KAYSONS AGENCIES P.LTD, MUMBAI V. ITO CIR 4(2)(4), MUMBAI

ITA 3812/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7796 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVDR
• Assessee Lawyers: HARI S RAHEJA
• Section: 147; 69

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./ 3812/MUM/2014 , /ASSESSMENT YEAR:2005-06 KAYSONS AGENCIES PRIVATE LIMITED 27, CHOTTALAL BHAVAN KALBADEVI ROAD,MUMBAI-400 020 PAN:AAACK 4685 C VS. INCOME TAX OFFICER CIRCLE-4(2)(4), AAYAKAR BHAVAN MUMBAI-400 020. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI RAJESH KUMAR YADAV-DR /ASSESSEE BY: SHRI HARI S. RAHEJA / DATE OF HEARING: 09/02/2017 / DATE OF PRONOUNCEMENT: 17.03.2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER,DATED 30.04.2014 OF THE CIT( A)-8,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF TRADING IN READY-MADE GARMENTS, ILED ITS RETURN ON 28.10.2005,DECLARING I NCOME OF RS.12.02 LAKHS.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT ON 15/03/2013,U /S.143(3) R.W.S. 148 OF THE ACT, DETERMINING ITS INCOME AT RS.33.99 LAKHS. BRIEF FACTS: 2. SURVEY PROCEEDINGS WERE INITIATED UNDER SECTION 133 A OF THE ACT AT THE BUSINESS PREMISES OF RAKESH KUMAR GUPTA GROUP CONCERNS (MANOJ MILLS, SHREE RAM SALES AND SYNTHETICS AND ASTHA SILK INDUSTRIES).DURING THE SURVEY,IT WAS FOU ND THAT THE GROUP COMPANIES WERE ENGAGED IN THE ACTIVITY OF ISSUING ACCOMMODATION BILLS AND THAT THEY WERE NOT A TRADING ACTIVITY. STATEMENT OF RAKESH KUMAR GUPTA(RKG) WERE ALSO RECO RDED WHO ADMITTED BEFORE THE SURVEY TEAM THAT HE AND THE OTHER GROUP CONCERNS WERE ENGA GED IN ACTIVITY OF ISSUING BILLS FOR THE PAST 9 YEARS AND WERE EARNING A COMMISSION OF 1% ON ACCOMMODATION BILLS. AS THE ASSESSEE HAD PURCHASED GOODS WORTH RS.25.64 LAKHS FROM ABOV E-MENTIONED GROUP CONCERNS, SO, THE AO DIRECTED IT TO EXPLAIN AS TO WHY THE PURCHASES M ADE FROM RKG GROUP SHOULD NOT BE TREATED AS NON-GENUINE PURCHASES AND SHOULD NOT BE ADDED TO ITS TOTAL INCOME. THE ASSESSEE OBJECTED TO THE ADDITION AND CONTENDED THAT PURCHAS ES MADE BY IT WERE GENUINE. IT ALSO ASKED FOR CROSS-EXAMINATION OF RKG.VIDE HIS LETTER DATED 11/12/2011 RKG CONFIRMED THE TRANSAC - TIONS OF SALE WITH THE ASSESSEE AND STATED THAT AME NDS HAD BEEN RECEIVED BY ACCOUNT PAYEE CHEQUES.BESIDES COPIES OF THE LEDGER ACCOUNTS WERE ALSO FILED BY THE RKG GROUP CONCERNS.THE AO SERVED THE NOTICE ON RKG TO APPEAR FOR CROSS-EXAMINATION ON 13/12/2011. BUT,HE DID NOT APPEAR. HE ALSO DID NOT APPEAR ON 14 /12/2011. THE ASSESSEE MADE ELABORATE 3812/M/14 KAYSONS AGENCIES PVT.L TD. 2 SUBMISSIONS BEFORE THE AO AND ARGUED THAT PURCHASES MADE BY IT WERE GENUINE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE CASES RELIED UPON BY IT, THE AO REFER TO THE STATEMENT OF RKG RECORDED ON 23/02/2009 AND ON 13/0 2/2009 HE OBSERVED THAT RKG HAD GIVEN COMPLETE MODUS OPERANDI OF THE BUSINESS CARRI ED OUT BY THE GROUP CONCERNS, THAT HE HAD ADMITTED THAT HE WAS IN THE BUSINESS OF PROVIDING A CCOMMODATION BILLS TO THE PARTIES, THAT HE WAS NOT MAINTAINING ANY STOCK REGISTER,THAT HE WAS RETURNING THE MONEY TO THE PARTIES TO HOME HE WAS ISSUING BILLS, THAT ASSESSEE WAS NOT ABLE TO BRING ANY PROOF ON RECORD TO PROVE THE GENUINENESS OF THE PURCHASES MADE BY IT FROM RKG AN D HIS FAMILY CONCERNS.FINALLY, HE MADE AN ADDITION OF RS.21.96 LAKHS TO THE TOTAL INCOME O F THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM THE ASSESSEE CH ALLENGED THE REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT AND THE ADDITIONS MAD E BY THE AO.REFERRING TO HIS OWN ORDER FOR THE EARLIER AY.,THE FAA HELD THAT THE AO HAD RI GHTLY INVOKED THE PROVISIONS OF SECTION 147 AND HAD REOPENED THE ASSESSMENT ON VALID GROUND S. WITH REGARD TO THE PURCHASES MADE FROM RKG GROUP, T HE FAA AGAIN REFERRED TO HIS ORDER, DATED 15/10/2012 FOR THE AY. 2006-07. IN THAT ORDER , HE HAD HELD THAT NO SURVEY ACTION OR ANY FURTHER ENQUIRY WAS CARRIED OUT IN THE CASE OF THE ASSESSEE, THAT ANY MEANINGFUL ENQUIRY/ INVESTIGATION WAS NOT CARRIED OUT IN THE CASE OF TH E SUPPLIER OF THE GOODS, THAT THE SOLE RELIANCE WAS PLACED ON THE INITIAL GENERAL STATEMENT OF RKG, THAT NO FURTHER ENQUIRY/ INVESTIGATION WAS CARRIED OUT AFTER RESTRICTION FILED BY RKG, THAT TH E AO COULD NOT HAVE TREATED THE ENTIRE PURCHASE AS UNEXPLAINED WHEN THE SUPPLIER HAD FILED A LETTER CONFIRMING THE SALES TO THE ASSESSEE AND WHEN THE ASSESSEE WAS NOT GRANTED OPPO RTUNITY OF CROSS-EXAMINING RKG,THAT THE SUPPLIER HAD GIVEN A SWEEPING STATEMENT WITHOUT REF ERRING TO THE ASSESSEE,THAT THE ASSESSEE HAD STATED THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND GOODS WERE SOLD TO 3 RD PARTIES, THAT THE SALES WERE NOT IN DOUBT, THAT THE ONLY ADDITION TO BE MADE COULD BE FOR POSSIBLE CASE RELATING TO PURCHASE,THAT NO ADDITION COULD BE MADE UNDER SECTION 69 OF THE ACT, THAT THE ASSESSEE HAS MADE THE PURCHASES FROM RKG G ROUP AND HAD ACCOUNTED THE SAME IN THE BOOKS OF ACCOUNTS,THAT IT WAS NOT A CASE WHERE INVE STMENTS/ PURCHASES WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS, THAT NO ADDITION U/S.69 COUL D BE MADE IN THE GIVEN FACTS OF THE CASE, THAT THE PURCHASES SHOWN BY THE ASSESSEE FROM THE R KG CONCERNS WERE IN DOUBT, THAT THE SUPPLIES WERE ACCOMMODATION BILL PROVIDERS, THAT SA LES /CLOSING STOCK WERE NOT PROVED BOGUS,THAT THE EXISTENCE OF PURCHASES COULD NOT BE DENIED, THAT THE PURCHASES MIGHT HAVE BEEN MADE FROM THE OPEN MARKET/UNREGISTERED DEALERS, THA T THE AUDIT REPORT CONTAINED QUANTITATIVE DETAILS OF CLOSING STOCK/OPENING STOCK,THAT THERE W AS NO EVIDENCE ON RECORD THAT PAYMENTS 3812/M/14 KAYSONS AGENCIES PVT.L TD. 3 MADE BY THE ASSESSEE HAD COME BACK TO IT IN CASH.FI NALLY, HE UPHELD THE ADDITION OF 10% OF THE DISPUTED PURCHASES. FOLLOWING THE ORDER FOR THE AY. 2006-07,HE CONFIRMED PROFIT AT THE RATE OF 10% OF THE PURCHASE IN QUESTION AND RESTRIC TED THE ADDITION TO RS. 2. 20 LAKHS. 3. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)ARGUED T HAT THE PURCHASES MADE WERE GENUINE,THAT THERE WAS NO POSSIBILITY OF ANY LEAKAG E, THAT THE REVENUE AUTHORITIES HAD NOT DISTURBED THE GROSS PROFIT SHOWN BY THE ASSESSEE, T HAT THE STATEMENT OF RKG WERE OF GENERAL NATURE. THE DEPARTMENTAL REPRESNETATIVE (DR)SUPPORT ED THE ORDER OF THE FAA AND STATED THAT HE HAD ALREADY GIVEN SUBSTANTIAL RELIEF TO THE ASSE SSEE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. BEFORE AND AT THE TIME OF COMPLETING THE ASSESSMENT UNDER SECTION 143 (3) THE AO WAS NOT HAVING INFORMATION ABOUT THE STATEMENTS OF RKG. AFTER RECEIVING THE IN FORMATION ABOUT THE SURVEY ACTION CARRIED OUT AT THE BUSINESS PREMISES OF RKG CONCERNS HE CAM E TO KNOW ABOUT THE NEW FACTS. THEREFORE,IN OUR OPINION, HE WAS JUSTIFIED IN ISSUI NG THE NOTICE UNDER SECTION 148 OF THE ACT. CONFIRMING THE ORDER OF THE FAA, IN THAT REGARD, WE DECIDE THE 1 ST GROUND OF APPEAL AGAINST THE ASSESSEE. 4.1. AS FAR AS THE ADDITION WITH REGARD TO NON-GENUINE P URCHASE IS CONCERNED, WE WANT TO MENTION THAT THE FAA HAS HELD THAT THERE WAS NO DOU BT ABOUT THE SALES MADE BY THE ASSESSEE, THAT THE ASSESSEE WAS NOT GIVEN A CHANCE TO CROSS-E XAMINE RKG, THAT THE QUANTITY DETAILS OF THE SALES AND CLOSING STOCK OF NOT CHALLENGED, THAT NO MEANINGFUL INVESTIGATION WAS DONE AFTER THE SURVEY PROCEEDINGS AT THE BUSINESS PREMISES OF RKG, THAT 10% OF THE TOTAL PURCHASES SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE.IN OU R OPINION,THERE WAS NO JUSTIFICATION FOR UPHOLDING THE ADDITION OF 10% OF THE PURCHASES ALSO .ONCE THE SALES AND CLOSING STOCK DETAILS WERE FOUND TO BE GENUINE,THEN WITHOUT BRINGING SOME POSITIVE MATERIAL ON RECORD TO PROVE THE UNACCOUNTED PURCHASES,NO ADDITION SHOULD HAVE BEEN MADE.IN THE CASE BEFORE US,THE SUPPLIER I.E. RKG HAS RETRACTED HIS STATEMENTS.CONSIDERING T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ORDER OF THE FA A CANNOT BE ENDORSED.SO,REVERSING THE SAME,WE DECIDED SECOND GROUND OF APPEAL IN FAVOUR O F THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2017. 17 , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 17 .03.2017. JV.SR.PS. 3812/M/14 KAYSONS AGENCIES PVT.L TD. 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.