ITO 8(2)-4, MUMBAI V. PAVITRA JEWELLERY PVT.LTD., MUMBAI

ITA 4696/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3566 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH C JOOTAWANT
• Assessee Lawyers: R DWIVEDI
• Keywords: Bogus purchase
• Section: 133A; 131; 148

Judgement Text

ITA NO.4696/M/2011 M/S P AVITRA JEWELLERY PVT LTD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4696/MUM/2011 (ASSESSMENT YEAR: 2006-07) ITO 8(2)-4, ROOM NO. 213/216A , 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 VS. M/S PAVITRA JEWELLERY PVT. LTD 25 G & Q , LAXMI INDUSTRIAL ESTATE, GROUND FLOOR, NEW LINK RAOD, ANDHERI (W) MUMBAI- 400058 PAN: AACPJ5703D (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI R. DWIVEDI (DR) DEPARTMENT BY: SHRI DINESH C. JOOTAWANT DATE OF HEARING: 06/06/2013 DATE OF PRONOUNCEMENT: 21/06/ 2013 O R D E R PER R.S. SYAL, A.M. THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 28.02.2011 IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUES RAISED IN THIS APPEAL IS AGAINST TH E DELETION OF ADDITION OF BOGUS PURCHASES AMOUNTING TO RS. 10,10, 722/- 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF GOLD AND DIAMOND STUDDED JEWELRY . THE ASSESSMENT WAS RE-OPENED U/S 148 OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER CALLED `THE ACT) FOR THE REASON THAT CERTAIN INFORMATION RECEIVED FROM THE OFFICE OF THE ADIT (INVESTIGATION) INDICATED THAT THE ASSESSE E HAD OBTAINED BOGUS PURCHASE BILLS FROM M/S MARVEL IMPEX WORTH RS. 10, 10,722/- DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. A SURVEY ACTION WAS TAKEN U/S 133A OF THE ACT ON THE SAID M/S MARVEL IMPEX AND M/S PUJAN IMPEX ON 19.04.2006 WHICH DIVUL GED THAT THESE ITA NO.4696/M/2011 M/S P AVITRA JEWELLERY PVT LTD. PAGE 2 OF 5 CONCERNS WERE ISSUING BOGUS BILLS WITHOUT ACTUAL AN D PHYSICAL DELIVERY OF GOODS. STATEMENT OF ONE SHRI DEEPAN SUNDERLAL MISTR Y WAS RECORDED IN THE COURSE OF SURVEY IN WHICH HE ADMITTED IN ANSWER TO QUESTION NO. 4 THAT HE ALONG WITH HIS BUSINESS ASSOCIATES, SHRI RA KESH R. PATEL AND SHRI RAMESH PATEL, WAS RUNNING BOGUS CONCERNS BY THE NAM ES OF M/S PUJAN IMPEX, M/S MARVEL IMPEX, M/S ATLANTA CORPORATION, M /S NIMBUS TRADING AND M/S VENUS STONES. HE ALSO ADMITTED THAT BOGUS P URCHASE BILLS OF DIAMONDS WERE ISSUED TO THE PARTIES WHICH WERE, IN TURN, ISSUING CHEQUES OF THE BILL AMOUNT. AFTER DEDUCTION OF COMMISSION A T THE RATE OF 0.25% OF THE BILL AMOUNT, THE BALANCE AMOUNT WAS RETURNED TO THE PARTIES IN CASH. HE ADMITTED TO BE INVOLVED IN THIS PRACTICE SINCE L AST 3 YEARS. IT WAS CATEGORICALLY ACCEPTED THAT THEY WERE NOT DOING ANY TRADING BUSINESS OF DIAMONDS AND AS SUCH NO DIAMONDS/MATERIALS WERE PHY SICALLY HANDED OVER BY THEM TO ANY PARTY. THE AO NOTED THAT A PURC HASE BILL OF RS. 4.08 LAC WAS ENTERED BY THE ASSESSEE IN ITS BOOKS OF ACC OUNT BEARING THE SIGNATURE OF SHRI DEEPAN SUNDERLAL MISTRY, THE SAME PERSON WHOSE STATEMENT WAS RECORDED ON OATH U/S 131 OF THE ACT. SECOND BILL OF RS. 6.02 LAC WAS BEARING THE SIGNATURE OF SHRI RAMESH P ATEL, STATED TO BE THE PROPRIETOR OF M/S MARVEL IMPEX. IN THE BACKDROP OF THESE FACTS, THE AO TREATED PURCHASES OF RS. 10.10 LAC MADE FROM M/S MA RVEL IMPEX AS BOGUS AND MADE THE ADDITION FOR THE EQUAL AMOUNT. THE LD. CIT(A) DELETED THE SAID ADDITION, AGAINST WHICH, THE REVENUE HAS COME UP IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DENYING THE FACT TH AT THE ASSESSEE RECORDED PURCHASES AMOUNTING TO RS. 10.10 LAC ALLEG EDLY MADE FROM M/S MARVEL IMPEX IN ITS BOOKS OF ACCOUNT DURING THE PER IOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. STATEMENT OF SHRI DEEPAN SUNDERLAL MISTRY, CONTROLLING M/S MARVEL IMPEX AND OTHER CONCERNS ALONG WITH TWO MORE BUSINESS ASSOCIATES, WAS RECORDED IN WHICH HE DISCLOSED THE MODUS OPERANDI OF HIS BUSINESS BY STATING THAT THEY WERE SIMPLY ISSUING BOGUS BILLS TO THE PARTIES AGAINST THE OMIS SION OF 0.25%. THE LD. ITA NO.4696/M/2011 M/S P AVITRA JEWELLERY PVT LTD. PAGE 3 OF 5 CIT(A) CHOSE TO DELETE THE ADDITION BY NOTING THAT SHRI RAMESH PATEL, THE PROPRIETOR OF M/S MARVEL IMPEX WAS NOT EXAMINED. IN THIS PROCESS, HE OVERLOOKED THE FACT THAT THE MAIN PERSON, NAMELY, S HRI DEEPAN SUNDERLAL MISTRY OF M/S MARVEL IMPEX AND OTHER GROUP CONCERNS , WAS QUESTIONED WHO CATEGORICALLY ADMITTED THAT NO DELIVERY OF GOOD S WAS GIVEN TO THE ASSESSEE BUT ONLY BOGUS BILLS WERE ISSUED FOR COMMI SSION @ 0.25% OF THE BILL AMOUNT. IT IS NOT THE CASE OF THE ASSESSEE THA T SHRI DEEPAN SUNDERLAL MISTRY WAS ALIEN TO M/S MARVEL IMPEX. NATURALLY IT COULD NOT HAVE BEEN SO BECAUSE HE ADMITTED IN HIS STATEMENT THAT M/S MA RVEL IMPEX AND OTHER CONCERN WERE RUN BY HIM AND TWO OTHER BUSINES S ASSOCIATES. THE FURTHER FACT WHICH WEIGHED WITH THE LD. CIT(A) WAS THAT THE PURCHASES FROM M/S MARVEL IMPEX WERE DULY PAID. IT IS OBVIOUS FROM STATEMENT OF SHRI DEEPAN SUNDERLAL MISTRY THAT HE WAS RECEIVING THE BILL AMOUNT THROUGH CHEQUES FROM THE CONCERNED PARTIES AND AFTE R DEDUCTION OF COMMISSION, THE NET AMOUNT WAS RETURNED TO SUCH PAR TIES IN CASH. THIS PART OF THE STATEMENT HAS NOT BEEN CONTROVERTED. TH IS REASON TAKEN BY THE LD. CIT(A), THEREFORE, DOES NOT STAND. THE LAST REA SONING OF THE LD. CIT(A) IS THAT THE ASSESSEE SHOULD HAVE BEEN AFFORDED AN O PPORTUNITY TO CROSS- EXAMINE THE CONCERNED PERSON IN THE INTEREST OF NAT URAL JUSTICE. TO THIS EXTENT, WE FIND THAT THERE IS NO REFERENCE IN THE A SSESSMENT ORDER THAT THE ASSESSEE WAS ALLOWED AN OPPORTUNITY TO CROSS-EXAMIN E SHRI DEEPAN SUNDERLAL MISTRY. HOWEVER, THE MERE FACT THAT AN OP PORTUNITY OF CROSS- EXAMINATION WAS NOT GIVEN WOULD NOT MAKE THE ASSESS MENT PROCEEDINGS VOID OR THE ADDITION ILLEGAL. IT IS SIMPLY AN IRREG ULARITY WHICH OCCURRED DURING THE COURSE OF PROCEEDINGS FOR WHICH THE AO H AD PROPER JURISDICTION. THE HONBLE SUPREME COURT IN SEVERAL JUDGMENTS INCLUDING ITO VS. M. PIRAI CHOODI (2011) 334 ITR 262(SC), GUD UTHUR BROTHERS VS. ITO (1960) 40 ITR 298 (SC), CIT VS. JAI PRAKASH SINGH ( 1996) 219 ITR 737 (SC) AND KAPURCHAND SHREEMAL VS. CIT (1981) 131 ITR 451 (SC) HAS HELD THAT WHERE AN OPPORTUNITY OF HEARING IS NOT GIVEN TO THE ASSESSEE, THE MATTER SHOULD BE SIMPLY RESTORED AND THERE CANNOT BE ANY D ELETION OF ADDITION. ITA NO.4696/M/2011 M/S P AVITRA JEWELLERY PVT LTD. PAGE 4 OF 5 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE STATEMENT OF SHRI DEEPAN SUNDERLAL MISTRY DOES NOT APPEAR TO HAVE BEEN CONFRONTED TO THE ASSESSEE. UNDER SUCH CIRCUMSTANCES, WE ARE O F THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUAT ELY IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO. WE ORDER ACCORDINGLY AND DIRECT HIM TO CONFRONT THE ASSESSEE WITH THE STATEMENT OF SHRI DEEPAN SUNDERLAL MISTRY AND IF TH E ASSESSEE REQUESTS FOR CROSS-EXAMINATION, THE SAME SHOULD ALSO BE PROV IDED. THE IMPUGNED ORDER IS, THEREFORE, SET ASIDE TO THIS EXTENT. 6. IN THE RESULT THE APPEAL IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 21 ST JUNE, 2013. SK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI