ASST CIT 19(3), MUMBAI V. VISHAL DIAMONDS, MUMBAI

ITA 4544/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3916 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANDHIR GUPTA
• Keywords: Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, ITA NOS. 4544, 4545 & 4548/MUM/2015 (ASSESSMENT YEARS:2008-09, 2009-10 & 2012-13) ASSTT. COMMISSIONER OF INCOME TAX-19(3), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 APPELLANT VS. M/S. VISHAL DIAMONDS 100A-PANCHRATNA, OPERA HOUSE, MUMBAI - 400004 RESPONDENT PAN: AACFV0161D / BY REVENUE : SHRI RANDHIR GUPTA, D.R. / BY ASSESSEE : NONE /DATE OF HEARING : 03.08.2016 /DATE OF PRONOUNCEMENT : 08.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: ALL THREE APPEALS HAVE BEEN FILED BY REVENUE AGAINS T THE COMMON ORDER OF COMMISSIONER OF INCOME-TAX ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 2 (APPEALS)-29, MUMBAI, DATED 29.05.2015 FOR ALL A.YS . I.E. 2008-09, 2009-10 & 2012-13. SINCE, THESE APPEALS P ERTAIN TO SAME ASSESSEE AND ON SIMILAR ISSUES, SO THEY ARE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENI ENCE. 2. IN ITA NO.4544/MUM/2015 FOR A.Y. 2008-09, REVENU E HAS FILED APPEAL ON FOLLOWING GROUNDS: 1. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND I N LAW IN PARTLY ALLOWING THE APPEAL OF THE ASSESSEE AND BY SUSTAINING THE ADDITION TO THE EXTENT OF 12.5% OF ADDITION MADE BY THE A.O. IN SPITE OF CONCLUDING THAT THE PURCHASES ARE UNVERIFIABLE. 2. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN PARTLY ALLOWING THE APPEAL OF THE ASSESSEE AND BY SUSTAINING THE ADDITION TO THE EXTENT OF 12.5% IN SPITE OF INCLUDING THAT THE ASSESSEE DOES NOT MAINTAIN ANY STOCK REGISTER. 3. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RELAYING ON THE DECISION IN THE CASE OF CIT VS. SIMIT SHETH(2013) [56 ITR 451(GUJ.)] IN VIEW OF THE FACT THAT THE SAID DECISION MAY ONLY BE APPLICABLE IN CASES WHERE THE PARTY HAS MAINTAINED A STOCK REGISTER AND HAS MATCHED ITS SALES VIS-A-VIS ITS PURCHASES, WHICH THE ASSESSEE HAS FAILED TO DO SO. 2.1 ASSESSING OFFICER ON THE BASIS OF INFORMATION R ECEIVED HAS FOUND THAT ASSESSEE HAS SHOWN HAWALA PURCHASES IN VARIOUS YEARS AS UNDER: A.Y. NAME OF THE HAWALA DEALER PURCHASES MADE SHOWN (RS.) 2007-08 M/S. MAYUR EXPORTS 1,45,000/- 2008-09 M/S. MOHIT ENTERPRISES 4,72,650/- 2009-10 M/S. MAYUR EXPORTS 9,13,302/- ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 3 2010-11 M/S. PRIME STAR 35,10,156/- 2011-12 M/S. PRIME STAR 6,04,440/- 2012-13 M/S. MOHIT ENTERPRISES 11,29,050/- 2.2 ON ENQUIRES BY THE ASSESSING OFFICER, ASSESSEE HAS FURNISHED COPIES OF BILLS OF SUPPLIER, LEDGER ACCOU NT OF SUPPLIER AND THE BANK STATEMENTS SHOWING PAYMENTS F OR THE PURCHASES. ANY DISCREPANCY IN THESE DOCUMENTS PRODU CED BEFORE ASSESSING OFFICER HAS NOT BEEN NOTED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS NOTED THAT ASSESSEE FAILED TO PRODUCE THE FOLLOWING DOCUMENTS/ INFORMATION. 1) ANY DOCUMENTARY EVIDENCE, SUBSTANTIATING RECEIP T OF MATERIAL CLAIMED TO BE PURCHASED FROM THE PARTY, 2) HE FAILED TO LINK THE PURCHASES OF THESE MATERIA LS WITH SALES MADE BY HIM BY STATING THAT THE DIAMONDS ONCE PURCHASED LOSE THEIR IDENTITY AND ARE UNTRACEABLE. 3) HE FAILED TO PRODUCE THE PARTY FROM WHOM PURCHASES WERE MADE FOR VERIFICATION. 2.3 ASSESSING OFFICER CONSIDERED THAT THE SUPPLIER IS A GROUP CONCERN OF SHRI BHAWARLAL JAIN AND IT WAS ADM ITTED BY SHRI BHAWARLAL JAIN BEFORE THE INVESTIGATION WIN G THAT HE HAS NOT CARRIED ANY GENUINE BUSINESS AND HAS GIV EN ONLY ACCOMMODATION ENTRIES. SHRI BHAWARLAL JAIN WAS OPER ATING MANY SUCH CONCERNS FOR GIVING ACCOMMODATION BILLS. IT WAS ALSO ACCEPTED BY SHRI BHAWARLAL JAIN THAT PAYMENTS WERE ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 4 RECEIVED THROUGH CHEQUE IN THE BANK ACCOUNT OPERATE D IN THE NAME OF HIS BANK EMPLOYEES AND THEREAFTER WITHD RAWN IN CASH AND ROUTED IN THE HAWALA BUSINESS. IN THIS REGARD, THE PURCHASES MADE FROM THE ABOVE FIRM WAS GENUINE. HOWEVR, HE FAILED TO PRODUCE THE PARTY OR TO FURNIS H ANY FRESH EVIDENCE ADDRESS MENTIONED IN THE BILLS PRODU CED. NOTICE U/S.133(6) OF THE ACT WERE ISSUED TO THE SUP PLIERS BUT IT COULD NOT BE SERVED. SO, ASSESSING OFFICER CONCLUDED THAT THESE PARTIES NEVER EXISTED, SO, ASSESSING OFF ICER REJECTED THE CONTENTION OF ASSESSEE BY MAKING ADDIT ION DISALLOWED THE PURCHASE MADE BY ASSESSEE FROM SHRI BHAWARLAL JAIN AND IT HAS ALSO DOUBTED FURTHER 20% OF SUCH PURCHASES FOR REASON THAT ASSESSEE HAS SHOWN LOW PR OFIT TO THAT EXTENT. 2.4 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) PAR TLY ALLOWED THE APPEAL OF ASSESSEE TO THE EXTENT OF 12. 5% OF THE ADDITION MADE BY ASSESSING OFFICER. 2.3 SAME HAS BEEN OPPOSED BEFORE ME ON BEHALF OF REVENUE INTER ALIA SUBMITTING THAT CIT(A) ERRED ON FACTS AND IN LAW WAS NOT JUSTIFIED IN APRTLY ALLOWING THE APP EAL OF ASSESSEE AND SUSTAINING THE ADDITION TO THE EXTENT OF 12.5% OF THE ADDITION MADE BY ASSESSING OFFICER IN SPITE OF CONCLUDING THAT THE PURCHASES WERE UNVERIFIABLE. ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 5 ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER ON THE ISSUE BE RESTORED. ON THE OTHER HAND, NONE APPEARED ON BEHALF OF ASSESSEE. THEREFOR E, I PROCEED TO DECIDE THE CASE EX PARTE ON THE BASIS OF SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE AND MATERIALS AVAILABLE ON RECORD. 2.4 AFTER GOING THROUGH THE SUBMISSION OF LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIA L ON RECORD, I FIND THAT AS PER TAX AUDIT REPORT FURNISH ED BY ASSESSEE, THE BOOKS OF ACCOUNTS MAINTAINED BY ASSES SEE ARE CASH BOOK, LEDGER, JOURNAL, SALES AND PURCHASE REGI STERS. ASSESSEE HAS RELIED BEFORE CIT(A) ON THE DECISION O F MUMBAI ITAT IN CASE OF ESSEM GLOBAL EXPORTS P. LTD. (2015) 43 CCH 0299, DATED 13.03.2015 AND ARGUED THAT IN VIEW OF E VIDENCE PRODUCED NO ADDITION ON ACCOUNT OF PURCHASE IS CALL ED FOR. IN ESSEM GLOBAL EXPORTS P. LTD. (SUPRA), WHEREIN TR IBUNAL HELD AS UNDER: '8. THE LD. AO, IN HIS REMAND REPORT, HAS NOT CONTROVERTED THE EVIDENCE FILED BY THE ASSESSEE BEF ORE THE LD. CIT(A). WE THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHILE HOLDING THAT NO DISALLOWANCE WAS COILED FOR IN RELATION TO THE PURC HASES MADE BY THE ASSESSEE FROM M/S. ZARIBA FASHIONS, THE ASSESSEE HAS ALSO PRODUCED BEFORE THE LD. CIT(A) TH E CERTIFICATE FROM BANK SHOWING THE TRANSFER OF THE A MOUNT FROM THE ACCOUNT MS. GAURI DASWANI AND FURTHER THE ASSESSEE HAS FILED CONFIRMATION INDICATING THE SOUR CE OF FUNDS. THE PAN NUMBER OF SAID MS. GAURI DASWANI HAS ALSO BEEN SUBMITTED. THE AD, IN HIS REMAND REPORT, HAS NOT CONTROVERTED THE SAID EVIDENCE ALSO. WE ACCORDI NGLY, ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 6 DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. C IT(A) DELETING THE DISALLOWANCE RELATING TO BOTH THE ISSU ES IN THE QUANTUM PROCEEDINGS. THIS APPEAL OF REVENUE RELATING TO QUANTUM PROCEEDINGS IS THEREFORE DISMIS SED.' 2.5 IN VIEW OF ABOVE, CIT(A) RIGHTLY OBSERVED THAT ASSESSEE HAS SHOWN CERTAIN PURCHASES WHICH WAS UNVERIFIABLE PAYMENTS ARE STATED TO BE BY ACCOUNT PAYEE CHEQUES. PURCHASE BILLS HAD BEEN PRODUCED BEFORE THE ASSESSI NG OFFICER. BUT ADMITTEDLY, SUPPLIERS PARTIES WERE NOT AVAILABLE AT THE ADDRESS FURNISHED. ASSESSEE DID NOT MAINTAIN ANY STOCK REGISTER AS EVIDENT FROM TAX AUDIT REPORT. ON THESE FACTS, APPLYING THE DECISION OF HONBLE GUJARAT HIG H COURT IN THE CASE SIMIT SHETH (356 ITR 451), CIT(A) DIREC TED TO ASSESSING OFFICER TO DISALLOW 12.5% OF THE PURCHASE S MADE IN RESPECTIVE YEARS AND HE ALSO DIRECTED THE ASSESS ING OFFICER TO COMPUTE THE INCOME ACCORDINGLY. UNDER FACTS AND CIRCUMSTANCES, THE DIRECTION OF CIT(A) IS APPRO PRIATE. ACCORDINGLY, SAME IS UPHELD. 3. AS A RESULT, APPEAL FILED BY REVENUE FOR A.Y. 20 08-09 IS DISMISSED. 4. IN OTHER TWO APPEALS I.E. ITA NOS. 4545 & 4548/MUM/2015 FOR A.YS. 2009-10 & 2012-13, SIMILAR ISSUE AROSE AS ABOVE APPEAL. FACTS BEING SIMILAR, SO, FOLLOWING SAME REASONING, I AM NOT INCLINED TO INTE RFERE WITH THE ORDER OF CIT(A). I UPHOLD THE SAME. ITA NOS. 4544, 4545 & 4548/MUM/15 A.Y. 08-09, 09-10 & 12-13 [ACIT VS. M/S. VISHAL DIAMONDS] PAGE 7 5. IN THE RESULT, ALL THREE APPEALS FILED BY REVENU E ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 08 TH DAY OF AUGUST, 2016. SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER MUMBAI: DATED 08/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. BY ORDER / , / , ,