ACIT 22(3), MUMBAI V. SANJAY O. GOEL LEGAL HEIR, MUMBAI

ITA 3241/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8518 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 3241/MUM/2015 (ASSESSMENT YEAR: 2010-11) A C I T 22(3) VS. LATE SANJAY O. GOEL ROOM NO. 322, 3 RD FLOOR PIRAMAL CHAMBERS, LALBAUG PAREL, MUMBAI 400012 L/H SAGAR SANJAY GOEL MOTI MAHAL, 3 RD FLOOR KHAR (W), MUMBAI 400012 PAN AAFPG8625A APPELLANT RESPONDENT APPELLANT BY: MS. ARJU GARODIA RESPONDENT BY: NONE DATE OF HEARING: 30.01.2017 DATE OF PRONOUNCEMENT: 01.02.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-34, MUMBAI DATED 12.03.2015 FOR A.Y. 2010-11. SINCE NON E WAS PRESENT FOR THE ASSESSEE, WHEN THE CASE WAS CALLED FOR HEARING, WE PROCEED TO DISPOSE OFF THIS APPEAL WITH THE ASSISTANCE OF THE LEARNED D.R. AND THE MATERIAL ON RECORD. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, ENGAGED IN THE BUSINESS OF TRADIN G IN HARDWARE ITEMS USED IN SUGAR FACTORIES, FILED THE RETURN OF INCOME FOR A.Y. 2010-11 ON 13.10.2010 DECLARING TOTAL INCOME OF ` 18,90,380/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T, 1961 (IN SHORT 'THE ACT') AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SC RUTINY. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTR A THAT CERTAIN DEALERS WERE PROVIDING ACCOMMODATION ENTRIES/BILLS FOR A SMALL COMMISSION WITHOUT DOING ANY ACTUAL BUSINESS OF PUR CHASE OR SALE OF ITA NO. 3241/MUM/2015 LATE SANJAY O. GOEL 2 COMMODITIES, WHICH WAS ADMITTED BY THEM IN STATEMEN TS BEFORE SALES TAX DEPARTMENT. ON GOING THROUGH THE LIST OF SUCH BOGUS /SUSPICIOUS DEALERS LISTED BY THE SALES TAX DEPARTMENT, THE AO NOTICED THAT THE ASSESSEE HAD MADE PURCHASES IN THE YEAR UNDER CONSIDERATION FROM THE FOLLOWING DEALERS, THE DETAILS OF WHICH ARE AS UNDER: - SR.NO. NAME OF ALLEGED SUPPLIER AMOUNT ( ` `` ` ) 1 SHIV INDUSTRIES 4,67,888/- 2 SIDHIVINAYAK STEELS 1,84,950/- 3 KRISH CORPORATION 3,82,500/- 4 SAGAR ENTERPRISES 1,51,313/- 5 ASIAN STEEL 2,53,125/- 6 SIDDHI ENTERPRISES 3,76,875/- 7 ATLAS INTERNATIONAL (I) 33,750/- 8 DEEP ENTERPRISES 1,15,650/- 9 SURAT TUBE CORPORATION 1,38,128/- 10 SHRITI ENTERPRISES 1,56,937/- 11 SKAND INDUSTRIES 3,87,000/- 12 CHANCHAL TUBE CORPORATION 1,80,675/- 13 MANAV IMPEX 35,625/- 14 ARIHANT TRADERS 2,97,451/- 15 AMEE ENTERPRISES 2,92,500/- TOTAL 34,54,367/- 2.2. TO ASCERTAIN THE GENUINENESS OF THE AFORESAID PURCHASES (SUPRA), THE ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY THE S AID PURCHASES AMOUNTING TO ` 34,54,367/- SHOULD NOT BE TREATED AS UNEXPLAINED. I N REPLY THERETO, THE ASSESSEE SUBMITTED THAT THE PURCHASES FROM THE ABOVE 15 PARTIES (SUPRA) ARE GENUINE; REFLECTED IN THE ASSES SEES BOOKS OF ACCOUNT; SUPPORTED BY PURCHASE BILLS, THE COPIES OF WHICH WE RE FILED, PAYMENTS FOR WHICH WERE MADE THROUGH NORMAL BANKING CHANNELS, DE LIVERY OF MATERIALS RECEIVED AND ONWARD SALES OF THE SAME WERE MADE TO VARIOUS SUGAR FACTORIES, PUBLIC REFINERIES IN MAHARASHTRA AND GUJ ARAT; WHICH SALES CAN BE IDENTIFIED WITH PURCHASES MADE. IN ORDER TO ASCERTA IN THE GENUINENESS OF THESE PURCHASES, THE AO ISSUED NOTICES TO THESE PAR TIES TO WHICH THERE WAS NO RESPONSE. AO ALSO RECORDED STATEMENT OF THE LATE ASSESSEES SON AND LEGAL HEIR, SHRI SAGAR SANJAY GOEL, UNDER SECTION 1 31 OF THE ACT. THE AO ITA NO. 3241/MUM/2015 LATE SANJAY O. GOEL 3 DID NOT ACCEPT THE EXPLANATION PUT FORTH BY THE ASS ESSEE AND BRUSHED ASIDE THE EVIDENCE/DETAILS PLACED BEFORE HIM, AS HE WAS O F THE VIEW THAT THE ASSESSEES EXPLANATION DID NOT PROVE THE PURCHASES WERE GENUINE AND ALSO FOR THE REASON THAT THE ASSESSEE FAILED TO PRODUCE THOSE PARTIES FROM WHOM PURCHASES WERE MADE FOR EXAMINATION IN THIS REGARD. IN THAT VIEW OF THE MATTER, THE AO TREATED THE AFORESAID PURCHASES AMOU NTING TO ` 34,54,367/- AS BOGUS AND BROUGHT THE SAME TO TAX IN THE ASSESSE ES HANDS. THE ASSESSMENT WAS ACCORDINGLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 20.03.2013, WHEREIN THE INCOME OF THE A SSESSEE WAS DETERMINED AT ` 53,44,750/-; WHICH INCLUDED THE ADDITION OF ` 34,54,367/- ON ACCOUNT OF BOGUS PURCHASES. 2.3 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 20.0 3.2013 FOR A.Y. 2010-11, THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT(A)-34, MUMBAI. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, EVIDENCE ON RECORD AND THE AOS VIEWS IN THE MATTER , ALLOWED THE ASSESSEES APPEAL FOLLOWING THE DECISION OF THE COO RDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAJEEV G. KALATHIL (ITA NO. 6727/MUM/2012 DATED 20.08.2014 FOR A.Y. 2009-10) HOLDING THAT ADDITION MADE SOLELY ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPART MENT, IN SUCH CASES WHERE THE AO HAS NOT CARRIED OUT ANY INDEPENDENT IN QUIRIES AND/OR NOT TAKEN THE INQUIRY TO ITS LOGICAL END CANNOT BE SUST AINED. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A)-34, MUMBAI DATED 12.03.2015 FOR A.Y. 2010-11, HAS PREFERRED TH IS APPEAL WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: - (1) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.34,54,367/- FOR A.Y. 2011-12 ON ACCOUNT OF BOGUS PURCHASES WITH OUT APPRECIATING THE FACT THAT THERE WAS SPECIFIC AND V ERIFIABLE INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAD RESORTED TO BOGUS PURCHASES AND ON BEING CONFRONTED , FAILED TO PRODUCE EVIDENCE IN RESPECT OF THE PURCHASES. (2) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET SIDE AND THAT OF THE AO BE RESTORED. (3) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 3241/MUM/2015 LATE SANJAY O. GOEL 4 3.2 THE LEARNED D.R. WAS HEARD IN SUPPORT OF THE GR OUNDS RAISED. IT WAS CONTENDED THAT SINCE THE 15 PARTIES FROM WHOM PURCH ASES WERE MADE BY THE ASSESSEE, IN THE YEAR UNDER CONSIDERATION, DID NOT RESPOND TO NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT ISSUED BY TH E AO AND DOCUMENTARY EVIDENCE TO SUPPORT THE PURCHASES FROM THESE PARTIE S COULD NOT BE VERIFIED, THE GENUINENESS OF THE SAID PURCHASES IS NOT ESTABL ISHED. THEREFORE, THE AO WAS JUSTIFIED IN TREATING THE SAID PURCHASES AS BOGUS AND BRINGING THE SAME TO TAX IN THE ASSESSEES HANDS. 3.3.1 WE HAVE HEARD THE LEARNED D.R. FOR REVENUE AN D PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS RELIED UPON BY THE AUTHORITIES BELOW. ON AN APPRECI ATION OF THE MATERIAL ON RECORD, IT IS EVIDENT FROM THE ORDER OF ASSESSMENT THAT IT IS ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT THE AO ISSUED THE SHOW CAUSE NOTI CE TO THE ASSESSEE TO EXPLAIN THE GENUINENESS OF THE SAID PURCHASES AND I SSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE AFORESAID 15 PERSO NS FROM WHOM THE SAID PURCHASES WERE MADE IN THE YEAR UNDER CONSIDERATION , TO WHICH THERE WAS NO RESPONSE. IT IS SEEN THAT THE AO PRIMARILY RELYING ON THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND STATEMENTS/ DEPOSITIO N GIVEN BEFORE THE SALES TAX DEPARTMENT BY THESE PARTIES, HELD THE SAI D PURCHASES TO BE BOGUS. WHILE IT MAY BE TRUE THAT THESE PARTIES DID NOT APP EAR BEFORE THE AO FOR WHATEVER REASONS, THE FACT REMAINS THAT THE LEARNED A.R. OF THE ASSESSEE/LEGAL HEIR HAD SUBMITTED COPIES OF PURCHAS E BILLS TO EVIDENCE PURCHASES FOR WHICH PAYMENTS WERE MADE BY ACCOUNT P AYEE CHEQUES THROUGH NORMAL BANKING CHANNELS AS REFLECTED IN THE BANK ST ATEMENT AND IN BOOKS OF ACCOUNT ALONGWITH CORRESPONDING SALES WITH BOOK PRO FIT THEREON; EVIDENCE OF MOVING OUT OF THE THESE GOODS, ETC. IT IS A FACT EV IDENT FROM THE RECORD THAT THE AO HAS NOT DOUBTED THE SALES AFFECTED BY THE ASSESS EE AND THEREFORE IT IS IN ORDER TO CONCLUDE THAT WITHOUT CORRESPONDING PURCHA SES BEING MADE, THE ASSESSEE COULD NOT HAVE EFFECTED SALES. 3.3.2 IN OUR CONSIDERED VIEW, THE AO HAS NOT BROUGH T ON RECORD ANY MATERIAL EVIDENCE TO CONCLUSIVELY PROVE THAT THE SA ID PURCHASES ARE BOGUS. ITA NO. 3241/MUM/2015 LATE SANJAY O. GOEL 5 MERE RELIANCE BY THE AO ON INFORMATION OBTAINED FRO M THE SALES TAX DEPARTMENT OR THE SWORN STATEMENT OF THE PARTIES BE FORE THE SALES TAX DEPARTMENT, WITHOUT AFFORDING THE ASSESSEE ANY OPPO RTUNITY TO CROSS EXAMINE THOSE WITNESSES IN THIS REGARD OR THE FACT THAT THESE PARTIES DID NOT RESPOND TO NOTICE UNDER SECTION 133(6) OF THE ACT, WOULD NOT IN ITSELF SUFFICE TO TREAT THE PURCHASES AS BOGUS AND MAKE THE ADDITI ON. IF THE AO DOUBTED THE GENUINENESS OF THIS SAID PURCHASES, IT WAS INCU MBENT UPON HIM TO CAUSE FURTHER INQUIRIES IN THE MATTER TO ASCERTAIN THE GENUINENESS OR OTHERWISE OF THE TRANSACTIONS. WITHOUT CAUSING ANY FURTHER ENQUIRES IN RESPECT OF THE SAID PURCHASES, THE AO CANNOT MAKE T HE SAID ADDITION ON ACCOUNT OF BOGUS PURCHASES BY MERELY RELYING ON INF ORMATION OBTAINED FROM THE SALES TAX DEPARTMENT, THE STATEMENT/AFFIDAVIT O F THIRD PARTIES WITHOUT THE ASSESSEE BEING AFFORDED ANY OPPORTUNITY OF CROS S EXAMINATION OF THAT PERSONS AND FOR NON-RESPONSE TO NOTICES UNDER SECTI ON 133(6) OF THE ACT. 3.3.3 IN THE FACTUAL MATRIX OF THE CASE, WHERE THE AO FAILED TO CAUSE ANY ENQUIRY TO BE MADE TO ESTABLISH HIS SUSPICIONS THAT THE SAID PURCHASES ARE BOGUS, THE ASSESSEE HAS BROUGHT ON RECORD DOCUMENTA RY EVIDENCES TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTI ONS, THE ACTION OF THE AO IN IGNORING THESE EVIDENCES CANNOT BE ACCEPTED. FURTHER, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ASHISH INT ERNATIONAL (ITA NO. 4299 OF 2009 (BOM) HAS HELD THAT THE GENUINENESS OF THE STATEMENTS RELIED UPON BY REVENUE IS NOT ESTABLISHED WHEN THE ASSESSE E DISPUTES THE CORRECTNESS OF THOSE STATEMENTS AND HAS NOT BEEN AF FORDED ADEQUATE OPPORTUNITY TO CROSS EXAMINE THESE PARTIES. MOREOVE R, AS CORRECTLY OBSERVED BY THE LEARNED CIT(A), WHEN THE PAYMENT FO R THE SAID PURCHASES TO THE CONCERNED PARTIES IS THROUGH PROPER BANKING CHANNELS AND THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE AO TO ESTABLIS H THAT THE SAID PAYMENTS WERE ROUTED BACK TO THE ASSESSEE, THE ADDI TION MADE BY THE AO AS BOGUS PURCHASES IS UNSUSTAINABLE. WE ARE FORTIFI ED IN THIS VIEW OF OURS BY THE DECISIONS OF, INTER ALIA, THE HON'BLE BOMBAY HIGH COURT IN THE CASES OF CIT VS. NIKUNJ EXIMP ENTERPRISES P. LTD. (372 IT R 619) (BOM), ASHISH INTERNATIONAL (SUPRA) AND THE DECISION OF THE COORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAJEEV G. KALATHIL (ITA NO. 6727/MUM/2012 DATED ITA NO. 3241/MUM/2015 LATE SANJAY O. GOEL 6 20.08.2014 FOR A.Y. 2009-10). IN THE FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WE FIND NO REQUIREMENT FOR INTERFE RENCE IN THE ORDER OF THE LEARNED CIT(A) AND CONSEQUENTLY UPHOLD THE SAME. TH EREFORE, REVENUES GROUNDS RAISED AT 1 TO 3) ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2010-11 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEBRUARY, 2017. SD/ - SD/ - (RAM LAL NEGI) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 1 ST FEBRUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -34, MUMBAI 4. THE CIT - 22, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.