SYNERGY FASHIONS, MUMBAI V. ADDL CIT CIR 17(2), MUMBAI

ITA 4289/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0642 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Bonafide belief; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 4289/M/2013 ASSESSMENT YEAR: 2008 - 09 M/S. SYNERGY FASHIONS, C - 31, 3 RD FLOOR, SHRIRAM IND. ESTATE, G.D . AMBEDKAR ROAD, MUMBAI 400 031 PAN: AACFS 3083R VS. ADDL. CIT, CIRCLE : 17(2) , PIRAMAL CHAMBERS, LALBAUG, MUMBAI . (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MISS MRUGAKSHI JOSHI, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 19.03. 201 5 DATE OF PRONOUNCEMENT : 27.05. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 05.04.2013 OF THE CO MMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008 - 09 . 2. THE ASSESSEE HAS AGITATED THE CONFIRMATION OF THE PART OF THE ADDITIONS MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) ON ACCOUNT OF NON RECONCILIATION/VERIFICATION OF THE PAYMENTS MADE BY THE ASSESSEE TOWARDS PURCHASES AND COMMISSION. THE AO , DURING THE ASSESSMENT PROCEEDINGS , HAD ISSUED NOTICE TO 15 PARTIES TO VERIFY THE PAYMENT MADE TOWARDS PURCHASES AND COMMISSION BY THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE COULD NOT RECONCILE THE PAYMENTS MADE TO M/S. MONI C A TEXTILE S AND ITA NO.4289/M/2013 M/S. SYNERGY FASHIONS 2 M/S. SOW M I YA GARMENTS TOWARDS PURCHASES MADE A ND TO M/S. BALAJI INTERNATIONAL FOR THE COMMISSION PAID. HE ACCORDINGLY ADDED THE AMOUNT SHOWN AS PAYMENTS TO ABOVE THREE PARTIES INTO THE INCOME OF THE ASSESSEE. 3. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE AO HAD NOT OFFERED PROPER OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE NECESSARY DETAILS AND EVIDENCES. HE THEREFORE ALLOWED THE APPLICATION O F THE ASSESSEE FOR ADDITIONAL EVIDENCE AND CALLED THE REMAND REPORT FROM THE AO. AFTER GETTING THE REMAND REPORT DATED 28.09.12, THE LD. CIT(A) OBSERVED THAT THE NOTICE ISSUED TO M/S. BALAJI INTERNATIONAL WAS RETURNED UN - SERVED FOR WANT OF PROPER ADDRESS/ CHANGE OF ADDRESS. NO REPLY WAS RECEIVED FROM M/S. MONICA TEXTILE S TO THE NOTICE SERVED AT THE NEW ADDRESS SUBMITTED BY THE ASSESSEE. A REPLY WAS RECEIVED FROM M/S. SOWMIYA GARMENTS AFTER CONSIDERATION O F WHICH THE AO NOTICED THAT OUT OF THE PURCHASES OF RS.1,81,93,882/ - , THE ASSESSEE COULD NOT RECONCILE/VERIFY THE PAYMENT OF RS.39,55,669/ - . THE LD. CIT(A) ALSO OBSERVED THAT THE NOTICES WERE ALSO ISSUED TO THE BANK S OF THE RESPECTIVE PARTIES TO VERIFY THE RECEIPT OF PAYMENTS BUT NO REPLY FROM THE BANKERS WAS RECEIVED. HE ACCORDINGLY CALLED FOR A SECOND REMAND REPORT. WHILE RELYING UPON THE SECOND REMAND REPORT, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE COULD NOT VERIFY/ RECONCILE THE PAYMENT RELATING TO THE PART OF THE PAYMENTS MADE TO THE ABOVE THREE CO NCERNS AND FURTHER THAT THE RESPECTIVE BANKS OF THE SAID PARTIES HAVE ALSO NOT FURNISHED THE BANK STATEMENTS. HE THEREFORE HELD THAT THE ASSESSEE COULD NOT FULLY RECONCILE/VERIFY THE PAYMENTS AND CONFIRMED THE ADDITIONS OF RS.10,05,888/ - IN CASE OF M/S. B ALAJI INTERNATIONAL OUT OF CLAIM OF TOTAL COMMISSION PAID OF RS.11,81,845/ - . SIMILARLY, HE CONFIRMED THE ENTIRE ADDITION OF RS. 1,19,05,391/ - IN CASE OF PAYMENTS MADE TO M/S. MONICA TEXTILES . HE ALSO CONFIRMED THE ADDITION OF RS. 39,55,669/ - OUT OF THE ADD ITION MADE BY THE AO OF RS. 1,81,93 , 8 81 / - IN RELATION TO PAYMENTS MADE TO M/S. SOWMIYA GARMENTS. ITA NO.4289/M/2013 M/S. SYNERGY FASHIONS 3 4. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS CONTENDED THAT EVEN THE SECOND REMAND REPORT OF THE AO WAS A PARTIAL REMAND REPORT AND THE FINAL REMAND REPORT FROM THE AO WAS PENDING BUT THE LD. CIT(A), PENDING THE CONFIRMATIONS/THE FINAL REMAND REPORT, DECIDED THE APPEAL OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE AO HAD WRITTEN LETTERS TO THE RESPECTIVE BANKS FOR CONFIRMING THE PAYMENTS MADE BY THE ASS ESSEE OUT OF WHICH FEW BANKS HAD REPLIED CONFIRMING THE AMOUNTS PAID BY THE ASSESSEE BUT CONFIRMATION RELATING TO THE BAL A NCE OF THE AMOUNT WAS STILL PENDING WHEN THE LD. CIT(A) PROCEEDED TO DECIDE THE APPEAL IN QUESTION. THE LD. A.R. OF THE ASSESSEE HAS FURTHER RELIED UPON THE ADDITIONAL EVIDENCES FURNISHED BEFORE US. THE DETAIL OF WHICH IS REPRODUCED AS UNDER: IN RESPECT OF COMMISSION PAID TO M/S. BALAJI INTERNATIONAL : RS.10,05,888/ - 1. AFFIDAVIT OF M/S. BALAJI INTL. 2. ACK. OF RETURN (WITH TDS AN NX.) OF BALAJI INTERNATIONAL 3. BANK STATEMENT OF BALAJI INTL. IN RESPECT OF PURCHASES MADE FROM MONICA TEXTILES : RS. 1,19,05,391/ - 1. AFFIDAVIT OF M/S. MONICA TEXTILES 2. BANK STATEMENT OF MONICA TEXTILES 3. PYAMENT LETTERS TO SYNERGY FASHION 4. FORMS ISSUED BY SALES TAX DEPARTMENT 5. CHART SHOWING PURCHASES AND EXPORTS IN RESPECT OF PURCHASES MADE FROM SOWMIYA GARMENTS : RS.39,5 5, 669 / - 1. AFFIDAVIT OF M/S. SOWMIYA GARMENTS 2. BANK STATEMENT OF SOWMIYA GARMENTS 3. FORMS ISSUED BY SALES T AX DEPARTMENT 4 . CHART SHOWING PURCHASES AND EXPORTS 5 . RECORDS OF AY 2009 - 10 5. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT IT HAD DISCHARGED ITS ONUS. HE HAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS CONFIR MED THE ADDITIONS FOR WANT OF BANK STATEMENTS AND CONFIRMATIONS FROM THE NECESSARY PARTIES. THE LD. A.R. HAS FURTHER STATED THAT ITA NO.4289/M/2013 M/S. SYNERGY FASHIONS 4 THE ADDRESS OF THE SAID PARTIES HAD CHANGED BUT THE ASSESSEE HAS MADE EFFORTS TO TRACE THE ABOVE SAID PARTIES AND HAVE OBTAINE D THEIR AFFIDAVITS, CONFIRMATIONS AND ALSO THEIR BANK STATEMENTS TO VERIFY THE CORRESPONDING CREDIT OF AMOUNTS IN THEIR ACCOUNTS WHICH WERE RECEIVED FROM THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ABOVE DOCUMENTS WERE VERY MUCH NECESSARY FOR THE PROP ER ADJUDICATION OF THE MATTER. HE HAS ALSO RELIED UPON THE AFFIDAVIT OF MR . VIRE NDRA P. KARNAVAT , PARTNER OF THE ASSESSEE FIRM. ON THE OTHER HAND, THE LD. D.R. HAS RELIED UPON THE FINDINGS OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIO NS. WE FIND THAT THE ADDITIONS HAVE BEEN MADE BY THE LOWER AUTHORITIES FOR WANT OF RECONCILIATION/VERIFICATION OF THE PAYMENTS. DESPITE BEST EFFORTS, THE ASSESSEE COULD NOT RECONCILE/VERIFY THE PAYMENTS. HOWEVER, IT IS ALSO A FACT THAT THE ASSESSEE, NOW , HAS PRODUCED THE BANK STATEMENTS, CONFIRMATIONS, AFFIDAVITS OF THE RESPECTIVE PARTIES TO SHOW THAT THE CORRESPONDING PAYMENTS WERE CREDITED INTO THE ACCOUNTS OF THE CONCERNED PARTIES. THE ABOVE DETAILED DOCUMENTS RELIED UPON BY THE ASSESSEE ARE VERY MUC H PROPER AND NECESSARY FOR THE JUST DECISION OF THE CASE. IT IS NOT A CASE WHERE THE ASSESSEE WANTS TO INTRODUCE NEW EVIDENCES, BUT IT IS A CASE WHERE THE ADDITIONS HAVE BEEN MADE FOR WANT OF VERIFICATION. THE ASSESSEE, DESPITE BEST EFFORTS, COULD NOT VE RIFY THE PAYMENTS. THE DOCUMENTS IN THE SHAPE OF BANK STATEMENTS ETC. CANNOT BE SAID TO BE THE DOCUMENTS WHICH COULD HAVE BEEN CREATED BY THE ASSESSEE. IF THE ASSESSEE HAS DULY MADE THE PAYMENTS THERE IS NO REASON THAT THE ASSESSEE SHOULD BE UNDULY TAXED DISBELIEVING THOSE PAYMENTS ESPECIALLY WHEN THE ASSESSEE HAS OBTAINED THE CONFIRMATIONS AND EVEN THE BANK STATEMENTS ETC. TO PROVE THAT THE PAYMENTS WERE ACTUALLY MADE. INTEREST OF JUSTICE DEMANDS THAT THE EVIDENCES PRODUCED BY THE ASSESSEE BE CONSIDERED AND VERIFIED. WE ACCORDINGLY ALLOW THE REQUEST OF THE ASSESSEE FOR ITA NO.4289/M/2013 M/S. SYNERGY FASHIONS 5 ADMISSION OF ADDITIONAL EVIDENCE AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR ADJUDICATION AFRESH. NEEDLESS TO SAY THAT THE AO WILL CONSIDER THE ADDITIONAL EVIDENCES RELIED UPON BY THE ASSESSEE AND WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND THEN TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27.05. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 27.05.2015 . * KISHORE , SR. P.S. COPY TO: THE AP PELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.