GARIMA TRADELINK P.LTD, THANE V. ASST CIT CIR 2, THANE

ITA 3175/MUM/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3674 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 07-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2014
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Assessee Lawyers: R S KHANDELWAL
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER ITA NO. 3175 /MUM./2014 ( ASSESSMENT YEAR : 20 07 08 ) M/S. GARIMA TRADELINK PVT. LTD. G 9, SHOP NO.12, JESSAL PARK BLDG JESSAL PARK CO OPERATIVE HOUSING BHAYANDER (E), THANE 401 105 PAN AABCG7257P . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2 , B WING, 6 TH FLOOR ASHAR I.T. PARK, ROAD NO.16 2 WAGLE INDUSTRIAL ESTATE THANE 400 604 . RESPONDEN T ASSESSEE BY : SHRI R.S. KHANDELWAL REVENUE BY : SHRI B.B. RAJENDRA PRASAD DATE OF HEARING 0 7 . 01 .201 6 DATE OF ORDER 0 7 .01.2016 O R D E R PER SAKTIJIT DEY , J.M. INSTANT APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13 TH FEBRUARY 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2, MUMBAI, FOR THE ASSESSMENT YEAR 2007 08. 2. THE SOLITARY ISSUE INVOL.VED IN THIS APPEAL IS IN RELATION TO DISALLOWANCE OF LOSS CLAIMED OF ` 29,45,38,756. M/S. GARIMA TRADELINK PVT. LTD. 2 3. BRIEFLY STATED THE FACTS ARE, ASSESSEE A COMPANY IS ENGAGED IN PURCHASE AND SALE OF EDIBLE OIL. FOR THE YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH OCTOBER 2007, DECLARING TOTAL INCOME AT ` NIL. HOWEVER, IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD COMPUTED LOSS OF ` 29,45,38,756. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, ON VERIFYING THE DETAILS OF PURCHASES EXPRESSED DOUBT REGARDING THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE FROM FEW PARTIES, HENCE, HE ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES. AS ALLEGED BY THE ASSESSING OFFICER, IN RESPONSE TO THE NOTICE S ISSUED UNDER SECTION 133(6) OF THE ACT, ONLY FEW REPLIES WERE RECEIVED FROM THE PARTIES TOWARDS THE FAG END OF THE YEAR, HENCE, COULD NOT BE VERIFI ED. THEREFORE, THE ASSESSING OFFICER TREATING THE PURCHASES MADE BY THE ASSESSEE TO BE NOT GENUINE AND MERE BOOK ENTRIES DISALLOWED THE CLAIM OF LOSS OF ` 29,45,38,756 AND TREATED IT AS AN INCOME OF THE ASSESSEE. BEING AGGRIEVED OF THE ASSESSMENT ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). 4. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE STRONGLY CONTESTING THE ALLEGATION MADE BY THE ASSESSING OFFICER SUBMITTED THAT IT HAS CARRIED OUT ITS BUSINESS OF TRADING IN EDIBLE OIL EITHER FROM INDORE OFFICE OR FROM MUMBAI. IT WAS SUBMITTED SINCE THE BUSINESS INVOLVED M/S. GARIMA TRADELINK PVT. LTD. 3 HIGH SEA TRADING FULL FLEDGED OFFICE IS NOT REQUIRED AS TRANSACTIONS OF PURCHASE AND SALE TOOK PLACE OVER TELEPHONE AND COMPLETED BY ENDORSEMENT OF DOCUMEN TS. AS REGARDS THE ALLEGATION OF GENUINENESS OF PURCHASES MADE FROM CERTAIN PARTIES, IT WAS SUBMITTED THAT THE COMPLETE DETAILS OF PARTIES ALONG WITH THE PURCHASE BILL S HAVING ALREADY BEEN SUBMITTED NO ADVERSE INFERENCE CAN BE DRAWN. ON THE BASIS OF SUBMIS SIONS MADE, THE LEARNED COMMISSIONER (APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICER, THOUGH ACCEPTED THAT PARTIES FROM WHOM ASSESSEE HAD EFFECTED PURCHASES HAVE RESPONDED TO THE NOTICES ISSUED U NDER SECTION 133(6) AND SUPPLIED THEIR ACCOUNT COPIES ACCEPTING THAT THEY HAVE ENTERED INTO TRANSACTIONS OF SALES AND PURCHASES WITH THE ASSESSEE BUT THE ASSESSING OFFICER AGAIN EXPRESSING DOUBT ON THE GENUINENESS OF SUCH TRANSACTIONS OPINED THAT THE PURCH ASES ARE MERE BOOK ENTRIES, HENCE, CANNOT BE ACCEPTED. ON THE BASIS OF THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE REMAND REPORT, LEARNED COMMISSIONER (APPEALS) OPINED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY GENUINE BUSINESS TRANSACTIONS AND TH E TRANSACTIONS SHOWN BY THE ASSESSEE ARE MERELY ON PAPER, HENCE, CANNOT BE ACCEPTED. ACCORDINGLY, HE CONFIRMED THE DISALLOWANCE OF LOSS CLAIMED BY THE ASSESSEE. M/S. GARIMA TRADELINK PVT. LTD. 4 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHO RITIES, SUBMITTED , THE INFERENCES DRAWN BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) ARE MERELY ON PRESUMPTION AND SURMISES AS NEITHER THEY HAVE CONDUCTED ANY ENQUIRY NOR BROUGHT ANY MATERIAL ON RECORD TO INDICATE THAT PURCHASES AND SALE S MADE BY THE ASSESSEE TO THE CONCERNED PARTIES ARE NOT GENUINE AND BOGUS. DRAWING OUR ATTENTION TO THE REMAND REPORT OF THE ASSESSING OFFICER, THE LEARNED COUNSEL SUBMITTED , ALL THE PARTIES IN RESPONSE TO THE NOTICE S UNDER SECTION 133(6) HAD SUBMITTED THE IR REPLIES ALONG WITH LEDGER COPIES ACCEPTING THE FACT THAT THEY HAVE EFFECTED SALES TO THE ASSESSEE. HE ALSO SUBMITTED , THE ENTIRE TRANSACTION IS REFLECTED NOT ONLY IN THE BOOKS OF ACCOUNT BUT IS THROUGH BANK ACCOUNT. HE SUBMITTED , BANK STATEMENTS WERE AL SO FURNISHED BEFORE THE DEPARTMENTAL AUTHORITIES. THE LEARNED COUNSEL SUBMITTED , AS AGAINST THE AFORESAID EVIDENCE S AVAILABLE ON RECORD ESTABLISHING THE GENUINENESS OF THE TRANSACTION, THE ASSESSING OFFICER HAS NEITHER CONDUCTED ANY ENQUIRY NOR PROVED WITH EVIDENCE THAT THE TRANSACTIONS ARE NOT GENUINE. LEARNED COUNSEL SUBMITTED , EVEN IN THE ASSESSMENT MADE UNDER SECTION 143(3), IN CASE OF THE CONCERNED PARTIES, THESE TRANSACTIONS HAVE BEEN ACCEPTED BY THE DEPARTMENT. THE LEARNED COUNS EL SUBMITTED, SALES TA X ASSESSMENT IN CASE OF ASSESSEE HAS ALSO BEEN COMPLETED FOR THE IMPUGNED ASSESSMENT YEAR ACCEPTING THE M/S. GARIMA TRADELINK PVT. LTD. 5 TURNOVER. HE SUBMITTED , EVEN IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2012 13, SIMILAR TRANSACTIONS ENTERED WITH VERY SAME PARTIES, HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) AND FURNISHED A COPY OF THE ORDER DATED 25 TH NOVEMBER 2014. HE FURTHER EMPHASISED THAT THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 2012 13 ACCEPTING SIMILAR TRANSACTIONS WITH VERY SAME PARTIES WAS AFTER THE SUBMISSION OF THE REMAND REPORT FOR THE IMPUGNED ASSESSMENT YEAR. HE, THEREFORE, SUBMITTED , THERE BEING NO EVIDENCE ON RECORD TO SHOW THAT THE PURCHASE AND SALE TRANSACTIONS ENTERED INTO WITH THE CONCERNED PARTIES ARE NOT G ENUINE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF LOSS CLAIMED ON MERE PRESUMPTION AND SURMISES IS NOT SUSTAINABLE. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: I. GUJARAT GAS FINANCIAL SERVICES LTD. V/S ACIT, [2013] 26 ITR 775 (AHD.) II. JYOTIRINDRA NARAIN SINHA CHOUDHURY V/S CIT, [1953] 31 ITR 20 ( CAL.) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE PREFERRED TO RELY UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A PERUSAL OF THE ASSESSMENT ORDER, IT IS VERY CLEAR THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY M/S. GARIMA TRADELINK PVT. LTD. 6 ENQUIRY BEFORE TREATING THE PURCHASE TRANSACTIONS MADE BY THE ASSESSEE AS NON GENUINE. AS PER HIS OWN ADMISSION, HE HAS NOT VERIFI ED REPLIES RECEIVED FROM THE PARTIES IN RESPONSE TO NOTICE UNDER SECTION 133(6). HOWEVER, IN COURSE OF THE APPEAL PROCEEDINGS, ASSESSING OFFICER WAS AGAIN GIVEN OPPORTUNITY TO EXAMINE THE GENUINENESS OF THE TRANSACTION ENTERED INTO BY THE ASSESSEE. AS COUL D BE SEEN FROM THE REMAND REPORT DATED 30 TH DECEMBER 2013, SUBMITTED BY THE ASSESSING OFFICER BEFORE THE LEARNED COMMISSIONER (APPEALS), HE HAS ACCEPTED THE FACT THAT ALL THE PARTIES WITH WHOM THE ASSESSEE HAS ENTERED INTO PURCHASE AND SALE TRANSACTIONS DU RING THE RELEVANT PREVIOUS YEAR HA VE RESPONDED TO NOTICE S ISSUED UNDER SECTION 133(6) AND ALSO ACCEPTING THE TRANSACTION WITH THE ASSESSEE THEY HAVE SUBMITTED LEDGER ACCOUNT COPIES BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT ASSESSEE HAS SUBMITTED BANK STATEMENT S THROUGH WHICH THE PURCHASE AND SALE TRANSACTIONS WERE EFFECTED. THEREFORE, WHEN ALL THE PARTIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTIONS HAVE CONFIRMED THE FACT BY PRODUCING THEIR LEDGER COPIES AND AS THE TRANSACTIONS ARE THROUGH BANKING CHANNELS WHICH IS REFLECTED IN THE BANK STATEMENT OF THE ASSESSEE, THE ASSESSING OFFICER BY MAKING CERTAIN GENERAL OBSERVATIONS LIKE GOVERNMENT DUTIES HAVE NOT BEEN PAID OR ASSESSEES EXISTENCE IN BOMBAY IN THE ADDRESS GIVE N IS DOUBTFUL CANNOT TREAT THE PURCHASE AND SALE TRANSACTIONS TO BE M/S. GARIMA TRADELINK PVT. LTD. 7 BOGUS / NON GENUINE MERELY ON PRESUMPTION AND SURMISES WITHOUT BRINGING ANY COGENT OR POSITIVE EVIDENCE ON RECORD TO ESTABLISH SUCH FACT. MOREOVER, AS COULD BE SEEN FROM THE MATERIAL PLACE D ON RECORD, ASSESSMENT IN CASE OF SOME OF THE PARTIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTIONS HAVE BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT BY RESPECTIVE ASSESSING OFFICER S ACCEPTING THE PURCHASE AND SALE TRANSACTIONS ENTERED INTO BY TH EM WITH THE ASSESSEE. THEREFORE, WHEN ONE WING OF THE DEPARTMENT HAS ACCEPTED THE PURCHASE AND SALE TRANSACTIONS, IT IS NOT UNDERSTOOD HOW A DIFFERENT VIEW CAN BE TAKEN IN CASE OF THE ASSESSEE. MOREOVER, THE FACT THAT SIMILAR TRANSACTIONS WITH VERY SAME PA RTIES HAVE BEEN ACCEPTED BY THE DEPARTMENT WHILE CONCLUDING ASSESSMENT IN CASE OF ASSESSEE IN ASSESSMENT YEAR 2012 13 CANNOT BE IGNORED. FURTHER, ASSESSEES CLAIM THAT SALES TAX AUTHORITIES HAVE COMPLETED ASSESSMENT FOR THE RELEVANT YEAR ACCEPTING THE PURC HASE / SALE TURNOVER REQUIRES EXAMINATION. ON A PERUSAL OF THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES, IT IS CLEAR THAT THE PURCHASE AND SALE TRANSACTIONS SHOWN BY THE ASSESSEE HAVE BEEN TREATED AS BOGUS / NOT GENUINE BY THE DEPARTMENTAL AUTHORITI ES BEING T OO OBSESSED WITH THE FACT THAT THE ADDRESS OF PLACE OF BUSINESS AT MUMBAI GIVEN BY THE ASSESSEE IS DOUBTFUL AS ON ENQUIRY CONDUCTED IT WAS FOUND THAT THE SAID PREMISE HAS BEEN GIVEN ON LEASE TO ANOTHER COMPANY. IN OUR VIEW, MERELY ON M/S. GARIMA TRADELINK PVT. LTD. 8 THE BASIS OF AFORESAID FACT, IT CANNOT BE CONCLUDED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY OR THE PURCHASE AND SALE TRANSACTIONS SHOWN ARE NOT GENUINE. IN THIS REGARD, ASSESSEES CLAIM THAT MOST OF HIS BUSINESS TRANSACTIONS ARE CARRIED OUT FROM IN DORE OFFICE REQUIRES TO BE EXAMINED . AS THE DEPARTMENTAL AUTHORITIES HAVE NOT CONDUCTED NECESSARY INVESTIGATION OR ENQUIRY INTO THE MATTER IN THE MANNER IT IS REQUIRED TO BE DONE , BEFORE MAKING ADDITION, WE ARE UNABLE TO SUSTAIN IT. HOWEVER, WE ARE INCLINE D TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING ASSESSEES CLAIM AND MAKING DENOVO ASSESSMENT AFTER PROVIDING DUE AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND CONSIDERING THE EVIDENCE AND MATERIAL BROUGHT ON RECOR D. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JANUARY 2016 SD/ - N.K. BILLAIYA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 7 TH JANUARY 2016 M/S. GARIMA TRADELINK PVT. LTD. 9 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./AS STT. REGISTRAR) ITAT, MUMBAI