ASIAN POWER CONTROLS LTD, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 4452/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2755 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYA SHANKAR
• Assessee Lawyers: VENUGOPAL C NAIR
• Keywords: Unexplained expenditure; Opportunity of being heard; Additional evidence; Non compliance
• Section: 69C; 133(6); 37(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, SR. VP & SHRI R.K. PANDA, AM I.T.A. NO. 4452/MUM/09 (ASSESSMENT YEAR 2006-07) M/S. ASIAN POWER CONTROLS LTD. B-48, GURUDEV APARTMENTS, SINDHI SOCIETY, CHEMBUR, MUMBAI-400 071 PAN: AACCA6535B VS. DCIT-CIRCLE 3(1) AAYAKAR BHAVAN, ROOM 603-607, 6 TH FLOOR, MUMBAI-400 020 APPELLANT RESPONDENT APPELLANT BY: SHRI VENUGOPAL C.NAIR RESPONDENT BY: SHRI DAYA SHANKAR O R D E R DATE OF HEARING: 01.12.2009 DATE OF ORDER: 04.12.2009 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 8 TH APRIL, 2009 OF THE CIT(A)-27, MUMBAI RELATING TO A SSESSMENT YEAR 2006-07. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLENGE D THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.33,65,3 6,631 U/S. 37(1) OF THE INCOME-TAX ACT, 1961 (THE ACT). 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEALING IN GENERATORS AND POWER EQUIPMENTS. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN TOTAL PURCHASES AMOUNTING TO RS.36,56,19,194 AND SUNDRY CREDITORS OF RS.13,62,72 ,269. THE ASSESSEE FURNISHED THE DETAILS OF PARTY WISE PURCHASES GIVIN G NAME, ADDRESS AND AMOUNT. IN ORDER TO VERIFY THE GENUINENESS AND REA SONABLENESS OF THESE PURCHASE TRANSACTIONS, THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF I.T.A. NO. 4452/MUM/09 M/S. ASIAN POWER CONTROLS LTD. ===================== 2 THE ACT TO VARIOUS PARTIES. FROM THE RESPONSE RECE IVED FROM VARIOUS PARTIES, THE ASSESSING OFFICER OBSERVED THAT THERE ARE CERTAIN DISCREPANCIES BETWEEN THE AMOUNT OF PURCHASES SHOWN BY THE ASSESSEE AND THE AMOUNT OF SALE TO THE ASSESSEE SHOWN BY THE ABOVE PARTIES. SIMILARLY SOME OF THE LETTERS SENT TO THE PURCHASE PARTIES WERE RETURNED UNSERVED AND IN SOME CASES THERE WAS NO RESPONSE FR OM THEM. THE ASSESSING OFFICER ACCORDINGLY ASKED THE ASSESSEE TO RECONCILE THE DISCREPANCIES AND PRODUCE THE ABOVE PARTIES ALONG W ITH THEIR BOOKS OF ACCOUNT TO PROVE THE GENUINENESS OF THE TRANSACTION S. IT WAS ALSO INFORMED BY THE ASSESSING OFFICER THAT IN THE EVENT OF NON COMPLIANCE THE TRANSACTIONS WITH THOSE PARTIES WILL BE CONSIDERED AS UNEXPLAINED AND THE PURCHASES MADE FROM THOSE PARTIES WILL BE TREATED A S BOGUS AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. SINCE TH E ASSESSEE NEITHER RECONCILED THE DIFFERENCES IN THE PURCHASE AMOUNT S HOWN ON ACCOUNT OF VARIOUS PURCHASE PARTIES WITH THEIR BOOKS OF ACCOUN T NOR PRODUCED THE PARTIES FOR HIS VERIFICATION IN SPITE OF OPPORTUNIT IES TO GIVEN, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 69C OF TH E ACT AND ADDED AN AMOUNT OF RS.33,65,36,636 TO THE TOTAL INCOME OF TH E ASSESSEE. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT NO PROPER O PPORTUNITY AND SUFFICIENT TIME WAS GIVEN TO THE ASSESSEE IN ORDER TO RECONCILE THE TRANSACTIONS WHEREIN DIFFERENCES ARE DETECTED OR TO SUBMIT EXPLANATION IN DETAIL TO PROVE THE GENUINENESS OF THE TRANSACTIONS . RELYING ON A NUMBER OF DECISIONS IT WAS SUBMITTED THAT THE ONUS OF PROV ING FOR MAKING THE ADDITION U/S.69C IS ON REVENUE AND ONLY WHEN SUCH O NUS IS DISCHARGED THE ADDITION CAN BE CONSIDERED. IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESSING OFFICER CANNOT MAKE ADDITION U/S. 69C OF THE ACT AND THEREFORE, THE ADDITION SHOULD BE DELETED. 5. THE LEARNED CIT(A) HELD THAT THE ASSESSEE HAS FAILE D TO DISCHARGE THE ONUS CAST ON IT DESPITE THE OPPORTUNITIES GIVEN TO HIM. HE ACCORDINGLY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER B UT U/S. 37(1) OF THE I.T.A. NO. 4452/MUM/09 M/S. ASIAN POWER CONTROLS LTD. ===================== 3 ACT AND NOT U/S. 69C AS MADE BY THE ASSESSING OFFIC ER. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION U/S. 69C OF THE ACT A ND HE WAS ARGUING HIS CASE CHALLENGING THE ADDITION MADE U/S. 69C OF THE ACT. HOWEVER, THE LEARNED CIT(A) CONFIRMED THE ADDITION U /S. 37(1) O F THE ACT TREATING THE PURCHASE TRANSACTIONS AS NON GENUINE. HE SUBMITTED THAT ALL THE SALES ARE EXCISABLE AND THE ASSESSEE IS SUBJECTED TO ASSESSME NT UNDER THE PROVISIONS OF CENTRAL EXCISE ACT AS WELL AS THE SAL ES TAX ACT. THE OPENING STOCK, SALES AND CLOSING STOCK ARE ACCEPTED BY THE ASSESSING OFFICER. THEREFORE, THE PURCHASES SHOULD NOT BE DOUBTED. HE SUBMITTED THAT WHEN THE ADDITIONS ARE SUSTAINED THE GP RATE WILL SHOOT UP TO ASTRONOMICALLY HIGH FIGURE WHICH IS NOT POSSIBLE IN THIS LINE OF T RADE. HE SUBMITTED THAT THE ASSESSEE IN THE MEANTIME HAS OBTAINED CONFIRMAT IONS FROM ALL THE PARTIES WHICH ARE FILED IN THE SHAPE OF ADDITIONAL EVIDENCES. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE THE ADDITIONAL EVID ENCES MAY BE ADMITTED AS THEY GO TO THE ROOT OF THE MATTER. HE SUBMITTED TH AT SINCE THE ISSUE BEFORE THE CIT(A) WAS ADDITION U/S. 69C AND NOT U/S. 37(1) THE EVIDENCES WERE NOT FILED. HE ACCORDINGLY SUBMITTED THAT EITHER TH E ADDITIONS MAY BE DELETED OR THE MATTER MAY BE RESTORED BACK TO THE F ILE OF THE CIT(A) FOR FRESH ADJUDICATION. HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SANCHITA MARINE PRODUCTS PVT. LTD. VS. DCIT REPORTED IN 15 SOT 280. 7. THE LEARNED DR, ON THE OTHER HAND, REFERRING TO PAR A 6.6 OF THE ORDER OF THE CIT(A) SUBMITTED THAT ENOUGH OPPORTUNI TY WAS GIVEN TO THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE PUR CHASES BY SUBMITTING THE DETAILS AS CALLED FOR. HOWEVER, THE ASSESSEE H AS NOT TAKEN ANY STEPS. THE ASSESSEE COULD HAVE PRODUCED ALL THESE DETAILS BEFORE THE CIT(A) ALSO WHICH HE FAILED TO DO. REFERRING TO THE DECISION O F THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LA-MEDICA REPORTED IN 250 ITR 575 HE I.T.A. NO. 4452/MUM/09 M/S. ASIAN POWER CONTROLS LTD. ===================== 4 SUBMITTED THAT UNPROVED PURCHASES CAN BE ADDED TO T HE TOTAL INCOME OF THE ASSESSEE. 8. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT THE DECISION OF THE HONBLE DELHI HIGH COURT I S NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE THERE WAS COLLUSION WITH THE PARTIES WHEREAS IN THE INSTANT CASE THE PARTIES FROM WHOM P URCHASES ARE MADE ARE REPUTED COMPANIES AND NOT CONNECTED WITH THE AS SESSEE. THEREFORE, THE DECISION OF THE DELHI HIGH COURT IS NOT APPLICA BLE TO THE FACTS OF THE PRESENT CASE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO RECONCILE TH E DIFFERENCES BETWEEN PURCHASES IN THE BOOKS OF ACCOUNT AND SALES IN THE BOOKS OF THE VARIOUS PARTIES AND ON ACCOUNT OF NON PRODUCTION OF THE PUR CHASE PARTIES BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER MADE T HE ADDITION OF RS.33,65,36,631 AS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. WE FIND THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OF FICER U/S. 37(1) OF THE ACT BUT NOT U/S. 69C. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT HE HAD ARGUED THE MATTER BEFORE THE C IT(A) CHALLENGING THE APPLICABILITY OF PROVISIONS OF SECTION 69C AND NOT U/S. 37(1) SINCE THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER BY APP LYING THE PROVISIONS OF SECTION 69C OF THE ACT. WE, THEREFORE, FIND MER IT IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CONFI RMATIONS WHICH HAVE BEEN OBTAINED SUBSEQUENT TO THE ASSESSMENT PROCEEDI NGS BUT WERE NOT FILED BEFORE THE CIT(A) SHOULD BE ADMITTED AS ADDIT IONAL EVIDENCES. ACCORDINGLY WE ADMIT THE CONFIRMATIONS FILED IN THE SHAPE OF ADDITIONAL EVIDENCES AND DEEM IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION OF THE ISS UE. THE ASSESSING OFFICER SHALL GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE AND DECIDE I.T.A. NO. 4452/MUM/09 M/S. ASIAN POWER CONTROLS LTD. ===================== 5 THE ISSUE AFRESH AND AS PER LAW. WE HOLD AND DIREC T ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 4 TH DECEMBER, 2009. SD/- (R.V. EASWAR) SR. VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 4 TH DECEMBER, 2009 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT (A)-XXVII, MUMBAI, (4) THE CIT, CITY-3, MUMBAI, (5) THE DR, A BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO