SACHIN LAXMAN JANGID, MUMBAI V. INCOME TAX OFFICER, WARD 3(3), THANE, MUMBAI

ITA 4311/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4172 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2017
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 4311 / MUM . /201 7 ( ASSESSMENT YEAR : 20 11 12 ) ITA NO. 6652 /MUM. /2017 ( ASSESSMENT YEAR : 20 11 12 ) SACHIN LAXMAN JANGID ASHU APARTMENT, VISHNU NAGAR NAUPADA, THANE (W) 400 602 PAN ADBPJ0867C . APPELLANT V/S INCOME TAX OFFICER WARD 3(3), THANE . RESPONDENT REVENUE BY : SHRI M. SUBRA MANYAM ASSESSEE BY : SHRI NITIN WAGHMODE DATE OF HEARING 06.08.2019 DATE OF ORDER 23.08.2019 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEALS BY THE ASSESSEE ARE AGAINST TWO SEPARATE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 2, THANE, PERTAINING TO THE ASSESSMENT YEAR 2011 12. 2 SACHIN LAXMAN JANGID ITA NO.4311/MUM./2017 2 . THE AFORESAID APPEAL ARISES OUT OF QUANTUM PROCEEDINGS. THE GROUNDS RAISED IN T HE MEMORANDUM OF APPEAL PERTAIN TO THE VALIDITY OF EX PARTE ASSESSMENT OR DER PASSED UN DER SECTION 144 R/W SECTION 147 OF THE ACT AS WELL AS ON THE MERITS OF THE ADDITION MADE OF ` 42,11,333, ON ACCOUNT OF NON GENUINE PURCHASES. IN ADDITION, THE ASSESSEE HAS RAISED ADDITIONAL GROUND S CHALLENGING THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. 3 . BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITY THROUGH HIS PROPRIET ARY CONCERN M/S. SACHIN CONSTRUCTION. FOR THE ASSESSMEN T YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 29 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 71,16,370. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY CERTAIN HAWALA OPERATORS BY WAY OF BOGUS PURCHASE BILLS AMOUNTING TO ` 42,11,333, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 1 47 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE , THROUGH PROPER DOCUMENTARY EVIDENCES, THE 3 SACHIN LAXMAN JANGID GENUINENESS OF PURCHASES OF ` 42,11,333, CLAIMED TO HAVE BEEN MADE FROM FOUR PARTIES. FURTHER, TO ASC ERTAIN THE GENUINENESS OF SUCH TRANSACTION S , THE ASSESSING OFFICER CONDUCTED INDEPENDENT ENQUIRY BY ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES. AS ALLEGED BY THE ASSESSING OFFICER, IN RESPONSE TO THE QUERY RAISED, THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES. FURTHER, THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT EITHER WERE NOT RESPONDED TO OR RETURNED BACK UN SERVED. IN VIEW OF THE AFORESAID, THE ASSESSING OFFICER PROCEEDED TO COMPL ETE THE ASSESSMENT TO THE BEST OF HI S JUDGMENT AS PER THE PROVISION OF SECTION 144 OF THE ACT. WHILE DOING SO, HE ADDED BACK THE ALLEGED BOGUS PURCHASE OF ` 42,11,333, TO THE INCOME OF THE ASSESSEE. AGAINST THE AFORESAID ADDITION, THE ASSESSEE PREFERRED AP PEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . IN THE COURSE OF APPEAL PROCEEDINGS, LEARNED COMMISSIONER (APPEALS) FOUND THAT DURING THE YEAR, THE ASSESSEE HAD EFFECTED TOTAL PURCHASES OF ` 2,48,49,832. BEING OF THE VIEW THAT THE ENTIRE PURCHASES SHOWN BY THE ASSESSEE IS NOT GENUINE, LEARNED COMMISSIONER (APPEALS) ISSUED NOTICES FOR ENHANCEMENT OF INCOME AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, MADE FURTHER ADDITION OF ` 206,38,499. 4 SACHIN LAXMAN JANGID 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , DUE TO UNAVOIDABLE CIRCUMSTANCES, THE ASSESSEE COULD NOT APPEAR AND FURNISH SUPPORTING EVIDENCES BEFORE THE ASSESSING OFFICER TO PROVE THE PURCHASES WHICH RESULTED IN A BEST JUDGMENT ASSESSMENT. FURTHER, HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) WITHOU T PROPERLY APPRECIATING THE FACTS HAS ENHANCED THE INCOME BY AN AMOUNT OF ` 2,06,38,499, DISALLOWING ALL THE PURCHASES SHOWN BY THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , SINCE THE ASSESSEE IS IN CONSTRUCTION ACTIVITY, IT IS HIGHLY IMPROBABLE FOR THE ASSESSEE TO CARRY ON THE CONSTRUCTION WORK WITHOUT PURCHASING MATERIALS LIKE STEEL, CEMENT, ETC. HE SUBMITTED , THE FACT THAT THE ASSESSEE IS ENGAGED IN CONSTRUCTION ACTIVITY IS NOT DISPUTED. THEREFORE, THE ENTIRE PURCHASE MADE BY THE ASS ESSEE DURING THE YEAR CANNOT BE TREATED AS NON GENUINE. HE SUBMITTED , THE ASSESSEE HAS ALL THE EVIDENCES TO DEMONSTRATE THAT THE MATERIALS LIKE STEEL, CEMENT, ETC., WERE PURCHASED AND UTILIZED IN CONSTRUCTION WORK DURING THE YEAR. THUS, HE SUBMITTED , THE A DDITION MADE WAS NOT PROPER. 6 . AS REGARDS THE VALIDITY OF ASSESSMENT UNDER SECTION 147 OF THE ACT, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSING OFFICER HAD NO TANGIBLE MATERIAL BEFORE HIM TO RE OPEN THE ASSESSMENT. THEREFORE, THE RE OPENI NG OF ASSESSMENT UNDER SECTION 147 OF THE ACT ON A MERE CHANGE OF OPINION IS INVALID. 5 SACHIN LAXMAN JANGID 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN ASSESSEES CASE NO SCRUTINY ASSESSMENT WAS MADE EARLIER AND THE RETURN OF INCOME W AS PROCESSED UNDER SECTION 143(1 ) OF THE ACT. HE SUBMITTED , SUBSEQUENT LY INFORMATION CAME TO THE NOTICE OF THE ASSESSING OFFICER INDICATING THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM HAWALA OPERATOR S . THAT BEING THE CASE, THE RE OPENING OF ASSESSMENT HAVING BEEN MADE ON THE BASIS OF TANGIBLE MATERIAL IS VALID. AS REGARDS THE MERITS OF THE ADDITION , THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE ASSESSEE HAVING FAILED TO PROVE THE GENUINENESS OF PURCHASES MADE DURING THE YEAR, LEARNED COMMISSIONER (APPEALS) WAS JUSTIF IED IN ENHANCING THE INCOME OF THE ASSESSEE BY DISALLOWING THE PURCHASES. HE SUBMITTED , THE ASSESSEE HAS NOT PROVED WITH SUPPORTING EVIDENCE WHY SUCH HUGE PURCHASE OF STEEL WAS REQUIRED AND HOW IT WAS UTILIZED. THUS, HE SUBMITTED , THE ADDITION MADE SHOULD BE SUSTAINED. 8 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, IN ASSESSEES C ASE THERE WAS NO SCRUTINY ASSESSMENT EARLIER AND THE RETURN OF INCOME FILED BY THE ASSESSEE WAS ONLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, MATERIAL CAME TO THE POSSESSION OF THE ASSESSING OFFICER INDICATING THAT THE ASSESSEE HAD AVAILED ACCOMMODATION ENTRIES BY WAY OF BOGUS PURCHASE BILLS. THEREFORE, IN OUR CONSIDERED OPINION, THE ASSESSING 6 SACHIN LAXMAN JANGID OFFICER HAD SUFFICIENT TANGIBLE MATERIAL AVAILABLE BEFORE HIM TO FORM BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THAT BEING THE CASE, THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, IN OUR VIEW, IS VALID. AS REGARDS THE MERITS OF THE ADDITION MADE BY THE ASSE SSING OFFICER AND ENHANCED BY LEARNED COMMISSIONER (APPEALS), UNDISPUTEDLY, BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES ALLEGEDLY MADE FROM HAWALA OPERATOR S . THEREFORE, HE ADDED SUCH PURCHA SES TO THE INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER (APPEALS) HAS EVEN ADDED BACK THE REST OF THE PURCHASES TO THE INCOME OF THE ASSESSEE. TO A QUERY FROM THE BENCH AS TO WHETHER THE ASSESSEE CAN FURNISH QUANTITATIVE DETAILS TO SHOW PURCHASES AND C ONSUMPTION OF MATERIAL IN CONSTRUCTION ACTIVITY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , GIVEN AN OPPORTUNITY , THE ASSESSEE WOULD FURNISH THE DETAILS BEFORE THE ASSESSING OFFICER. IN V IEW OF THE AFORESAID SUBMISSION OF THE LEARNED AUTHORISED REPRE SENTATIVE, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED IN THE MEMORANDUM OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES, WHEREAS, T HE ADDITIONAL GROUNDS RAISED ARE DISMISSED. 7 SACHIN LAXMAN JANGID 9 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.6652/MUM./2017 10 . THIS APPEAL IS AGAINST IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 11 . AS COULD BE SEEN FROM THE FACTS ON RECORD , ON THE BASIS OF ADDITIONS MADE ON ACCOUNT OF NON GENUINE PURCHASES, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY PASSED ORDER IMPOSING PENALTY UNDER SEC TION 271(1)( C) OF THE ACT. L EARNED COMMISSIONER (APPEALS) ALSO SUSTAINED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 12 . WHILE DECIDING ASSESSEES QUANTUM APPEAL IN ITA NO.4311/MUM./ 2017, HEREIN BEFORE, WE HAVE RESTORED THE ISSUE RELATING TO THE ADDITION MADE ON ACCOUN T OF NON GENUINE PURCHASES TO THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. THUS, FOR THE PRESENT, THE ADDITION MADE DOES NOT SURVIVE. THAT BEING THE CASE, PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON SUCH ADDITION CANNOT SURVIVE. ACCORDINGLY, W E SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) SUSTAINING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER MAY INITIATE PENALTY PROCEEDINGS , IF WARRANTED , DEPENDING UPON THE DECISION TO BE TAKEN IN RE SPECT OF THE 8 SACHIN LAXMAN JANGID GENUINENESS OF PURCHASES MADE BY THE ASSESSEE DURING THE YEAR. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 13 . IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 14 . TO SUM UP, ITA NO.4311/MUM./2017 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO.6652/MUM./2017, IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN C OURT ON 23.08.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 23.08.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI