 4 OF 1961 AS INCOME FROM OTHER SOURCES AND THE ASSE SSEE PROFITS WERE REQUIRED TO BE INCREASED BY RS. 47,025/- I.E. GP @20.90% ON RS. 2,25,000/- AS INCOME UNDER THE HEAD INCOME FROM BUSINESS, VIDE ASSESS MENT ORDER DATED 28-02- 2006 PASSED U/S 143(3) OF THE ACT. THE AO ALSO MADE ADDITIONS TO THE INCOME OF THE ASSESSEE TO THE TUNE OF RS. 2,06,100/- TOWAR DS BOGUS PURCHASES WHICH WERE ADDED TO INCOME UNDER THE HEAD INCOME FROM B USINESS AND COMMISSION PAYMENT TO SUBSHAKSHA EXPORTS LIMITED FO R SERVICES RENDERED TO THE ASSESSEE PAID OUTSIDE THE BOOKS WERE ESTIMATED @ 5% ON TOTAL PURCHASES FROM SUBHEKSHA EXPORTS LIMITED AND ADDITIONS WERE M ADE TO THE TUNE OF RS. 21,555/- AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES VIDE ASSESSMENT ORDER DATED 28-02-2006 PAS SED U/S 143(3) OF THE ACT . THE MATTER WENT UP TO THE LD. CIT(A) AGAINST QUANT UM ASSESSMENT AND LEARNED CIT(A) VIDE APPELLATE ORDER DATED 16-05-20 06 CONFIRMED THE ADDITION OF RS. 2,25,000/- ON ACCOUNT OF PURCHASES OUTSIDE B OOKS AND RS. 21,555/- ON ACCOUNT OF HAWALA COMMISSION PAYMENT OUTSIDE BOOKS, WHEREIN BOTH THE ADDITIONS WERE MADE BY THE AO UNDER THE HEAD INCOM E FROM OTHER SOURCES IN ASSESSMENT ORDER. THE LD. CIT(A) DIRECTED FOR GRANT OF RELIEF U/S 80IB ON INCOME DERIVED BY THE ASSESSEE FROM INDUSTRIAL UND ERTAKING IN ACCORDANCE WITH LAW FOR WHICH DIRECTIONS WERE ISSUED TO THE AO TO GRANT RELIEF U/S 80IB OF THE ACT. THE A.O. WHILE GIVING EFFECT TO THE ORDER OF THE LD . CIT(A) DID NOT ALLOW THE DEDUCTION U/S 80IB OF THE ACT ON ACCOUNT OF ADDITIO NS OF RS. 2,25,000/- AND RS. 21,255/- AS DETAILED ABOVE BY HOLDING THAT THES E ARE NOT PROFIT DERIVED BY THE ASSESSEE FROM BUSINESS OF INDUSTRIAL UNDERTAKIN G AND THE ADDITIONS HAVE BEEN MADE U/S 69 OF THE ACT ON PURCHASES OUTSIDE TH E BOOKS , HENCE WERE TREATED AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES ON WHICH NO DEDUCTION U/S 80IB OF THE ACT IS ALLOWABLE. ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 5 AGGRIEVED BY THE ORDER GIVING EFFECT TO LEARNED CIT (A) ORDER PASSED BY THE AO, THE ASSESSEE PREFERRED RECTIFICATION APPLICATION DA TED 16-11-2006 AND 20-11- 2006 U/S 154 OF THE ACT, WHICH WAS REJECTED BY THE A.O. VIDE ORDERS DATED 09- 02-2007 ON THE GROUND THAT DEDUCTION U/S.80-IB IS RE-COMPUTED ON PROFIT AND GAIN DERIVED BY THE ASSESSEE FROM BUSINESS OF I NDUSTRIAL UNDERTAKING ONLY WHICH DID NOT INCLUDE INCOME FROM OTHER SOURCES OF RS.2,46,555/- AS THESE WERE NOT PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING AS ADDITIONS HAD BEEN MADE U/S.69 OF THE ACT ON PURCHASES OUTSIDE THE BOO KS, HENCE TREATED AS INCOME FROM OTHER SOURCES, THUS THERE IS NO APPAREN T MISTAKE FROM RECORDS WHICH NEEDS RECTIFICATION U/S. L54 OF THE ACT. THUS , VIDE ORDER DATED 9-2-2007, THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE U/S 154 OF THE ACT WAS REJECTED BY THE AO BY HOLDING THAT THERE WAS NO APP ARENT MISTAKE FROM RECORDS WHICH COULD BE RECTIFIED UNDER THE MANDATE OF PROVISIONS OF SECTION 154 OF THE ACT. 4. AGGRIEVED BY THE REJECTION OF RECTIFICATION APPL ICATION U/S 154 OF THE ACT BY THE AO VIDE ORDERS DATED 09-02-2007, THE ASSESSEE F ILED APPEAL BEFORE THE LD. CIT(A) , WHICH APPEAL OF THE ASSESSEE WAS REJECTED BY THE LD. CIT(A) WHEREIN THE LEARNED CIT(A) HELD THAT BOTH THE ADDITIONS MAD E ON ACCOUNT OF BOGUS/UNEXPLAINED PURCHASES OUTSIDE BOOKS AND UNEX PLAINED COMMISSIONS FALLS U/S 69C OF THE ACT AS BOTH THESE ITEMS ARE DE BITED TO PROFIT AND LOSS ACCOUNT BUT KEEPING IN VIEW THE PROVISO TO SECTION 69C OF THE ACT , THE DEDUCTION U/S 80IB OF THE ACT CANNOT BE ALLOWED. TH E LEARNED CIT(A) REFERRED TO PROVISO TO SECTION 69C OF THE ACT WHICH READS AS UNDER:- PROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED I N ANY OTHER PROVISION OF THIS ACT SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT B E ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 6 THE LD. CIT(A) ALSO HELD THAT THIS WAS NOT A MISTAK E APPARENT FROM RECORD WHICH COULD BE RECTIFIED U/S 154 OF THE ACT, VIDE A PPELLATE ORDERS DATED 30-05- 2007 PASSED BY LEARNED CIT(A). 5. AGGRIEVED BY THE APPELLATE ORDER DATED 30-05-200 7 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE, HENCE, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. D.R. AND MATERI AL PLACED ON RECORD. 7. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. A ND THE LD. CIT(A). IT IS SUBMITTED THAT THE ASSESSEE HAD MADE PURCHASES OF R S. 4,31,100/- FROM M/S SUBHAKSHA EXPORTS LTD. WHICH ARE BOGUS PURCHASES BE ING ACCOMMODATION/HAWALA ENTRIES FROM SUBHEKSHA EXPORTS LIMITED WHO WAS ENGAGED IN PROVIDING BOGUS ACCOMMODATION /HAWALA EN TRIES WHEREIN ONLY BOGUS BILLS WERE ISSUED BY SAID SUBHAKSHA EXPORTS L IMITED AND NO DELIVERY OF MATERIAL TOOK PLACE . THE ASSESSEE DID NOT ACCOUNTE D FOR PURCHASES TO THE TUNE OF RS. 2,25,000/- IN ITS BOOKS OF ACCOUNTS AS ALSO NO PAYMENTS WERE REFLECTED IN THE BOOKS OF THE ASSESSEE TOWARDS AS S AID PURCHASES WERE MADE OUTSIDE THE BOOKS OF ACCOUNTS AND ADDITIONS WERE MA DE U/S 69 OF THE ACT UNDER THE HEAD INCOME FROM OTHER SOURCES. IT WAS STATED THAT FURTHER ADDITIONS OF RS. 21,555/- WAS MADE TOWARDS COMMISSI ON PAID BY THE ASSESSEE @5% OF TOTAL PURCHASES OF RS. 4,31,100/- FROM SUBHA KSHA EXPORTS LIMITED TOWARDS SERVICES FOR ARRANGING BOGUS/ACCOMMODATION HAWALA BILLS WHICH WERE ALSO MADE OUTSIDE BOOKS OF ACCOUNTS , AND BOTH THE ADDITIONS WERE MADE UNDER THE HEAD INCOME FROM OTHER SOURCES . THUS, ADDITIONS HAVE BEEN MADE U/S 69 OF THE ACT WHICH IS BASED UPON THE AFFIDAVIT GIVEN BY SHRI CHANDRAKANT THAKKER, DIRECTOR OF THE COMPANY SUBHEK SHA EXPORTS LIMITED THAT THE SAID SUBHEKSHA EXPORTS LIMITED IS ENGAGED IN PROVIDING BOGUS/HAWALA ACCOMMODATION BILLS . IT IS SUBMITTED THAT SECTION 154 OF THE ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 7 ACT HAS LIMITED MANDATE AND ONLY MISTAKE APPARENT F ROM RECORDS CAN BE RECTIFIED AND IT WAS SUBMITTED THAT THE AO WHILE GI VING EFFECT TO THE APPELLATE ORDER OF THE LEARNED CIT(A) WHO SUSTAINED THE ADDIT IONS DENIED THE BENEFIT OF DEDUCTION U/S 80IB OF THE ACT KEEPING IN VIEW PROVI SO TO SECTION 69C OF THE ACT. 8. WE HAVE HEARD LD. D.R. AND ALSO PERUSED THE MAT ERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MANUFACTURING OF POULTRY AND CATTLE FEEDS . WE HAVE OBSERVED THAT ASSESSEE HAD DEALINGS WITH M/S SUBHEKSHA EXPORTS. LTD. AND S HRI CHANDRAKANT THAKKER, SIRECTOR OF THE SAID COMPANY SUBHEKSHA EXP ORTS LIMITED, FILED AN AFFIDAVIT ADMITTING THAT HE WAS ISSUING ACCOMMODATI ON/BOGUS BILLS FOR PHARMACEUTICAL RAW MATERIAL TO INTERESTED PARTIES A ND PAYMENT RECEIVED AGAINST THE BILLS ISSUED WAS RETURNED TO THE PARTY AFTER DEDUCTING COMMISSION FOR THE SERVICES RENDERED. THE ASSESSEE HAD MADE PU RCHASES OF RS. 2,06,100/- VIDE BILL DATED 10-12-1997 AND 24-12-199 7 WHEREBY THE RAW MATERIAL WAS PURCHASED AND USED IN THE MANUFACTURE OF SPECTRO BE AND SPECTRO MIX, WHICH BILLS OF PURCHASES TO THE TUNE O F RS. 2,06,100/- WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE. THUS, THE ASSESSEE HAD ADMITTED PURCHASES OF RS. 2,06,100/- ONLY FROM M/S SUBHEKSHA EXPORTS LTD. AS AGAINST SALE OF RS. 4,31,100/- SHOWN BY M/S SUBHEKSHA EXPORTS LTD. MADE TO THE ASSESSEE. THE A.O. HAS MADE ADDITION OF RS. 2,25,000/- U/S 69 OF THE ACT AND MATTER WENT UP THE LD. CIT(A) WHO DISMI SSED THE APPEAL OF THE ASSESSEE. SIMILARLY , ADDITIONS OF RS. 21,555/- AS MADE BY THE AO TOWARDS COMMISSIONS @5% PAID ON TOTAL PURCHASES OF RS. 4,31 ,100/- MADE FROM SUBHEKSHA EXPORTS LIMITED FOR PROVIDING SERVICES FO R PROVIDING ACCOMMODATION/BOGUS BILLS WERE ALSO UPHELD BY THE L EARNED CIT(A). HOWEVER, IT WAS DIRECTED BY LEARNED CIT(A) TO THE AO TO GIVE RELIEF U/S 80IB OF THE ACT OF THE ACT , WHICH WAS DENIED BY THE AO ON THESE AFOR E-STATED TWO ADDITIONS ON THE GROUND THAT THESE ADDITIONS WERE NOT INCOME FRO M BUSINESS OF INDUSTRIAL ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 8 UNDERTAKING AS ADDITIONS WERE MADE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE MOVED AN RECTIFICATION APPLI CATIONS DATED 16.11.2006 AND 20.11.2006 U/S 154 OF THE ACT, WHICH WERE REJEC TED BY THE AO VIDE ORDERS DATED 09-02-2007 ON MERITS AS WELL AS ON THE GROUND S THAT SECTION 154 OF THE ACT HAS LIMITED APPLICATION WHEREIN ONLY MISTAKE AP PARENT FROM RECORDS CAN BE RECTIFIED . SECTION 154 OF THE ACT OF 1961 AS AP PLICABLE FOR RELEVANT PERIOD IS REPRODUCED HEREUNDER:- RECTIFICATION OF MISTAKE. 154. [(1) WITH A VIEW TO RECTIFYING ANY MISTAKE APP ARENT FROM THE RECORD AN INCOME-TAX AUTHORITY REFER RED TO IN SECTION 116 MAY, ( A ) AMEND ANY ORDER PASSED BY IT UNDER THE PROVISIONS OF THIS ACT ; ( B ) AMEND ANY INTIMATION SENT BY IT UNDER SUB-SECTION (1) OF SECTION 143, OR ENHANCE OR REDUCE THE AMOUNT OF REFUND GRANTED BY IT UNDER THAT SUB-S ECTION.] [(1A) WHERE ANY MATTER HAS BEEN CONSIDERED AND DEC IDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION RELATING TO AN ORDER REFERRED TO IN SUB-SECTION (1) , THE AUTHORITY PASSING SUCH ORDER MAY, NOTWITHSTAN DING ANYTHING CONTAINED IN ANY LAW FOR THE TIME BEING IN FORCE, AMEND THE ORDER UNDER THAT SUB-SECTION IN R ELA- TION TO ANY MATTER OTHER THAN THE MATTER WHICH HAS BEEN SO CONSIDERED AND DECIDED.] (2) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION , THE AUTHORITY CONCERNED ( A ) MAY MAKE AN AMENDMENT UNDER SUB-SECTION (1) OF IT S OWN MOTION, AND ( B ) SHALL MAKE SUCH AMENDMENT FOR RECTIFYING ANY SUCH MISTAKE WHICH HAS BEEN BROUGHT TO ITS NOTICE BY THE ASSESSEE, AND WHERE THE AUTHORITY CON CERNED IS THE [DEPUTY COMMISSIONER (APPEALS)] [OR THE COMMISSIONER (APPEALS)], BY THE [ASSESSING] OFFICER ALSO. [* * *] (3) AN AMENDMENT, WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SECTION UNLESS THE AUTHORITY CONCERNED HAS GIVEN NOTICE TO THE ASSESSEE OF ITS I NTENTION SO TO DO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. (4) WHERE AN AMENDMENT IS MADE UNDER THIS SECTION, AN ORDER SHALL BE PASSED IN WRITING BY THE INCOME- TAX AUTHORITY CONCERNED. (5) SUBJECT TO THE PROVISIONS OF SECTION 241, WHERE ANY SUCH AMENDMENT HAS THE EFFECT OF REDUCING THE ASSESSMENT, THE [ASSESSING] OFFICER SHALL MAKE ANY REFUND WHICH MAY BE DUE TO SUCH ASSESSEE. (6) WHERE ANY SUCH AMENDMENT HAS THE EFFECT OF ENHA NCING THE ASSESSMENT OR REDUCING A REFUND ALREADY MADE, THE [ASSESSING] OFFICER SHALL SERVE ON THE A SSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED FORM SPECIFYING THE SUM PAYABLE, AND SUCH NOTICE OF DEMA ND SHALL BE DEEMED TO BE ISSUED UNDER SECTION 156 AND THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDIN GLY. (7) SAVE AS OTHERWISE PROVIDED IN SECTION 155 OR SU B-SECTION (4) OF SECTION 186 NO AMENDMENT UNDER THI S SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEAR S [FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED.] ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 9 AS PER THE SECTION 154 OF THE ACT, ONLY APPARENT M ISTAKE FROM RECORDS CAN BE CORRECTED AND THE MANDATE OF SECTION 154 OF THE ACT DO NOT EXTEND TO THE MISTAKES WHICH CAN BE RECTIFIED AFTER A LONG DRAWN REASONING AND DEBATE WHICH INVOLVES APPLICATION OF MIND WITH REASONING O R ARE DEBATABLE ISSUES HAVING TWO POSSIBLE VIEWS . THE A.O. DENIED THE DE DUCTION U/S 80IB OF THE ACT ON ACCOUNT OF ADDITIONS HAVING BEEN MADE U/S 69 OF THE ACT ON PURCHASES OUTSIDE THE BOOKS WHICH WERE TREATED AS INCOME FROM OTHER SOURCES AND WERE NOT PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING. T HUS IN OUR CONSIDERED VIEW, ALLOWABILITY OF DEDUCTION U/S 80IB OF THE ACT ON IN COME WHICH ARE COVERED UNDER THE HEAD INCOME FROM OTHER SOURCES IS CLEA RLY A DEBATABLE ISSUE WHICH REQUIRES LONG DRAWN REASONING AND DEBATE INVO LVING APPLICATION OF MIND WHEREIN CLEARLY TWO VIEWS ARE POSSIBLE WHICH C ANNOT BE COVERED UNDER THE LIMITED MANDATE OF PROVISIONS OF SECTION 154 O F THE ACT WHICH CONCERNS ONLY WITH RECTIFICATION OF MISTAKES APPARENT FROM R ECORDS. THUS, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND TH E LIMITED MANDATE OF PROVISION OF SECTION 154 OF THE ACT, IN OUR CONSIDE RED VIEW, THE LD. CIT(A) HAS RIGHTLY HELD THAT THE RECTIFICATION APPLICATION MOV ED BY THE ASSESSEE U/S 154 OF THE ACT IS NOT MAINTAINABLE AS IT IS BEYOND THE LIMITED SCOPE AND MANDATE OF SECTION 154 OF THE ACT WHICH IS TO CORRECT ONLY MISTAKES APPARENT FROM RECORDS. WE UPHOLD THE APPELLATE ORDER OF LEARNED C IT(A) IN WHICH WE DONOT FIND ANY INFIRMITY AND DISMISS THE APPEAL OF THE AS SESSEE . WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 5327/MUM/2007 FOR ASSESSMENT YEAR 1998-99 IS DISMISSED. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 3084/MUM/2009 FOR ASSESSMENT YEAR 1998-99. ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 10 10. THE FACTS OF THE CASE IN RESPECT OF THIS APPEAL IS ALREADY ENUMERATED ABOVE WHILE DEALING WITH THE APPEAL OF THE ASSESSEE IN ITA NO. 5327/MUM/2007 WHICH ARE NOT REPEATED FOR SAKE OF BR EVITY. THIS APPEAL IS WITH RESPECT TO THE LEVY OF PENALTY OF RS. 86,296/- U/S 271(1)(C) OF THE ACT, VIDE ORDERS DATED 28-03-2008 PASSED BY THE AO U/S 2 71(1)(C) OF THE ACT WHICH WAS UPHELD BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 02-04-2009 PASSED BY LEARNED CIT(A). 11. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH TRIBUNAL READS AS UNDER:- 1.1 THE ORDER PASSED U/S 250 OF THE ACT ON 2.4.2009 FOR A. Y.1998- 99 BY CIT(A)-XXV, MUMBAI UPHOLDING THE PENALTY OF RS .86,296/- LEVIED U/S.271 (1 )(C) OF THE ACT BY A.O. IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN FAILING TO CONSIDER FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PROD UCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED PENALTY. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF INC OME AS WELL AS CONCEALED THE PARTICULARS OF INCOME. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE PENALTY LEVIED U/S.271(1) (C) BY AO. 2.3 THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THE M ATERIAL RELIED UPON BY A.O. FOR THE PURPOSE OF MAKING ADDITION OF RS .2,25,000/- WAS NOT CONFRONTED TO THE APPELLANT AND HENCE MERELY BECAU SE THE ADDITION WAS CONFIRMED IN ASSESSMENT, PENALTY U/S.271 (1 )(C ) COULD NOT BE IMPOSED AUTOMATICALLY. IT IS, THEREFORE, PRAYED THAT PENALTY OF RS.86,296/- UP HELD BY THE CIT(A) MAY PLEASE BE DELETED. ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 11 12. THE ASSESSMENT FOR THE YEAR 1998-99 WAS COMPLET ED ON 28 TH FEBRUARY, 2006 BY THE AO , WHEREBY THE FOLLOWING ADDITIONS WE RE MADE TO THE INCOME OF THE ASSESSEE BY THE AO IN THE ASSESSMENT ORDER:- A) UNACCOUNTED PURCHASES FROM M/S SUBEKSHA EXPORTS PVT. LTD. RS. 2,06,100/- B) PROFIT ON SALE NOT ACCOUNTED RS. 47,025/- C) ADDITION U/S 69 ON ACCOUNT OF PURCHASES OUTSIDE THE BOOKS RS. 2,25,000/- D) COMMISSION PAID OUT OF BOOKS RS. 21,555/- ON APPEAL BEFORE THE LD. CIT(A) , THE LEARNED CIT(A ) DELETED THE ADDITIONS OF RS. 2,06,100/- AND RS. 47,025/- AND CONFIRMED THE A DDITIONS MADE ON ACCOUNT OF UNACCOUNTED PURCHASES OF RS. 2,25,000/- AND UNACCOUNTED COMMISSION OF RS. 21,555/-, WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SAID ADDITION HAS BEEN MADE B ASED UPON THE AFFIDAVIT OF SHRI CHANDRAKANT THAKKER, DIRECTOR OF THE COMPANY M /S SUBEKSHA EXPORTS LIMITED WHEREIN IN THE AFFIDAVIT HE DEPOSED THAT H E WAS ENGAGED IN ACCOMMODATION/ HAWALA ENTRIES AND WERE ISSUING BOGU S BILLS AND THERE WAS NO ACTUAL DELIVERY OF MATERIAL. IT WAS CONFIRMED B Y SAID SH. CHANDERKANT THAKKAR THAT THE ASSESSEE HAS AVAILED BOGUS/ACCOMMO DATION BILLS TO THE TUNE OF RS. 4,31,100/- FROM SUBEKSHA EXPORTS LIMITED, OU T OF WHICH THE LEARNED CIT(A) HAS DELETED THE ADDITIONS OF RS. 2,06,100/- BEING BILLS WHICH WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE FOR WHICH PAYMENTS WERE MADE BY THE ASSESSEE TO SUBEKSHA EXPORTS LIMIT ED BY ACCOUNT PAYEE CHEQUE AND PROFITS OF RS. 47,025/- MADE ON ACCOUNT OF UN-ACCOUNTED SALES ALSO STOOD DELETED BY LEARNED CIT(A) , WHILE LEARNE D CIT(A) CONFIRMED THE ADDITIONS TOWARDS ACCOMMODATION BILL OF RS. 2,25,00 0/- PURPORTED TO BE ISSUED BY SUBEKSHA EXPORTS LIMITED IN FAVOUR OF THE ASSESSEE AGAINST WHICH ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 12 NO DELIVERY OF MATERIAL WAS MADE AND WHICH WAS ALSO NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE BY HOLDING THE SA ME TO BE PURCHASES OUT OF BOOKS FOR WHICH PAYMENTS HAD BEEN MADE BY THE ASSES SEE OUT OF BOOKS AS WELL ADDITIONS TO THE TUNE OF RS. 21,555/- WAS CONF IRMED BY LEARNED CIT(A) ON ACCOUNT OF COMMISSION @5% PAID TO SUBEKSHA EXPORTS LIMITED OUT OF BOOKS FOR PROVIDING SERVICES FOR ARRANGING BOGUS ACCOMMOD ATION BILLS FOR THE ASSESSEE AGAINST WHICH NO DELIVERY OF MATERIAL TOOL PLACE. THE A.O. BASED UPON THE CONFIRMATION OF THE AFORE-STATED ADDITIONS OF RS. 2,46,555/- BY LEARNED CIT(A), LEVIED THE PENALTY OF RS. 86,296/- U/S 271(1)(C) OF THE ACT DESPITE THE FACT THAT THE ASSESSEE HAD DENIED SAID TRANSACTIONS ON ACCOUNT OF PURCHASES MADE OUTSIDE THE BOOKS OF RS. 2,25,000/- FROM M/S SUBHAKSHA EXPORTS PVT. LTD. THE PENALTY OF RS. 86,296/- LEVI ED BY THE AO U/S 271(1)(C) OF THE ACT WAS CONFIRMED BY LEARNED CIT(A). THE ASS ESSEE SUBMITTED THAT THE MATERIAL USED BY THE REVENUE BEING AFFIDAVIT GIVEN BY SAID MR CHANDERKANT THAKKAR, DIRECTOR OF SUBHEKSHA EXPORTS LIMITED AGA INST THE ASSESSEE WAS NOT CONFRONTED TO THE ASSESSEE AS IS EMERGING FROM THE PARA 5 /PAGE 2 OF THE LEARNED CIT(A) ORDERS DATED 02-04-2009 . 13. THE LD. D.R. RELIED UPON THE ORDERS OF AUTHORIT IES BELOW.ON BEING ASKED BY THE BENCH , LEARNED DR ADMITTED THAT AFFIDAVIT O F SAID MR CHANDERKANT THAKKAR, DIRECTOR OF SUBHEKSHA EXPORTS LIMITED GIV EN AGAINST THE ASSESSEE WAS NOT CONFRONTED TO THE ASSESSEE NOR CROSS EXAMIN ATION WAS ALLOWED TO THE ASSESSEE. 14. WE HAVE HEARD LD. D.R. AND ALSO PERUSED THE MAT ERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE REVENUE HAD MADE ADDITIONS BASED UPON THE AFFIDAVIT OF SHRI CHANDRAKANT THAKKER, DIRECTOR OF M/S SUBHEKSHA EXPORTS LTD. WHEREBY SHRI CHANDRAKANT THAKKER , DIR ECTOR THROUGH HIS AFFIDAVIT DEPOSED AND CONFIRMED THAT HE IS ENGAGED IN ISSUING HAWALA/ACCOMMODATION BILLS WHEREIN NO DELIVERY OF M ATERIAL TAKES PLACE. IT ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 13 WAS DEPOSED BY HIM IN THE AFFIDAVIT THAT THE SAID C OMPANY SUBHEKSHA EXPORTS LTD. HAD ISSUED ACCOMMODATION/HAWALA BILL FOR RS. 4,31,000/- TO THE ASESSEE AGAINST WHICH NO MATERIAL WAS DELIVERED TO THE ASSESSEE. THE ASSESSEE DISOWNED THE PURCHASES TO THE TUNE OF RS. 2,25,000/- AS NOT BEEN ENTERED INTO BY THE ASSESSEE WITH SAID SUBHEKSHA EX PORTS LTD., WHILE PURCHASES TO THE TUNE OF RS.2,06,100/- WERE ADMITTE D BY THE ASSESSEE AND WERE DULY ENTERED IN BOOKS OF ACCOUNTS OF THE ASSES SEE AGAINST WHICH PAYMENT OF RS. 2,06,100/- WAS ALSO MADE BY ASSESSEE BY ACCOUNT PAYEE CHEQUE TO SUBHEKSHA EXPORTS LIMITED. THE AFFIDAVIT OF SHRI CHANDRAKANT THAKKER WAS NOT SUPPLIED TO THE ASSESSEE NOR CROSS EXAMINATION OF SAID SH CHANDERKANT THAKKAR WAS ALLOWED TO THE ASSESSEE. TH E ASSESSEE HAS GIVEN AN EXPLANATION THAT THE ASSESSEE HAS NOT MADE PURCHASE S OF RS. 2,25,000/- FROM SUBHEKSHA EXPORTS LIMITED AND THE PAYMENTS WERE ALL EGED BY REVENUE TO BE MADE OUTSIDE BOOKS OF ACCOUNTS WHICH WAS ALSO DENIE D BY THE ASSESSEE. THE ADDITIONS HAS BEEN MADE ONLY ON THE BASIS OF SAID AFFIDAVIT OF SHRI CHANDRAKANT THAKKER AND THERE IS NO OTHER INCRIMINA TING MATERIAL WITH THE REVENUE TO CONCLUSIVELY PROVE THE ALLEGED PURCHASE OF MATERIAL OF RS. 2,25,000/- BY THE ASSESSEE FROM SUBHEKSHA EXPORTS L TD. OUTSIDE BOOKS OF ACCOUNTS FOR WHICH PAYMENTS WERE ALSO ALLEGED BY R EVENUE TO BE MADE BY ASSESSEE TO SUBHEKSHA EXPORTS LTD. OUTSIDE BOOKS OF ACCOUNTS. THE AFFIDAVIT WAS NOT CONFRONTED TO THE ASSESSEE NOR CROSS EXAMIN ATION WAS ALLOWED.FURTHER, THE COMMISSION PAYMENT TO THE TUNE OF RS. 21,555/- @5% ON PURCHASES OF RS. 4,31,100/- FOR SERVICES RENDERE D BY SUBHEKSHA EXPORTS LIMITED FOR ARRANGING ACCOMMODATION BILLS ALLEGED T O BE MADE BY ASSESSEE TO SAID SUBHEKSHA EXPORTS LTD. WERE ALSO MADE ON ESTIM ATE BASIS BY THE AO WITHOUT ANY COGENT EVIDENCES ON RECORD, WHICH WAS A LSO DENIED BY THE ASSESSEE. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY REVENUE AS WELL LEARNED DR THAT THE AFFIDAVIT OF SH CHANDERKANT THAKKAR WAS PROVIDED TO THE ASSESSEE AND HE WAS OFFERED BY REVENUE FOR CROSS EX AMINATION BY ASSESSE NOR ANY OTHER INCRIMINATING MATERIAL IS BROUGHT ON RECO RD BY LEARNED DR TO ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 14 CONCLUSIVELY PROVE THAT THE ASSESSEE INDULGED IN SA ID ALLEGED TRANSACTIONS OUT OF BOOKS. PRINCIPLES OF NATURAL JUSTICE ARE CLEARLY BREACHED AS THERE ARE NO OTHER CORROBORATORY EVIDENCE IN POSSESSION OF REVEN UE TO CORROBORATE THE AFFIDAVIT OF SAID SH. CHANDERKANT THAKKAR , DIRECTO R OF SUBHEKSHA EXPORTS LTD.. THE ASSESSEE CANNOT BE ASKED TO PROVE NEGATIV E, ONCE THE ASSESSEE DENIED THE ALLEGED TRANSACTION AND IT WAS ALL THE M ORE INCUMBENT ON REVENUE TO HAVE PROVIDED AFFIDAVIT OF SH CHANDERKANT THAKKA R AND ALSO PROVIDED CROSS EXAMINATION OF SAID SH CHANDERKANT THAKKAR TO THE A SSESSEE AS THE REVENUE IS RELYING ON THE SAID AFFIDAVIT TO PREJUDICE THE A SSESSEE AND THE SAID AFFIDAVIT INCRIMINATING ASSESSEE WAS EXECUTED AND FURNISHED B Y SAID SH CHANDERKANT THAKKAR AT THE BACK OF THE ASSESSEE. MOREOVER, BURD EN ON REVENUE UNDER PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT TO FAS TEN THE LIABILITY ON THE ASSESSEE TO HAVE EITHER CONCEALED PARTICULARS OF IN COME OR HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IS CERTAINLY ON A HIGHER PEDESTRIAL VIS--VIS ASSESSMENT PROCEEDINGS, WHICH IN THE INSTANT CASE I N OUR CONSIDERED VIEW, REVENUE IS UNABLE TO DISCHARGE BASED ON FACTUAL MA TRIX OF THE CASE. THUS, WE ARE OF THE CONSIDERED VIEW BASED ON PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE KEEPING IN VIEW FACTUAL MATRIX OF THE CASE THA T UNDER THESE CIRCUMSTANCES PENALTY OF RS. 86,296/ LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AS CONFIRMED BY LEARNED CIT(A) IN FIRST APPEAL CANNOT BE SUSTAINED AND IS HEREBY ORDERED TO BE DELETED. WE ORDER ACCORDINGLY. 15. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NO. 5327/MUM/2007 FOR ASSESSMENT YEAR 1998-99 IS DISMISSED AND THE AP PEAL FILED BY THE ASSESSEE IN ITA NO. 3084/MUM/2009 FOR ASSESSMENT YE AR 1998-99 IS ALLOWED. ITA NO. 5327/MUM/2007 & ITA NO. 4084/MUM/2009 15 16. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2017. # $% &' 27-02-2017 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 27-02-2017 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI I BENCH 6. (BC / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI