ACIT 9(1), MUMBAI V. APOLLO HEAT EXCHANGERS P.LTD, MUMBAI

ITA 4064/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8610 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Rejection of books of accounts; Corroborative evidences; Accommodation entries

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PR ASAD,JUDICIAL MEMBER ./I.T.A./4064/MUM/14 , /ASSESSMENT YEAR:2010-11 ACIT, 9(1) ROOM NO.223 AAYAKAR BHAVAN, M K ROAD, MUMBAI-400 020 VS. M/S. APOLLO HEAT EXCHANGERS PVT.LTD. INDO INDL ESTATE NO.2, PLOT NO.109 NAVGHAR VILLAGE,VASAI ROAD(E),THANE PAN:AAACA 3597 P ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI RAJESH KUMAR YADAV /ASSESSEE BY: SHRI SANJAY PARIKH / DATE OF HEARING: 18/01/2017 / DATE OF PRONOUNCEMENT: 08.02.2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER,DATED 10/03/2014,OF THE CIT ( A)-19,MUMBAI THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,E NGAGED IN THE BUSINESS OF MANUFACTUR - ING OF HEAT EXCHANGERS,FILED ITS RETURN OF INCOME O N 01/10/ 2010,DECLARING TOTAL INCOME AT RS. 50.01 LAKHS.THE AO COMPLETED THE ASSESSMENT U/S.143 (3) OF THE ACT,ON 19/02/2013, DETERMINING ITS INCOME AT RS.1.24 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION OF RS.74.28 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT ASSESSEE HAD MADE PURCHASES OF RS. 74.28 LAKHS (RS. 64.98 LAKHS FROM NUTAN METAL + RS. 9.29 LAKHS FROM MAGNITUDE TRADING PRIVATE LTD.) FROM TWO PARTIES, THAT AS PER THE INFORMATION RECEI VED FROM THE SALES TAX DEPARTMENT (STD) THE PURCHASES MADE BY THE ASSESSEE FROM THE ABOVE R EFERRED TO PARTIES WERE BOGUS, THAT THE SUPPLIERS,IN THE STATEMENT GIVEN BEFORE THE STD,HAD ADMITTED THAT THEY HAD ONLY PROVIDED ACCOMMODATION ENTRIES AND NO SALES IN TERM OF ANY M ATERIAL HAD BEEN MADE. HE ISSUED A SHOW CAUSE NOTICE ASKING THE ASSESSEE AS TO WHY THE PURC HASES AMOUNTING TO RS.74,28, 253/-SHOULD NOT BE DISALLOWED ON THE BASIS OF INFORMATION RECEI VED FROM STD AND DIRECTED IT TO PRODUCE BOTH THE SUPPLIERS. AS PER THE AO,THE ASSESSEE FAIL ED TO PRODUCE THE PARTIES FOR VERIFICATION OF THE GENUINENESS OF THE PURCHASES SHOWN.HE HELD THAT PURCHASES MADE BY THE ASSESSEE WERE NOT VERIFIABLE BY SUPPORTING EVIDENCES, THAT THE SU PPLIERS HAD AGREED BEFORE THE STD THAT THEY PROVIDED BOGUS BILLS TO THE ASSESSEE, THAT THE SUBM ISSIONS MADE BY IT HAD TO BE REJECTED. FINALLY, HE MADE AN ADDITION OF RS.74.28 LAKHS TO T HE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM, IT MADE ELABOR ATE SUBMISSIONS AND STATED THAT IT HAD ACTUALLY PURCHASED THE GOODS FROM THE SUPPLIERS AN D HAD USED THEM IN CARRYING OUT ITS 4064/M/14(10-11- APPOLLO HEAT EXCHANGERS PVT.LTD. 2 BUSINESS,THAT IT HAD FILED ALL THE NECESSARY DOCUME NTARY EVIDENCES INCLUDING COPIES OF LEDGER ACCOUNTS OF THE SUPPLIERS IN THE ASSESSEES BOOK,CO PIES OF ALL THE PURCHASE INVOICE FROM THE PARTIES, COPIES OF DELIVERY CHALLAN AND BANK STATEM ENT, THAT PAYMENTS WERE MADE BY CROSSED- CHEQUES,THAT AO HAD IGNORED ALL THESE EVIDENCES, TH AT HE HAD CHOSEN TO RELY ON THE STATEMENT MADE BY THE SUPPLIERS BEFORE THE STD,THAT IT WAS NO T PERMITTED TO CROSS-EXAMINE THE SUPPLIERS,THAT THE STATEMENTS WERE GENERAL IN NATUR E ABOUT ACCOMMODATION ENTRIES,THAT IN THE STATEMENT THE SUPPLIERS HAD NOWHERE MENTIONED THAT CONCERNED PARTIES HAD PROVIDED ACCO - MMODATION BILLS TO THE ASSESSEE.THE FAA CALLED FOR A REMAND REPORT FROM THE AO FOR CARRYING OUT A COMPREHENSIVE ENQUIRY. IN HIS REPORT DATED 12/09/2013, THE AO EXPRESSED HIS INABILITY TO CARRY OUT ANY ENQUIRY AS THE NOTICES W ERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN. AFTER CONSIDERING THE AVAILABLE MATERIAL, THE FAA H ELD THAT THE AO HAD RECEIVED INFORMATION FROM THE STD, THAT THE INFORMATION WAS ABOUT BOGUS SALES MADE AND ACCOMMODATION ENTRIES GIVEN BY TWO SPECIFIC SUPPLIERS, THAT HE HAD RECEIV ED THE INFORMATION IN GENERAL AND NOT SPECIFICALLY IN CONTEXT OF THE ASSESSEE, THAT HE HA D ASKED THE ASSESSEE TO PRODUCE THE SUPPLIERS, THAT ON FAILURE OF THE ASSESSEE TO PRESENT THEM BEF ORE THE VIEW RESULTED IN THE ADDITION, THAT OWNERS OF PRODUCING THE PARTIES PARTLY WAS ON HIM, THAT HE WAS SEEKING TO RELY ON THE STATEMENT OF THE SUPPLIERS,THAT HE WAS BOUND TO PRO VIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THOSE TWO PARTIES, THAT HE WAS ALSO B OUND TO ALLOW ACCESS TO THE STATEMENTS OF THE SUPPLIERS, THAT THE ASSESSMENT ORDER WAS SILENT ON THAT MATTER, THAT THE DOCUMENTATION PRODUCED BY THE ASSESSEE WERE SPECIFIC,THAT DOCUMEN TS WERE PRODUCED BEFORE HIM ALSO DURING THE APPELLATE PROCEEDINGS, THAT THE AO HAD FAILED T O TAKE INTO ACCOUNT ANY OF THESE DOCUMENTS, THAT HE HAD CONFRONTED THE ASSESSEE ONLY BY WAY OF SEEKING THE PRESENCE OF THE SUPPLIERS WITHOUT SUPPLYING IT THE COPY OF THEIR STATEMENTS, THAT IN THE REMAND REPORT THE AO HAS NOT DEALT WITH THE BASIC ISSUE,THAT THE PAYMENTS WERE T HROUGH BANKING CHANNELS BY WAY OF CROSSED -CHEQUES, THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE COULD NOT BE TERMED AS CASH PURCHASES. HE REFERRED TO THE CASES OF NIKUNJ EXIMP S ENTERPRISE PRIVATE LTD. (2013-1 TMI 88)AND JAGDAMBA TRADING COMPANY[2006-(ID 2)-GJD-068 9-T JOD] AND DELETED THE ADDITION MADE BY THE AO. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)RELIED UPON THE ORDER OF THE AO AND STATED THAT THE ASSESSEE DID NOT PRODUCE THE SUPPLIERS BEF ORE HIM..THE AUTHORISED REPRESENTATIVE (AR)SUPPORTED THE ORDER OF THE FAA AND STATED THAT ASSESSEE HAD PRODUCED ALL THE NECESSARY EVIDENCES BEFORE THE AO, THAT STATEMENTS OF THE SUP PLIERS WERE NOT GIVEN TO THE ASSESSEE, THAT THE SUPPLIERS HAD MADE GENERAL STATEMENTS,THAT THE SALES MADE BY THE ASSESSEE ACCEPTED BY THE 4064/M/14(10-11- APPOLLO HEAT EXCHANGERS PVT.LTD. 3 AO.HE RELIED UPON THE CASES OF RAJEEV G KALATHI(ITA /6727/MUM/2012-AY.2009-10,DTD. 20/08/2014),DEEPAK POPATLAL GALA(ITA.S/5920/MUM/201 3-AY.2010-11,DTD.27/03/2015) RAMILA PRAVEEN SHAH(ITA/5246/MUMBAI/2013,AY.2010-11 ,DTD.5/03/2015),SHIVAM TEXTILE AND PROOFING INDUSTRIES (ITA/5248/MUM/2013,AY.2010- 11,DTD.16/07/2015)AND DIGITRON COMPUTERS PRIVATE LTD.(ITA.S./160,1406-07/MUM/2015- AY.S. 2010-11 TO 2011-12, DATED 06/01/ 2017). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MADE THE ADDITION ON THE BASIS OF STATEMENTS RECORDED BY THE STD FROM TWO OF THE SUPPLIERS OF THE ASSESSEE, THAT THE AO HAD DIRECTED THE ASSESSEE TO PRODUCE THEM, THAT DOCUMENTARY EVIDENCES LIKE PURCHASE BILLS,DELIVERY CHALLANS, ACCOUNT PAYEE CHEQUES, LEDGER ACCOUNTS WERE NOT CONSIDERED BY THE AO DURING THE A SSESSMENT PROCEEDINGS,THAT NON- PRODUCTION OF THE SUPPLIERS OF THE GOODS AND THEIR STATEMENTS WERE THE BASIS FOR MAKING THE ADDITIONS, THAT THE FAA CALLED FOR A REMAND REPORT, THAT IN THE REPORT THE AO DID NOT COMMENT UPON THE STATEMENTS OF THE SUPPLIERS,THAT THE ASSES SEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXAMINE THE PARTIES WHO HAD SUPPLIED THE GOODS TO I T,THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THAT HE HAD ACCEPTED T HE SALES MADE BY IT. THE FAA HAS MENTIONED THAT THE AO DID NOT COMMENT UPON AS TO WH ETHER THE SUPPLIERS HAD IMPLICATED THE ASSESSEE SPECIFICALLY OR THE STATEMENTS WERE GENERA L IN NATURE.IN CASE THE STATEMENTS WERE ABOUT PROVIDING ACCOMMODATION ENTRY IN GENERAL, IN OUR OPINION,THE ISSUE SHOULD HAVE BEEN INVESTIGATED FURTHER.THE ASSESSEE HAD PRODUCED DOCU MENTARY EVIDENCES INCLUDING THE PROOF OF PAYMENT THROUGH BANKING CHANNEL.WE FURTHER FIND THA T THE AO HAS NOT MENTIONED IN HIS ORDER AS TO WHAT DOCUMENTS WERE PRODUCED BEFORE HIM-THOUG H HE STATED THAT SAME ARE BEING REJECT - ED.WITHOUT GIVING THE DETAILS OF THE DOCUMENTS AND REASONS FOR REJECTING THE SAME IS ARBITRARY USE OF THE POWERS.THE INFORMATION RECEIVED FROM THE STD WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION.BUT SAME HAD TO BE TAK EN TO THE LOGICAL END THE DOCUMENTS PRODUCED BY THE ASSESSEE HAD TO BE REBUTTED. IN THE CASE OF RAJEEV G. KALATHIL RAJEEV G. KALATHIL (SUPRA)THE TRIBUNAL HAS HELD AS UNDER: 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DE CLARED A HAWALA DEALER BY THE VAT DEPARTMENT.WE AGREE THAT IT WAS A GOOD STARTING POI NT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END.BUT,HE LEFT THE JOB AT INITI AL POINT ITSELF.SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE.HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMME DIATE CASH WITHDRAWAL FROM THEIR ACCOUNT.WE FIND THAT NO SUCH EXERCISE WAS DONE.TRAN SPORTATION OF GOOD TO THE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE.THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSE E WAS FORMING PART OF CLOSING STOCK.AS FAR AS 4064/M/14(10-11- APPOLLO HEAT EXCHANGERS PVT.LTD. 4 THE CASE OF WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED,WE FIND THAT IN THAT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS.BUT,IN THE CASE BEFORE US,THERE IS NOTHING,IN THE ORDER OF THE AO,ABOUT THE CASH TRAIL.SECONDLY,PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THERERFORE,CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INF IRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO.SO,CONF IRMING THE ORDER OF THE FAA,WE DECIDE GROUND NO.1 AGAINST THE AO. IN ALL THE OTHER CASES ARE REFERRED TO BY THE AR(PA RAGRAPH 4 OF OUR ORDER) AND DELIVERED BY THE TRIBUNAL ADDITIONS MADE ON ACCOUNT OF INFORMATION R ECEIVED FROM THE STD HAVE BEEN DELETED. CONSIDERING THE ABOVE,WE ARE OF THE OPINION THAT TH E ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.CONFIRMING THE SAME AND CONSIDERING THE FACTS AND CIRCUM - STANCES OF THE CASE,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY, 2017. 08 , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 08.02.2017. JV.SR.PS. / 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.