MOHAMMEDI Z KANCHWALA, MUMBAI V. ITO 15(3)(2), MUMBAI

ITA 3834/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3825 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 25-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Court: TRIBUNAL
• Department Lawyers: RAJESHWARI MOTWANI
• Assessee Lawyers: RAJESH B GUPTA
• Keywords: Bogus purchase; Unexplained cash credit
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & AMIT SHUKLA (JM) I.T.A. NO. 3834 /MUM/ 2013 (ASSESSMENT YEAR 2009 - 10 ) MOHAMMEDI Z. KANCHWALA 11/11C, THACKER INDUSTRIAL ESTATE OLD ANJINWADI - A MAZGAON MUMBAI - 400 01 0. VS. ITO 15(3)(2) ROOM NO. 109 MATARU MANDIR 1 ST FLOOR NANACHOWK MUMBAI - 400 007. ( APPELLANT ) ( RESPONDENT ) PAN NO. ABJPK1291P ASSESSEE BY SHRI RAJESH B. GUPTA DEPARTMENT BY S MT. RAJESHWARI MOTWANI DATE OF HEARING 3 .5 . 201 6 DATE OF PRONOU NCEMENT 6 . 5 . 201 6 O R D E R PER B.R. BASKARAN, A M : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.3.2013 PASSED BY LEARNED CIT(A) - 26, MUMBAI AND IT RELATES TO A.Y. 2009 - 10. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISIO N OF LEARNED CIT(A) IN PARTIALLY CONFIRMING THE ADDITION MADE U/S. 68 OF THE ACT AND ALSO CONFIRMING THE ADDITION MADE U/S. 40(A)(IA) OF THE ACT. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF C LASSES, M.S. MATERIALS, ALUMINIUM SHEETS ETC. 4. THE FIRST ISSUE RELATES TO THE ADDITION MADE U/S. 68 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE S U/S. 133(6) OF THE ACT TO THREE SUNDRY CREDITORS, OUT OF WH ICH LETTERS ISSUED TO TWO CREDITORS, VIZ., M/S. ASCENT ENTERPRISES AND THEME INC. WERE RETURNED UN - MOHAMMEDI Z. KANCHWALA 2 SERVED. HENCE THE ASSESSING OFFICER ASSESSED THE BALANCE OUTSTANDING IN THEIR NAMES AGGREGATING TO RS. 23,85,129/ - AS INCOME OF THE ASSESSEE U/S. 68 OF THE AC T. IN THE APPELLATE PROCEEDINGS , THE ASSESSEE FILED CERTAIN DETAILS AND HEN CE LEARNED CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER THEREON. BASED ON THE REMAND REPORT , THE LEARNED CIT(A) DELETED THE ADDITION RELATING TO THEME INC. IN RES PECT OF BALANCE OUTSTANDING IN THE NAME OF ASCENT ENTERPRISES, LEARNED CIT(A) CONFIRMED T HE SAME, SINCE THE ITS NAME APPEARED IN THE LIST OF H AWALA OPERATORS PREPARED BY THE SALES TAX DEPARTMENT. 5. BEFORE US, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS SOLD THE GOODS AND THE SAME IS NOT POSSIBLE WITHOUT MAKING CORRESPONDING PURCHASES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED GOODS FROM M/S ASCENT ENTERPRISES TO THE TUNE OF RS.24,23,285/ - DURING THE YEAR UNDER CONSIDERATION AND HAS MADE PAYMENT TO THE TUNE OF RS.12,24,010/ - LEAVING A BALANCE OF RS.11,99,275/ - . THE TAX AUTHORITIES HAVE MADE THE ADDITION TO THE TUNE OF THE BALANCE OUTSTANDING, MEANING THEREBY, THEY HAVE ACCEPTED THE PURCHASES IN PART AND DISBELIEVED THE SAME IN PART WITHOU T BRINGING ANY SUPPORTING MATERIAL. HE FURTHER PLACED RELIANCE ON THE FOLLOWING DECISIONS WHEREIN IT WAS HELD THAT THE ADDITION MADE ON THE BASIS OF SALES TAX REPORTS, WITHOUT CONDUCTING FURTHER ENQUIRIES, IS NOT SUSTAINABLE: - (A) DCIT VS. SHRI RAJEEV G KALATHIL (ITA NO.6727/MUM/2012 DATED 20 - 08 - 14) (B) SHRI GANPATRAJ A SAMGHAVI VS. ACIT (ITA NO.2826/MUM/2013 DATED 5.11.2014) (C) DCIT VS. M/S ASPEE AGRO EQUIPMENT P LTD (ITA NO.4065/MUM/2014 DATED 1.1.2016) (D) ITO VS. SHRI RAJKUMAR AGARWAL (ITA NO.5 233/MUM/2013 DATED 10.4.2015) (E) RAMESH KUMAR & CO. VS. ACIT (ITA NO.2959/MUM/2014 DATED 28.11.2014) MOHAMMEDI Z. KANCHWALA 3 6. ON THE CONTRARY, THE LD D.R STRONGLY SUPPORTED THE ORDER PASSED BY LD CIT(A). 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS ADDED ONLY PART OF PURCHASES MADE FROM M/S ASCENT ENTERPRISES, WHILE ACCEPTING THE BALANCE. WE NOTICE THAT THE ASSESSEE HAS PURCHASED GOODS WORTH RS.24.23 LAKHS FROM M/S ASCENT ENTERPRISES AND HAS MADE A PAYMENT OF RS.12.24 LAKHS LEAVING A BALANCE OF RS.11.99 LAKHS AS THE AMOUNT DUE TO M/S ASCENT ENTERPRISES. THIS OUTSTANDING BALANCE ALONE HAS BEEN ASSESSED AS UNEXPLAINED CREDIT BY THE AO AND THE SAME HAS BEEN CONFIRMED BY THE LD CIT(A). THE REASONING GIVEN BY THE LD CIT(A) TO CONFIRM THIS ADDITION IS THAT THE NAME OF M/S ASCENT ENTERPRISES FINDS PLACE IN THE LIST OF HAWALA TRADERS. THE INGREDIENTS FOR MAKING ADDITION U/S 68 ARE DIFFERENT FROM THE INGREDIENT FOR MAKING ADDITION TOWARDS BOGUS PURCHASES. HOWEVER, TH E ADDITION MADE U/S 68 IS LIABLE TO DELETED, SINCE PART OF THE TRANSACTIONS HAVE BEEN ACCEPTED BY THE AO. THE ADDITION TOWARDS BOGUS PURCHASES CANNOT ALSO BE SUSTAINED, SINCE PART S OF THE PURCHASES HAVE BEEN ACCEPTED AND FURTHER NO ENQUIRY HAS BEEN CONDUC TED TO PROVE THE BOGUS NATURE OF PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO DELETE THIS ADDITION. 7. THE NEXT ISSUE RELATES TO THE ADDITION MADE U/S 40(A)(IA) OF THE ACT. THE LD A.R., BY PLACING RELIANCE ON THE D ECISION DATED 26 - 08 - 2015 RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP P LTD (ITA NO.160/2015), SUBMITTED THAT THE PROVISO INSERTED BY FINANCE ACT, 2012 IN SEC. 40(A)(IA) IS RETROSPECTIVE IN NATURE AND HENCE THIS ADDI TION REQUIRES FRESH EXAMINATION IN THE LIGHT OF NEWLY INSERTED PROVISION. WE FIND FORCE IN THE SAID SUBMISSION. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE SAME AFRESH IN THE LIGHT OF DECISION RENDERED BY THE MOHAMMEDI Z. KANCHWALA 4 HONBLE DELHI HIGH COURT REFERRED ABOVE AND THE NEWLY INSERTED PROVISO TO SEC. 40(A)(IA) AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 6 .5 .2016 . SD/ - SD/ - (AMIT SHUKLA ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 6 / 5 /20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) I TAT, MUMBAI PS