PRATIBHA PIPES AND STRUCTURAL CONSORTIUM, MUMBAI V. ITO 27(2)(2), NAVI MUMBAI

ITA 3219/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8088 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Assessee Lawyers: AMAR SANGHVI
• Keywords: Principle of natural justice; Reason to believe; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA N O. 3219/MUM/2016 ( ASSESSMENT YEAR : 2008 09 ) M/S. PRATIBHA PIPES AND STRUCTURAL CONSORTIUM UNIT NO.405, HIND RAJASTHAN CENTRE D.S. PHALKE ROAD, DADAR (E) MUMBAI 400 014 PAN: AAJFP4822E . APPELLANT V/S ITO 27 (2)(2) VASHI IT TOWER, ABOVE VASHI RAILWAY STATION NAVI MUMBAI . RESPONDENT ITA N O. 4662/MUM/2016 ( ASSESSMENT YEAR :2008 09 ) ITO 27 (2)(5) R.NO.421, TOWER NO.6 VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI 400 703 . APPELLANT V/S M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM, 13, 14 TH FLOOR UNIVERSAL MAJESTIC BUILDING OPP. MARG, GHAT KOPAR MANKHURD LINK ROAD, GOVANDI 400 088 PAN: AAJFP4822E . RESPONDENT 2 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM APPELLANT BY : SHR I AMAR SANGHVI RESPONDENT BY : MS. AARJU GARODIA DATE OF HEARING 14/12/2017 DATE OF ORDER 15/12/2017 O R D E R PER SAKTIJIT DEY, J.M. THE AFORESAID CROSS APPEALS ARE DIRECTED AGAINST ORDER DATED 29/03/2016 OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI 28 FOR THE A.Y.2008 09. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN REOPENING THE ASSESSMENT IN ABSENCE OF REASON TO BELIEVE AND MATERIAL ON RECORDS AND SUCH REOPENING OF THE ASSESSMENT IS BAD IN LAW AND ERRONEOUS IN FACTS AND IS LIA BLE TO BE QUASHED. 2. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN REOPENING THE ASSESSMENT WHEN ASSESSMENT WAS ALREADY FRAMED U/S 143(3) BY ACCEPTING THE RETURN OF INCOME AS ASSESSED INCOME AND SUCH REOPENING OF THE ASSESSMENT IS BAD IN LAW AND ERRONEOUS IN FACTS AND IS LIABLE TO BE QUASHED. 3. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER ON ACCOUNT OF TREATING DIFFERENCE BETWEEN SALES AND PURCHASES UNDER HEAD INCOME FROM OTHER SOURCES; SUCH ADDITION IS BAD IN LAW AND LIABLE TO BE DELETED. 4. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERR ED IN CONFIRMING THE ACTION OF THE LD ASSESSING OFFICER ON ACCOUNT OF HOLDING THE PURCHASE AND SALE TRANSACTION AS SHAM CUM PAPER TRANSACTION; WHICH IS BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE REVERSED. 3 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM 5. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE BANK COMMISSION (BG/LC) WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 6. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONO UNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE BANK CHARGES AND BANK INTEREST WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 7. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEME NTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE AUDIT FEES WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 8. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE BROKERAGE CHARGES WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 9. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDI TION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE LEGAL AND PROFESSIONAL CHARGES WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 10. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION M ADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE PRINTING AND STATIONERY WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 11. ON THE GIVEN FACTS, CIRCUMSTANCES AND LEGAL PROPOSITIONS; HON. CIT (A) ERRED IN PASSING THE ORDER IN ABSENCE OF REASONABLE OPPORTUNITY OF MAKING THE SUBMISSIONS TO THE ASSESSEE IN PRINCIPLES OF NATURAL JUSTICE AND SUCH ORDER IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND LIABLE TO BE QUASHED. 12. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ALL OR ANY OF TH E PREVIOUSLY MENTIONED GROUNDS OF APPEAL. 3. GROUNDS RAISED BY THE DEPARTMENT ARE AS UNDER: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO VERIFY THE SALES TAX SET - OFF AVAILED BY THE ASSESSEE BY LOOKING INTO THE RETURNS FILED WITH THE SALES TAX DEPARTMENT, THUS 4 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM SETTING ASIDE THE ASSESSMENT ORDER WITHOUT EXPLI CITLY MENTIONING THE SAME AND WHICH POWER IS NOT AVAILABLE TO THE CIT(A). 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE GROUND NO.3 AS ALLOWED IN CONTRARY TO THE DISCUSSION IN THE APPELLATE ORDER T HAT THE WHOLE TRANSACTION OF THE ASSESSEE IS SHAM AND FRAUDULENT. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED BY DELETING THE ADDITION OF RS.1,05,99,8607 - TREATED UNDER INCOME FROM OTHER SOURCES, BY IGNORING THE FAC T THAT THE TRANSACTION IS PURELY A FINANCIAL ONE AND NO COMMERCIAL ELEMENT IS INVOLVED IN IT. 4. - THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT C RAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 4. BRIEFLY THE FACTS ARE , THE ASSESSEE, A PARTNERSHIP FIRM , IS ENGAGED IN THE BUSINESS OF TRADING OF MILD STEEL (MS ) PIPES. FOR THE ASSESSMENT UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME 29/08/2008 DECLARING TOTAL INCOME OF RS.5,91,530/ . SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION.147 OF THE ACT. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ENTIRE SALE AND PURCHASE TRANSACTION S ARE WITH M/S. PRATIBHA INDUSTRIES LTD., AND M/S. PRATIBHA PIPES & STRUCTURAL LTD. AFTER EXAMINING THE DETAILS CALLED FOR , THE ASSESSING OFFICER WAS OF THE VIEW THAT THE TRANSACTI ON ENTERED INTO BY THE ASSESSEE AND M/S. PRATIBHA INDUSTIRES LTD., IS ONLY A PAPER TRANSACTION , H ENCE, THE EXPENSES CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED UNDER SECTION.36(1)(III) . T HEREFORE, AFTER DISALLOWING INTEREST EXPENDITURE AND OTHER EXPENSES, TH E ASSESSING OFFICER HELD THAT THE DIFFERENCE BETWEEN THE VALUE OF SALE AND PURCHASES SHOWN BY THE ASSESSEE IS NOTHING BUT INCOME 5 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM FROM OTHER SOURCES. ON THE AFORESAID BASIS , ULTIMATELY THE ASSESSING OFFICER MADE AN ADDITION OF RS .1,05,99,860/ . 5. BEING AG GRIEVED OF THE ADDITION MADE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSION E R (A PPEALS ). 6. LD. COMMISSIONER (A PPEALS ) FOLLOWING HIS ORDER PASSED FOR ASSESSMENT YEAR 2009 10 IN ASSESSEES OWN CASE, DISPOSED OFF THE APPEAL GRANTING PARTIAL RELIEF T O THE ASSESSEE. AGAINST THE AFORESAID ORDER OF THE FIRST APPELLATE AUTHORITY, BOTH THE ASSESSEE AND DEPARTMENT ARE IN APPEAL BEFORE US. 7. AT THE VERY OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED BEFORE US THAT IDENTICAL ISSUES WERE RAISED IN THE CR OSS APPEALS FILED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2009 10 IN ITA NO.6940/MUM/2012 AND ITA NO/7240/MUM/2012. IT WAS SUBMITTED , WHILE DISPOSING OFF THE AFORESAID APPEAL S VIDE ORDER DATED 23/12/2016, THE TRIBUNAL HA S RESTORED ALL THE ISSUES TO THE FIRST APPELLATE AUTHORITY FOR FRESH ADJUDICATION. 8. THE LD. D EPARTMENTAL R EPRESENTATIVE AGREED WITH THE AFORESAID SUBMISSIONS OF THE ASSESSEE. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON REOCRD. AS COULD BE SEEN FROM THE GROUNDS RAISED, IDENTICAL ISSUES AROSE IN THE CROSS APPEALS FILED BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2009 10. IN FACT, THE LD. COMMISSIONER (A PPEALS ) WHILE DISPOSIG OFF ASSESSEES 6 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM APPEAL FOR THE IMPUGNED ASSESSMENT YEAR HAS FOLLOWED H IS ORDER IN CASE OF ASSESSEE FOR A.Y.2009 10. NOTABLY, WHILE DISPOSING OFF THE CROSS APPEALS, FOR A.Y.2009 10, THE TRIBUNAL HA S RESTORED ALL THE ISSUES BACK TO THE COMMISSIONER OF INCOME TAX (APPEALS) FOR FRESH ADJUDICATION IN THE ORDER REFERRED TO ABOVE. CONSISTENT WITH THE VIEW EXPRESSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2009 10(SUPRA), WE RESTORE ALL THE ISSUES IN THESE CROSS APPEALS TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR FRESH ADJUDICATION IN TERMS OF THE DIRECTION OF THE TRIBUNAL IN A.Y.2009 10. IN THE RESULT, ALL THE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15/12/2017 SD/ - SD/ - SD/ - SD/ - N.K. PRADHAN ACCOUNTANT MEMBER S D/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 15/12/2017 7 ITA NO.3219/MUM/2016 & 4662/MUM/2016 M/S. PRATIBHA PIPES & STRUCTURAL CONSORTIUM 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 KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI