JCIT (OSD)12(3)(1), MUMBAI V. K.C & SONS INFRASTRUCTURE P.LTD, MUMBAI

ITA 3535/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0021 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN LD
• Section: 143(3); 133(6)

Judgement Text

ITA.NO.3535/MUM/2016 K.C & SONS INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3535/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) JOINT COMMISSIONER OF INCOME-TAX (OSD) 12(3)(1) R.NO.147B, 1 ST FLOOR AAYAKAR BHAVAN, M.K.ROAD MUMBAI - 400 020 / VS. K.C . & SONS PRIVATE LIMITED 9A/108, VRINDAVAN CHS LIMITED SHASHTRI NAGAR, GOREGAON(W) MUMBAI-400 104 ./ ./PAN/GIR NO. AADCK-6491-R ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : M.C. OMI NINGSHEN, LD. DR / DATE OF HEARING : 22/02/2018 / DATE OF PRONOUNCEMENT : 28 /02/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011- 12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-20 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-20/DCIT-12(3)(1)/IT-285/2014-15 DATED 05/02/2016 BY RAISING THE FOLLOWING GROUNDS O F APPEAL: - 1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF OUTSTANDING BALANCE OF CREDITORS AMOUNTING TO RS.3,30,30,836/- THOUGH THE ASSESSEE WAS UNABLE TO DISCHARGE ONUS TO ESTABLISH THAT CREDITOR S WERE GENUINE. ITA.NO.3535/MUM/2016 K.C & SONS INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEAR 2011-12 2 2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSE HAS MADE ALL TRANSACTIONS THROUGH BANK ACCOUNT WHEREAS THE ASSESSE IN OWN SUBMISSION CATEG ORICALLY STATED THAT PAYMENTS WERE MADE BY CASH OR CHEQUE. 3)THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 4) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ALL OR ANY OF THE GROUNDS OF APPEAL. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME-TAX-CIRCLE 9(2), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT,1961 ON 30/03/2014 WHERE THE ASSESSEE WAS SADDLED WITH AGGREGATE ADDITION OF RS.3,30,30,836/- ON ACCO UNT OF CREDITORS FOR GOODS FOR RS.63,48,239/- & CREDITORS FOR EXPENSES AMOUNTING TO RS.2,66,82,597/-. NONE HAS APPEARED FOR ASSESSEE DE SPITE NOTICE AND NO ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AV AILABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. 2. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE WAS ENGAGED IN CONSTRUCTION ACTIVITY. THE ASSESSEE WAS REQUIRED TO FURNISH THE NAME, ADDRESS AND AMOUNTS OF ALL CREDIT ORS AND PURCHASES. THE ASSESSEE FAILED TO PROVIDE THE COMPLETE DETAILS AS WELL AS REASONABLE EXPLANATION TO THE SATISFACTION OF LD. A O. TO CONFIRM THE TRANSACTIONS, NOTICE U/S 133(6) WERE SENT TO VARIOU S PARTIES BUT THE SAME ELICITED NO SATISFACTORY RESPONSE. ALL THESE FACTOR S LED LD. AO TO BELIEVE THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF P ROVING THE GENUINENESS OF THE LIABILITIES REFLECTED BY HIM IN THE FINANCIAL STATEMENTS AND ACCORDINGLY, THE IMPUGNED ADDITIONS WERE MADE I N THE HANDS OF THE ASSESSEE. ITA.NO.3535/MUM/2016 K.C & SONS INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEAR 2011-12 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/02/2016 WHE RE THE ASSESSEE, INTER-ALIA, CONTENDED THAT THE SAID LIABILITIES WERE ASCERTAIN ED LIABILITIES AND DID NOT CEASE TO EXIST WITHIN THE MEANING OF SE CTION 41(1) AND THEREFORE, THE ADDITIONS WERE NOT JUSTIFIED. RELIAN CE WAS PLACED ON SEVERAL JUDICIAL PRONOUNCEMENTS AS NOTED BY LD. CIT (A) IN THE IMPUGNED ORDER. THE LD. CIT(A) OBSERVED THAT ENTIRE CREDITOR S WERE DISALLOWED BY LD. AO WITHOUT ESTABLISHING THE SPECIFIED BOGUS CREDITORS THROUGH INQUIRY WHEREAS SALES WERE NOT DOUBTED BY LD. AO. THE LD. C IT(A) FURTHER OBSERVED THAT THE PAYMENTS WERE THROUGH BANKING CHA NNELS AND BALANCES WERE PAID IN SUBSEQUENT YEARS. FINALLY, TH E IMPUGNED ADDITIONS WERE DELETED BY LD. CIT(A). AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DR SUBMITTED THAT RELIEF HAS BEEN GRANTE D TO THE ASSESSEE BY LD. FIRST APPELLATE AUTHORITY WITHOUT ANY SOUND BASIS SINCE THE ASSESSEE MISERABLY FAILED TO PROVE EVEN THE IDENTIT Y OF THE CREDITORS DURING ASSESSMENT PROCEEDINGS AND MOREOVER, LD. CIT (A) ERRED IN NOTING THAT ALL THE PAYMENTS WERE MADE THROUGH BANK ING CHANNELS IN THE IMPUGNED AY AS WELL AS IN SUBSEQUENT YEARS. 5. WE HAVE CAREFULLY HEARD THE CONTENTIONS AND PERU SED RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE REFLE CTED IMPUGNED CREDITORS IN THE FINANCIAL STATEMENTS WHICH WERE ST ATED TO BE AGAINST RECEIPT OF GOODS AND SERVICES. HOWEVER, A PERUSAL O F THE ASSESSMENT ORDER, PRIMA FACIE, REVEALS THAT THE ASSESSEE EVEN FAILED TO PROVE THE IDENTITY OF THE CREDITORS WITH COGENT MATERIAL. THE NOTICES SERVED U/S 133(6) REMAINED UN-COMPLIED WITH AND THE ASSESSEE C OULD NOT FURNISH ITA.NO.3535/MUM/2016 K.C & SONS INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEAR 2011-12 4 EVEN THE BASIC DETAILS LIKE ADDRESS, PAN ETC. IN MA JORITY OF THE CASES DESPITE HAVING HUGE CREDITORS AGGREGATING TO MORE T HAN RS.330.30 LACS. IT IS ALSO NOT CLEAR THAT WHETHER APPLICABLE TDS WA S DEDUCTED AS PER LAW FROM THE IMPUGNED PAYMENTS SINCE THE ASSESSEE WAS C ORPORATE ASSESSEE. THE LD. CIT(A) ERRED IN NOTING THAT THE L D. AO FAIL TO SPECIFY THE BOGUS CREDITORS THROUGH PROPER INQUIRY WHEREAS EVEN THE INITIAL ONU S TO PROVE THE GENUINENESS OF THE CREDITORS COULD NOT BE DISCHARGED BY THE ASSESSEE BY ADDUCING ANY COGENT MATERIAL. THE LD. C IT(A) ALSO NOTED THAT THE PAYMENTS WERE MADE THROUGH BANKING CHANNEL S IN SUBSEQUENT YEARS, HOWEVER, THE MATERIAL ON THE BASIS OF WHICH AFORESAID CONCLUSION WAS DRAWN, WAS NEVER CONFRONTED TO LD. AO. THEREFOR E, ON FACTUAL MATRIX AND KEEPING IN VIEW THE QUANTUM ADDITIONS, WE REMIT THE MATTER BACK TO THE FILE OF LD. AO TO VERIFY THE CLAIM OF THE ASSES SEE IN THIS REGARD WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM WITH COGENT MATERIAL FAILING WHICH LD. AO SHALL BE AT LIBERTY TO DISPOSE -OFF THE SAME AS PER LAW ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 6. RESULTANTLY, THE REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018 SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28 . 02.2018 SR.PS:- THIRUMALESH ITA.NO.3535/MUM/2016 K.C & SONS INFRASTRUCTURE PRIVATE LIMITED ASSESSMENT YEAR 2011-12 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. !$- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI