SHAILESH J BURAD, MUMBAI V. ITO 16(3)(4), MUMBAI

ITA 4187/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0227 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R R SHAH
• Keywords: Bogus purchase; Unexplained expenditure; Opportunity of being heard; Principle of natural justice; Peak credit; Additional evidence
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4187/MUM/2014 ASSESSMENT YEAR: 2010 - 11 SHAILESH J BURAD 2201 F WING, SIDDHESH JYOTI APARTMENT, BALARAM STREET, GRANT ROAD, MUMBAI - 400007 VS. ITO - 16(3)(4) MATRU MA NDIR, TARDEO ROAD MUMBAI - 400007. PAN NO. AKCPB4190Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.R. SHAH, A R REVENUE BY : SHRI SAURABH KUMAR RAI, DR DATE OF HEARING : 24 /05 /2017 DATE OF PRONOUNCEMENT: 18/08/2017 ORDER PER N.K. PRADHAN, A.M . THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 27 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). ITA NO. 4187/MUM/2014 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THAT THE ORDER PASSED BY LEARNED AO IS AGAINST THE LAW, FACTS, PRINCIPLE OF NATURAL JUSTICE AND WITHOUT JURISDICTION. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,61,47,488/ - AS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT ON SURMISE AND CONJECTURE AND WITHOUT CONSIDERING THE SUBMISSION MADE. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS THOUGH THE APPELLANT HAS FILED COPY OF AN AFFIDAVIT, WHICH WAS FILED BEFORE THE MAHARASHTRA SALES TAX AUTHORITY STATING THAT THE APPELLANT WAS ONLY AN HAWALA DEALER AND HAS NOT IN FACT DEALT IN ANY GOODS DURING THE YEAR AND THEREFORE, THE ADDITION CANNOT BE MADE IN RESPECT OF PEAK CREDIT ON PURCHASE OF GOODS. 4) WITHOUT PREJUDICE TO ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIONS ON THE WRONG FACTS TH AT: A. THE APPELLANT IS A MANUFACTURER. B. THE APPELLANT IS NOT HAVING DETAILS OF MOVEMENT OF STOCK. C. O THER SUBMISSIONS MADE DURING THE HEARING. 5) WITHOUT PREJUDICE TO ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED I N CONFIRMING ADDITION ON THE BASIS OF PEAK CREDIT THOUGH THERE IS NO QUESTION OF MAKING ANY CASH PAYMENT. 6) WITHOUT PREJUDICE TO ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION ON THE BASIS OF PEAK CREDIT WITHOUT CONSIDERING THE PAYMENT RECEIVED AND NO WORKING OF THE PEAK CREDIT IS PREPARED ON DAY TO DAY BASIS THOUGH IT IS PREPARED ON MONTHLY BASIS WITHOUT GIVING THE WORKING OF THE SAME. ITA NO. 4187/MUM/2014 3 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASS ESSING OFFICER (AO) ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA FOUND THAT THE NAME OF THE ASSESSEE APPEARED IN THE LIST OF PERSONS WHO HAD OBTAINED BOGUS PURCHASE BILLS FROM THE ENTRY PROVIDERS. AS PER THE AO, THE BOGUS PURCHASE BILLS TAKEN BY THE ASSESSEE AMOUNTED TO RS.6,53,82,045/ - . THE BREAK - UP IS AS UNDER : S. NO. NAME OF THE PARTY TIN AMOUNT (RS.) 1. AAYUSHI ENTERPRISES 27630522965V 29,14,575 2. ANKIT ENTERPRISES 27060103705V 23,62,708 3. ARYEN SALES CORP. 27630522965V 1,09,67,634 4. MANVA IMPEX 272805 0 4194V 1,25,56,172 5. NAMAN ENTERPRISES 27450524228 V 1,03,35,752 6. SHAKTI TRADING CO. 27300350341 V 2,16,78,418 7. SIDDHIVINAYAK CORP. 27130558724V 45,66,786 TOTAL 6,53,82,045 DURING THE COURSE OF VERIFICATION, THE AO ISSUED NOTICES TO THE CONCERNED SUPPLIERS. HOWEVER, THE LETTERS ISSUED TO THEM WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN OR NO SUCH ADDRESS . THE AO ALSO DEPUTED THE INSPECTOR OF IN COME TAX TO MAKE FIELD INQUIRIES ON THE ABOVE PARTIES. THE INSPECTOR REPORTED TO THE AO THAT THE SAID PARTIES DID NOT EXIST IN THE ADDRESS PROVIDED BY THE ASSESSEE. THE AO THEN ISSUED A NOTICE U/S 142(1) TO THE ASSESSEE TO EXPLAIN THE GENUINENESS OF THE PU RCHASE. THE ASSESSEE FAILED TO FILE ANY SUBMISSION BEFORE THE AO. THE AO THEN WORKED OUT THE PEAK BALANCE AND MADE AN ADDITION OF RS.3,61,47,488/ - TO THE INCOME SHOWN BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A). THE LD. CIT(A) OBSERVED THAT (I) IN THE ASSESSEES ITA NO. 4187/MUM/2014 4 CASE, IT IS SEEN THAT IT IS A MANUFACTURER AND THE ONUS CAST ON IT IS MUCH HIGHER THAN THAT OF A TRADER BECAUSE THE GOODS HAVE BEEN CLAIMED TO HAVE BEEN CONSUMED FOR PRODUCTION, (II) NO STOCK REGISTER HAS BEEN MAINTAINED BY THE ASSESSEE AND, THEREFORE, ANY CLAIM OF CONSUMPTION CAN BE FUDGED TO THE BENEFIT OF THE ASSESSEE, (III) NO VEHICLE NO. HAS BEEN GIVEN SO FAR AS DELIVERY OF THE PURCHASES ARE CONCERNED. THEREFORE, THE LD. CIT(A) AGR EED WITH THE FINDING OF THE AO AND DISMISSED TH E APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) STATEMENT OF INCOME, (II) FINAL ACCOUNTS FOR THE YEAR ENDED ON 31.03.2010, (III) AFFIDAVIT, (IV) STOCK DETAILS, (V) BANK STATEMENT IN (A) BANK OF INDIA A/S NO. 3160010105002 67 BHULESHWAR BRANCH, (B) KOTAK MAHINDRA BANK A/C NO. 09612000005778, KALABADEVI BRANCH, (C) HDFFC BANK A/C NO. 03562560005588, CHARNI ROAD BRANCH, (VI) ASSESSMENT ORDER FOR AY 2009 - 10. FURTHER, THE LD. COUNSEL CLARIFIES THAT ITEM NO. (IV) AND (VI) WERE N OT FILED BEFORE THE AO OR THE CIT(A) AND THE SAME MAY BE ADMITTED AS ADDITIONAL EVIDENCE. 6. THE LD. DR RELIES ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN N.K. PROTEINS LTD. VS. DCIT (2017 - TIOL - 23 - SC - IT). IN THAT CASE D URING THE COURSE OF SEARCH PROCE EDINGS AT THE OFFICE PREMISES OF N.K. PROTEINS LTD., BLANK SIGNED CHEQUE BOOKS AND VOUCHERS OF NUMBER OF CONCERNS WERE FOUND. ENDORSED BLANK CHEQUES OF N.K. PROTEINS LTD. BY THESE CONCERNS WERE ALSO FOUND FROM THE OFFICE PREMISES OF N.K. PROTEINS LTD. WHER EIN THE ITA NO. 4187/MUM/2014 5 ENDORSEMENT WAS ON THE BACK OF THE CHEQUES. BLANK BILL BOOKS, LETTER HEADS AND VOUCHERS OF THESE CONCERNS WERE FOUND AND SEIZED FROM THE FACTORY PREMISES OF N.K. PROTEINS LTD. PURCHASES MADE BY THESE CONCERNS HAVE BEEN TREATED BY THE AO AS BOGUS PU RCHASES. BUT THIS IS NOT THE CASE HERE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS MENTIONED HERE - IN - ABOVE AT PARA 5, THE ASSESSEE HAS FILED STOCK DETAILS FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE SAME WAS NOT FILED BEFORE THE AO OR THE LD. CIT(A). THE STOCK DETAILS ARE RELEVANT IN DETERMINING THE ISSUE AT HAND. THEREFORE, WE ADMIT THE ADDITIONAL EVIDENCE IN THE SHAPE OF STOCK DETAILS FILED BEFORE US. WE ARE OF THE CONSIDERED VIEW THAT THE CONTENTIOUS ISSUES I N THE INSTANT APPEAL COULD BE RESOLVED BY VERIFICATION OF THE STOCK DETAILS, BANK STATEMENTS ETC. ALONG WITH THE EXAMINATION OF THE AFOREMENTIONED SEVEN PARTIES. THE HON'BLE SUPREME COURT IN STATE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627 , RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECESSARILY CARRY WITH IT THE RIGHT TO EXAMINE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS - EXAMINE WITNESSES. I N ITO VS. M. PIRAI CHOODI (2012) 20 TAXMANN.COM 733 (SC) , THE HON'BLE SUPREME COURT HAS HELD THAT ORDER OF ASSESSMENT PASSED WITHOUT GRANTING AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE, SHOULD NOT HAVE BEEN SET ASIDE BY HIGH COURT; AT MOST, HIGH COURT SH OULD HAVE ITA NO. 4187/MUM/2014 6 DIRECTED ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE CONCERNED WITNESS. IN VIEW OF THE ABOVE, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT IN THE LIGHT OF OUR OBSERVATION HERE - IN - ABOVE AND AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE RIGHT TO CROSS - EXAMINE THE WITNESSES. THE ASSESSEE IS ALSO DIRECTED TO FILE THE PERTINENT DETAILS BEFORE THE AO. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 18/08/2017 . SD/ - SD/ - (MAHAVIR S INGH) (N.K. PRADHAN) J UDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 18/08/2017 RAHUL SHARMA, SR. P.S. 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