M/S ROLEX STEEL & ENGG CO, Mumbai V. ITO 19 (3)(1), Mumbai

ITA 4538/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3507 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 04-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Accommodation entries; Set aside
• Section: 271(1)(c); 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4538/MUM/2019 ASSESSMENT YEAR: 2011-12 M/S ROLEX STEEL & ENGG CO., ROOM NO. 7, GROUND FLOOR, KISAN PAHELWAN, BLDG NO. 80, SANT SENA MAHARAJ MARG, 2 ND FLOOR, KUMHARWADA, MUMBAI-400 004. VS. ITO 19(3)(1), MATRU MANDIR, MUMBAI-400 007. PAN NO. AAIFR 2636 P APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MR. SANJAY J. SETHI, DR DATE OF HEARING : 02/03/2021 DATE OF PRONOUNCEMENT : 05/03/2021 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2011-12. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE I NCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 11.01.2021 AND 02.03.2021, NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTAT IVE APPEARED BEFORE THE BENCH ON THE ABOVE DATES. AS THERE IS NON-COMPLIANC E BY THE ASSESSEE, WE ITA NO. 4538/M/2019 M/S ROLEX STEEL & ENGG 2 ARE PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXA MINING THE MATERIALS AVAILABLE ON RECORD AND HEARING THE LD. DEPARTMENTA L REPRESENTATIVE (DR). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. ERRED IN PASSING THE ORDER U/S 143(3) R.W.S. 147 AND THEREFO RE RENDERING THE WHOLE RE- ASSESSMENT BAD IN LAW AND ALSO ON THE BASIS OF BORR OWED SATISFACTION, PRESUMPTION AND SURMISES. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE AO ERRED IN ADDING RS.5,86,587/- AS ALLEGED NON-GENUINE PURCHASES BEIN G 12.5% OF THE TOTAL PURCHASES AMOUNTING TO RS.46,92,697/-. A. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. ERRED IN ADDING RS.5,86,587/- AS ALLEGED NON-GENUINE PURCHAS ES BEING 12.5% OF THE TOTAL PURCHASES AMOUNTING TO RS.46,92,697/-, EVEN T HOUGH THE PAYMENT FOR PURCHASES IS MADE FROM THE BOOKS BY A/C PAYEE CHEQU ES AND CANNOT BE TERMED AS NON-GENUINE EVEN THOUGH THE SAME HAS BEEN FULLY ALLOWED BY THE JURISDICTIONAL MUMBAI TRIBUNAL IN RECENT CASE O F RAJEEV M KALATHIL 6727/M/12, GANPATRAJ A SANGHAVI [I.T.A. NO.2826/MUM /2013], RAMESH KUMAR & CO. APPEAL NO. 2959/MUM/2014, DEEPAK POPATL AL GALA [ITA NO 5920/M/13], RAMILA P SHAH [ITA NO 5246/M/13] PARESH GANDHI [ITA NO- 5706/M/2013], HIRALAL CHUNILAL JAIN [ITA NO. 4547/M /14], TARLA SHAH [ITA NO. 5295/MUM/2013] AND M/S. IMPERIAL IMP. & EX P [ITA NO. 5427/MUM/2015]. B. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. ERRED IN ADDING RS.5,86,587/- AS ALLEGED NON-GENUINE PURCHAS ES BEING 12.5% OF THE TOTAL PURCHASES AMOUNTING TO RS.46,92,697/- ONLY ON THE BASIS OF THE INFORMATION ON THE WEBSITE WWW.MAHAVAT.GOV.IN ABOUT 10 SUSPICIOUS DEALERS WHOSE COPY OF STATEMENT RECORDED WERE NOT F URNISHED TO THE APPELLANT. C. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE A.O. ERRED IN ADDING RS.5,86,587/- AS ALLEGED NON-GENUINE PURCHAS ES WITHOUT ITA NO. 4538/M/2019 M/S ROLEX STEEL & ENGG 3 APPRECIATING THE FACT THAT NO ADDITION CAN BE MADE IF THE SUPPLIERS ARE NOT TRACEABLE AS PER THE JUDGMENT OF THE BOMBAY HIGH CO URT. D. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE A.O. ERRED IN DISALLOWING RS.5,86,587/- AS ALLEGED NON-GENUINE PU RCHASES EVEN THOUGH THE PAYMENTS WERE MADE BY A/C PAYEE CHEQUES FROM TH E DISCLOSED BANK ACCOUNTS. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE AO ERRED IN LEVYING PENALTY U/S 271(1)(C) AND INTEREST CHARGED U/S 234 A, B, C & D. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN CONFIRMING THE ABOVE DISALLOWANCES. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2011-12 ON 1 1.08.2011 DECLARING TOTAL INCOME OF RS.18,620/-. ON RECEIPT OF INFORMAT ION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSE SSEE HAD OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.46,92,697/- F ROM 10 PARTIES, THE ASSESSING OFFICER (AO) ISSUED NOTICE U/S 148 FOR RE -OPENING THE ASSESSMENT. IN RESPONSE TO IT, THE ASSESSEE VIDE ITS LETTER DATED 30.09.2016 REQUESTED THE AO THAT THE RETURN ORIGINALLY FILED BE TREATED AS F ILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF REASSESSME NT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE ALLEGED ENTRY PROVI DERS TO VERIFY THE GENUINENESS OF THE PURCHASES. HOWEVER, THOSE NOTICE S WERE RETURNED UN- SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE F ILED BEFORE THE AO, COPY OF AUDITED BALANCE SHEET, P&L ACCOUNT, AUDIT REPORT , BANK STATEMENT, PURCHASE/SALE BILL (PARTY-WISE) STOCK REGISTER, PUR CHASE/SALE BILL AND MODE OF PAYMENT. HOWEVER, THE AO OBSERVED THAT THE ASSES SEE COULD NOT FILE TRANSPORT RECEIPTS, OCTROI RECEIPTS, RECEIPTS FROM WEIGHBRIDGE, EXCISE GATE PASS, GOODS INWARD REGISTER. THEREFORE, CONSIDERING THE FACTS AND ITA NO. 4538/M/2019 M/S ROLEX STEEL & ENGG 4 CIRCUMSTANCES OF THE CASE AND RELYING ON THE DECISI ON IN CIT V. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) AND M/S BHOLENATH POLY FAB P. LTD. 355 ITR 290 (GUJ), ESTIMATED THE PROFIT @ 12.5% ON THE DISPUTED PURCHASES OF RS.46,92,697/- WHICH COMES TO RS.5,86,587/-. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 24.06 .2019, THE LD. CIT(A) HAS PASSED AN EX-PARTE ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD , CONFIRMING THE ESTIMATION DONE BY THE AO. 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS MENTIONED EARLIER, THE NOTICES ISSUED BY THE AO U/S 133(6) TO THE SAID PARTIES WERE RETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN. HOWEVER, IN RESPONSE TO A QUER Y RAISED BY THE AO, THE ASSESSEE FILED DURING THE COURSE OF ASSESSMENT PROC EEDINGS COPY OF AUDITED BALANCE SHEET, P&L ACCOUNT, AUDIT REPORT, BANK STAT EMENT, PURCHASE/SALE BILL (PARTY-WISE) STOCK REGISTER, PURCHASE/SALE BILL AND MODE OF PAYMENT. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE COULD NO T FILE TRANSPORT RECEIPTS, OCTROI RECEIPTS, RECEIPTS FROM WEIGHBRIDG E, EXCISE GATE PASS, GOODS INWARD REGISTER. THUS CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ESTIMATION BE MADE @ 6% OF THE DISPUTED PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD. CIT(A) AND DIRECT THE AO TO ESTIMATE PROFIT @ 6% ON THE DISPUTED PURC HASES OF RS.46,92,697/- AND BRING RS.2,81,560/- ONLY TO TAX. ITA NO. 4538/M/2019 M/S ROLEX STEEL & ENGG 5 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/03/2021. SD/- SD/- ( VIKAS AWASTHY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 05/03/2021 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI