DCIT CC 3(1) CEN RG 3, MUMBAI V. SAROVAR HOMES P.LTD, MUMBAI

ITA 466/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VDHYADHAR
• Keywords: Bogus purchase; Non passing of speaking order
• Section: 69C; 148

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./466 & 467/MUM/2016, /ASSESSMENT YEAR: 2009-10 & 2010-11 DY. CIT-CENT. CIRCLE-3(1) CENTRAL RANGE-3, ROOM NO.1924, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400 021. VS. M/S. SAROVAR HOMES PVT. LTD. SAIRA & SONA, CHURCH ROAD, OPP. EVEREST ROAD BUILDING, ANDHERI-KURLA ROAD ANDHERI-MUMBAI-400 004. PAN:AABCS 3740 B ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI V. VDHYADHAR /ASSESSEE BY: SHRI BHUPENDRA SHAH / DATE OF HEARING: 16/11/2017 / DATE OF PRONOUNCEMENT: 24/01/2018 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 30/11/2015 OF THE CIT(A )-9,MUMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEALS FOR THE ABOVE MENTIO NED TWO ASSESSMENT YEARS (AY.S).ASSESSEE - COMPANY IS A CONTRACTOR & PROPERTY DEVELOPER AND IS ALSO A TRADER IN BUILDI NG MATERIAL.THE DETAILS OF FILING OF RETURN OF INCOME, RETURNED INC OME, DATE OF ASSESSMENT ETC. ARE SUMMARIZED BELOW: A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DT. AS SESSED INCOME 2009-10 21/09/2009 RS.6,14,308/- 30/09/2011 RS.1,13 ,68,020/- 2010-11 13/10/2010 RS.18,16,000/- 30/03/2014 RS.2,9 6,35,580/- ITA.S/466-467/MUM/2016,AY.S.2009-10 & 2010-11: 2.EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION/REDU CTION OF ADDITION MADE BY THE AO.THE AO RECEIVED PIECES OF INFORMATION FROM THE SALES TAX D EPARTMENT THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF HAWALA BILLS,THAT IT HAD RECEI VED BOGUS BILL FROM THREE PARTIES NAMELY, AMBIKA TRADE IMPEX(ATI),RUMEET ENTERPRISES(RE)AND S HIVRAJ TRADERS(SRT)FOR THE AY. 2010-11 AND FROM ONE PARTY I.E.DEEP ENTERPRISE,THAT IT HAD OBTAINED BILLS OF RS. 98.22 LAKHS AND RS.2.77 CRORES FOR THE AY.2009-10 AND 2010-11 R ESPECTIVELY.HE ISSUED A NOTICED U/S. 148 OF THE ACT,AS HE WAS OF THE OPINION THAT TAXABLE IN COME HAD ESCAPED ASSESSMENT FOR THE AY.S. HE CONFRONTED THE ASSESSEE WITH THE INFORMATION RE CEIVED FROM THE SALES TAX DEPARTMENT AND ASKED AS TO WHY THE PURCHASES MADE FROM ATI,RE( RS.70.20 LAKHS) AND SRT(RS.1.07 CRORES)SHOULD NOT BE TREATED AS BOGUS FOR THE AY.20 10-11.SIMILAR QUERY WAS RAISED FOR THE PURCHASES MADE FROM DEEP ENTERPRISES. 466/M/16- SAROVAR HOMES PVT. LTD. 2 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,HE HELD THAT PURCHASES MADE FROM THE ABOVE- MENTIONED PARTIES WERE BOGUS IN NATURE, THAT THE DE LIVERY CHALLANS FILED WERE INCOMPLETE,THAT THE DETAILS OF VEHICLE NUMBERS WERE NOT MENTIONED O N THE DELIVERY CHALLANS,THAT THERE WAS NO ACKNOWLEDGEMENT ON DELIVERY CHALLANS.INVOKING THE P ROVISIONS OF SECTION 69C OF THE ACT, THE AO HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE G ENUINENESS OF THE PURCHASES, THAT THE EXPENDITURE INCURRED BY ITS HAD TO BE DISALLOWED. H E MADE A DISALLOWANCE OF RS.2.77 CRORES TO THE TOTAL INCOME OF THE ASSESSEE FOR THE AY.2010-11 . DISALLOWANCE OF RS.98.22 LAKHS WAS MADE FOR THE AY.2009-10. 3. AGGRIEVED BY THE ORDERS OF THE AO,THE ASSESSEE FILE D APPEALS BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMISSIONS BEFO RE HIM. IT ALSO RELIED UPON CERTAIN CASE LAWS.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND THE ASSESSMENT ORDER,THE FAA REFERRED TO MANY A CASES,DEALING WITH BOGUS PURCHAS ES,DELIVERED BY THE HONBLE COURTS OR THE TRIBUNAL. HE HE DIRECTED THE ASSESSEE TO FURNISH DE TAILS OF GROSS PROFIT/NET PROFIT RATIO OF THE EARLIER ASSESSMENT YEARS FOR COMPARISON AND TO CHEC K THE PROBABLE AND POSSIBLE LEAKAGE OF REVENUE ARISING OUT OF SUCH TRANSACTIONS.AFTER COMP ARING THE GROSS PROFIT RATIO OF THE YEAR UNDER CONSIDERATION WITH THE EARLIER ASSESSMENT YEA RS, HE PREPARED A CHART AS UNDER: AY.2010-11(RS.) AY.2009-10(RS.) 2008-09(RS.) SALES 7,92,81,873 8, 09, 94, 231 8, 55, 73, 120 PURCHASE 6,31,00,178 7, 15, 20, 361 7, 96, 74, 974 GROSS PROFIT 1,41,77,397 92, 28, 786 5, 90, 11, 453 PROFIT BEFORE TAX 13,40,040 4, 43, 305 3, 54, 949 GROSS PROFIT RATIO 17.88 11.39 6.90 NET PROFIT RATIO 1.69 0.55 0.41 HE FURTHER DIRECTED THE ASSESSEE TO GIVE SPECIFIC G P RATIO FOR THE TRADING ACTIVITIES IN WHICH THE ALLEGED HAWALA DEALERS WERE INVOLVED. HE CONCLU DED THAT THE COMPARATIVE ANALYSIS OF THE DATA PROVED THAT THE GP RATIO IN THE AY.2009-10 WAS HIGHER THAN THE AVERAGE GP RATIO, THAT NO ADDITION WAS CALLED FOR IN THAT REGARD, THAT IN THE AY.010-11 THERE WAS A LOSS AND THE GP RATIO HAD GONE DOWN INTO NEGATIVE.HE RESTRICTED THE ADDIT ION TO RS. 16.46 LAKHS OUT OF RS. 2.77 CRORES FOR THE AY.2010-11 AND HE DELETED THE ADDITI ON FOR THE EARLIER AY.IN SHORT, HE GAVE A RELIEF OF RS. 2.60 CRORE TO THE ASSESSEE FOR THE AY .2010-11.FOR THE AY.2009-10 HE DELETED THE ENTIRE ADDITION. 4 .DURING THE COURSE OF HEARING BEFORE US,THE DEPARTM ENTAL REPRESENTATIVE (DR) HEAVILY RELIED UPON THE ORDERS OF THE AO AND STATED THAT THE FAA H AD NOT DEALT WITH THE ISSUE OF DELIVERY CHALLANS,THAT THERE WAS NO EVIDENCE OF DELIVERY OF GOODS, THAT ONUS WAS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSANCTIONS.HE RELIE D UPON THE CASE OF NK PROTINS OF THE 466/M/16- SAROVAR HOMES PVT. LTD. 3 HONBLE SUPREME COURT.THE AUTHORISED REPRESENTATIVE STATED THAT THE ASSESSEE HAD FURNISHED ALL THE NECESSARY DETAILS BEFORE THE AO,THAT PROVIS IONS OF SECTION 69C COULD NOT BE APPLIED TO BOGUS PURCHASE CASES,THAT THE AO HAD NOT DOUBTED TH E GENUINENESS OF THE SALES,THAT WITHOUT PURCHASES THERE COULD NOT BE ANY SALES.HE RELIED UP ON THE CASES OF KARSAN NANDU (77 TAXMANN.COM.275),GEOLIFE ORGANICS(ITA/3699/MUM/ 201 6,DTD.05.05.2017)AND M/S.STEEL LINE(INDIA)-(ITA/880/MUM/2016-DTD.29/ 08/ 2017). 5 .WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA HAD PASSED A THIRTY-SEVEN PAGE ORDER WHEREIN MA NY A CASES HAVE BEEN REFERRED TO. BUT, WE ARE UNABLE TO FIND FROM THE ORDER AS TO WHICH PA RT OF HIS ORDER RECORDS SUBMISSIONS OF THE ASSESSEE AND WHICH OF THE PARAGRAPHS ARE HIS CONCLU SION.IN SHORT,HIS ORDER IS A NON SPEAKING ORDER.WE DO NOT WANT TO DIRECT THE FAA AS TO HOW HE SHOULD WRITE HIS ORDER.BUT,FOR DECIDING A CASE WHAT WE NEED IS CLEAR CUT FINDING BY THE FAA AS TO WHY HE ARRIVES AT A PARTICULAR CONCLUSION.SUBMISSION OF THE ASSESSEE AND THE ORDER OF THE AO MUST FIND PLACE IN THE ORDER OF THE FAA,BUT,FINALLY IT SHOULD BE CLEAR AS TO WHY TH E APPEAL WAS ALLOWED OR DISMISSED. SECONDLY,HOW THE CASE LAWS RELIED UPON BY THE AO/ A SSESSEE HAS RELEVANCE TO THE FACTS OF THE CASE HAS TO BE BROUGHT OUT CLEARLY.BUT,IN BOTH THE CASES WE FIND THAT FAA HAS NOT DEALT THE ISSUE IN A SYSTEMIC MANNER.FOR EXAMPLE NO FINDING H AS BEEN GIVEN ABOUT DELIVERY CHALLANS OR APPLICABILITY OF SECTION 69C OF THE ACT.AS BOTH THE ORDERS ARE NOT REASONED ORDERS,SO,IN THE INTEREST OF JUSTICE,WE WERE RESTORING BACK THEM TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. HE IS DIRECTED TO PASS A SPEAKING AND REASONED ORDE R GIVING CLEAR FINDINGS AND AFTER CONSIDERING THE CASES RELIED UPON BY THE AR AND THE DR BEFORE US.HE WOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND THE AO.EFFECTIVE GROUND OF APPEAL FOR BOTH THE AY.S.ARE DECIDED IN FAVOUR OF THE AO,IN PA RT. AS A RESULT,THE APPEALS FILED BY THE AO,FOR THE AY. S.2009-10 AND 2010-11,STAND PARTLY ALLOWED. 2009-10 2010-11 ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH ,JANUARY ,2018. 24, , 2018 SD/- SD/- ( (( ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 24 . 01 .2018. JV.SR.PS. 466/M/16- SAROVAR HOMES PVT. LTD. 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.