NARESH B VORA, MUMBAI V. ASST CIT CEN CIR 18 &19, MUMBAI

ITA 4623/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1054 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-05-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 13-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Revised return
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4623/MUM/2013 (ASSESSMENT YEAR- 1997-98) SHRI NARESH B. VORA, PARAS-2, GULMOHAR CROSS ROAD NO.4, JVPD SCHEME, MUMBAI-400049 PAN: AABPV0742K VS. ACIT-CC-18 & 19, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO.4624/MUM/2013 (ASSESSMENT YEAR- 1998-99) SHRI NARESH B. VORA, PARAS-2, GULMOHAR CROSS ROAD NO.4, JVPD SCHEME, MUMBAI-400049 PAN: AABPV0742K VS. ACIT-CC-18 & 19, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ASSESSEE BY : NONE REVENUE BY : SHRI KAILASH KANOJIYA (DR) DATE OF HEARING : 03.05.2017 DATE OF PRONOUNCEMENT : 05.05.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THESE TWO APPEAL BY ASSESSEE UNDER SECTION 253 OF THE INCOME-TAX ACT (THE ACT) ARE DIRECTED AGAINST TWO SEPARATE ORDER OF LD. CIT(A)-39, MUMBAI DATED 07.03.2013 FOR AY 1997-98 & 1998-99 RESPECTIVELY. T HE FACTS OF BOTH THE AYS ARE ALMOST SIMILAR; THE ASSESSEE HAS RAISED SOME CO MMON GROUNDS OF APPEAL. THUS, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE DECIDING BY A CONSOLIDATED ORDER TO AVOID THE CONFLICTING DECISION. FOR APPREC IATION OF FACTS WE ARE REFERRING THE FACTS OF APPEAL ITA NO. 4623/MUM/2013 FOR AY 1997-98 ITA NO.4623 & 4624 /M/201- SHRI NARESH B. VORA 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) ERRED IN CONFIRMING THE ADDITIONS OF RS. 14,59,699/- ON THE FICTITIOUS SALES OF RS. 3,64,92,493 @ 4%. B. (A). THE LEARNED CIT (A) ERRED IN CONFIRMING THE AD DITIONS OF RS. 57,93,252/- TREATING THE SAME AS UNEXPLAINED CREDITS IN THE BAL ANCE SHEET (SUNDRY CREDITORS) (B). CIT (A) FAILED TO APPRECIATE THAT THE SUNDRY C REDITORS ARE FICTITIOUS, WHICH AROSE ON ACCOUNT OF FICTITIOUS PURCHASES SHOWN IN THE HAWALA TRANSACTIONS. 3. THE LEARNED CIT (A) ERRED IN CONFIRMING A.O.'S A CTION TAXING THE COMMISSION INCOME OF RS. 55,56,468 @ 4% OF RS. 13, 89, 11,705. 4. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDI TION OF RS.1,84,076/- ON ACCOUNT OF OPENING BALANCE IN THE CAPITAL ACCOUNTS. 5. THE LEARNED CIT (A) ERRED IN HOLDING THAT 4% OF RS. 21, 68,000 BE TAXED, NOT ACCEPTING THE FACT THAT RS. 21, 68,000 IS A PART IF THE TOTAL CASH RECEIPTS OF RS. 13, 89, 11.705 ON WHICH COMMISSION INCOME IS TAXED. 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT 4% COMM ISSION INCOME ON RS, 10,49,000 BE TAXED NOT ACCEPTING THE FACT THAT RS. 10,49,000 IS A PART OF TOTAL CASH RECEIPTS OF RS. 13, 89, 11,705. 7. THE LEARNED CIT(A) ERRED IN HOLDING THAT 4% COMM ISSION BE TAXED ON RS. 1,72,85,000/- NOT ACCEPTING THE FACT THAT THE TOTAL RECEIPTS OF RS. 13,89,11,705 COMMISSION HAS BEEN TAXED. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 31,99,965 NOT ACCEPTING THE FACT THAT THE SAID AMOUNT IS INCLUDED IN THE TOTAL CASH RECEIPT OF RS. 13,89,11,705 ON WHICH COMMISSION OF 4& INCOME IS TAXED. 3. THE BACKGROUND FACTS ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 31.10.1997 DECLARING TAXABLE INCOME OF RS. 78,804/-. SUBSEQUEN TLY A REVISED RETURN WAS FILED ON 08.10.1999 DECLARING INCOME OF RS. 10,62,340/- WHEREIN THE ASSESSEE WITHDREW THE DEDUCTION CLAIMED U/S 80IA, AS CLAIMED IN THE O RIGINAL RETURN OF INCOME. SUBSEQUENTLY, A SURVEY ACTION U/S 133A WAS CONDUCTE D ON 24.09.1998. THE ORIGINAL ASSESSMENT WAS COMPLETED ON 28.03.2000, CO NSIDERING THE MATERIAL FOUND DURING THE SURVEY, THE AO DETERMINED THE INCOME OF ASSESSEE AT RS.17,30,00,600/-. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE WAS G RANTED PARTIAL RELIEF. ASSESSEE AS WELL AS REVENUE FILED CROSS APPEAL BEFORE THE TR IBUNAL. THE TRIBUNAL IN A COMMON ORDER IN ITA NO. 4043/M/12 DATED 19.11.2007 SET-ASIDE THE ASSESSMENT ORDER AND RESTORED THE CASE FOR FRESH ASSESSMENT. I N THE SET-ASIDE PROCEEDING, THE AO OBSERVED AS UNDER: THE A.O. OBSERVED THAT THE ASSESSEE SHRI NARESH BA LWANT RAI VORA AND HIS BROTHER SHRI SUDHIR BALWANT RAI VORA ARE HAWALA BILL PROVID ERS TO CERTAIN PETROLEUM PRODUCT DEALERS IN MUMBAI. THEY HAVE MAINLY PROVIDED HAWALA BILLS TO THE MEMBERS OF THAKKAR GROUP AND PILOT VIJAN GROUP. THE A.O. ALSO OBSERVED THAT THE PETROLEUM PRODUCT DEALERS HAVE LICENCE TO TRADE IN NAPHTHA AN D OTHER NAPHTHA BASED PRODUCTS. THE LICENSES ARE ISSUED BY THE MINISTRY OF PETROLEU M AND THE END USERS OF THE NAPHTHA RELATED PETROLEUM PRODUCTS ARE PAINT AND VARNISH IN DUSTRIES. HOWEVER, THE A.O. NOTICED THAT THE NAPHTHA WAS SOLD TO THE PETROL BUNKS AT A HEAVY PREMIUM OF RS. 8.00 PER LITRE ITA NO.4623 & 4624 /M/201- SHRI NARESH B. VORA 3 IN TANKER LOADS. EACH TANKER HAS CAPACITY OF 12,000 LITRES. FOR INDULGING IN THIS OPERATION, THE ASSESSEE PROVIDED BOGUS PURCHASE BIL LS TO THE NAPHTHA DEALERS. THE A.O. ALSO OBSERVED THAT THE ASSESSEE HAS ACCEPTED THAT H E HAS INDULGED IN THIS PRACTICE. FURTHER, THE A.O. OBSERVED THAT THE ASSESSEE HAS AC CEPTED CASH ALONG WITH FABRICATED TRANSPORT BILLS FROM THE NAPHTHA DEALERS AND DEPOSI TED THE CASH IN THE BANK ACCOUNTS MAINTAINED BY HIM AND HAS ISSUED DEMAND DRAFT/PAY O RDER TO THE NAPHTHA DEALERS. THE A.O. HAS FURTHER STATED THAT THE ASSESSEE CLAIMED T HAT HE USED TO GET A FIXED COMMISSION ON THE VALUE OF THE BILLS. THE TANKER LO AD OF THE NAPHTHA IS CLANDESTINELY SOLD TO THE PETROL BUNK OWNERS FOR ADULTERATION AND THE OWNER PAYS THE PRICE OF THE TANKER IN CASH TO THE NAPHTHA DEALERS. THE PURCHASE PRICE OF THE NAPHTHA NEEDS TO BE PAID TO THE OIL COMPANIES SUCH AS IOCL ETC. AND HEN CE PART OF THE SALE PROCEEDS IN: CASH RECEIVED FROM THE PETROL BUNK OWNERS WAS DIVER TED BY THE NAPHTHA DEALERS TO THE ASSESSEE WHO HAD DEPOSITED IT IN HIS BANK AND RETUR NED THE PAY ORDER / DD TO THE NAPHTHA DEALERS. THE A.O. OBSERVED THAT THE ASSESSE E RECEIVED COMMISSION FOR HIS SERVICES ON THE TOTAL VALUE OF THE BOGUS BILLS PROV IDED BY HIM. 4. IN THE SET-ASIDE PROCEEDING, THE AO WHILE PASSING T HE ASSESSMENT ORDER ON 17.11.2008 U/S 143(3) R.W.S 254 OF THE ACT AND MADE THE FOLLOWING ADDITION: SR. PARTICULARS ADDITION (RS.) (1) U/S 80-IA CLAIM WITHDRAWN 9,83,541 (2) BROKERAGE INCOME 80,600 (3) NET PROFIT ON THE SALE OF RS.3,64,92,493 (4%) 14,59,699 (4) UNEXPLAINED CREDIT IN THE BALANCE SHEET- SUNDRY C REDITORS 57,93,252 (5) UNEXPLAINED CREDIT IN THE BALANCE SHEET- LOAN C REDIT 45,860 (6) OPENING BALANCE IN THE CAPITAL A/C 1,84,076 (7) UNDISCLOSED INCOME UTILIZED IN MAKING PAYMENTS TO SEVEN PETROLEUM COMPANY 21,68,000 (8) UNDISCLOSED INCOME UTILIZED IN MAKING PAYMENTS TO SEVEN PETROLEUM COMPANY 10,49,000 (9) SALE PROCEEDS NOT RECORDED IN BOOKS 96,70,356 (10) INVESTMENT IN CLOSING STOCK 76,14,644 (11) UNEXPLAINED RECEIPTS 31,99,965 (12) UNEXPLAINED RECEIPTS 20,29,000 5. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION OF RS . 14,59,699/- ON ACCOUNT OF NET PROFIT @ 4% ON THE SALE OF RS. 3,64,92,934/-, UNEX PLAINED CASH CREDIT IN THE BALANCE OF SUNDRY CREDITOR OF RS. 57,93,253/-, THE ADDITION ON ACCOUNT OF CAPITAL ACCOUNT OF RS. 1,84,076/-, UNEXPLAINED INCOME UTILI ZED IN MAKING PAYMENT TO SEVEN PETROLEUM COMPANY OF RS. 21,68,000/- AND UNDI SCLOSED INCOME UTILIZED IN MAKING THE PAYMENTS TO SEVEN PETROLEUM COMPANY OF R S. 10,49,000/- WAS SUSTAINED AND REST OF THE ADDITION WAS DELETED. FUR THER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPE AL BEFORE US. 6. THE APPEALS WERE FIXED ON 03.05.2017, NONE-APPEARE D ON BEHALF OF ASSESSEE DESPITE REPEATED CALLS AND PASS OVER. PERUSAL OF RE CORD REVEALS THAT ASSESSEE IS VERY ITA NO.4623 & 4624 /M/201- SHRI NARESH B. VORA 4 WELL AWARE ABOUT THE DATES OF HEARING. THE ASSESSEE HIMSELF MADE AN APPLICATION BEFORE THE TRIBUNAL ON 29.09.2014 FOR SEEKING ADJOU RNMENT AND THE CASE WAS ADJOURNED ON HIS APPLICATION FOR 11.03.2015. THE A SSESSEE WAS INFORMED BY COURT NOTICE WAS THROUGH RPAD. THE NOTICE FOR HEARING FIX ED FOR TODAY WAS ALSO SERVED BY RPAD AS AD CARD IS ON RECORD. IN THESE CIRCUMST ANCES, WE LEFT NO OPTION EXCEPT TO HEAR THE SUBMISSIONS OF LD. DR FOR THE R EVENUE AND TO RELY UPON THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE RE VENUE ARGUED THAT IN THE FIRST ROUND OF LITIGATION, THE APPEAL OF THE ASSESSEE WA S RESTORED BACK TO THE FILE OF AO VIDE ORDER DATED 29.11.2007 IN ITA NO. 4043/M/02. T HE AO AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE MADE THE OTHER ADDITION BESIDES THE OTHER ADDITIONS. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE WAS GIVE N SUBSTANTIAL RELIEF. THE LD. DR FOR THE REVENUE ARGUED THAT ASSESSEE HAS NEITHER CA ME TO SUBSTANTIATE HIS CLAIM NOR FILED ANY DOCUMENTARY EVIDENCE ON RECORD. THUS , THE APPEAL OF THE ASSESSEE IS LIABLE TO BE DISMISSED. 7. WE HAVE CONSIDERED THE RIVAL CONTENTION OF LD. DR F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE SET-ASIDE PROCEEDING, THE AO MADE THE ADDITION AS REFERRED IN PARA 4 ABOVE. WE HAVE FURTH ER NOTICED THAT AGAINST THE ADDITION, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) ON THE BASIS OF MATERIAL PLACED BEFORE HIM GRANTED SUBSTAN TIAL RELIEF DELETING A NUMBER OF ADDITION. BEFORE US, THE ASSESSEE NEITHER FILED ANY DOCUMENTARY EVIDENCE NOR ANY WRITTEN SUBMISSION TO SUBSTANTIATE HIS CLAIMS. WE H AVE SEEN THAT THE LEARNED CIT(A) SUSTAINED THE VARIOUS ADDITIONS ON THE BASIS OF THE INCRIMINATING MATERIAL FOUND AGAINST THE ASSESSEE IN THE SURVEY ACTION UN DER SECTION 133A CONDUCTED ON 29.04.1998. MOREOVER, THE ASSESSEE HIMSELF ADMITTE D THAT HE WAS ENGAGED IN A HAWALA TRANSACTIONS. THE LD CIT(A) PASSED THE ORD ER AFTER CONSIDERING ALL THE MATERIAL AVAILABLE BEFORE HIM. THE ASSESSEE DESPITE AVAILING A NUMBER OF OPPORTUNITIES HAS NOT COME FORWARD TO SUBSTANTIATE HIS VERSION. THUS, IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON TO IN TERFERE IN THE ORDER PASSED BY LD. CIT(A) . HENCE, ALL THE GROUNDS OF APPEAL RAISE D BY ASSESSEE ARE REJECTED. 8. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMISSE D. ITA NO.4623 & 4624 /M/201- SHRI NARESH B. VORA 5 ITA NO. 4624/MUM/2013 AY 1998-99 9. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF AO IN TAXING THE COMMISSIO N INCOME @ 4%. WE HAVE SEEN THAT THE ASSESSEE HAS RAISED THE SIMILAR GROU NDS OF APPEAL IN ITA NO. 4623/MUM/2013 FOR AY 1997-98. AS WE HAVE DISMISSED THE APPEAL FOR AY 1997- 98 AND CONFIRMED THE ORDER OF LD CIT(A), HENCE, THE GROUND OF APPEAL RAISED IN APPEAL FOR THIS AY IS ALSO DISMISSED WITH SIMILAR O BSERVATIONS. 10. IN THE RESULT, APPEALS FILED BY ASSESSEE FOR BOTH T HE AY ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF MAY 2017. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/05/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. /TRUE COPY/