Appeal details
Counselvise Citation
[2017] 126 COUNSELVISE.COM (IT) 8971 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-10-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2012-2013
Appeal Filed On
31-05-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 3962 / M/ 20 1 7 ( / ASSESSMENT YEAR: 20 12 - 13 ) AMIT SINGH DALJIT SINGH JAGGI C/O. M/S. PORWAL & PORWAL LLP 625, LAXMI PLAZA, 6 TH FLOOR, OFF NEW LINK ROAD, ANDHERI(W ) PIN:400053 / VS. CIT(24) PIRAMAL CHAMBERS, LALBAUG, PAREL. MUMBAI PIN:400012 ./ ./ PAN/GIR NO. : ADRPJ 6257 C ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 11 .0 9 .2017 / DATE OF PRONOUNCEMENT : . 26 . 10 .2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 30 .0 3 .2017 PASSED BY THE COMMISSIONER OF INCOME TAX , MUMBAI IN VIEW OF THE PROVISION U/S 263 OF THE ACT, 1961. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LD. CIT WAS NOT JUSTIFIED IN PASSING THE ORDER U/S 263 WITHOUT GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. ASSESSEE BY: N.S. PORWAL (AR) DEPARTMENT BY: SHRI R.P. MEENA ( CIT DR) ITA. NO.3962/M/2017 A.Y.2012 - 13 2 2. THE LD. CIT ERRED IN PASSING THE ORDER U/S 263 ON THE BASIS OF UNSIGNED NOTICE SENT THROUGH E - MAIL TO ASSESSEES REPRESENTATIVES ON 29.03.2017. 3. THE ORDER PASSED BY THE LD. CIT IS WITHOUT JURISDICTION. 4. THE ORDER U/S 263 PASSED BY THE LD. CIT IS BASED ON VAGUE NOTICE WITH A VIEW TO STARTING FISHING AND ROVING ENQUIRIES IN THE MATTER AND HENCE BAD IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR ADD TO ANY OF THE ABOVE GROUNDS. 3 . THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSMENT U/S 143(3) OF THE ACT, 1961 WAS COMPLETED ON 19.03.2015 FOR THE A.Y. 2012 - 13 AT THE NET INCOME TO THE TUNE OF RS.14,57,890/ - BY THE ITO - 24(1)(1), (MUMBAI). A SHOW CAUSE NOT ICE DATED 20.03.2017 U/S 263 OF THE I.T. ACT, 1961 WAS ISSUED TO THE ASSESSEE WHICH WAS RECEIVED BY THE ASSESSEE ON 29.03.2 017. THE ASSESSEE DID NOT RAISE ANY OBJECTION REGARDING JURISDICTION OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING. THE ASSESSMENT ORDER PASSED BY THE AO ON DATED 19.03.2015. THE LD. REPRESENTATIVE OF THE ASSESSEE FILED THE REPLY DATED 29.03.2017 STATING THEREIN THAT THE N OTICE WAS WITHOUT JURISDICTION HENCE, INVALI D. THE OBJECTION WAS HELD TO BE INVALID BEING THE ASSESSEE DID NOT RAISED THE QUESTION AT THE TIME OF THE PROCEEDING. SHOW CAUSE NOTICE DATED 29.03.2017 WAS SENT TO THE ASSESSEE ASKING HIM AS TO WHY THE ASSESSME NT ORDER DATED 19.03.2015 SHOULD NOT BE REVISED WITHIN THE MEANING OF THE PROVISION U/S 263 OF THE ACT ON THE FOLLOWING ISSUES.: - IT IS SEEN FROM THE RECORDS THAT THE LIST OF SUNDRY CREDITORS INCLUDES THE FOLLOWING PARTIES TO WHOM THE DEPARTMENT HAS TRE ATED AS BOGUS/NON GENUINE: - SR.NO. NAME OF THE PARTY AMOUNT TIN NO. 1 ANSHU MERCHANTILE PVT. LTD RS.8,73,786/ - 27540680106V 2 DHIREN MERCANTILE P. LTD. RS.1,78,125/ - 27450680107V ITA. NO.3962/M/2017 A.Y.2012 - 13 3 3 MAYURI SALES CORPORATION RS.13,21,875/ - 27160815824V 4 RADHIKA ENTERPRISES RS.27,28,125/ - 27100330372V 5 RIDHI SIDHI CORPORATION RS.3,72,936/ - 27180703099V 27730718947V 6 S.K. TRADING COMPANY RS.20,40,250/ - 27860638123V TOTAL RS.75,15,097/ - IT IS NOT POSSIBLE TO ESTABLISH WHETHER THE SUNDRY CREDITORS ARE PERTAINING TO THIS YEAR OF PURCHASES OR PREVIOUS YEAR SINCE NO DETAILS OF PURCHASES ARE AVAILABLE ON RECORDS. HENCE, EXCESS LIABILITY HAS BEEN SHOWN BY ASSESSEE BY SHOWING BOGUS SUNDRY CREDIT ORS, WHO HAVE BEEN TREATED BY THE DEPARTMENT AS BOGUS/NON - GENUI NE . THE GENUINENESS OF SUNDRY CREDITORS FOR PURCHASE OF GOODS FROM THE ABOVE PARTIES WERE NOT VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. AFTER CONSIDERING THE REPLY OF THE ASSESSEE , THE COMMISSIONER OF INCOME TAX WAS OF THE VIEW THAT THERE WAS A LACK OF ENQUIRY OR LACK OF APPLICATION OF MIND ON THE PART OF THE AO WHILE ACCEPTING THE SUBMISSION OF THE ASSESSEE ON ITS FACE VALUE WITHOUT ITS PROPER VERIFICATION, THEREFORE, HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS IN SO FAR AS THE PREJUDICIAL T O THE INTEREST OF REVENUE AND THE CASE WAS DIRECTED TO BE RE OPEN IN VIEW OF PROVISION U/S 263 OF THE ACT. . FEELING AGGRIEVED , THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ITA. NO.3962/M/2017 A.Y.2012 - 13 4 5. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE DID NOT RECEIVED ANY NOTICE THROUGH POST HOWEVER, THE ASSESSEE RECEIVED THE NOTICE THROUGH EMAIL WHICH HAS NOT BEEN SIGNED BY IN AUTHORITY,T HEREFORE, IN THE SAID CI RCUMSTANCES, THE ORDER U/S 263 OF THE A CT IS NOT JUSTIFIABLE HENCE LIABLE TO BE SET ASIDE. IN THIS REGARD, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE RELIED UPON THE LAW SETTLED IN CRIMINAL APPEAL 172 OF 2014 SHAIKH FAROOQ VS. SHAIKH RAFIQ. IT IS ALSO ARGUED THAT THE ORDER U/S 263 OF THE ACT WAS PASSED WITH A VIEW TO START ING FISHING AND ROVING ENQUIRY, HENCE, THE SAID ORDER IS BAD IN LAW AND IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION . BEFORE GOING FURTHER, IT IS NECESSARY TO ADVERT THE REASONS ON THE BASIS OF WHICH THE ORDER U/S 263 OF THE ACT, 1961 WAS PASSED. THE REASONS ARE HEREBY MENTIONED BELOW : - IT IS SEEN FROM THE RECORDS THAT THE LIST OF SUNDRY CREDITORS INCLUDES THE FOLLOWING PARTIES TO WHOM THE DEPARTMENT HAS TREATED AS BOGUS/NON GENUINE: - SR.NO. NAME OF THE PARTY AMOUNT TIN NO. 1 ANSHU MERCHANTILE PVT. LTD RS.8,73,786/ - 27540680106V 2 DHIREN MERCANTILE P. LTD. RS.1,78,125/ - 27450680107V 3 MAYURI SALES CORPORATION RS.13,21,875/ - 27160815824V ITA. NO.3962/M/2017 A.Y.2012 - 13 5 4 RADHIKA ENTERPRISES RS.27,28,125/ - 27100330372V 5 RIDHI SIDHI CORPORATION RS.3,72,936/ - 27180703099V 27730718947V 6 S.K. TRADING COMPANY RS.20,40,250/ - 27860638123V TOTAL RS.75,15,097/ - IT IS NOT POSSIBLE TO ESTABLISH WHETHER THE SUNDRY CREDITORS ARE PERTAINING TO THIS YEAR OF PURCHASES OR PREVIOUS YEAR SINCE NO DETAILS OF PURCHASES ARE AVAILABLE ON RECORDS. HENCE, EXCESS LIABILITY HAS BEEN SHOWN BY ASSESSEE BY SHOWING BOGUS SUNDRY CREDITORS, WHO HAVE BEEN TREATED BY THE DEPARTMENT AS BOGUS/NON - GENUINE. THE GENUINENESS OF SUNDRY CREDITORS FOR PURCHASE OF GOODS FROM THE ABOVE PARTIES WERE NOT VERIFIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. THE A BOVE SAID REASONS NOWHERE SPEAK ABOUT THIS FACT THAT THE ORDER IS ERRONEOUS IN SO FAR AS THE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ORDER MUST BE BASED ON MATERIAL ON RECORD OF PROCEEDING CALL ED FOR BY HIM. THE COMMISSIONER COULD NOT INITIATE THE PROCEEDING WITH A VIEW TO START FISHING AND ROVING ENQUIRIES IN THE MATTER OF ORDER WHICH HAS ALREADY BEEN CONCLUDED. NOW, IT IS TO BE SEEN WHETHER THIS MATTER OF CONTROVERSY HAS ALREADY BEEN EXAMINED BY THE AO OR NOT WHILE PASSING THE ORDER U/S 143( 3) OF THE ACT, 1961 DATED 19.03.2015 . WE NOTICED THAT THE ASSESSING OFFICER HAD ISSUED THE NOTICE U/S 142(1) OF THE I.T. ACT, 1961 D ATED 11.07.2014 TO THE ASSESSEE WHEREIN THE ASSESSING OFFICER HAS ALREADY RAISED THE QUERY ABOUT THE SUNDRY CREDITORS OF TRANSPORT, SUNDRY CREDITORS FOR GOODS, SUNDRY DEBTOR WITH CREDIT BALANCE AND OTHER LIABILITIES. THE SAID LETTER HAS BEEN PLACED ON RECO RD WHICH LIES AT PAGE 10 OF THE PAPER BOOK. SUBSEQUENTLY, THE NOTICE DATED 07.10.2011 WAS ALSO FILED IN WHICH THE ASSESSING OFFICER CALLED FOR INFORMATION IN VIEW OF THE LETTER ISSUED ON 11.07.2014. THE ITA. NO.3962/M/2017 A.Y.2012 - 13 6 REPLY HAS BEEN FILED BY THE ASSESSEE WHICH LIES AT PA GE 17 TO 18 OF THE PAPER BOOK. THE REPLY IN CONNECTION WITH SUNDRY CREDITORS HAS BEEN GIVEN BY THE ASSESSEE WHICH IS HEREBY REPRODUCED BELOW.: - AS REGARDS THE CHANGE IN THE SUNDRY CREDITORS OF A.Y. 2011 - 12 AND A.Y. 2012 - 13 WE HAVE TO STATE THE FOLLOWING: A.Y. 2011 - 12 A.Y. 2012 - 13 A. SUNDRY CREDITORS FOR TRANSPORT 10,93,990.20 21,13,347.20 B. SUNDRY CREDITORS FOR GOOD 2,70,20,399 .08 1,75,99,471.88 C. SUNDRY DEBTORS WITH CREDIT BALANCE 56,99,893.00 71,39,058.00 D. OTHER LIABILITIES 6,81,523.46 1,89,29,859.78 TOTA L 3,44,95,805.74 4,57,81,736.86 DURING THE YEAR A.Y. 2012 - 13, THE BANK OVERDRAFT OF RS.1,47,82,500.30 WAS SHOWN UNDER THE HEAD OTHER LIABILITIES WHEREAS THE SAME BANK OVERDRAFT OF RS.1,03,96,173.87 DURING THE YEAR A.Y.2011 - 12 WAS CLASSIFIED AS SECURED LOAN, HENCE IF THE BANK OVERDRAFT IS NOT TAKEN AS PART OF THE COMPARISON THE TOTAL OF SUNDRY CREDITORS FOR A.Y. 2012 - 13 WOULD HAVE BEEN RS.3.09,99,236.56 AND THUS IT WOULD BE SEEN THAT AS COMPARED TO THE SUNDRY CREDITORS OF A.Y. 2011 - 12, THERE IS A FALL IN THE SUNDRY CREDITORS OF A.Y. 2012 - 13. 7 . THE REPLY ALSO SPEAKS ABOUT THE FACTS THAT THE MATTER HAS BEEN EXAMINED BUT THIS EXPLANATION HAS NOT BEEN CONSIDERED BY THE CIT WHILE PASSING THE ORDER U/S 263 OF THE I.T. ACT, 1961. FURTHER, WHILE PASSING THE ORDER THE U/S 143(3) OF THE ACT, DATED 28.03.2016 FOR THE A.Y. 2013 - 14 THE MATTER HAS BEEN RE - EXAMINED AND NO ADDITIO N WAS RAISED. HOWEVER, IN DETAIL THE MATTER OF CONTROVERSY HAS NOT BEEN ITA. NO.3962/M/2017 A.Y.2012 - 13 7 DISCUSSED BY THE AO WHILE PASSING THE ORDER U/S 143(3) OF THE ACT DATED 19.03.2015. COMING TO THE REASONS OF REOPENING U/S263 OF THE ACT, WE FIND NO MATERIAL ON RECORD WHICH LEADS TO THE CIRCUMSTANCES AS TO FACTS THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE BASIC THING WHICH IS REQUIRED TO BE SEEN THAT THE VERIFICATION IS NOT DONE BY THE AO OR THE SAME HAS NOT BEEN REFLECTED IN THE ORDER. HOWEVER, WE HAVE DISCUSSED THE MATERIAL ABOVE IN WHICH WE NOTICED THAT THE ASSESSING OFFICER HAD ISSUED THE NOTICE IN THIS REGARD AND ALSO RECEIVED THE REPLY FOR THAT . T HE ENQUIRY WAS DONE BY THE AO AND THERE WAS AN APPLICATION OF MIND BECAUSE THE AO ISSUED THE NOT ICED IN THIS REGARD AND ALSO RECEIVED THE REPLY OF THE NOTICE. THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACTS AS FILED OF THE BOMBAY HIGH COURT IN THE CASE CRIMINAL APPEAL 172 OF 2014 SHAIKH FAROOQ VS. SHAIKH RAFIQ. IN VIEW OF THE SAID LAW, W E ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER IN VIEW OF THE PROVISION U/S 263 OF THE I.T. ACT, 1961 WRONGLY AND ILLEGALLY THEREFORE, WE SET ASIDE THE SAME AND ALLOWED THE APPEAL OF THE ASSESSEE. 8 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26 .10 . 2017 SD/ - SD/ - ( G.S PANNU ) ( AMARJIT SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ITA. NO.3962/M/2017 A.Y.2012 - 13 8 MUMBAI; DATED : 26 . 10 . 201 7 V.P.SINGH / 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) , / ITAT, MUMBAI
