ACIT CIR 12(3), MUMBAI V. SHRIDHAR M SHETTY, MUMBAI

ITA 4303/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8134 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 15-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2014
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: SHRIDHAR SHETTY
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER , A ND SHRI N.K. PRADHAN , A CCOUNTANT M EMBER ITA NO . 4303 /MUM/20 14 ASSESSMENT YEAR: 2009 - 10 ACIT - 12(3), R. NO.137, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 / VS. SHRI SHRIDHAR M SHETTY, 71 - B, MITTAL TOWER, NARIMAN POINT, MUMBAI - 400021 ( / R EVENUE) ( /ASSESSEE) P.A. NO. AKXPS3214K / REVENUE BY SHRI H. N.SING H CIT - DR / ASSESSEE BY SHRI SHRIDHAR SHETTY / DATE OF HEARING : 15/02/2017 / DATE OF ORDER : 08 /0 3 /2017 S HRIDHAR M. SHETTY ITA NO. 4 303/MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 20/03/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI , WHEREIN, THE ADDITION OF RS.1,37,88,816/ - WAS DELETED IN RESPECT TO COMMISSION PAID TO FOREIGN AGENTS FOR NON - DEDUCTION OF TAX AT SOURCE DESPITE THE FACT THAT THE SERVICES OFFICERS OFFERED BY THE FOREIGN AGENTS ARE CLEARLY COVERED UNDER MANAGERIAL SERVICES AS PER EXPLANATION - 2 U/S 9(1)(VII) OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT) AND FURTHER SUSTAINING THE ADDITION OF ONLY 10% OF THE BOGUS PURCHASES AMOUNTING TO RS.9,33,57,092/ - DISALLOWED U/S 68 OF THE ACT. 2. DURING HEARING, THE LD. CIT - DR, SHRI H. N.SINGH, DEFENDED THE ADDITION/DISALLOWANCE MADE BY THE ASSESSING OFFICE R. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI SHRIDHAR SHETTY, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. HOWEVER, IT WAS POINTED OUT BY LD. CIT - DR THAT FOR ASSESSMENT YEAR 2009 - 10 ITSELF , THE APPEAL OF THE ASSESSEE, WAS REMA NDED BACK TO THE FILE OF THE LD. ASSESSING OFFICER BY THE TRIBUNAL VIDE ORDER DATED 13/07/2016 (ITA NO.4418/MUM/2014) WITH A DIRECTION TO PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THEREAFTER MAY BE DECIDED. 2.1. WE HAVE CONSIDERED T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, S HRIDHAR M. SHETTY ITA NO. 4 303/MUM/2014 3 WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 13/07/2016 FOR READY REFERENCE AND ANALYSIS: - THIS APPEAL IS FILED B Y THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 23, MUMBAI DATED 20.3.2014 PERTAINING TO ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT(A) HAS CONFIRMED THE ADHOC ADDITION @10% OUT OF TOTAL PURCHASES FROM SUSPICIOUS HAWALA PURCHASES OF RS. 9,33,57,092/ - 2. THE LD. CIT(A) NOT CONSIDERED THE FACTS THAT DEPARTMENT HAS CONSIDERED THE PEAK AMOUNT FOR ADDITION IN ASSESSEES CASE FOR A.Y. 2010 - 11. 3. THE LD. CIT(A) HAS NOT CONSIDERED THE FACTS THAT HIGHEST PEAK OF HAWALA PURCHASES WAS RS. 29,37,311/ - FOR THE CONCERNED YEAR. 4. THE LD. CIT(A) HAS NOT CONSIDERED THE FACTS THAT WITHOUT PURCHASES, HOW SALES CAN BE EFFECTED? 5. THE LD. CIT(A) HAS NOT CONSIDERED THE FACTS THAT THE ASSESSEE IS RESELLERS NOT A MANUFACT URERS. THE ASSESSEE HAS PROVED THAT ENTIRE SALES IS EXPORT. ENTIRE EXPORT SALES WAS CONFIRMED BY VARIOUS GOVERNMENT AUTHORITIES. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008 - 09 RESTOR ED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AS THE ASSESSEE CONTENDED THAT HE HAS MAINTAINED CERTAIN RECORDS WHICH SHOWS THAT THE PURCHASE WAS GENUINE. 4. THE LD. DEPARTMENTAL REPRESENTATI VE HAS NO SERIOUS OBJECTION IN REMITTING THE ISSUE TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 5. WE HAVE PERUSED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008 - 09 IN ITA NO. 1164/M/2012 DATED 21.3.2016 AND FIND THAT THE AD DITION/DISALLOWANCE ON ACCOUNT OF PURCHASES TREATED AS NOT GENUINE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THE SAME AFRESH OBSERVING AS UNDER: S HRIDHAR M. SHETTY ITA NO. 4 303/MUM/2014 4 NEXT GROUND RELATES TO DISALLOWANCE OF PURCHASE BY HOLDING THAT THE SAME AS NON - GE NUINE IN NATURE. LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN CERTAIN DETAILSFROM SALES TAX DEPARTMENT AND FOUND THAT SOME OF THE PARTIES, FROM WHOM THE ASSESSEE HAD PURCHASED GOODS, HAVE BEEN ALLEGED TO BE ISSUING BOGUS BILLS. LEARNED AR SUBM ITTED THAT THAT THE ASSESSING OFFICER HAS ACCORDINGLY DISALLOWED THE PURCHASES WITHOUT CONSIDERING VARIOUS MATERIALS AVAILABLE WITH THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES. LEARNED AR FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN A DIFFERENT VIEW IN A.Y. 2010 - 11 AND ACCORDINGLY ADDED PEAK AMOUNT OF PAYMENTS MADE TOWARDS PURCHASES INSTEAD OF ADDING ENTIRE AMOUNT OF PURCHASES. ACCORDINGLY, LEARNED AR SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IN A.Y. 2010 - 11 MAY ALSO BE APP LIED TO THE YEAR UNDER CONSIDERATION ALSO. 6. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER MIGHT HAVE TAKEN DIFFERENT VIEW IN A.Y. 2010 - 11 CONSIDERING THE FACTS PREVAILING IN THAT YEAR AND HENCE SAID METHODOLOG Y CANNOT BE APPLIED BLINDLY TO THE YEAR UNDER CONSIDERATION. 7. HAVING HEARD RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER FOR THE FOLLOWING REASONS: - A) THE ASSESSEE CLAIMED THAT HE HAS MAINTAINED CERTAIN RECORDS WHICH WOULD SHOW THAT THE PURCHASES WERE GENUINE AND THE SAID RECORDS HAVE BEEN EXAMINED BY THE ASSESSING OFFICER. B) THE ASSESSING OFFICER HAS TAKEN DIFFERENT VIEW OF THE MATTER IN A.Y. 2010 - 11 AND ACCORDING TO THE ASSESSEE FACTS ARE IDENTICAL BETWEEN THAT YEAR AND THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE SAME AFRESH AFT ER CONSIDERING THE EXPLANATION AND INFORMATION THAT MAY BE FURNISHED BY THE ASSESSEE BEFORE HIM. THE ASSESSING OFFICER MAY ALSO TAKE INTO CONSIDERATION THE ASSESSMENT ORDER PASSED BY HIM FOR A.Y. 2010 - 11 IN THIS REGARD. 6. THE REVENUE COULD NOT POINT OUT ANY CHANGE IN FACTS DURING THIS ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009 - 10 WHICH IS UNDER APPEAL BEFORE US. THEREFORE SINCE THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES RESPECTFULLY FOLLOWING THE SAID ORDER, WE RESTORE THIS ISSUE BACK TO THE FILE OF TH E ASSESSING OFFICER S HRIDHAR M. SHETTY ITA NO. 4 303/MUM/2014 5 WITH A DIRECTION TO EXAMINE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 2.2. WE FIND THAT THE TRI BUNAL VIDE AFORESAID ORDER DATED 13/07/2016 WITH RESPECT TO ADDITION OF 10% OUT OF TOTAL PURCHASES FROM SUSP ICIOUS H AWALA TRADERS FO R AN AMOUNT OF RS.9,33,57,092/ - , HIGHEST PEAK HAWALA PURCHASES ETC WERE CONSIDERED AND FOLLOWING THE DECISION OF THE TRIBUNA L FOR ASSESSMENT YEAR 2008 - 09 (ITA NO.1164/MUM/2012) ORDER DATED 21/03/2016, WHEREIN, THE ADDITION/DISALLOWANCES ON ACCOUNT OF PURCHASES, WHICH WERE TREATED AS NON - GENUINE WERE RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE S AME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SINCE, THE DEPARTMENT HAS CHALLENGED THE PART RELIEF AND THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) WITH RESPECT TO COMMISSION PAID TO FO REIGN AGENTS AND EXPLANATION - 2 TO SECTION 9(1)(VII) OF THE ACT, IT WOULD BE APPROPRIATE IF THIS FILE IS ALSO REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE FACTUAL MATRIX AND THEN ADJUDICATE THE ISSUES. NEEDLESS TO MENT ION HERE THAT THE ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS AT LIBERTY TO FURNISH NECESSARY EV IDENCE, IF ANY, IN SUPPORT OF HI S CLAIM. THUS, THE APPEAL OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. S HRIDHAR M. SHETTY ITA NO. 4 303/MUM/2014 6 FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. T HIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT T H E CONCLUSION OF THE HEARING ON 15 /02/2017 . S D/ - SD/ - ( N.K. PRADHAN ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 08/03 /2017 SHEKHAR, P.S / / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RES PONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I,