DCIT 25(2), MUMBAI V. STARLITE ENTERPRISES, MUMBAI

ITA 3743/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3712 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 11-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Bogus purchase
• Section: 133(6); 10

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI .. , ! ' ##, $ ' , % BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NO.3743/MUM/2010 : ASST.YEAR 2007-2008 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 25(2) MUMBAI. M/S.STARLITE ENTERPRISES 11, GROUND FLOOR, PANCHRATNA APTS. CHAMUNDA CIRCLE, BORIVALI (WEST) MUMBAI 400 092. PAN : AARFS5693Q. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) &' , ,, , - - - - / APPELLANT BY : SHRI MOHIT JAIN *+&' , - , - , - , - / RESPONDENT BY : DR.K.SHIVARAM & SHRI AJAY SINGH ) , .! / / / / DATE OF HEARING : 06.05.2013 /01 , .! / DATE OF PRONOUNCEMENT : 08.05.2013 ' ' ' '2 2 2 2 / / / / O R D E R PER R.S.SYAL ( AM) : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 24.0 2.2010 IN RELATION TO THE ASSESSMENT YEAR 2007-2008. 2. THE FIRST GROUND IS AGAINST THE DELETION OF ADDI TION OF ` 1,04,55,030 MADE BY THE ASSESSING OFFICER ON ACCOUN T OF INFLATED AND BOGUS PURCHASES. 3. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE DEBITED A SUM OF ` 2.59 CRORE ON ACCOUNT OF PURCHASES. ON BEING CALLED UPON TO FURNISH DETAILS IN SUPPORT OF THESE PURCHASES, THE ASSESSEE FURNISHED ADDRESSES. THE A.O. ISSUED NOTIC E U/S 133(6) TO 10 ITA NO.3743/MUM/2010. M/S.STARLITE ENTERPRISES. 2 PARTIES LISTED ON PAGES 2 AND 3 OF THE ASSESSMENT O RDER. IN RESPECT OF 8 PARTIES TABULATED ON PAGE 3 OF THE ASSESSMENT ORDER , NOTICES SENT U/S 133(6) WERE RECEIVED BACK UNSERVED. THIS FACT WAS B ROUGHT TO THE NOTICE OF THE ASSESSEES AR. THE ASSESSEE FILED WRI TTEN SUBMISSIONS DATED 28.10.2009 IN TAPAL SUBMITTING THE CONFIRMATI ONS OF 10 PARTIES AS WELL AS COPIES OF INCOME-TAX RETURNS AND BANK ST ATEMENTS IN RESPECT OF MOST OF THE PARTIES. AGAIN ON 30.11.2009, THE A SSESSEES REPRESENTATIVE APPEARED IN PERSON AND FILED CONFIRM ATIONS OF REMAINING 6 PARTIES WITH COPIES OF BANK STATEMENTS AND COPY OF INCOME-TAX RETURNS IN SOME CASES, WHICH WERE NOT FI LED EARLIER. THE ASSESSING OFFICER OBSERVED THAT THE CONFIRMATIONS S O FILED BY THE ASSESSEE WERE ONLY COMPUTER GENERATED ACCOUNTS FROM THE BOOKS OF THE ASSESSEE WHICH WERE SHOWN TO HAVE BEEN SIGNED B Y THE PARTIES IN MOST CASES. IN THIS BACKDROP OF THE FACTS, IT WAS NOTICED HELD THAT THE PURCHASES TO THE TUNE OF ` 1.16 CRORE IN RESPECT OF WHICH NOTICES WERE RETURNED UNSERVED, WERE NOT PROVED. AFTER DECLARIN G THESE PURCHASES AS BOGUS, THE A.O. MADE ADDITION AT THE RATE OF 90% OF SUCH BOGUS PURCHASES. THE LEARNED CIT(A), ON THE PERUSAL OF NE CESSARY DETAILS, DELETED THE ADDITION OF ` 1.04 CRORE MADE BY THE A.O. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE ASSESSING OFFICER HAS RESTRICTED THE ADDITION IN RESPECT OF PURCHASES TO THE TUNE OF ` 1.16 CRORE, OF WHICH 90% HAS BEEN ADDED RESULTING INTO A N ADDITION OF ` 1.04 CRORE. THE DETAIL OF PURCHASES TO THE TUNE OF ` 1.16 CRORE IS INCORPORATED IN THE IMPUGNED ORDER ALONG WITH REMAR KS GIVEN BY THE ITA NO.3743/MUM/2010. M/S.STARLITE ENTERPRISES. 3 ASSESSEE. A COMMON FEATURE AS PREVAILING IN RESPECT OF ALL THESE PARTIES IS THAT THE COPIES OF CONFIRMATIONS OF THES E PARTIES HAVE INVARIABLY BEEN MADE AVAILABLE. FOR EXAMPLE, THE FI RST PARTY IS M/S.AKSHAT ENTERPRISES FROM WHOM PURCHASES WORTH ` 27.57 LAKH WERE MADE. A COPY OF CONFIRMATION FROM THIS PARTY I S AVAILABLE ON PAGE 182 OF THE PAPER BOOK. THIS CONFIRMATION IS NO T ONLY DULY SIGNED BY M/S.AKSHAT ENTERPRISES BUT ALSO GIVES PERMANENT ACCOUNT NUMBER OF THE SAID PARTY ALONG WITH MOBILE NUMBER OF THE C ONCERNED PERSON. SIMILAR POSITION IS OBTAINING IN THE OTHER CASES AL SO. APART FROM THAT, THE ASSESSEE HAS ALSO FURNISHED INCOME-TAX RETURNS WITH OTHER ATTACHING DOCUMENTS IN RESPECT OF 3 PARTIES. UNDER THESE CIRCUMSTANCES WE ARE UNABLE TO APPRECIATE THE CONTE NTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESS EE FAILED TO DISCHARGE THE ONUS CAST UPON IT TO PROVE THE GENUIN ENESS OF THE PURCHASES. ONCE CONFIRMATION FROM THE PARTY TOGETHE R WITH ITS PERMANENT ACCOUNT NUMBER ETC. IS PROVIDED, THE ONUS ON THE ASSESSEE STANDS DISCHARGED. IF THE ASSESSING OFFICER IS NOT SATISFIED WITH THE PARTICULARS SO FURNISHED, IT IS OPEN TO HIM TO MAKE FURTHER INQUIRY FROM THE CONCERNED PARTY. HAVING NOT DONE SO, IT IS NOT OPEN TO THE A.O. TO MAKE ADDITION. WE, THEREFORE, UPHOLD THE IM PUGNED ORDER ON THIS ISSUE. THIS GROUND TAKEN BY THE REVENUE IS, TH EREFORE, NOT ALLOWED. 5. GROUND NO.2 OF THE APPEAL IS AGAINST THE DELETIO N OF ADDITION OF ` 7,10,084 ON ACCOUNT OF BROKERAGE EXPENSES. FACTS AP ROPOS THIS GROUND ARE THAT THE ASSESSEE SHOWED BROKERAGE PAID TO THE EXTENT OF ITA NO.3743/MUM/2010. M/S.STARLITE ENTERPRISES. 4 ` 14.20 LAKH. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSEE WAS REQUIRED TO PRODUCE DETAILS OF THE PAR TIES TO WHOM BROKERAGE WAS PAID ALONG WITH DOCUMENTARY EVIDENCE. THE ASSESSEE COULD FURNISH PARTICULARS OF ONLY 4 PARTIES WHICH H AVE BEEN TABULATED ON PAGE 9 OF THE ASSESSMENT ORDER. NOTICE U/S 133(6 ) WERE ISSUED TO THESE PARTIES, MOST OF WHICH WERE RETURNED UNSERVED . AS REGARDS OTHER PARTIES TABULATED IN PARA 6.1 OF THE ASSESSMENT ORD ER, THE ASSESSEE DID NOT PROVIDE THEIR ADDRESSES. CONSIDERING THESE FACT S IN TOTALITY, THE A.O. MADE ADDITION AT THE RATE OF 50% OF THE TOTAL BROKERAGE EXPENSES. THE LEARNED CIT(A) DELETED THE ADDITION O F ` 7.10 LAKH. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT TH E TOTAL BROKERAGE PAID BY THE ASSESSEE AMOUNTED TO ` 14.20 LAKH. THE ASSESSEE FURNISHED ADDRESSES IN RESPECT OF 4 PARTIES TO WHOM BROKERAGE AMOUNTING TO ` 6.68 LAKH WAS PAID. IT IS ONLY THESE 4 PARTIES WHOS E DETAILS WERE FURNISHED BEFORE THE LEARNED CIT(A), ON WHICH BASIS HE CHOSE TO DELETE THE ENTIRE ADDITION. IN THIS PROCESS, THE F ACT THAT THE ASSESSEE DID NOT PROVIDE EVEN ADDRESSES OF SEVERAL PERSONS L ISTED ON PARA 6.1 OF THE ASSESSMENT ORDER, REMAINED UN-NOTICED BY THE LE ARNED CIT(A). THERE IS NO MENTION IN THE IMPUGNED ORDER OF THE AS SESSEE HAVING FURNISHED ANY DETAILS IN RESPECT OF THESE PARTIES. PAGE NOS.232 TO 237 OF THE PAPER BOOK CONTAIN THE DETAILS IN RESPECT OF BROKERAGE OF ` 14.20 LAKH. THESE DETAILS WERE ADMITTEDLY FILED BEF ORE THE LEARNED CIT(A) ONLY. SINCE THESE DETAILS HAVE NOT BEEN EXAM INED BY THE LEARNED CIT(A), WHO CHOSE TO DELETE THE ADDITION ON THE BASIS OF ITA NO.3743/MUM/2010. M/S.STARLITE ENTERPRISES. 5 BROKERAGE PAID TO 4 PARTIES ALONE, WE CANNOT COUNTE NANCE THE COURSE OF ACTION ADOPTED BY THE LEARNED CIT(A). IN THE GIV EN FACTS, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE IN THE INTE REST OF JUSTICE IF THE IMPUGNED ORDER ON THIS SCORE IS SET ASIDE AND THE M ATTER IS RESTORED TO THE FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HI M TO DECIDE THIS ISSUE AFRESH. NEEDLESS TO SAY, THE ASSESSEE WILL B E AT LIBERTY TO FURNISH ANY EVIDENCE IN ITS DEFENCE IN THE FRESH ROUND OF P ROCEEDINGS AND WILL ALSO EXTEND FULL COOPERATION TO THE ASSESSING OFFIC ER, FAILING WHICH THE AO WILL BE ENTITLED TO DRAW ADVERSE INFERENCE. 7. THE LAST GROUND IS AGAINST THE DELETION OF ADDIT ION OF ` 11.51 LAKH ON ACCOUNT OF LABOUR CHARGES. THE ASSESSEE DEB ITED A SUM OF ` 57.56 LAKH TOWARDS LABOUR CHARGES. THE ASSESSEE DID NOT PROVIDE EVEN ADDRESSES OR BILLS IN RESPECT OF 8 PARTIES. M OST OF THE PARTIES IN RESPECT OF WHOM THE ADDRESSES WERE GIVEN, WERE RETU RNED UNSERVED. THE A.O. MADE DISALLOWANCE AT THE RATE OF 20% OF TH E TOTAL EXPENSE UNDER THIS HEAD. THE LEARNED CIT(A) DELETED THE ENT IRE ADDITION. FACTS OF THIS GROUND AS ALSO THE DECISION TAKEN BY THE LD . CIT(A) IS MUTATIS MUTANDIS SIMILAR TO GROUND NO.2. HERE AGAIN, THE LEARNED CI T(A) DELETED THE ENTIRE ADDITION BY LOSING SIGHT OF THE FACT THAT IN RESPECT OF SEVERAL PERSONS TO WHOM THE ALLEGED PAYMENT WAS MAD E, THE ASSESSEE FAILED TO FURNISH EVEN THE BASIC DETAILS SUCH AS AD DRESSES OR BILLS. IT IS ON CERTAIN SELECTIVE MATERIAL THAT THE TOTAL ADDITI ON CAME TO BE DELETED. THE ASSESSEE HAS FILED FRESH DETAILS BEFORE THE LD. CIT(A), WHICH HAVE NEITHER BEEN COMMENTED UPON BY THE LD. CIT(A) NOR THE REMAND REPORT CALLED FROM THE AO. IN OUR CONSIDERED OPINIO N, THE ENDS OF ITA NO.3743/MUM/2010. M/S.STARLITE ENTERPRISES. 6 JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS ISSUE IS ALSO SET ASIDE AND THE MATTER IS REMITTED TO THE FI LE OF A.O. WE ORDER ACCORDINGLY AND REQUIRE HIM TO DECIDE THIS ISSUE AF RESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HE ARD. 8. 3 .4 5 6, 789 : :2 . ; , . <= IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED ON THIS 08 TH DAY OF MAY, 2013. '2 , /01 >')4 0 , # SD/- SD/- (SANJAY GARG) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; >') DATED : 08 TH MAY, 2013. DEVDAS* '2 , *$.:? @?1. '2 , *$.:? @?1. '2 , *$.:? @?1. '2 , *$.:? @?1./ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. *+&' / THE RESPONDENT. 3. A () / THE CIT, MUMBAI. 4. A / CIT(A)-XXV , MUMBAI 5. ?D# *$.$) , , / DR, ITAT, MUMBAI 6. #E F / GUARD FILE. '2) '2) '2) '2) / BY ORDER, +?. *$. //TRUE COPY// 7 7 7 7/ // /< < < < ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI