JSW STEEL LTD(successor COMPANY ON AMALGAMATION WITH JSW ISPAT STEEL LTD), MUMBAI V. DCIT CEN CIR 3(2), MUMBAI

ITA 4068/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8893 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Reopening of assessment; Bogus purchase; Unexplained expenditure; Tangible material; Difference of opinion; Accommodation entries; Change of opinion; Reassessment proceedings
• Section: 69C; 143(3); 133(6); 147; 148

Judgement Text

1 ITA 4068/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PAWAN SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO. 4068/MUM/2018 (ASSESSMENT YEAR : 2011-12) M/S JSW STEEL LTD (SUCCESSOR ON AMALGAMATION WITH JSW ISPAT STEEL LTD), JSW CENTRE BKC, BANDRA (E), MUMBAI-400 051 PAN : AAACI6293E VS DY.CIT, CENT.CIR.3(2), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI GAURAV KABRA RESPONDENT BY SHRI RAJIV GUBGOTRA DATE OF HEARING 03-07-2019 DATE OF PRONOUNCEMENT -07-2019 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT(A)- 51, MUMBAI DATED 20-04-2018 AND IT PERTAINS TO AY 2 011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED CIT/A) HAS ERRED IN UPHOLDING THE A CTION OF THE LEARNED ASSESSING OFFICER IN REOPENING THE CASE , T HE CASE U/S.147 OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND POSITRON OF FEW. 2 ITA 4068/MUM/2018 2) THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING TH E FACT THAT THE ISSUE ON THE BASIS OF WHICH THE CASE WAS REOPENED H AD BEEN EXAMINED IN THE PAST AT THE TIME OF THE ORIGINAL AS SESSMENT PROCEEDINGS AND BEEN ACCEPTED BY THE LEARNED ASSESS ING OFFICER THEN, PROOF OF WHICH WAS DULY FURNISHED TO THE LEAR NED ASSESSING OFFICER AT THE TIME OF REASSESSMENT PROCEEDINGS. 3) THE LEARNED CIT(A) HAS ERRED IN UPHOLDING AN ADD ITION OF RS.5,67,0007-MADE BY THE ASSESSING OFFICER ON ACCOU NT OF ALLEGED NON GENUINE PURCHASES, WITHOUT APPRECIATING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND POSITION OF LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 29-09-20 11 DECLARING TOTAL LOSS OF RS.1098,47,11,129. THE ASSESSMENT HAS BEEN COMPLET ED U/S 143(3) OF THE ACT, ON 28-02-2013 AND DETERMINED TOTAL INCOME AT RS.91 CRORES BY REJECTING BROUGHT FORWARD LOSSES CLAIMED BY THE ASSESSEE. SU BSEQUENTLY, THE CASE HAS BEEN REOPENED U/S 147 OF THE ACT, ON THE BASIS OF I NFORMATION RECEIVED FROM SALES-TAX DEPARTMENT THAT THE ASSESSEE IS A BENEFIC IARY OF ACCOMMODATION ENTRIES OF PURCHASE BILLS ISSUED BY SUSPICIOUS / HA WALA DEALERS. ACCORDINGLY NOTICE U/S 148 WAS ISSUED AND SERVED ON THE ASSESSE E. THEREAFTER, THE CASE HAS BEEN SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO CALLED UPON THE ASSESSEE TO PRODUCE EVIDENCE IN RESPECT OF PURCHASES CLAIMED TO HAVE BEEN MADE FROM M/S KOTSON IMPEX PVT LTD AMOUNTING TO RS.5,67,000. IN RESPONSE, THE ASSESSEE HAS FILED V ARIOUS DETAILS INCLUDING PURCHASE BILLS AND ALSO FURNISHED PAYMENT PROOF AGA INST SUCH PURCHASES. THE 3 ITA 4068/MUM/2018 AO, AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE A ND ALSO BY RELYING UPON VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HARIRAM BHAMBHANI VS CIT ITA N O.313 OF 2013(BOM), OPINED THAT MERE FURNISHING OF PURCHASE BILLS AND P AYMENT PROOF IS NOT SUFFICIENT ENOUGH WHEN INFORMATION GATHERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLEARLY PROVED THAT THE ASSESSEE HAS OB TAINED ACCOMMODATION ENTRY OF PURCHASES FROM SUSPICIOUS / HAWALA DEALERS . ACCORDINGLY, THE AO MADE ADDITION OF RS.5,67,000 TOWARDS PURCHASES CLAIMED TO HAVE MADE FROM M/S KOTSON IMPEX PVT LTD. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO HAS REOPENED A SSESSMENT ON MERE CHANGE OF OPINION WITHOUT THERE BEING ANY TANGIBLE MATERIAL WHICH SUGGESTED ESCAPEMENT OF INCOME WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3), WHERE THE AO HAS C ALLED FOR COMPLETE DETAILS OF PURCHASES. THE ASSESSEE ALSO HAS FURNISHED VARI OUS DETAILS IN RESPECT OF PURCHASES FROM THE ABOVE PARTY AND ARGUED THAT NO A DDITION COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DE PARTMENT WHEN ASSESSEE HAD FILED COMPLETE SET OF DOCUMENTS. THE LD.CIT(A) , AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELYING UPO N THE DECISION OF HONBLE 4 ITA 4068/MUM/2018 SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS L TD VS CIT 236 ITR 34 (SC) HELD THAT THERE IS NO INFIRMITY IN THE ACTION OF THE AO IN REOPENING THE ASSESSMENT IN THE CASE OF THE ASSESSEE BECAUSE THE AO WAS SITTING WITH INFORMATION RECEIVED FROM EXTERNAL AGENCIES, LIKE S ALES-TAX DEPARTMENT, AS PER WHICH, INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED AS SESSMENT. THE LD.CIT(A) FURTHER OBSERVED THAT AT THE TIME OF REOPENING OF A SSESSMENT, THE AO NEED NOT PROVE ESCAPEMENT OF INCOME AND WHAT IS RELEVANT IS PRIMA FACIE MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME. IN THIS CASE, THERE IS NO DOUBT, WHATSOEVER, WITH REGARD TO THE AVAILABILITY OF MATERIAL IN THE POSSESSION OF THE AO, THEREFORE, THERE WAS NO MERIT IN THE LEGAL GROUND T AKEN BY THE ASSESSEE. INSOFAR AS ADDITION TOWARDS PURCHASES FROM M/S KOTS ON IMPEX PVT LTD, THE LD.CIT(A) HELD THAT ALTHOUGH THE ASSESSEE HAS FILED PURCHASE BILLS AND PAYMENT PROOF, BUT WHEN THE AO HAD ISSUED NOTICE U/S 133(6) , THE SAME COULD NOT BE SERVED AND WAS RETURNED BACK BY THE POSTAL AUTHORIT IES WITH THE REMARK NOT KNOWN OR NO SUCH ADDRESS. FURTHER, WHEN THE AO CALLED UPON THE ASSESSEE TO PRODUCE THE PARTY ALONG WITH ITS BOOKS OF ACCOUN T AND ALSO TO FURNISH EVIDENCES, THE ASSESSEE WAS UNABLE TO PRODUCE THE S AID PARTY. FROM THE ABOVE, IT WAS VERY CLEAR THAT EITHER THE PARTY WAS NOT EXI STENT OR PURCHASES FROM THAT PARTY WAS BOGUS. THEREFORE, THERE IS NO ERROR IN T HE FINDINGS RECORDED BY THE 5 ITA 4068/MUM/2018 AO WHILE MAKING ADDITION TOWARDS PURCHASES FROM M/S KOTSON IMPEX PVT LTD. ACCORDINGLY, HE DISMISSED THE APPEAL FILED BY THE A SSESSEE. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE AO IN REOPENING THE ASS ESSMENT U/S 147 OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT H AS BEEN REOPENED ON MERE CHANGE OF OPINION, BECAUSE IN ORIGINAL ASSESSMENT P ROCEEDINGS, THE AO HAS VERIFIED THE PURCHASE. THE LD.AR FURTHER SUBMITTED THAT AS REGARDS ADDITION MADE BY THE AO TOWARDS PURCHASE OF RS.5,67,000, HE SUBMITTED THAT THE ASSESSEE HAS FILED ALL RELEVANT DETAILS INCLUDING P URCHASE BILLS AND PAYMENT PROOF FOR SUCH PURCHASES. THE AO, WITHOUT MAKING A NY FURTHER ENQUIRIES TO ASCERTAIN TRUE NATURE OF TRANSACTIONS, SIMPLY RELIE D UPON INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT AND MADE ADDITION WHICH I S INCORRECT. 6. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. AS REGARDS GROUND TAKEN BY THE ASSESSEE CHALLENGING VALIDITY OF REOPENING OF A SSESSMENT, WE FIND THAT THE AO HAS REOPENED ASSESSMENT ON THE BASIS OF INFORMAT ION RECEIVED FROM DGIT(INV) WHICH WAS FURTHER SUPPORTED BY REPORT OF SALES-TAX DEPARTMENT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE I NFORMATION RECEIVED FROM 6 ITA 4068/MUM/2018 EXTERNAL AGENCIES BY THE AO IN THE FORM OF REPORT O F INVESTIGATION WING CONSTITUTE A FRESH MATERIAL WHICH IS SUFFICIENT TO FORM A REASONABLE BELIEF OF ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT AND HENCE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERI T IN THE LEGAL GROUND TAKEN BY THE ASSESSEE CHALLENGING VALIDITY OF REOPENING O F ASSESSMENT. ACCORDINGLY, WE REJECT GROUND TAKEN BY THE ASSESSEE. 8. COMING TO THE ISSUE IN QUESTION, THE AO HAS MADE ADDITION OF RS.5,67,000 TOWARDS PURCHASES CLAIMED TO HAVE BEEN MADE FROM M/S KOTSON IMPEX PVT LTD ON THE GROUND THAT ALTHOUGH ASSESSEE HAS PRODUCED BILLS AND PAYMENT PROOF, BUT FAILED TO FILE FURTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDINGS FROM THE SALES-TAX DEPARTMENT THAT THE DEA LER IS A SUSPICIOUS / HAWALA DEALER INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IT IS THE CLAIM OF THE ASSESSEE THAT MERELY FOR THE REASON OF INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT, NO ADVERSE INFERENCE COULD BE DRAWN AGA INST ASSESSEE WHEN ASSESSEE HAS FURNISHED NECESSARY INFORMATION INCLUD ING PURCHASE BILLS. THE ASSESSEE FURTHER CONTENDED THAT THE TOTAL PURCHASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS MORE RS.5,000 CRORES, WHEN S UCH BEING THE CASE, IT IS IMPROBABLE TO HOLD THAT THE ASSESSEE WAS INDULGING IN OBTAINING ACCOMMODATION ENTRIES OF PURCHASE FOR RS.5,67,000 T O INFLATE ITS EXPENDITURE. MORE SO, WHEN THE ASSESSEE HAS DECLARED HUGE LOSS O F MORE THAN RS,.1,000 7 ITA 4068/MUM/2018 CRORES FOR THE YEAR UNDER CONSIDERATION. WE FIND T HAT THE ASSESSEE IS A CORPORATE GIANT INVOLVED IN THE BUSINESS OF MANUFAC TURING AND SELLING OF IRON AND STEEL PRODUCTS. THE ASSESSEES TURNOVER FOR TH E YEAR UNDER CONSIDERATION IS MORE THAN RS.8,900 CRORES. THE ASSESSEE HAS DECLAR ED A NET LOSS OF RS.1098 THOUSAND CRORES. UNDER THESE FACTS, IT IS DIFFICUL T TO ACCEPT THE ARGUMENTS OF THE DEPARTMENT THAT ASSESSEE WAS INVOLVED IN OBTAIN ING ACCOMMODATION ENTRIES FOR PURCHASES AMOUNTING TO RS.5,67,000. TH EREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO AS WELL AS THE LD.CIT(A ) WERE ERRED IN MAKING ADDITION TOWARDS PURCHASE OF RS.5,67,000 FROM M/S K OTSON IMPEX PVT LTD AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT ONLY ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT IGNORING EVIDENC ES FILED BY THE ASSESSEE. HENCE, WE DIRECT THE AO TO DELETE THE ADDITION MADE TOWARDS ALLEGED BOGUS PURCHASES. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 -07-2019 . SD/- SD/- (PAWAN SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 03 RD JULY, 2019 PK/- 8 ITA 4068/MUM/2018 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI