MANOJ RAMESHWAR MITTAL, THANE V. ITO., WARD-1(4), THANE

ITA 3471/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8593 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: SUBODH L RATNAPARIKH
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI B. R. JAIN, AM AND SHRI VIVEK VARMA, JM ITA NO. : 3471/MUM/2011 ASSESSMENT YEAR : 2007-08 SHRI MANOJ RAMESHWAR MITTAL C-301, SHRUTI PARK, KOLSHET ROAD, DHOKALI, THANE (W)-400 607 PAN NO: ADEPM 9476 F VS. ITO, WARD 1(4), THANE(W)-400 604 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBODH L. RATNAPARIKH RESPONDENT BY : SHRI PRAVIN KUMAR DATE OF HEARING : 01.10.2012 DATE OF PRONOUNCEMENT : 10.10.2012 ORDER PER B. R. JAIN, A.M. : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATE D 29.11.2010 OF LD. CIT(A)-II, THANE RAISES THE FOLLOWING GROUNDS I N APPEAL :- 1A. THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF `. 25,02,783/- MADE BY DISALLOWING THE PURCHASES OF THE APPELLANT FROM ONE M/S. SAROJ STEEL TRADERS PROPRIETARY CONCERN OF ONE SHRI ANIL GOYAL BY HOLDING THE SAME TO BE BOGUS PURCHASES. 1B THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O. OF DISALLOWING THE PURCHASES FROM THE M/S. SAROJ STEEL TRADERS PROPRIETARY CONCERN OF ONE SHRI ANIL GOYAL WHILE AT THE SAME TIME HOLDING THE SALES OF THE SAID PURCHASED MATERI AL TO BE GENUINE. ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 2 1C. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT WITHOUT PURCHASES OF ANY MATERIAL, YOUR APPELLANT COULD NOT HAVE EFFECTED SALES AND THAT BY DISALLOWING THE PURCHASE S OF MATERIAL, THE LD. A.O. HAS EFFECTIVELY ESTABLISHED THE PROPOSITION THAT YOUR APPELLANT IS NOT ENGAGED IN ANY ACTIVITY OF PURCHASE AND SALE OF MATERIAL. 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION M ADE BY THE LD. A.O. WITHOUT GRANTING YOUR APPELLANT ANY OPPORTUNIT Y TO EXAMINE THE ADVERSE EVIDENCE ALLEGEDLY IN POSSESSIO N OF THE LD. A.O. AND WITHOUT AFFORDING YOUR APPELLANT ANY OPPOR TUNITY TO CROSS EXAMINE THE SOURCE OF SUCH ADVERSE EVIDENCE, THEREBY BREACHING THE SALIENT PRINCIPLES OF EQUITY, FAIRPLA Y AND NATURAL JUSTICE. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION ON THE BASIS OF EVIDENCES ALLEGEDLY PERTAINING TO F.Y. 1998-99, WHE REAS THE APPELLANT COMMENCED HIS BUSINESS ACTIVITIES ON 07 TH MAY, 2003 AND THE ADDITION HAS BEEN MADE FOR A.Y. 2007-08. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE IS A TRA DER IN IRON AND STEEL ITEMS. HE RUNS HIS BUSINESS AS A PROPRIETOR OF M/S. SAROJ STEEL TRADERS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PURCHASES AMOUNT ING TO `. 25,02,753/- FROM M/S. SAROJ STEEL TRADERS, BUT THE CREDITORS LIST RE VEALED AN AMOUNT OF `. 17,02,753/- PAYABLE TO THEM. THE CONFIRMATION OF S UNDRY CREDITORS PLACED ON ASSESSMENT RECORD REVEALED THAT THE SAID OUTSTANDING OF `. 17,02,753/- WAS A SUBSTANTIAL AMOUNT WHICH WAS KEPT FOR A CONSIDERABLE HIGH PERIOD OF TIME BY THE ASSESSEE. THE PROPRIETOR OF THIS FIRM SHRI ANIL GOYAL HAD BEEN CARRYING THE BUSINESS OF ISSUING PAPER BILLS IN THE NAMES OF VARIOUS CONCERNS RUN BY HIM WITHOUT ACTUALLY ENTERING INTO ANY GENUINE TRANSACTION IN CONSIDERATION OF CO MMISSION THEREON. THIS FACT STOOD ADMITTED BY SHRI ANIL GOYAL AT VARI OUS STAGES OF SURVEY, ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 3 ASSESSMENT AND APPELLATE PROCEEDINGS UPTO A.Y. 2007 -08. IN HIS CASE, THE APPELLATE TRIBUNAL HAS ESTIMATED HIS INCOME @ 1% OF THE HAWALA TRANSACTIONS CARRIED BY HIM. IN THIS BACKGROUND, T HE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE APPELLANT FROM M/S. SAROJ STEEL TRADERS WERE NOT CONSIDERED GENUINE AND ACCORDINGLY THE ASSESSIN G OFFICER PROPOSED TO DISALLOW THE ENTIRE PURCHASES SO CLAIMED TO HAVE BE EN MADE FOR THE YEAR UNDER CONSIDERATION. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED A LETTER DATED 21.12.2009 AND CLAIMED THA T IT SHALL BE ABSURD TO TREAT THE SALES MADE BY THE ASSESSEE AS PER ITS BOO KS AS GENUINE SALES AND DISALLOW PURCHASES OF `. 25,02,753/- AS BOGUS DISREGARDING THE FACT THAT THE PAYMENT OF `. 8,00,000/- HAS ALSO BEEN MADE BY THE ASSESSEE THROU GH ACCOUNT PAYEE CHEQUE TO THEM. THE ASSESSEE ALSO RE QUIRED THE ASSESSING AUTHORITY TO CONFRONT HIM WITH THE DOCUMENTARY EVID ENCE LEADING TO THE ASSUMPTION THAT THERE HAS BEEN A HAWALA TRANSACTION BETWEEN THE APPELLANT CONCERN AND M/S. SAROJ STEEL TRADERS, WHI LE THE ASSESSEE HAS RECORDED THE STOCK AS WELL AS PURCHASES IN HIS BOOK S OF ACCOUNT AND PART PAYMENT ALSO STOOD MADE DURING THE PERIOD UNDER CON SIDERATION ITSELF. HOWEVER, IN THE LIGHT OF THE ADMISSION BY SHRI ANIL GOYAL BEFORE VARIOUS AUTHORITIES THAT HE IS INVOLVED IN HAWALA TRANSACTI ONS AND HAD ISSUED PAPER BILLS IN CONSIDERATION OF RECEIPT OF COMMISSI ON, THE A.O., HELD THAT THE PURCHASES MADE FROM M/S. SAROJ STEEL TRADERS PR OPRIETOR SHRI ANIL GOYAL ARE NOT GENUINE. ACCORDINGLY, HE DISALLOWED T HE ENTIRE PURCHASES OF `. 25,02,783/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 4 THUS THE TOTAL INCOME THUS STOOD ASSESSED AT ` .26,02,453/- AS AGAINST THE RETURNED INCOME OF `. 99,670/-. 3. THE LD. CIT(A) AFTER CONSIDERING THE ENTIRE FACT S ON RECORD AND THE SUBMISSIONS MADE BY THE APPELLANT BEFORE HIM UPHELD THE DECISION TAKEN BY THE LEARNED ASSESSING AUTHORITY. THE PAYMENT BY CHEQUE FOR `. 8,00,000/- COULD NOT BE TAKEN AS CONCLUSIVE TO TREA T THE PURCHASES GENUINE. THE ASSESSEE DID NOT PLACE ON RECORD ANY DELIVERY CHALLAN NEITHER BEFORE THE ASSESSING AUTHORITY NOR BEFORE HIM IN TH E APPELLATE PROCEEDINGS. THE ASSESSEES SUBMISSIONS DATED 25.1 1.2010 THOUGH MENTIONED THAT THE COPIES OF BANK STATEMENTS, CONFI RMATION LETTERS, AND LEDGER ACCOUNTS ARE SUBMITTED FOR VERIFICATION, YET THE SAME WERE NOT LAID BEFORE HIM. CONSIDERING THE FACT AND THE MODUS OPE RANDI OF SHRI ANIL GOYAL AND IN THE ABSENCE OF ANY COGENT MATERIAL FRO M WHICH IT COULD BE HELD THAT THE PURCHASES MADE BY THE ASSESSEE FROM T HAT CONCERN ARE A GENUINE, THE GROUND RAISED IN APPEAL STOOD REJECTED . 4. IN APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE ASSAILING THE IMPUGNED ORDER CONTENDS THAT THE AUTHORITIES BELOW HAVE NOT GIVEN ANY OPPORTUNITY TO THE APPELLANT TO EXAMINE ANY ADVERSE EVIDENCE ALLEGEDLY IN POSSESSION OF THE ASSESSING AUTHORITY. THE APPELLA NT HAS LAID ON RECORD AND ALSO IN HIS PAPER BOOK, THE COPIES OF INVOICES AS WELL AS THE DELIVERY CHALLANS SUBSTANTIATING THE FACT THAT THE PURCHASES HAVE GENUINELY BEEN MADE BY THE APPELLANT. THE AUTHORITIES BELOW HOWEV ER, PROCEEDED TO REJECT ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 5 THE CLAIM OF THE ASSESSEE MERELY BY SAYING THAT THE DELIVERY CHALLANS FOR TRANSPORTATION OF GOODS HAVE NOT BEEN LAID ON THEIR RECORD. IN ANY EVENT, IF SHRI ANIL GOYAL HAVE MADE ANY ADMISSION THAT HE IS AN HAWALA OPERATOR, THAT FACT ALONE DOES NOT MAKE THE PURCHASES NON GEN UINE AND AS SUCH THE ASSESSEES APPEAL NEEDS TO BE ALLOWED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) CONTENDS THAT THE AUTHORITIES BELOW ON THE PECULIAR FACTS SET OUT ON RECORD CANNOT BE SAID TO HAVE ERRED IN CONCLUDING THAT THE PURCHASES MADE BY THE ASSESSEE ARE NON GENUINE / BOGUS. THE APPELLAN T HAS NOT BEEN ABLE TO SHOW THAT THERE IS ANY PERVERSITY IN FINDINGS OF TH E FACTS REACHED BY THE AUTHORITIES BELOW. IN THAT VIEW OF THE MATTER, THE APPELLANTS GROUNDS IN APPEAL BEING DEVOID OF ANY MERIT REQUIRE TO BE DISM ISSED. 6. WE HAVE HEARD PARTIES WITH REFERENCE TO THE MATE RIAL ON RECORD. ESSENTIALLY, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE PURCHASES MADE BY HIM ARE GENUINE. HE IS ALSO DUTY BOUND TO PROVE THAT THE SAME GOODS INFACT HAVE BEEN RECEIVED FROM THE SAME PARTY IN WHOSE NAME THE PURCHASES ARE ACCOUNTED FOR IN HIS BOOKS OF ACCOUNT . THE APPELLANT CLAIMS TO HAVE LAID ON RECORD OF AUTHORITIES BELOW THE COP IES OF DELIVERY CHALLANS WHICH ALSO REVEALED MODE OF TRANSPORTATION OF GOODS THROUGH A PARTICULAR CARRIER I.E. TRUCK OR TEMPO ETC, BUT THE AUTHORITIE S BELOW ARE NOT SHOWN TO HAVE EXAMINED THAT FACT IN THE LIGHT OF ASSERTION T HAT THESE WERE NOT LAID BEFORE THEM. THE TRANSPORTERS BILLS, HOWEVER, HAVE NOT BEEN LAID BEFORE ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 6 THIS TRIBUNAL NOR BEFORE THE AUTHORITIES BELOW TO S UBSTANTIATE THE FACT AS TO WHETHER THE SAME GOODS AS STATED IN THE INVOICES HA VE FACTUALLY BEEN RECEIVED BY THE ASSESSEE OF WHICH THE RECORDED SALE S HAVE BEEN AFFECTED BY HIM. IT ALSO HAS NOT BEEN VERIFIED BY THE AUTHORIT IES BELOW AS TO WHETHER THE RECORDED SALES ARE OF SOME OTHER GOODS OR THOSE OF THE SAME GOODS THAT WERE PURCHASED BY THE APPELLANT. IT IS ALSO THE PL EA OF THE APPELLANT THAT THE ADMISSION MADE BY SHRI ANIL GOYAL, M/S. SAROJ S TEEL TRADERS IS NOT PUT TO HIM FOR TESTING THE CORRECTNESS THEREOF OR O THERWISE TO PROVE THE APPELLANTS CASE OF PURCHASES BEING GENUINE. THAT APART THE AUTHORITIES BELOW ARE NOT FOUND TO HAVE TESTED AS TO WHETHER TH E PAYMENT OF `. 8,00,000/- OR ANY PAYMENT IN SUBSEQUENT YEAR AGAINS T SUCH PURCHASES IS A REAL PAYMENT OR IT WAS MERELY AN ACCOMMODATION ENTRY. IN THE TOTALITY OF THE FACTS, IT IS EVIDENT THAT THE AUTHORITIES BE LOW HAVE NOT MADE THE PROPER ENQUIRY INTO THE FACTS NOR THEY HAVE CONFRON TED THE APPELLANT WITH ANY ADVERSE MATERIAL THAT THEY HAVE IN THEIR POSSES SION FOR HOLDING THE PURCHASES AS NON GENUINE. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESS ING AUTHORITY TO ADJUDICATE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, HAVING REGARD TO THE AFORESAID OBSERVATIONS AND ALSO TO THE JUDGMENTS BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. LA-MEDICA. (2001) 250 ITR 575 (DEL) AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF ADINATH INDUSTRIES (2001) 252 ITR 476 (GUJ) . NEEDLESS TO ADD THE ASSESSEE SHALL BE ALLOWED RE ASONABLE ITA NO : 3471/MUM/2011 SHRI MANOJ RAMESHWAR MITTAL 7 AND EFFECTIVE OPPORTUNITY OF BEING HEARD BEFORE TAK ING THE DECISION IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2012. SD/- - SD/- ( VIVEK VARMA ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 10.10.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI