RAKESH PRABHUDAS DOSHI, MUMBAI V. PRINCIPAL COMMISSIONER OF INCOME TAX - 29, MUMBAI

ITA 4056/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5520 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Keywords: Bogus purchase; Revision of order; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE SH. R. C. SHARMA, A M & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 4056/MUM/2018 (ASSESSMENT YEAR : 2010 - 11) RAKESH PRABHUDAS DOSHI PROP. RAJDEEP ENTERPRISES, 6, MULUND PARAG SOCIETY, GANESH GAVDE ROAD, OPP. HIRA MONGI HOSPITAL, MULUND WEST, MUMBAI - 400 080 / VS. PR. CIT CIR 29 PRATYAKSHKAR BHAVN, BKC, BANDRA EAST, MUMBAI - 400 051 ./ ./ PAN NO. A DFPD2888K ( / ASSESSEE ) : ( / RESPONDENT ) / ASSESSEE BY : SHRI DEVENDRA JAIN , A R / RESPONDENTBY : SHRI H. N. SINGH , D R / DATE OF HEARING : 08.08 .2018 / DATE OF PRONOUNCEMENT : 02.11.2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. PR. CIT - 29 , MUMBAI DATED 28 .03 .18 FOR AY 2010 - 11 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI 1 . I N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LEARNED PR. CIT - 29 MUMBAI HAS ERRED IN INVOKING CLAUSE (A) OF EXPLANATION 2 TO SECTION 263(1) WITHOUT CONSIDERING THE FACT THAT AO HAD PASSED THE ORDER U/S 143(3) R.W.S 147 AFTER ALL THE ENQUIRIES AS DEEMED NECESSARY AND AFTER APPRECIATION OF THE ENTIRE FACTUAL MATRI X. 2 . IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED PR. CIT - 29 MUMBAI HAS ERRED IN INVOKING CLAUSE (D) OF EXPLANATION 2 TO SECTION 263(1) WITHOUT CONSIDERING THAT THE FACTS OF THE CASE IN N. K. PROTEINS LTD. VRS. DCIT 2017 (84 TAX MANN.COM 289) WERE ENTIRELY DIFFERENT FROM THE FACTS OF THE CASE OF THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN IRON, STEEL AND HARDWARE SUPPLIER AND FILED ITS RETURN OF INCOME FOR THE YE AR UNDER CONSIDERATION ON 13.10.10 DECLARING TOTAL INCOME AT RS. 8,58,150/ - . SUBSEQUENTLY ON RECEIVING INFORMATION FROM DGIT(INV.), MUMBAI, THE ASSESSMENT WAS REOPENED AND THE SAME WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE I.T. ACT ON 02.03.16, DETERMINI NG THE TOTAL INCOME OF RS. 14,85,000/ - . LATER ON, VIDE ORDER DATED 28.03.18, 3 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI THE COMMISSIONER OF INCOME TAX PASSED ORDER U/S 263 OF THE I.T. ACT ON THE GROUND THAT ASSESSEE HAS FAILED TO EXAMINE THE ISSUE MENTIONED IN THE NOTICE U/S 263 OF THE I.T. ACT, TH EREBY HOLDING THAT ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST O F REVENUE . AGGRIEVED BY THE ORDER OF AO AS WELL AS LD. CIT, ASSESSEE PREFERRED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED ABOVE. GROUND NO. 1 & 2 3 . THESE GROUND RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHA LLENGING THE ORDER OF LD. CIT IN INVOKING CLAUSE (A) OF EXPLANATION - 2 TO SECTION 263(1) WITHOUT CONSIDERING THE FACT THAT AO HAD PASSED IN ORDER U/S 143(3) R.W.S 147 AFTER MAKING ALL ENQUIRIES AND AFTER APPRECIATING THE ENTIRE FACTUAL MATRIX, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 4 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI 4 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD , JUDGMENT CITED BY BOTH THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND FROM THE RECORDS THAT WHILE PASSING ORDER U/S 143(3) R.W.S. 147 OF THE I.T. ACT, THE AO HAS CONSIDERED THE FACTUAL POSIT ION WITH REGARD TO MAKING PURCHASES FROM DIFFERENT PERSONS WHICH IS CONTAINED IN PARA NO. 4 TO 5.7 OF ITS ORDER AND MADE ADDITIONS OF RS. 6,26,847/ - . WE FURTHER NOTICE THAT LD. CIT PASSED ORDER U/S 263 OF I.T. ACT BY HOLDING THAT AO FAILED TO EXAMINE THE ISSUE MENTIONED IN THE NOTICE PASSED U/S 263 OF THE I.T. ACT AND HENCE TO THIS EXTENT, IT WAS HELD THAT ASSESSMENT ORDER PASSED BY AO IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, THEREFORE ORDER OF ASSESSMENT PASSED BY AO IS SET ASIDE. LD. AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BEFORE LD. CIT AND THE SAME IS MENTIONED IN PARA NO. 7 OF THE ORDER OF LD. CIT. FROM THE RECORDS, WE FOUND THAT COMPLETED ASSESSMENT WAS REOPENED ON 5 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI THE GROUND OF INFORMATION FROM THE INVESTIGATION WING THAT ASSESSEE HAD MADE PURCHASES FROM ALLEGED BOGUS SUPPLIER. SINCE THE REOPENING ITSELF WAS FOR THIS PURPO SE ONLY THE AO AFTER HAVING DETAILED INQUIRY AND INVESTIGATION FOUND THAT CORRESPONDING SALES HAVE BEEN DULY ACCOUNTED FOR IN THE BOOKS, ACCORDINGLY ENTIRE PURCHASES COULD NOT BE ADDED AND HE ESTIMATED EXTRA PROFIT OF 6% ON SUCH PURCHASES AND ADDED THE SAM E IN ASSESSEES INCOME. AFTER HAVING GONE THROUGH THE ORDER PASSED BY LD. CIT AS WELL AS SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND THAT AFTER REOPENING THE ORDER OF RE - ASSESSMENT WAS PASSED BY AO U/S 143(3) R.W.S. 147 OF THE I.T ACT DATED 02.03.16 T HEREBY ADDITIONS WERE MADE BY THE AO @ 6% OF THE ENTIRE BOGUS PURCHASES, BUT THE LD. CIT HAS REVISED THE ORDER PASSED BY AO ON THE GROUND THAT AO HAD NOT MADE 100% ADDITION. IN THIS WAY, LD. AR DRAWN OUR ATTENTION TO VARIOUS DECISIONS IN THE CASE OF ACIT V RS. M/S STEEL LINE (INDIA) PASSED IN ITA NO. 1321 - 1323/MUM/16, M/S KANCHAN FERROMET VRS. ITO PASSED IN ITA NO. 1522/MUM/17 AND N.K. INDUSTRIES VRS. DCIT (2016)72 6 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI TAXMANN.COM 289 (GUJ) , WHEREIN UNDER SIMILAR CIRCUMSTANCES, ADDITIONS WERE RESTRICTED @ 2% OF THE BOGUS PURCHASES. AFTER CONSIDERING THE AFORESAID JUDICIAL PRONOUNCEMENTS AS WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED VIEW THAT ORDER PASSED BY LD. CIT U/S 263 OF IT. ACT IS NOT CORRECT AS LD. CIT HAS NOT DISCUSSED THE FA CTUAL DETAILS PASSED IN THE ORDER IN THE CASE OF N. K. PROTEINS LTD. VRS. DCIT (2017) 84 TAXMAN.COM (SC) AND N.K. INDUSTRIES VRS. DCIT (2016)72 TAXMANN.COM 289 (GUJ) , WHEREIN IN THESE CASES, 100% OF ADDITIONS WERE MADE. THEREFORE IN THE CASE OF THE ASSESSE E, AO HAD NOT MADE 100% ADDITION, WHEREAS AFTER GOING THROUGH THE AFOREMENTIONED DIFFERENT ORDERS PASSED BY DIFFERENT COURTS, HAD MADE ADDITIONS @ 6%. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS OF THE JUDICIAL AUTHORITIES, WHEREIN UNDER IDENTICAL FACT S AND CIRCUMSTANCES, 2% ADDITIONS ON BOGUS PURCHASES WERE MADE. SINCE THE ADDITIONS IN SUCH TYPE OF CASE DEPEND ON THE FACTS OF EACH CASE, THEREFORE PROVISIONS OF SECTION 263 COULD NOT HAVE 7 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI BEEN INVOKED BY THE LD. CIT. THEREFORE, KEEPING IN VIEW THE INTERE ST OF JUSTICE AS WELL AS FACTS OF THE PRESENT CASE, WE ALLOW THESE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 5 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED WITH NO ORDER AS TO COST . ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOV , 2018 SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 02 . 11 .201 8 SR.PS . DHANANJAY 8 I.T.A. NO. 4056 /MUM/201 8 RAKESH PRABHUDAS DOSHI / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI