ASST CIT CEN CIR 45, MUMBAI V. R. KESHAVLAL TRADERS P.LTD, MUMBAI

ITA 3425/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7975 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AWUNGSHI GIMSON
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 148; 154

Judgement Text

P A G E | 1 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, M UMBAI BEFORE SHRI P.K. BANSAL , VICE PRESIDENT AND SHRI RAVISH SOOD, JM ITA NO. 3425/MUM/2013 ( / ASSESSMENT YEAR:2004 - 05) ACIT, CENTRAL CIRCLE - 45, MUMBAI - 400 020. / VS. M/S R. KESHAVLAL TRADERS PVT. LTD., A 504, SILVER BELL, LAXMAN MAHATRE ROAD, DAHISAR (WEST), MUMBAI - 400 068. ./ ./ PAN NO. AACCR2251F ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAHUL HAKANI , A.R. / RESPONDENT BY : SHRI AWUNGSHI GIMSON , D .R. / DATE OF HEARING : 2 8 .11 .2017 / DATE OF PRONOUNCEMENT : 20 .1 2 .2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX ( APPEALS ) - 38 , MUMBAI, DATED 31 .0 1 .2013 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 147 OF THE INCOME - TAX A CT, 1961 (FOR SHORT ACT), DATED 24.11.2011 . THE ASSESSEE ASSAILING THE P A G E | 2 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN DELETED THE ADDITION OF RS. 5,16,49,105/ - ON ACCOUNT OF UNEXPLAINED PURCHASES FROM M/S AVANI ENTERPRISES IGNORING THE FACT THAT THE CAPACITY OF THE PARTY AND TH E GENUINENESS OF THE TRANSACTION HAD NOT BEEN PROVED AND ALSO DURING SEARCH AND POST SEARCH ENQUIRIES, IT WAS PROVED/ADMITTED THAT THE TRANSACTIONS WERE ONLY ACCOMMODATION ENTRIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE CIT( A) WAS NOT JUSTIFIED IN IGNORING CONCLUSIVE EVIDENCE BY WAY OF STATEMENT OF SHRI PRAVIN GHAGHDA, PROPRIETOR OF M/S AVANI ENTERPRISES, ADMITTING THAT THE ALLEGED TRADING TRANSACTIONS WERE IN NATURE OF ACCOMMODATION ENTRIES ONLY AND ALSO IGNORING THE FACT TH AT THERE WERE SUBSTANTIAL DEPOSITS IN CRORES OF RUPEES IN THE BANK ACCOUNT OF HIS CONCERN, WHICH WERE IMMEDIATELY WITHDRAWN. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND AND/OR ADD NEW GROUNDS WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF IRON & STEEL HAD FILED ITS RETURN OF INCOME ON 30. 10 .20 04 , DECLARING TOTAL INCOME AT RS. 4,52,879/ - . THE CASE OF THE ASSESSEE WAS THEREAFTER SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) AND ITS INCOME WAS ASSESSED VAT RS. 5,43,320/ - , VIDE ORDER DATED. 23.10.2006 . T HE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC. 147 OF THE ACT. THE A .O PASSED THE REASSESSMENT ORDER UNDER SEC. 143(3) R.W.S 147 OF THE ACT ON 15.12.2009 AND THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 32,60,93,194/ - . AGGRIEVED, THE ASSESSEE ASSAILED THE ORDER OF THE A.O BEFORE THE CIT(A), WHO VIDE HIS ORDER DATED 11.03.2010 PARTLY ALLOWED THE GROUND OF APPEAL PERTAINING TO THE ADDITION OF RS. 32,39,79,137/ - MADE ON ACCOUNT OF OUTSTANDING CREDITOR FOR SUPPLY OF GOODS BY OBSERVING THAT TH E OUTSTANDING LIABILITY PAYABLE TO THE SUPPLIER WAS ALREADY PAID AND SQUARED UP IN SUBSEQUENT ASSESSMENT YEARS. P A G E | 3 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD HOWEVER, THE CIT(A) BEING OF THE VIEW THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE WAS ON THE LOWER SIDE, THUS ESTIMATED THE SAME @6% AND THE DIFFERENCE IN G.P OF 5.5% OF THE TURNOVER WORKED OUT TO RS. 2,54,64,409/ - , THE ADDITION TO WHICH EXTENT WAS SUSTAINED BY THE CIT(A). THEREAFTER, WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A) IT WAS NOTICED BY THE A.O THAT TH E UNPROVED PURCHASES FROM M/S AV ANI ENTERPRISE OF RS. 5,16,49,105/ - WHICH WAS REQUIRED TO BE ADDED WHILE REASSESSING THE INCOME OF THE ASSESSEE VIDE ORDER PASSED UNDER SEC. 143(3) R.W.S 147, DATED 15.12.2009, HAD ESCAPED ASSESSMENT. THE A.O TO UNDO THE AFO RESAID FAILURE ON HIS PART AND TO ASSESS THE AFORESAID AMOUNT OF RS. 5,16,49,105/ - INITIALLY ISSUED NOTICE UNDER SEC. 154 OF THE ACT, WHICH WAS CHALLENGED BY THE ASSESSEE. THE A.O THEREAFTER ISSUED A NOTICE UNDER SEC. 148 AND CALLED UPON THE ASSESSEE TO FI LE ITS RETURN OF INCOME IN COMPLIANCE TO THE SAME. THE ASSESSMENT UNDER SEC. 143(3) R.W.S 147 WAS FRAMED ON 24.11.2011 AND THE INCOME OF THE ASSESSEE AFTER MAKING AN ADDITION OF RS. 5,16,49,105/ - TO THE TOTAL INCOME DETERMINED AFTER GIVING EFFECT TO THE OR DER OF THE CIT(A) WAS ASSESSED AT RS. 7,92,27,580/ - . 3. AGGRIEVED, THE ASSESSEE ASSAILED THE ORDER OF REASSESSMENT BEFORE THE CIT(A). THE ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT THE A.O WHILE MAKING AN ADDITION OF RS. 5,16,49,105/ - AS REGARDS THE ALLEGED UNPROVED PURCHASES OF THE ASS ESSEE FROM M/S AVANI ENTERPRISE , HAD HOWEVER LOST SIGHT OF THE ORDER PASSED BY THE CIT(A) - 36, MUMBAI, DATED 11.03.2010. IT WAS SUBMITTED BY THE ASSESSEE THAT THE A.O WHILE REOPENING THE ASSESSMENT WHICH WAS CONCLUDED VIDE ORDE R PASSED UNDER SEC. 143(3) R.W.S 147, DATED. 15.12.2009 , HAD THOUGH OBSERVED THAT THE INCOME OF THE ASSESSEE WAS EARLIER REASSESSED AT RS. 37,56,28,242/ - AFTER MAKING AN ADDITION OF RS. 32,39,79,137/ - TOWARDS BOGUS OUTSTANDING CREDITS, BUT HOWEVER, HAD FAI LED TO TAKE P A G E | 4 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD COGNIZANCE OF THE FACT THAT THE SAID REASSESSMENT ORDER ALREADY STOOD MERGED IN THE ORDER PASSED BY THE CIT(A) - 36, MUMBAI, DATED 11.03.2010. IT WAS SUBMITTED BY THE ASSESSEE THAT THE CIT(A) VIDE HIS ORDER DATED 11.03.2010 HAD THOUGH PARTLY ALLO WED THE APPEAL AND HAD DELETED THE ADDITION OF RS. 32,39,79,137/ - , BUT FINDING THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE WAS ON THE LOWER SIDE, HAD THEREIN ESTIMATED THE G.P @6% ,AS A RESULT WHEREOF AN ADDITION OF RS. 2,54,64,409/ - WAS SUSTAINED. IT WAS THUS THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT THE A.O LOOSING SIGHT OF THE ORDER PASSED BY THE CIT(A) - 36, DATED 11.03.2010, HAD ONCE AGAIN DEALT WITH THE MATTER AND WRONGLY MADE AN ADDITION OF RS. 5,16,49,105/ - . 4 . THE CIT(A) AFTER DELIBERATING ON THE AFORESAID CONTENTIONS OF THE ASSESSEE IN THE BACKDROP OF THE FACTS OF THE CASE, THEREIN HELD THAT THE ISSUE OF M/S AVANI ENTERPRISES WAS COVERED BY THE ORDER OF HIS PREDECESSOR, VIZ. CIT(A) - 36, DATED 11.03.2010, WHO AFT ER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE HAD ESTIMATED THE GROSS PROFIT OF THE ASSESSEE @ 6% ON THE TOTAL TURNOVER OF THE ASSESSEE, WHICH THEREIN HAD LED TO UPHOLDING OF AN ADDITION OF RS. 2,54,64,409/ - IN THE HANDS OF THE ASSESSEE. THE CIT(A) OBS ERVED THAT THE ORDER OF THE A.O PASSED UNDER SEC. 143 (3) R.W.S 147, DATED 15.12.2009 STOOD MERGED IN THE ORDER OF THE CIT(A) - 36, DATED 11.03.2010. THE CIT(A) OBSERVED THAT NOW WHEN HIS PREDECESSOR, VIZ. CIT(A) - 36 HAD VIDE HIS ORDER DATED 11.03.2010, ESTIMA TED THE GROSS PROFIT OF THE ASSESSEE BY ADOPTING A G.P RATE OF 6% ON THE TURNOVER DISCLOSED BY THE ASSESSEE, THEREFORE, THE ISSUE OF ALLEGED BOGUS PURCHASES WHICH AS PER THE A.O THE ASSESSEE HAD MADE FROM M/S AVANI ENTERPRISES WAS SUBSUMED. THUS, IN THE BA CKDROP OF HIS AFORESAID OBSERVATIONS THE CIT(A) CONCLUDED THAT AS HIS PREDECESSO R HAD ALREADY DECIDED THE ISSUE , THEREFORE, IT WAS NOT OPEN FOR THE A.O TO DISLODGE THE SAID ORDER OF THE CIT(A) BY P A G E | 5 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD EITHER TAKING RECOURSE TO SEC. 154 OR REOPENING OF THE EARLI ER RE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 147, AS THE SAME ALREADY STOOD MERGED IN THE ORDER OF THE CIT(A). 5. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT BOTH TH E ASSESSEE AND THE REVENUE HAD FURTHER ASSAILED THE ORDER PASSED BY THE CIT( A) - 36, MUMBAI, DATED 11.03.2010 BEFORE THE TRIBUNAL . IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL, VIZ. ITAT D BENCH, MUMBAI, VIDE ITS ORDER DATED. 14.06.2017, WHILE DISPOSI NG OF THE CROSS APPEALS OF THE ASSESSEE AND REVENUE FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2004 - 05, AMONGST OTHER YEARS, TAKING COGNIZANCE OF THE SUBMISSIONS OF THE REVENUE THAT THE CIT(A) WHILE DISPOSING OF THE APPEAL HAD FAILED TO AFFORD AN OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE, THEREFORE, THE MATER BE RESTORED TO THE FILE OF THE CIT(A) F OR FRESH ADJUDICATION, OBSERVED THAT THE ASSESSEE HAD NO OBJEC TION IF THE AFORESAID REQUEST OF THE REVENUE WAS ACCEPTED , HAD THUS RESTORED THE MATTER TO THE FIL E OF THE CIT(A). THAT ON AN ENQUIRY BY THE BENCH THE LD. A.R SUBMITTED THAT THE AFORESAID APPEAL BEFORE THE CIT(A) WAS PENDING ADJUDICATION AS ON DATE. PER CONTRA, THE LD. D.R RELIED ON THE ORDER OF THE A.O AND SUBMITTED THAT AS THE ADDITION OF THE BOGUS PURCHASES OF RS. 5,16,49, 105/ - FROM M/S AVANI ENTERPRISE HAD REMAINED OMITTED TO BE ADDED BY THE A.O WHILE FRAMING THE REASSESSMENT, THEREFORE, THE ADDITION TO THE SAID EXTENT WAS RIGHTLY MADE BY THE A.O. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FO R BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE REASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 147, DATED. 15.12.2009, WHEREIN AN ADDITION OF UNPROVED OUTSTANDING CREDITS OF RS. 32,39,79,137/ - WAS MADE AND THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. P A G E | 6 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD 37,56,28,242/ - WAS CARRIED IN APPEAL BEFORE THE CIT(A) - 36, MUMBAI. WE FIND THAT THE CIT(A) - 36, VIDE HIS ORDER DATED 11.03.2010 HAD THOUGH DELETED THE ADDITION OF RS. 32, 39,79 ,137/ - , BUT AT THE SAME TIME OBSERVING THAT THE DISCLOSED GROSS PROFIT OF THE ASSESSEE WAS ON THE LOWER SIDE, HAD ESTIMATED THE G.P RATE @6%, AS A RESULT WHEREOF AN ADDITION OF RS. 2,54,64,409/ - WAS SUSTAINED . WE FIND THAT BOTH THE ASSESSEE AND THE REVENUE BEING AGGRIEVED WITH THE AFORESAID ORDER OF THE CIT(A) HAD THEREIN CARRIED THE SAME BY WAY OF CROSS APPEALS BEFORE THE TRIBUNAL. WE FIND THAT THE TRIBUNAL WHIL E DISPOSING OF THE CROSS APPEAL S OF THE ASSESSEE AND THE REVENUE HAD RESTORED THE MATTER TO THE FILE OF THE CIT(A) WITH A DIRECTION TO ADJUDICATE THE SAME AFRESH. 7. WE HAVE DELIBERATED ON THE FACTS OF THE CASE AND ARE PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A). WE FIND THAT THE CIT (A) HAD RIGHTLY CONCLUDED THAT NOW WHEN HIS PREDECESSOR, VIZ. CIT(A) - 36, MUMBAI, HAD ESTIMATED THE GP RATE @6% ON THE DISCLOSED TURNOVER OF THE ASSESSEE, THEREFORE, THE ISSUE AS REGARDS THE ALLEGED BOGUS PURCHASES OF RS.5,16,49,105/ - FROM M/S AVANI ENTERPR ISES, WAS SUBSUMED AND IT WAS NOT PERMISSIBLE FOR THE A.O TO HAVE THEREAFTER MADE A SEPARATE ADDITION OF THE SAME TO THE INCOME OF THE ASSESSEE. RATHER, WE FIND IT BEYOND COMPREHENSION THAT NOW WHEN THE ORDER OF REASSESSMENT DATED. 15.12.2009 PASSED BY THE A.O UNDER SEC. 143(3) R.W.S 147 HAD MERGED IN THE ORDER OF THE CIT(A) - 36, MUMBAI, DATED. 11.03.2010, AND HAD NO MORE OF AN INDEPENDENT EXISTENCE OF ITS OWN, HOW THE A.O COULD HAVE MADE A SEPARATE ADDITION OF RS. 5,16,49,105/ - LOOSING SIGHT OF THE AFORESAI D ORDER OF THE CI T(A) IN WHICH THE SAME STOOD MERGED. WE THUS ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE MATTER HAD BEEN RESTORED BY THE TRIBUNAL, VIZ. ITAT D BENCH, MUMBAI, VIDE ITS ORDER DATED. 14.06.2017, WHILE DISPOSING OF THE CROSS APPEALS OF THE ASSESSEE AND REVENUE FOR THE YEAR UNDER P A G E | 7 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD CONSIDERATION, VIZ. A.Y. 2004 - 05, THEREFORE, THE WHOLE MATTER IS SUBJUDICE BEFORE THE CIT(A) . BE THAT AS IT MAY, WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS AND THE TOTALITY OF TH E FACTS INVOLVED, THE ORDER OF THE CIT(A) WHICH HAD BEEN AS SAILED BEFORE US BY THE REVENUE ON THE GROUND THAT HE HAD ERRED IN SETTING ASIDE THE ADDITION OF THE ALLEGED BOGUS PURCHASES OF RS. 5,16,49,105/ - WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MAD E FROM M/S AVANI E NTERPRISE IS NOT FOUND TO BE SUFFERING FROM ANY INFIRMITY, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) . BEFORE PARTING, WE MAY OBSERVE THAT OUR OBSERVATIONS RECORDED HEREINABOVE WOULD NOT COME IN THE WAY OF THE FRESH ADJUDICAT ION OF THE CASE OF THE ASSESSEE BY THE CIT(A), WHICH AS OBSERVED BY US HEREINABOVE HAD BEEN RESTORED TO HIS FILE BY THE TRIBUNAL, VIDE ITS ORDER DATED. 14.06.2017. 8. THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRO NOUNCED IN THE OPEN COURT ON 20 /12/2017 SD/ - SD/ - (P.K. BANSAL ) ( RAVISH SOOD ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; 20 .1 2 .2017 PS. ROHIT KUMAR P A G E | 8 ITA NO. 3425/MUM/2013 AY : 2004 - 05 ACIT VS. R. KESHAVLAL TRADERS PVT. LTD / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI