HAREN B. SHAH, MUMBAI V. ITO 14(3)(1), MUMBAI

ITA 3293/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3829 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 25-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3293/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) HAREN B. SHAH HUF 5 TH FLOOR, GOPAL NIWAS, 133, PRINCESS STREET, MUMBAI - 400002 / VS. INCOME TAX OFFICER14(3)(1) 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 ./ ./ PAN/GIR NO. : AAAHH0650K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 02.05.2016 !' /DATE OF PRONOUNCEMENT:10.08.2015 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 11.03.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 25, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y. 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUE: 1. THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES TO THE EXTENT OF ASSESSEE BY: SHRI MANDAR VAIDYA DEPARTMENT BY: SHRI A. N. SONTAKKE ITA NO.3293/M/14 A.Y. 2009-10 2 25% OF THE PURCHASES. THE LD. CIT(A) OUGHT TO HAVE CONFINED THE SAME TO 4.5% OF THE SAID VALUE. 2. THE LD. CIT(A) ERRED IN NOT ADOPTING THE METHODO LOGY ADOPTED BY THE LD. A.O. FOR THE SUBSEQUENT YEAR A.Y.2011-12, WHICH WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A). 3. THE BRIEF FACTS OF THE OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 25.01.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.3,25,490/-. A COPY OF TAX AUDIT REPORT U/S.44AB INCOME TAX ACT, 1 961 ( IN SHORT THE ACT) WAS ALSO FILED IN FORM NO.3 CD ALONG WITH RET URN. THE RETURN WAS PROCESSED U/S.143(1). THE CASE WAS SELECTED FOR SC RUTINY THROUGH CASS. THE NOTICE U/S.143(2) OF THE ACT WHICH WAS ISSUED O N 18.08.2010 AND SERVED UPON THE ASSESSEE. THE NOTICE U/S.142(1) OF THE AC T WAS ALSO ISSUED. THE ASSESSEE CARRIED ON THE BUSINESS OF TRADING IN TOOL S AND ALLOYS STEEL UNDER HIS PROPRIETARY CONCERN M/S. DIVYA ENTERPRISES AND HAS DERIVED INCOME FROM SAID BUSINESS AND ALSO SOME INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. SOME PURCHASE WAS NOT VERIFIED AND EXPEN SES WERE NOT AVAILABLE, THEREFORE THE INCOME OF THE ASSESSEE WAS ASSESSED T O THE TUNE OF RS.75,40,800/-. FEELING AGGRIEVED, THE ASSESSEE HA S FILED THE APPEAL BEFORE CIT(A) AND THE CIT(A) CONFIRMED THE SAID ADDITIONS . HENCE THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 & 2:- 4. ISSUE NO.1 AND 2 ARE INTERCONNECTED, THEREFORE A RE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES THE ASSESSEE HAD CHALLENGED THE CONFIRMATION OF DISALLOWANCE ON ACCOUNT OF PURC HASE TO THE EXTENT OF 25%. ASSESSING OFFICER DISALLOWED THE PURCHASES MA DE FROM THE M/S. KRISH ITA NO.3293/M/14 A.Y. 2009-10 3 CORPORATION TO THE TUNE OF RS.13,64,116/- ON ACCOU NT OF STATEMENT OF SHRI. R.C.SALOT PROPRIETOR OF M/S. KRISH CORPORATION DATE D 26.12.2011. THE ASSESSING OFFICER ALSO DISALLOWED THE PURCHASES MAD E FROM M/S. PALAK ENTERPRISES, M/S. NIRUPAM ENTERPRISES AND M/S. S.B. STEEL HARDWARE ON THE GROUND OF THAT NOTICE ISSUED U/S.133(6) OF THE ACT WERE ISSUED TO THESE PARTIES AND THE SAME WERE RETURNED UNSERVED. THE P URCHASES TO THE TUNE OF RS.58,33,204/- WAS DISALLOWED. ON APPEAL THIS CIT( A) DISALLOWED THE PURCHASE TO THE EXTENT OF 25%. THE LEARNED REPRESE NTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSING OFFICER DECLINED THE PURCHASE FOR THREE PARTIES TO THE TUNE OF RS.58,33,204/- ON THE BASIS OF INSPE CTORS REPORT THAT PARTIES WERE NOT RESIDING AT THEIR GIVEN ADDRESS. SPECIFIC ALLY ON THE REPORT THAT SOME PARTIES HAVE SHIFTED THEIR BUSINESS AND OR CLOSED THEIR BUSINESS. IT IS ARGUED THAT THE ASSESSEE HAS GIVEN THE RELEVANT DOCUMENTS SUCH AS CONFIRMATION LETTERS FROM THE PARTIES, THE PAN NOS. & BANK STATE MENTS REFLECTING THE PAYMENTS MADE HENCE THE EXISTENCE OF SAID PARTIES C OULD NOT BE DOUBTED. IT IS ALSO ARGUED THAT THE TRANSACTIONS WERE EFFECTED THROUGH BANKING CHANNELS BUT THE ASSESSING OFFICER DID NOT CONSIDER THE SUBM ISSION OF THE ASSESSEE, THEREFORE THE ORDER OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND ORDER IS LIABLE TO BE SET ASIDE. RELIANCE IS PLACED UPON TH E LAW SETTLED BY THE HONBLE APEX COURT IN THE CASE OF ORISSA CORPORATION 159 IT R 78 (SC). TH E LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS STRONG LY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. IN VIEW OF THE A RGUMENT ADVANCED BY THE PARTIES AND PERUSING THE RECORD IT CAME INTO NOTIC E THAT THE ASSESSING OFFICER REJECTED THE PURCHASES MADE FROM M/S.KRISH CORPORAT ION TO THE TUNE OF RS.13,64,116/- ON THE STATEMENT OF SHRI R.C.SALOT P ROPRIETOR OF M/S. KRISH ITA NO.3293/M/14 A.Y. 2009-10 4 CORPORATION RECORDED ON 26.12.2011. THE ORDER SPEA KS THAT THE ADDITION WAS MADE ON THE BASIS OF STATEMENT OF SHRI R.C.SALOT BU T NO OPPORTUNITY FOR THE CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE. IN VI EW OF THE LAW RELIED BY THE LEARNED REPRESENTATIVE OF THE ASSESSEE MENTIONE D ABOVE, IT IS QUITE CLEAR THAT THE ADDITION IS NOT JUSTIFIABLE ON THE BASIS O F THE STATEMENT OF THE THIRD PARTY. IN THIS REGARD WE ALSO RELIED UPON THE LAW SETTLED IN HONBLE APEX COURT IN THE CASE OF ORISSA CORPORATION 159 ITR 78 (SC). OTHER ADDITIONS WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE LETTERS RETURNED WHICH WE WERE SENT TO THE SELLER. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO PRODUCE THE DOCUMEN TS SUCH AS CONFIRMATION LETTERS, BANK STATEMENT REFLECTING THE PAYMENT GIVE N TO THEM. IT ALSO CAME TO THE NOTICE THAT THE TRANSACTIONS WERE EFFECTED THRO UGH BANKING CHANNELS. IN VIEW OF THE LAW SETTLED IN HONBLE APEX COURT IN THE CASE OF ORISSA CORPORATION 159 ITR 78 (SC), WHEN THESE DOCUMENTS WERE SUBMITTED BY THE ASSESSEE THEN IN THE SAID CIRCUMSTANCES THE ASSESSI NG OFFICER SHOULD CONSIDER THESE DOCUMENT IN ACCORDANCE WITH LAW OR O THERWISE THERE SHOULD BE SOME MATERIAL TO DISCREDIT THE SAID PIECE OF EVI DENCE. THE PAYMENT WAS MADE THROUGH BANKING CHANNELS. THE ASSESSEE HAS AL SO PRODUCED THE COPY OF CHEQUES ISSUED FOR THE PURCHASE LIES AT PAGE 77 TO 84 OF THE PAPER BOOK AND LIST OF SUPPLIER AND PURCHASER ARE LIES AT PAGE 85 TO 92 OF THE PAPER BOOK AND LIST OF THE DEBTORS AND CREDITORS ARE LIES AT PAGE 93 TO 95 OF THE PAPER BOOK. MERELY ISSUANCE OF LETTERS U/S.133(6) OF THE ACT D OES NOT ITSELF CAN BE REASON TO DISCREDIT THE PURCHASES SPECIFICALLY IN THE CIRC UMSTANCES WHEN THE ASSESSEE WAS HAVING NECESSARY DOCUMENTS OF PURCHASE S AND THE DOCUMENTS OF BANK TRANSACTIONS. NO DOUBT IN VIEW OF THE SAID CIRCUMSTANCES AND IN ITA NO.3293/M/14 A.Y. 2009-10 5 VIEW OF THE ABOVE MENTIONED LAW WE ARE OF THE VIEW THAT THE ADDITION ON ACCOUNT OF STATEMENT MADE BY SHRI. R.C.SALOT PROPRI ETOR OF M/S. KRISH CORPORATION WITHOUT GIVING AN OPPORTUNITY TO CROSS EXAMINATION IS NOT JUSTIFIABLE. THEREFORE, THE SAME IS HEREBY ORDERED TO BE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RE-ASSESS THE ABOV E SAID TRANSACTIONS AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AND BY CONSID ERING RELEVANT EVIDENCE ADDUCIBLE BY THE ASSESSEE. ACCORDINGLY THE PURCHAS E FROM M/S. PALAK ENTERPRISES, M/S. NIRUPAM ENTERPRISES AND M/S. S.B. STEEL HARDWARE IS ALSO REQUIRED TO BE REASSESSED IN VIEW OF THE EVIDENCE A DDUCED BY THE ASSESSEE IN ACCORDANCE WITH LAW. HENCE FINDING ON THIS ISSUE O F THE CIT(A) IS HEREBY ORDERED TO BE SET ASIDE AND THESE ISSUES ARE HEREBY ORDERED TO BE RESTORED TO THE FILE OF ASSESSING OFFICER TO RE-ASSESS THE MATT ER OF CONTROVERSY IN VIEW OF THE OBSERVATION MADE ABOVE AND IN ACCORDANCE WITH L AW. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST , 2016. SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 10 TH AUGUST 2016 MP MP MP MP ITA NO.3293/M/14 A.Y. 2009-10 6 !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. !' ) / BY ORDER, - & //TRUE COPY// */)+ , (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI