ITO 9(1)(2), MUMBAI V. BDH INDUSTRIES LTD, MUMBAI

ITA 4816/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3840 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONNAR
• Assessee Lawyers: G L NACHHARA
• Keywords: Accommodation entries; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO. 4816 /MUM/2012 ASSESSMENT YEAR: 2009-10 THE ITO - 9 (1 ) (2) , ROOM NO. 226, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400020. VS. M/S BDH INDUSTRIES LTD. NAIR BAUG, AKURLI ROAD, KANDIVALI (E), MUMBAI- 400101 . PAN- AAACB1720H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. PEEYUSH SONNAR RESPONDENT BY : SHRI. G.L. NACHHARA DATE OF HEARING: 07/12/2015 DATE OF PRONOUNCEMENT: 17/02/2016 O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVEN UE AGAINST ORDER DATED 23/05/2012 PASSED BY THE LD. CIT(APPEALS)-19, MUMBA I FOR THE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY ENGAGED IN MANUFACTURING & EXPORT OF PHARMACEUTICALS PRODUCTS FILED ITS RETURN DECLARING THE TOTAL INCOME OF RS. 25,60,986/- FOR THE A.Y. 20 09-10. THE CASE WAS SELECTED FOR SCRUTINY, ASSESSMENT PROCEEDINGS WERE INITIATED AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED. THE ASSESSING OFFICER INTER ALIA ADDED BACK RS. 77.14 LACS I.E, 5% OF THE TOTAL PURCHASES, TO THE I NCOME OF THE ASSESSEE TREATING THE SAME AS UNACCOUNTED PURCHASES. 2 ITA NO. 4816 /MUM/2012 ASSESSMENT YEAR: 2009-10 THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER IN QUE STION BY PREFERRING APPEAL BEFORE THE CIT(A), MUMBAI. THE CIT(A) AFTER HEARIN G THE ASSESSEE ALLOWED THE APPEAL AND DIRECTED ASSESSING OFFICER TO VERIFY THE CLAIM OF THE APPELLANT FROM THE RECORD AND GRANT RELIEF AS ADMISSIBLE. 3. FEELING AGGRIEVED BY THE SAID ORDER THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. THE REVENUE HAS CHALLENGED THE IMPUGNED O RDER PASSED BY THE CIT(A) ON THE FOLLOWING EFFECTIVE GROUND:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE AD DITION OF RS. 77,14,000/- FROM THE TOTAL PURCHASE, ON ESTIMATED B ASIS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO SUBMIT DETAILS LIKE ITEM, VALUE, QUANTITY OF OPENING AND C LOSING STOCK SUMMARY OF RG-23 AND PLA REGISTER, THOUGH ASSESSEE MAINTAINS BIN CARD BUT THE SAME IS HAND WRITTEN AND REMAINS UNVERIFIABLE. 4. BEFORE US THE LD. DR SUBMITTED THAT SINCE THE AS SESSEE HAS FAILED TO PRODUCE STOCK REGISTER, MANUFACTURING REGISTER, THE CONSUMP TION OF RAW MATERIAL AND VALUATION OF CLOSING STOCK, IT WAS NOT POSSIBLE FOR THE AO TO VERIFY AND DETERMINE THE TRUE PROFIT OF THE BUSINESS. THEREFOR E, THE ADDITION IN QUESTION HAS RIGHTLY BEING MADE BY THE ASSESSING OFFICER. TH E DR HAS FURTHER SUBMITTED THAT DEPARTMENT HAS ALSO CHALLENGED THE ORDER OF CI T(A) PASSED IN ASSESSEES OWN CASE FOR THE A.Y. 2008-09, WHICH IS PENDING ADJ UDICATION BEFORE THIS TRIBUNAL. 5. ON THE OTHER THE LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT THE ADDITION IN QUESTION IS BASED ON ESTIMATION WHICH I S TOTALLY UNWARRANTED. THE CIT(A) HAS ALLOWED THE IDENTICAL GROUND IN APPEAL F ILED BY THE ASSESSEE AGAINST 3 ITA NO. 4816 /MUM/2012 ASSESSMENT YEAR: 2009-10 THE ASSESSMENT ORDER FOR THE A.Y. 2008-09. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE IS A LIMITED COMPANY AND REGULATE D BY THE SEVERAL AUDITS I.E. STATUTORY AUDIT, TAX AUDIT, VAT AUDIT AND EXCISE AU DIT. THE DETAILS OF PURCHASES MADE BY THE ASSESSEE DURING THE RELEVANT YEAR HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNTS. BALANCE SHEET , P&L ACCOUNT, AUDIT REP ORT ETC HAVE ALREADY BEEN SUBMITTED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDING. THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE APPEA L OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PART IES AND ALSO PERUSED THE MATERIAL PLACED BEFORE US. THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE CIT(A) IN T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER FOR THE ASSES SMENT YEAR 2008-09. HOWEVER, THIS TRIBUNAL HAS DISMISSED ITA NO 6533/M/ 2011 I.E., APPEAL FILED BY DEPARTMENT AGAINST THE SAID ORDER OF THE LD. CIT(A) IN LIMINE IN TERMS OF CIRCULAR NO 21/2015 DATED 10TH DEC.2015 AS THE TAX EFFECT WAS BELOW TEN LACS. 7. THE LD. CIT(A) HAS ALLOWED THE GROUND OF APPEAL OF THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2009-10, WITH REGARD TO ADDITI ON OF RS. 77,14,000/- MADE BY THE ASSESSING OFFICER ON ADHOC-BASIS, HOLDING AS UNDER:- I HAVE VERY CAREFULLY CONSIDERED THE MATTER AND AL SO THE ORDER OF THE CIT(A)-19, MUMBAI. THE ASSESSING OFFICER HAS IN DEED MADE AN ESTIMATED ADDITION BY MAKING VERY GENERAL OBSERVATI ONS. IT IS AGREED BY THE ASSESSING OFFICER HIMSELF THAT DETAILS WERE SUBMITTED THROUGH NOT FULLY. ALSO, THE ADDITION HAS MADE BY THE ASSES SING OFFICER FACTORING IN THE ASPECT THAT PURCHASES ARE NOT INCL USIVE OF TAXES, DUTIES AS PER MANDATE OF SEC. 145A. FOR THE REASONS AS MENTIONED BY HIM, THE ASSESSING OFFICER HAS DISALLOWED 5% OF PURCHASES TOTALING RS. 77.14LACKS. I AM UNABLE TO SUSTAIN THE SAID ADDITION AS MADE BY THE ASSESSING OFFICER. THE PURCHASES TO EXT ENT OF RS. 4 ITA NO. 4816 /MUM/2012 ASSESSMENT YEAR: 2009-10 77,14,000/- HAVE BEEN ADDED BACK TO THE INCOME BUT THERE IS NO FINDING THAT PURCHASES ARE BOGUS OR MERE ACCOMMODAT ION ENTRIES. NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS AS MENTIONED SO AS TO REJECT THE BOOK RESULTS. THE ACCOUNTS REGULAR LY MAINTAINED IN THE COURSE OF BUSINESS HAVE TO BE TAKEN AS CORRECT UNLESS THERE ARE STRONG AND SUFFICIENT REASONS TO INDICATE THAT THEY ARE NOT RELIABLE, THERE IS NO INDICATION THAT PURCHASES ARE NOT GENUI NE, NEITHER IS THERE ANY INDICATION THAT THE EVIDENCES AS PRODUCED ARE REBUTTABLE. REJECTION OF BOOKS RESULTS WILL BE JUSTIFIED WHEN T HE ACCOUNT BOOKS ARE FOUND FOR VALID REASONS TO BE UNRELIABLE, INCOR RECT. IN THIS CASE THE BOOKS RESULTS HAVE BEEN REJECTED FOR THE REASON S THAT DETAILS FILED ARE NOT COMPLETE AND THAT THE ASSESSEE HAS NO T FOLLOWED THE MANDATE OF SECTION 145A. BUT THE SAID REASONS DO NO T LEAD TO ANY INFERENCE OF SUPPRESSION OF TURNOVER AND HENCE REJE CTION OF BOOKS RESULTS AND ESTIMATING DISALLOWANCE OF EXPENSES ARE A PERCENTAGE OF PURCHASES IS NOT JUSTIFIED ON THE FACT OF THE CASE, THE ACTION OF THE ASSESSING OFFICER THEREFORE NOT SUSTAINED. THE ADDI TION OF RS. 77,14,000/- IS THEREFORE DIRECTED TO BE DELETED. 8. THE LD. CIT HAS RIGHTLY POINTED OUT THAT THERE IS NO FINDING OF THE AO TO HOLD THAT THE PURCHASES ARE BOGUS AND THAT THE BOOK S CONTAIN MERE ACCOMMODATION ENTRIES. THE ASSESSING OFFICER HAS NO T POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS SO AS TO REJECT THE ENTRIES MADE THEREIN. AS PER THE SETTLED PRINCIPLES OF THE LAW THE ACCOUNTS REGU LARLY MAINTAINED IN THE COURSE OF BUSINESS ARE PRESUMED TO BE CORRECT UNLES S THERE ARE COGENT AND SUFFICIENT REASONS TO REBUT THE SAME. 9. SIMILARLY THE ASSESSING OFFICER HAS FAILED TO P OINT OUT THAT THE PURCHASES IN QUESTION ARE BOGUS. NO EVIDENCE WAS COLLECTED TO PR OVE THE ALLEGED BOGUS/ACCOMMODATION BILLS. UNDER THESE CIRCUMSTANCE S, THE LD. CIT(A) HAS 5 ITA NO. 4816 /MUM/2012 ASSESSMENT YEAR: 2009-10 RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DIRE CTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE AND GRANT THE RELIEF AS ADMIS SIBLE. WE THEREFORE, DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AS WE ARE UNABLE TO SEE ANY ILLEGALITY OR ANY VALID REASON TO INTERFERE WITH TH E SAME. ACCORDING WE UPHOLD ORDER DATED 23/05/2012 PASSED BY THE CIT(A) AND DIS MISS THE GROUND OF THE APPEAL OF THE REVENUE BEING DEVOID OF MERITS. 10. IN THE RESULT, APPEAL OF THE REVENUE FOR THE A. Y. 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH FEBRUARY, 2016 SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:17/02/2016 / 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./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA