GRRENTEX EXPORTS INDIA, MUMBAI V. ITO 14(2)(4), MUMBAI

ITA 3311/MUM/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3530 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries
• Section: 69C; 147; 148

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH SMC MUMBAI BEFORE SHRI A.D.JAIN , JUDICIAL MEMBER . . , ./ I.T.A. NO. 3311 / MUM/20 1 5 ( / ASSESSMENT YEAR : 200 9 - 10 ) M / S GREENTEX EXPORTS INDIA, MODI ESTATE, 1ST FLOOR, OPP. CHIRAG NAGAR POLICE STN. GHATKOPAR WEST, MUMBAI - 4000 80 / VS. INCOME TAX - WARD 14(2)(4), MUMBAI. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AADFG1360L / APPELLANT BY NONE / RSPONDENT BY SHRI A RAMCHANDRAN / DATE OF HEARING : 04 . 0 7 . 201 6 / DATE OF PRONOUNCEMENT : 04.07.2016 / O R D E R PER A D JAIN ( J M) THIS IS ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2009 - 10 CHALLENGING THE ORDER OF ID.CIT(A) DATED 12.3.2015. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVI CE OF NOTICE . HOWEVER, FINDING THAT THE MATTER CAN BE PROCEEDED WITH IN THE ABSENCE OF THE ASSESSEE, I AM DOING SO. ITA NO. 838 / MUM/20 1 5 2 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED A RETURN OF INCOME ON 26.09.2009 , DECLARING A TOTAL INCOME OF RS.12,56,635/ - . I NFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, VIDE LETTER F . NO.DGIT/(INV)/CARR.FIELD /2012 - 13, DATED 26.12.2012 , C OMMUNICATED VIDE LETTER F NO.CIT - 14/CORR. FIELD /2012 - 13 DATED 27.12.2012 OF CIT - 14, MUMBAI OFFICE OF DGI T, THAT THE S ALES TAX DEPAR TMENT, MUMBAI HAS IDENTIFIED BOGUS BILLERS/ACCOM M ODATION ENTRY PROVIDERS AND HAVE RECORDED THEIR STATEMENTS ; AND THAT THE SALES TAX DEPARTMENT HAS PROVIDED THE LIST OF BOGUS BILLERS/ ACCOMMODATION ENTRY PROVIDERS AND THE BENEFICIARIES WHO HAVE UTILIZED THE SERVICES OF THESE BOGUS BILLERS. IN THE SAID LETTER IT HAS BEEN MENTIONED THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES OF BOGUS PURCHASE S FROM THREE PARTIES , I.E. , (1) M/S SEVA ENTERPRISES RS.81,640/ - (2) M/S MOTION TRADERS PVT.LTD . RS. 1 ,08,859/ - AND (3) M/S JAIN TRADING CORPORATION RS. 1 ,06,875/ - TOTALING TO RS.2,97,374/ - . THE CASE WAS PROCEEDE D WITH U/S 147 AND 148 OF THE INCOME TAX ACT, 1961 AND THE STATEMENTS WERE RECORDED FROM THE ABOVE THREE PARTIES. THE AO ISSUED NOTICE U/S 148 TO THE ASSESS EE, C ALLING FOR IT TO EXPLAIN AS TO WHY THESE PURCHASES SHOULD NOT BE TREATED AS BOGUS PURCHASES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN RESPONSE , T HE ASSESSEE ASKED THE AO TO PROVIDE THE COPIES OF THE S T ATEMENTS OF THESE PERSONS RECORDED BY THE SALES TAX DEPARTMENT AND SUBMITTED COPIES OF LEDGER ACCOUN TS OF M/S JAIN TRADING CORPORATION, M/S MOTION TRADERS PVT LTD, M/S SEVA EN TERPRISES, ALONG WITH BANK STATEME NT, ETC . THE AO ACCEDED TO THE ITA NO. 838 / MUM/20 1 5 3 ASSESSEES REQUEST. THE AO ISSUED NOTICE TO THESE PARTIE S, CA LLING FOR EXPLANATION REGARDING THE PURCHASE ENTRIES TO THESE THREE PARTIES . APROPOS THE NOTICES ISSUED TO M / S SEVA ENTERPRISES AND M / S JAIN TRADING CORPORATIONS, NO RESPONSE WAS RECEIVED, WHEREAS THE NOTICE ISSUED TO M / S MOTION TRADERS PVT LTD RETURNED U NSERVED. THEREFORE, THE AO WAS OF THE OPINION THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CLAIM AND , A CCORDINGLY, HE MADE AN ADDITION OF RS.2,97,374 / - AS UNEXPLAINED EXPENDITURE U / S 69C OF THE ACT AND FRAMED THE ASSESSMENT U / S 143 R.W.S.147 OF THE ACT AT AN AMOUNT OF RS.15,54,010 / - .AGGRIEVED BY THE DECISION OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE L D.CIT(A). THE L D. CIT(A) C ONFIRMED THE ACTION OF THE AO BY HOLDING AS UNDER : ''3.3. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSION M ADE. THE APPELLANT NEITHER DURING THE ASSESSMENT NOR DURING APPEAL HAS FURNISHED QUANTITATIVE DETAILS. IT IS NOT SUBMITTED THAT ANY STOCK REGISTER HAS BEEN MAINTAINED AND THE QUANTITATIVE DETAILS ARE RECONCILED. THEREFORE, THIS IS A CASE WHERE QUANTITATIVE DETAILS ARE NOT FURNISHED. THEREFORE, IN ABSENCE OF QUANTITATIVE DETAILS AND RECONCILIATION, IT HAS NOT BEEN SUBSTANTIATED THAT ANY GENUINE PURCHASE HAS BEEN MADE BY THE APPELLANT FOR THE BOGUS BILLS OBTAINED FROM THESE SUPPLIERS. HENCE, THE ORDER OF THE AD IS THEREFORE UPHELD AND THIS GROUND OF APPELLANT IS DISMISSED. 4. THE IIND GROUND OF APPEAL IS REGARDING ADDITION OF RS.1,06,875/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE IN THE CASE OF RETURNED GOODS. REGARDING PURCHASE OF RS.1,06,87S/ - FROM JAIN TRAD ING CO. THE ASSESSEE HAS CLAIMED THAT PURCHASES DEBITED IN THE ACCOUNTS HAS BEEN REVERSED IN SUBSEQUENT YEAR SINCE THE GOODS HAVE BEEN RETURNED. COPY OF LEDGER ACCOUNT HAS ALSO BEEN PRODUCED AND IT HAS BEEN SUBMITTED THAT P&L ACCOUNT HAS BEEN CREDITED IN SUBSEQUENT YEAR BY SUCH GOODS RETURNED AND THEREFORE, IF THE DISALLOWANCE IS MADE IN THIS YEAR ALSO, IT WOULD AMOUNT DOUBLE TAXATION. ITA NO. 838 / MUM/20 1 5 4 4.1. FACT OF THE CASE AND SUBMISSION MADE HAVE BEEN CONSIDERED CAREFULLY. THE RETURN OF GOODS, IF ANY, HAS AFFECTED THE COMPUTATION OF INCOME OF AY 2010 - 11/ BUT IN AY 2009 - 10 THE FACT REMAINS THAT THE GOODS CLAIMED AS PURCHASED ARE BOGUS. THE APPELLANT HAS NOT SHOWN THE PHYSICAL QUANTITATIVE TALLY OF THE GOOD SO PURCHASED WITH THE STATEMENT OF INVENTORY AS ON 31.03.2009. THEREFORE , VERACITY OF THE CLAIM IS NOT VERIFIABLE. MORE OVER ANY PAYMENT FOR THIS PURCHASE BY ACCOUNT PAYEE CHEQUE IS ALSO NOT SHOWN. THEREFORE , THE ADDITION MADE BY THE A O IN THIS REGARD IS HEREBY UPHELD. HOWEVER, TO AVOID DOUBLE TAXATION , IF A N Y , THE ASS ESSEE MAY UNDERTAKE APPROPRIATE REMEDIAL MEASURE IN A. Y. 2010 - 11 AGGRIEVED BY THE ORDER OF L D.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE BENCH. 4. I HAVE HEARD THE L D.DR AND HAVE PERUSED THE RECORD AVAILABLE , INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. 5. I FIND FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE AO HAS MADE THE ADDITION UNDER SECTION 69C OF THE ACT ON THE BASIS OF THE REPORT PROVIDED BY THE STATE SALES DEPARTMENT AND THE STATE MENTS OF THE PARTIES , AS RECORDED BY THE SALES TAX D EPARTMENT. THE ID. CIT(A) HAS ALSO CONFIRMED THE ADDITION MADE BY THE AO. I FIND FROM THE RECORD THAT TH OUGH THE ASSESSEE HAS PROVIDED DOCUMENTARY EVIDENCES BUT THESE DOCUMENTS HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW AND THEY MADE THE ADDITION ONLY ON THE BASIS OF THIRD PERSON EVIDENCE WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE. THEREFORE, IN VIEW OF THIS LEGAL AND FACTUAL ASPECT , I FEEL THAT IF THE ASSESSEE BE GIV EN OPPORTUNITY BEFORE THE AO TO SUBSTANTIATE ITS CAS E, IT WILL MEET THE ENDS OF JUSTICE AND NO PREJUDICE WOULD BE CAU SED TO THE REVENUE. IT ITA NO. 838 / MUM/20 1 5 5 IS SEEN THAT THIS TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF DEEPAK POPATLAL GALA, IN ITA NO. 5920/M/13 AND VIDE ORDER DATED 27.3.2015, IT HAS HELD AS UNDER:- 10. THE NEXT I SSUE RELATES TO DISALLOWANCE MADE OUT OF PURCHASES AND ASSESSED U/S 69C OF THE ACT. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE TOTAL PURCHASE EXPENDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS.7,36,27,555 / - . THE AO NOTICE D THAT THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA HAS LISTED OUT NAMES OF CERTAIN DEALERS , WHO WERE ALLEGED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ACTUAL BUSINESS. THE AO NOTICED THAT THE ASSESSEE MADE PURCHASE S TO THE TUNE O F RS.38.69 LAKHS FROM TWO PARTIES NAMED M/S UMIYA SALES AGENCY PVT LTD AND M/S MERCURY ENTERPRISES , WHOSE NAMES FOUND PLACE IN THE LIST PROVIDED BY THE SALES TAX DEPARTMENT . T HE AO PLACED FULL RELIANCE ON THE ENQUIRIES CONDUCTED BY SALES TAX DEPARTMENT IN RESPECT OF THE PARTIES, REFERRED ABOVE. ACCORDINGLY, THE AO TOOK THE VIEW THAT T HE PURCHASES TO THE TUNE OF RS.38.69 LAKHS HAVE TO BE TREATED AS UNEXPLAINED EXPENDITURE. ACCORDINGLY, HE ASSESSED THE SAME U/S 69C OF THE ACT. 11. THE LD. CIT(A) DELETED THE ADDITION AND HENCE THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. THE LD. DR STRONGLY PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 13. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE ADDITIONS MADE IN THE CASE OF SOME OTHER ASSESSES O N IDENTICAL REASONS HAVE BEEN DELETED BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLLOWING CASES : A) RAMESH KUMAR AND CO V/S ACIT IN ITA NO.2959/MUM/2014 (AY - 2010 - 11) DATED 28.11.2014; B) DCIT V/S SHRI RAJEEV G KALATHIL IN ITA NO.6727/MUM/2012 ( AY - 2009 - 10) DATED 20.8.2014; AND C) SHRI GANPATRAJ A SANGHAVI V/S ACIT IN ITA NO. 2826/MUM/2013 (AY - 2009 - 10) DATED 5.11.2014 IN ALL THE ABOVE SAID CASES, THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITI ON ON THE ITA NO. 838 / MUM/20 1 5 6 BASIS OF STATEMENT S GIVEN BY THE THIRD PARTIES BEFORE THE SALES TAX DEPARTMENT , WITHOUT CONDUCTING ANY OTHER INVESTIGATION. IN THE INSTANT CASE ALSO, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMENTS GIVEN BY THE PA RTIES BEFORE THE SALES TAX DEPARTMENT. WE NOTICE THAT THE LD.CIT(A) HAS TAKEN NOTE OF THE FACT THAT NO SALES COULD BE EFFECTED WITHOUT PURCHASES. HE HAS FURTHER PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M.K. BROTHERS (163 ITR 249). HE HAS FURTHER RELIED UPON THE DECISION RENDERED BY THE TRIBUNAL IN THE CAE OF ITO VS. PREMANAND (2008)(25 SOT 11)(JODH), WHEREIN IT HAS BEEN HELD THAT WHERE THE AO HAS MADE ADDITION MERELY ON THE BASIS OF OBSERVATIONS MADE B Y THE SALES TAX DEPT AND HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRIES FOR MAKING THE ADDITION ESPECIALLY IN A CASE WHERE THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF SHOWING BOOKS OF ACCOUNT, PAYMENT BY WAY OF ACCOUNT PAYEE CHEQUE AND PRODUCING VOUCHERS FOR SALE OF GOODS, SUCH AN ADDITION COULD NOT BE SUSTAINED. THE LD CIT(A) HAS ALSO APPRECIATED THE CONTENTIONS OF THE ASSESSEE THAT HE WAS NOT PROVIDED WITH AN OPPORTUNITY TO CROSS EXAMINE THE SELLERS, WHICH IS REQUIRED TO BE GIVEN AS PER THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PONKUNNAM TRADERS (83 ITR 508 & 102 ITR 366). ACCORDINGLY, THE LD CIT(A) HAS DELETED THE IMPUGNED ADDITION. ON A CAREFUL PERUSAL OF THE DECISION RENDERED BY LD CIT(A) WOULD SHOW THAT THE FIRST APPELLATE AUTHORITY HAS ANALYSED THE ISSUE IN ALL ANGLES AND APPLIED THE RATIO LAID DOWN BY THE HIGH COURTS AND TRIBUNALS IN DECIDING THIS ISSUE. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER ON THIS ISSUE. THERE ALSO, NO INDEPENDENT ENQUIRY HAS BEEN CONDUC TED BY THE DEPARTMENT. SINCE THE ISSUE RAISED IN THIS APPEAL STANDS COVERED BY THE ORDER OF TRIBUNAL, THE L D.DR DID NOT OBJECT FOR SETTING ASIDE THE APPEAL TO THE FILE OF THE AO FOR FRESH CONSIDERATION OF THE ISSUE. THEREFORE, IN THE INTEREST OF INTEREST J USTICE AND FAIR PLAY, I SET ASIDE THE ORDER OF L D. CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR FRESH APPLICATION OF MIND ON THE DOCUMENTARY EVIDENCES AS PROVIDED BY THE ASSESSEE. THE ASSESSEE SHALL BE PROVIDED DUE AND ADEQUATE ITA NO. 838 / MUM/20 1 5 7 OPPORTUNITY IN THE FRESH PROCEEDINGS BEFORE THE AO AND THE ASSESSEE, NO DOUBT, WILL COOPERATE WITH THE AO. 6. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 4 TH JULY, 201 6 . 4 TH JULY, 2016 SD ( . . , / A.D. JAIN ) / JUDICIAL MEMBER MUMBAI: 4 TH JULY, 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI