OSIANS ART FUND, MUMBAI V. ACIT CEN CIR 11, MUMBAI

ITA 4397/MUM/2011

• Counselvise Citation: 439719914 RSA 2011
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: DEEPAK TRALSHWAL A
• Keywords: Bogus purchase; Search and seizure; Opportunity of cross examination; Onus to prove
• Section: 132; 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUD ICIAL MEMBER . / ITA NO. 4397 /MUM./ 2011 ( / ASSESSMENT YEAR : 2 0 0 7 08 ) OSIANS ART FUND 24 B, NARIMAN BHAVAN NARIMAN POINT, MUMBAI 400 021 .. / APPELLANT V/S DY. COMMISSIONER OF I NCOME TA X / ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 11, MUMBAI .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAATO1513E / ASSESSEE BY : MR. DEEPAK TRALSHWALA / REVENUE BY : MR. SUMIT KUMAR / DATE OF HEARING 19 .06.2014 / DATE OF ORDE R 30.06.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HA S BEEN PREFERRED BY THE ASSESSEE , CHALLEN GING THE IMPUGNED ORDER DATED 19 TH APRIL 2011 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XX XV II , MUMBAI , FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/S SECTION 153A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 200 7 08 , ON THE FOLLOWING GROUNDS: OSIANS ART FUND 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L A W , T H E LD . COMMISSIONER OF INCOME TAX (APPEALS) - 37 , MUMBAI ERRED IN 1. HOLDING PURELY ON SURMISES AND CONJECTURES THAT TH E ASSE SSEE - APPELLANT HAD PURCHASED THE PAI NTINGS THROUGH UNREGIST E R E D D EA L ERS OR FROM GRAY MARKET , AT A LESSER COST. 2 . UPHOLDING THE ADDITIONS OF RS. 3,32 , 43,750/ - BY THE LD . A SSESS IN G OFFICER ON ACCOUNT OF BOGUS PURCHASES ALTHOUGH A LL TH E PURCH ASES WERE MADE BY CHEQUES, THE SALES HAVE BEEN FULLY RECORD E D , A ND N O DISCREPANCY WAS POINTED OUT IN THE STOCKS . 3 . UPHOLDING THE ADDITIONS OF RS. 3,32 , 43,750/ - BY THE LD. ASSE SS IN G OFFICER ON ACCOUNT OF BOGUS PURCHASES ON THE BASIS O F STAT E M E N T S MADE BY THREE PERSONS , ALTHOUGH THEY WERE NOT PRODU CE D FOR C RO S S EXAMINATION EVEN 10 MONTHS AFTER SPECIFIC DIRECTIONS OF TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) 37. 4 . HOLDING INSTEAD , AT PAGE 26, THAT IT WAS THE APPELLANTS WHO H A D F A IL E D TO DISCHARGE THE BURDEN OF PROOF RE : THE ' CREDITWORTHIN E SS O F T H E CREDITORS FROM WHOM THE DISPUTED PURCHASES WERE MADE '. 5 . UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT BY THE LD. A SSESS IN G OFFICER , ALTHOUGH NOT A SINGLE DISCREPANCY WAS POINTED OU T IN T H E SA ID BOOKS OF ACCOUNT. 2 . FACTS IN BRIEF : THE ASSESSEE IS A TRUST WHICH IS E NGAGED IN THE BUSINESS OF ACQUISITION, HOLDING, MANAGEMENT, TRADING OR DISPOSAL OF INDIAN AS WELL AS FOREIGN ART OR ANY OTHER PROPERTY INCLUDING ANTIQUITIES. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 AND 132A, WAS CARRIED OUT ON 17 TH APRIL 20907, IN CA SE OF M/S. OSIANS CONNOISSEURS OF ARTS PVT. LTD., AND ITS ASSOCIATE CONCERNS. IN PURSUANCE OF SUCH SEARCH AND SEIZURE ACTION, ASSESSMENT UNDER SECTION 153A HAS BEEN COMPLETED IN CASE OF THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBITE D PURCHASES OF ` 116,56,44,768, IN THE BOOKS OF ACCOUNT. ON A PERUSAL OF THE PURCHASE BILLS, HE NOTED THAT CERTAIN PURCHASE BILLS WERE OBTAINED FROM THE FOLLOWING CONCERNS WHICH WERE MAINLY PROPRIETARY OSIANS ART FUND 3 CONCERN OF S/SHRI JESARAM PRAJAPATI, ASHOK PALLAN AND CHENTAN M. SHAH. 1. M/S. OSWAL TRADERS PRO. JESARAM PRAJAPATI 2. M/S. BALAJI SALES CORP. 3. M/S. JYOTI ENTERPRISES 4. M/S. MARCO ENTERPRISES 5. M/S. RAJ ENTERPRISES 6. M/S. KIRAN TRADERS 7. M/S. ELEGANT TRADING CO. PRO. ASHOK PALLAN 8. M/S. MU KTA SALES CORP. 9. M/S. MANGLA CORPORATION 10. M/S. OM ENTERPRISES 11. M/S. SUPER CORPORATION 12. M/S. NEELAM SALES CORP. PRO. CHETAN M. SHAH 3 . THE ASSESSING OFFICER RECORDED THE STATEMENT OF THESE PERSONS FROM WHERE IT REVEALED TO HIM THAT PURCHA SES AGGREGATING TO ` 13,69,75,000, WERE NON GENUINE. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ESTIMATED 25% OF THE PURCHASES DEBITED IN THE BOOKS OF ACCOUNT AS BOGUS AND ADDED THE SUM OF ` 3,32,43,750 (25% OF ` 13,29,75,000). THE LEARNED COMMISSIONER (APPEALS) TOO, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE MATERIAL AVAILABLE ON RECORD , CONFIRMED THE FINDING OF THE ASSESSING OFFICER. HE HAS FURTEHR NOTED THAT THE ASSESSEE DU RING THE COURSE OF REMAND PROCEEDINGS DID NOT INFORM THE ASSESSING OFFICER THE CONVENIENT DATES FOR CROSS EXAMINING THESE PERSONS. THUS, NO CROSS EXAMINATION OF THESE PERSONS WERE CARRIED OUT. OSIANS ART FUND 4 4 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE HAD COME UP FOR CONSID E R ATION IN OSIANS CONNOISSEURS OF ARTS PVT. LTD. V/S ACIT, ITA NO.4099/MUM./2004, ORDER DATED 29 TH JUNE 2011, WHEREIN , ON SIMILAR FACTS AND IDENTICAL ISSUE OF PURCHASES MADE FROM SAME PERSONS I.E., JESARAM PRAJAPATI, ASHOK PALLAN AND CHENTAN M. SHAH, THE MATTER HAS BEEN REMANDED BACK TO THE ASSESSING OFFICER TO PROVIDE THE ASSESSEE , OPPORTUNITY TO CROSS EXAMINE THESE PERSONS AND TO PASS A FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW. THEREFORE, CONSISTENT WITH THE VIE W TAKEN THEREIN, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR CROSS EXAMINATION OF THESE PERSONS AS THEY ARE THE WITNESS OF THE DEPARTMENT. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 6 . AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS AND ON A PERUSAL OF THE MATERIAL ON RECORD, WE FIND THAT THE BASIS FOR REJECTION OF THE BOOKS OF ACCOUNT AND THE ENTIRE ADDITION IS BASED ON THE STATEMENT RECO RDED BY THE ASSESSING OFFICER OF THE THREE PERSONS NAMELY, S/SHRI JESARAM PRAJAPATI, ASHOK PALLAN AND CHENTAN M. SHAH. ON SIMILAR FACTS, IN THE GROUP CONCERN OF THE ASSESSEE, WHEREIN SIMILAR ADDITION WAS MADE ON THE BASIS OF THE STATEMENT OF THE AFORESAID PERSONS, THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD BE GIVEN OPPORTUNITY TO CROSS EXAMINE THESE WITNESSES AND THEN TO DECIDE THE CASE AFRESH AND IN ACCORDANCE WITH THE PROVISIONS OF LA W. IN THE PRESENT CASE ALSO, NO PROPER OPPORTUNITY OF CROSS EXAMINATION OF THE WITNESSES HAS BEEN PROVIDED TO THE ASSESSEE, THEREFORE, ON SIMILAR LINE AND DIRECTIONS, W E SET ASIDE THE MATTER TO FILE OF THE ASSESSING OFFICER TO ALLOW OPPORTUNITY TO THE ASSE SSEE TO CROSS EXAMINE THE WITNESS ES AND THEN TO PASS FRESH ASSESSMENT ORDER IN ACCORDANCE WITH THE LAW AFTER PROVIDING DUE AND OSIANS ART FUND 5 EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. TH U S, WITHOUT GOING INTO THE MERIT OF THE CASE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7 . 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 30 TH JUNE 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 30 TH JUNE 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 30 TH JUNE 2014 / 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 / / (DY./ASSTT. REGISTRAR) , / ITAT , MUMBAI OSIANS ART FUND 6 DATE INITIAL ORIGINAL DICTATION PAID IS ENCLOSED AT THE END OF FILE 1. DRAFT DICTATED ON 26. 6.2014 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 2 7 . 6.2014 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26. 6.2014 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND M EMBER 26. 6.2014 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26. 6.2014 SR.PS 6. DATE OF PRONOUNCEMENT 30 . 6.2014 SR.PS 7. FILE SENT TO THE BENCH CLERK 30 . 6.2014 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / 19997 98 2000 01 / / / / / / / / / /