M/S. RAMLIN LABORATORIES, MUMBAI V. ACIT 20(3), MUMBAI

ITA 3969/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4069 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2018
• Court: TRIBUNAL

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAVISH SOOD ( J M) I.T.A. NO. 3969 /MUM/ 201 8 (ASSESSMENT YEAR 20 09 - 10 ) M/S. REMLIN LABORATORIES 6, TARA NIWAS, 2 ND FLOOR BHADARKAR ROAD OPP PRAMANIK STORE KING CIR CLE, MATUNGA (E) MUMBAI - 400 019. PAN : AAAFR0393P V S . ACIT 20(3) PIRAMAL CHAMBERS MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MRS. RUPA GAMI DEPARTMENT BY SHRI CHAITNYA ANJARIA DATE OF HEARING 2.5 . 201 9 DATE OF PRONOUNCEMENT 6 . 5 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 26.2.2018 AND PERTAINS TO A.Y. 2009 - 10. 2. GROUNDS OF APPEAL READ AS UNDER : - B EING AGGRIEVED BY THE ORDER O F CI T (APPEALS) - 32, MUMB AI, THE PETITIONERS RAISE THE FOL L O WING GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER AND IN THE ALTERNATIVE. 1. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER WHICH IS ARBITRARY, ILLEGAL, UNJUST AN D AGAINST THE PROVISIONS OF LAW AND THEREFORE THE PETITIONERS PRAY THAT THE ORDER BE SET ASIDE AND BOOK RESULTS BE ACCEPTED. 2. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ASSESSMENT ORDER WHERE THE PROFIT ELEMENT OF 12.5% IE. RS.61360/ - ON PURCH ASES OF RS.490878/ - HAS BEEN ADDED BY TREATING THE PURCHASES AS MADE FROM HAWALA PARTIES BASED ON THE INFORMATION FROM THE SALES TAX DEPARTMENT WHICH IS NOT CORRECT SINCE THE PARTY HAS GENUINELY RECEIVED THE MATERIAL AND THEN SOLD IT AND THEREFORE THE PETI TIONERS PRAY THAT THE ORDER BE SET ASIDE AND NO ADDITIONS BE MADE. M/S. REMLIN LABORATORIES 2 3. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ORDER OF ASSESSMENT WHERE THERE IS AN ADDITION OF GROSS PROFIT ON PURCHASES OF RS.3328/ - TREATING IT AS BOGUS PURCHASES ALTHOUGH THE PURCHASES ARE GENUINE AND SUPPORTED BY INVOICES AND BANK STATEMENT AND THEREFORE THE PETITIONERS PRAY THAT THE ORDER BE SET ASIDE AND NO ADDITIONS BE MADE. 4. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ORDER OF ASSESSMENT WHERE ADDITIONS ARE MAD E OF ESTIMATED GROSS PROFIT OF 12.5% ON PURCHASES OF RS.487550/ - FROM THE PARTY M/S U. K. AROMATICS TREATING IT AS BOGUS PURCHASES ALTHOUGH THE PARTY IS EXISTING AND FILING INCOME TAX RETURNS HAVING A VALID PAN NO. AND THE PURCHASES ARE SUPPORTED BY VARIOU S DOCUMENTS IE. INVOICES, STOCK REGISTER, BANK STATEMENT, ETC., HOWEVER, THE PURCHASES HAVE BEEN HELD AS NON - GENUINE AS THE PARTY COULD NOT BE SERVED WITH THE NOTICE U/S 133(6) DUE TO THE PARTY HAVING SHIFTED ITS PLACE OF BUSINESS AND THEREFORE THE PETITIO NERS PRAY THAT THE ORDER BE SET ASIDE AND NO ADDITIONS BE MADE . 5. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ORDER OF ASSESSMENT WHERE AN ESTIMATED GROSS PROFIT OF 12.5% ON ALLEGED BOGUS PURCHASES OF RS.490878/ - HAS BEEN ADDED WHICH IS NOT JUST IFIABLE SINCE THE ASSESSING OFFICER HAS MADE ADDITIONS MERELY ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT WITHOUT UNDERTAKING ANY INDEPENDENT ENQUIRY AND WITHOUT CONSIDERING THE VARIOUS EVIDENCES SUBMITTED TO HIM WHICH CLEARLY SHOW THAT THE PURCH ASES ARE GENUINE AND THEREFORE THE PETITIONERS PRAY THAT THE ORDER BE SET ASIDE AND NO ADDITIONS BE MADE. 6. THAT THE CIT (APPEALS) HAS ERRED BY CONFIRMING THE ORDER OF ASSESSMENT MAKING ADDITIONS OF RS.61360/ - BY ESTIMATING GROSS PROFIT OF 12.5% ON ALL EGED BOGUS PURCHASES NOT REALIZING THAT WHEN THE TURNOVER OF THE APPELLANT IS SO HUGE OF RS.49406915/ - , HE COULD NEVER HAVE RESORTED TO HAWALA TRANSACTION OF AN AMOUNT OF RS3328/ - AND THEREFORE THE PETITIONERS PRAY THAT THE ORDER BE SET ASIDE AND NO ADDITI ONS BE MADE. 3. BRIEF FACTS OF THE CASE ARE AS UNDER : - THE A.O RECEIVED INFORMATION FROM DGIT(INV.) WING THAT THE APPELLANT DURING THE YEAR UNDER CONSIDERATION INDULGED IN THE ACCEPTANCE OF BOGUS HAWALA ENTRIES IN RESPECT OF PURCHASE TO THE TUNE OF RS. 3,328/ - . ON VERIFICATION IT WAS FOUND THAT THE TRANSACTION OF RS. 3,328/ - WAS NOT DISCLOSED IN THE RETURN OF INCOME FILED BY THE ASSESSEE . IN VIEW OF THE ABOVE, THE CASE WAS REOPENED BY THE A.O AND NOTICE U/S. 148 WAS ISSUED. IN RESPONSE TO THE M/S. REMLIN LABORATORIES 3 NOTICE, TH E ASSESSEE FILED LETTER REQUESTING TO TREAT THE RETURN FILED BY HIM ON 20.09.2009 DECLARING TOTAL INCOME OF RS. 33,96,447/ - AS THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148. 4. THE ASSESSEE ON RECEIPT OF THE REASONS RECORDED FOR REOPENING THE ASSESSEE INITIALLY RAISED OBJECTION TO THE REOPENING OF ASSESSMENT AND SUBMITTED ITS EXPLANATION. THE ASSESSEE SUBMITTED THE DETAILS OF THE PARTIES MENTIONED IN THE REASONS FOR REOPENING. ON RECEIPT OF THE DETAILS OF THE PARTY, NOTICES U/S. 133(6) WERE ISSUED M/S. SHREE GANESH ENTERPRISES, M/S. BABUBHAI GIRDHARLAL AND M/S. U.K. AROMATICS AND CHEMICALS FROM WHOM THE ASSESSEE HAD MADE PURCHASES. THE ASSESSEE WAS REQUESTED TO STATE THAT IN CASE IF THE ASSESSEE IS UNABLE TO PRODUCE THE PARTIES THEN WHY THE SAID PURCHASE S SHOULD NOT BE TREATED AS BOGUS. THE ASSESSEE FAILED TO PRODUCE THE PARTY AS WELL AS THE RELEVANT RECORDS. THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS OF PURCHASES WITH M/S. SHREE GANESH ENTERPRISES AND M/S. U.K. AROMATICS AND CHEMICALS ARE GENUINE WA S NOT ACCEPTED BY THE A.O. THE AO PLACED RELIANCE ON THE FOLLOWING: C VASANTLAL & COMPANY VS. CIT (1962) 45 ITR 206 (SC). CHATURBHUJ PANAUJ AIR 1969 (SC) SUMAN DAYAL VS. CIT (1995) 214 ITR 801 (SC) CIT VS. DURGA PRASAD 82 ITR 540(SC) SUMATI DAYAL VS CIT 21 4 ITR 801 (SC) 5 . THE ASSESSING OFFICER WAS OF THE OPINION THAT S INCE THE INFORMATION WAS AVAILABLE WITH THE MAHARASHTRA SALES TAX DEPARTMENT'S WEBSITE LEADS TO DOUBT REGARDING TO GENUINENESS OF THE PURCHASES OF M/S. SHREE GANESH ENTERPRISES, IT WAS INCUM BENT ON THE ASSESSEE TO PRODUCE THIS PARTY AND DOCUMENTS TO ESTABLISH THE GENUIN ENE SS OF THE TRANSACTION AS THIS PARTY WAS NOT FOUND AT THE GIVEN ADDRESS. IN VIEW OF THE FACTS OF THE CASE IN THE ORDER, IT WAS CLEAR TO THE ASSESSING OFFICER THAT THE ASSESSE E HAD TAKEN ACCOMMODATION ENTRY OF PURCHASES FOR THE TWO PARTIES. THAT T HESE PURCHASES WERE ONLY SHOWN ON PAPER AND NO MATERIAL WAS RECEIVED. TH AT THE TOTAL AMOUNT OF SUCH PURCHASES WORKS OUT TO RS. 4,90,878/ - (RS. 3,328/ - MENTIONED IN THE REASONS FOR REOP ENING + M/S. REMLIN LABORATORIES 4 RS. 4,87,550/ - PURCHASES FROM M/S. U.K. & CHEMICALS). THE AO HELD THAT 12.5% OF TOTAL AMOUNT OF RS. 4,90,878/ - PURCHASES IS THE QUANTUM OF PROFIT ELEMENT INVOLVED ON ACCOUNT OF INFLATION OF PURCHASES. ACCORDINGLY, THE A.O DISALLOWED AN AMOUNT OF RS . 61,360/ - AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE . 6. AGAINST THE ABOVE ORDER ASSESSEE APPEALED BEFORE LEARNED CIT(A). LEARNED CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER BY INTER ALIA REFERRING TO THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT. 7. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. 8. LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT INFORMATION WAS RECEIVED REGARDING PURCHASE OF RS. 3,328/ - ONLY FROM SHREE GANESH ENTERPRISES. THERE IS NO ALLEGATION FROM THE SAL ES TAX DEPARTMENT THAT OTHER PURCHASES ARE BOGUS. LEARNED COUNSEL SUBMITTED THAT THE AUTHORITIES BELOW HAVE TOTALLY ERRED IN TREATING THESE PURCHASES AS BOGUS PURSUANT TO INFORMATION RECEIVED FROM SALES TAX DEPARTMENT. LEARNED COUNSEL CONTENDED THAT THE NO TICE U/S. 133(6) WAS NOT REPLIED AS THE PARTY CONCERN HAS CHANGED ADDRESS. SHE PLEADED THAT IN THE CIRCUMSTANCES NO ADDITION CAN BE MADE. 9. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 10. UPON CAREFUL CONSIDERATION, WE NOTE THAT LEARNED COUNSEL OF THE ASSESSEE IS CORRECT THAT EXCEPT FOR A SUM OF RS. 3,328/ - FROM ON E PARTY THERE IS NO OTHER MENTION FROM THE SALES TAX DEPARTMENT THAT ANY OF THE SUPPLIERS OF THE ASSESSEE ARE BOGUS. HENCE VERY BASIS OF ASS ESSMENT IN HIS CASE IS NOT SUSTAINABLE. FURTHERMORE, LEARNED COUNSEL OF THE ASSESSEE HAS CONTENDED THAT THE REPLY FROM THE IMPUGNED SUPPLIERS COULD NOT BE RECEIVED AS THERE WAS A CHANGE IN THEIR ADDRESS. IN THIS VIEW OF THE MATTER IN OUR CONSIDERED OPINIO N THE MATTER CAN BE REMITTED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH. BOTH COUNSEL FAIRLY AGREED WITH THE ABOVE PROPOSITION. M/S. REMLIN LABORATORIES 5 ACCORDINGLY, THE ISSUE RAISED IN THIS APPEAL IS REMITTED TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 11. IN THE RESULT, APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 6 . 5 . 201 9 . SD/ - SD/ - (RAVISH SOOD ) (SH A MIM YAHYA ) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 6 / 5 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RE SPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI