DCIT CEN CIR 23, MUMBAI V. CENTAUR MERCANTILE P.LTD, MUMBAI

ITA 3562/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2428 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K S DAHIADR
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3562/MUM/2014 ASSESSMENT YEAR- 2011-12 DCIT, CENTRAL CIRCLE-23, ROOM NO.409, 4 TH FLOOR, AAYKAR BHAN, M.K. ROAD, MUMBAI-400020 / VS. M/S CENTAUR MERCANTILE PVT LTD. 10 TH FLOOR, 215 ATRIUM ANDHERI KURLA ROAD, ANDHERI (EAST), MUMBAI-400020 ( / REVENUE) ( ! /ASSESSEE) PAN. NO. AACCC4199F / REVENUE BY SHRI L.K.S. DAHIA-DR ! / ASSESSEE BY SHRI VIJAY MEHTA ' # $ ! % / DATE OF HEARING : 16/11/2015 $ ! % / DATE OF ORDER: 23/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 06/03/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE REVENUE PERTAINS TO D ELETING THE ADDITION MADE ON ACCOUNT OF RECEIPT OF POSSIBLE ON-MONEY IGNORING THE DIARY SEIZED BY THE DEPARTMENT. M/S CENTAUR MERCANTILE PVT. LTD, ITA NO.3562/MUM/2014 2 2. DURING HEARING OF THIS APPEAL, THE LD. CIT-DR, SHRI L.K.S. DAHIYA, ADVANCED ARGUMENTS WHICH ARE IDENTIC AL TO THE GROUND RAISED AND BROADLY RELIED UPON ASSESSMEN T ORDER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE , SHRI VIJAY MEHTA, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUS INESS OF REAL ESTATE DEVELOPMENT AND IS PART OF KANAKIA GROU P. A SEARCH ACTION WAS CARRIED OUT UPON THE KANAKIA GROU P ON 29/03/2011. PURSUANT TO SEARCH, ASSESSMENT WAS FRA MED U/S 143(3) OF THE ACT. THE WHOLE ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE PLEA THAT ASSESSEE BOOKED CERTAIN BOGUS PURCHASES IN ITS BOOKS OF ACCOUNTS, WHICH WER E PAID THROUGH CHEQUE. THE ASSESSEE PASSED NECESSARY JOURN AL ENTRIES WHEREIN, PURCHASES WERE REVERSED AND THE RE SULTANT CASH HAS BEEN BROUGHT IN TO BOOKS OF ACCOUNTS. THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT SUCH BACK MU ST BE OUT OF ON-MONEY, CHARGED BY THE ASSESSEE AND CASH WAS GENERATED BY WAY OF BOOKING OF BOGUS PURCHASES. TO TALITY OF FACTS/SEIZED PAPERS (CONTAINED IN ANNEXURE A/1), CL EARLY INDICATES THAT CASH FLOW DEPICTS THE RECEIPT OF CAS H AGAINST THE PAYMENT IN CHEQUE TOWARDS PURCHASES. THE SAID C ASH FLOW REVEALS THE BALANCE AVAILABLE FROM 2007 ONWARD S AND FURTHER SUCH CASH WAS SHOWED IN THE CLOSING BALANCE EVIDENCING THAT THE CASH WAS AVAILABLE. THE CASH FL OW HAS M/S CENTAUR MERCANTILE PVT. LTD, ITA NO.3562/MUM/2014 3 BEEN REPRODUCED AT PAGE 11 & 12 OF THE ASSESSMENT O RDER. THE STATEMENTS OF DIRECTORS AS WELL AS SOME OF THE EMPLOYEES WERE RECORDED, WHEREIN, THE FACTUM OF RECEIPT OF CA SH AGAINST BOGUS PURCHASES HAS BEEN TENDERED. HOWEVER, ACCEPT THE STATEMENT, THERE IS NO EVIDENCE ON RECORD THAT ON-M ONEY WAS CHARGED BY THE ASSESSEE AND THE SEIZED PAPERS, FOUN D DURING THE SEARCH, PERTAINING THE SISTER CONCERN OF THE AS SESSEE, M/S KANAKIA SPACES PVT. LTD. AND THE STATEMENT RELIED U PON BY THE ASSESSING OFFICER WAS SUBSEQUENTLY RETRACTED. THERE IS NO EVIDENCE ON RECORD THAT CASH GENERATED BY THE AS SESSEE WAS OUT OF BOGUS PURCHASES AND USE OF UTILIZATION O F CASH WAS EVEN NOT DISCOVERED DURING SEIZURE ACTION. THE STATEMENTS WERE RETRACTED BY THE EMPLOYEE ON THE VE RY NEXT DAY AND M/S KANAKIA SPACES PVT. LTD. APPROACH THE H ONBLE SETTLEMENT COMMISSION, WHEREIN, IT WAS CONCLUDED TH AT THERE IS NO ON-MONEY CHARGED BY THE SISTER CONCERN. IT I S ALSO NOTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) DELETED THE ADDITION CONSIDERING THE FACTUAL MATRIX AND FOUND THAT THE ASSESSING OFFICER PARTIALLY ACCEPTED THE S EIZE PAPER ACCEPTING THE FACT THAT THE ASSESSEE MADE BOGUS PUR CHASES AT THE SAME TIME DENIED THE ASSESSEE THE BENEFIT OF CA SH GENERATED OUT OF SUCH BOGUS PURCHASES STATING THAT THE SAID CASH WAS SPEND ELSEWHERE FOR WHICH NO EVIDENCE WAS BROUGHT ON RECORD. IN SUCH A SITUATION, THE ASSESSEE GET S UPPORTS FROM THE DECISION IN THE CASE OF VIREN V. SAVLA VS ACIT (100 TTJ 1006 (MUM.), WHEREIN, IT WAS HELD THAT THE SEIZ ED MATERIAL SHOULD BE READ AND ACCEPTED AS A WHOLE AND SHOULD BE TREATED AS GENUINE WITH RESPECT TO ALL ENTRIES T HEREIN. M/S CENTAUR MERCANTILE PVT. LTD, ITA NO.3562/MUM/2014 4 THERE IS NO EVIDENCE OF CHARGING OF ON-MONEY BY THE ASSESSEE AND THE STATEMENT SO RECORDED AND THE SEIZE PAPER, SEIZED DURING THE COURSE OF SEARCH, PERTAINS TO SISTER CON CERN OF THE ASSESSEE. THE WHOLE ADDITION WAS MADE BY THE ASSES SING OFFICER BASED UPON THE STATEMENT OF VIREN LOHAR AND MS. SONA MEHTA, WHO ARE THE EMPLOYEES OF SISTER CONCERN AND THAT STATEMENT WAS RETRACTED LATER ON. IN VIEW OF T HE FINDING OF THE SETTLEMENT COMMISSION AND THE UNCONTROVERTED FACTUAL FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WE FIND NO MERIT IN THE APPEAL OF THE RE VENUE. IT IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 16/11/2015. SD/- SD/- ( ASHWANI TANE JA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 23/11/2015 F| P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0! ( )* ) / THE CIT, MUMBAI. 4. / / ' 0! / CIT(A)- , MUMBAI 5. 23 -! , / )*% ) 4 , ' # / DR, ITAT, MUMBAI M/S CENTAUR MERCANTILE PVT. LTD, ITA NO.3562/MUM/2014 5 6. 5 6# / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI.