DCIT 12(2)(1), MUMBAI V. D R COATS INK AND RESINS P.LTD, MUMBAI

ITA 4858/MUM/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4939 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 12-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT ANDHALE SR
• Assessee Lawyers: M SUBRAMANIAM
• Keywords: Reopening of assessment; Bogus purchase; Condonation of delay; Set aside
• Section: 143(3); 234B; 143(1); 274; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4858 /MUM/201 7 ( / ASSESSMENT YEAR: 2011 - 12 ) DCIT 12(2)(1) ROOM NO. 223, 2 ND FLOOR, AA YAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020. / VS. M/S. D. R. COATS INK AND RESINS PVT. LTD. 230 NEW SONAL LINK INDUSTRIAL, BUILDING NO.2, ESTATE LINK ROAD, MALAD (W), MUMBAI - 400064. CO . NO. 240 /MUM/20 1 8 ( ARISING OUT OF ITA . NO. 4858/MU M/2017 ) ( / ASSESSMENT YEAR: 20 11 - 1 2 ) M/S. D. R. COATS INK AND RESINS PVT. LTD. 230 NEW SONAL LINK INDUSTRIAL, BUILDING NO.2, ESTATE LINK ROAD, MALAD (W), MUMBAI - 400064 / VS. DCIT 12(2)(1) ROOM NO. 22 3, 2 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABCD8645A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 06/01/2021 / DATE OF PRONOUNCEMENT : 01 /04 /2021 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE AS WELL AS ASSESSEE HAVE FILED THE ABOVE MENTIONED APPEAL AS W ELL AS CROSS OBJECTION AGAINST THE ORDER DATED 28 . 04 .201 7 PASSED REVENUE BY: SHRI BHARAT ANDHALE ( SR. A R) ASSESSEE BY : SHRI M. SUBRAMANIAM ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 2 BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 1 2 . ITA. NO.4858/M/2017 2 . THE REVENUE HAS FILED THE PRESENT APPEAL A GAINST THE ORDER DATED 28.04.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 20 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION @ 2% OF ALLEGED BOGUS PURCHASE WITHOUT APPRECIATING THE FACTS THAT THE ASSESSING OFFICER MADE THE ADDITIONS AFTER ELABORATELY CONSIDERING AND DISCUSSING ALL THE RELEVANT FAC T AND CASE LAWS AS IS EVIDENT FROM THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE I. T. ACT. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE APPELLANT CRAVE S LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND . ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 3 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED ITS RETURN OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME TO THE TUNE OF RS.1,22,74,851/ - FOR THE A.Y.2011 - 12. THE RETURN WAS PROCE SSED U/S 143(1) OF THE I. T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DGIT(INV.) MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRY FROM THE FOLLOWING TWO PARTIES.: - S . NO. NAME OF THE CONCERN F.Y. AMOUNTS (RS.) 1 EVERITE CORPORATION 2010 - 11 5,49,18,518 2 S. B. INDUSTRIES 2010 - 11 6,99,96,623 TOTAL RS.12,49,15,141/ - THEREAFTER, THE NOT ICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, THE AO RAISED THE ADDITION TO THE EXTENT OF 12.5% OF THE TOTAL BOGUS PURCHASE IN SUM OF RS.12,49,15,141/ - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 2,78,86,240/ - . FEELING AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 2% OF THE TOTAL BOGUS PURCHASE OF RS.12,49 ,15,141/ - BUT THE REVENUE WAS NOT SATISFIED, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US . ISSUE NO. 1 5 . WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 4 5.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISS IONS MADE IN THIS REGARD. IT IS NOTED THAT THE A.O. HAD MADE ADDITION OUT OF PURCHASE MADE BY THE ASSESSEE TO THE TUNE OF 12,49,15,141/ - ON THE BASIS OF THE INFORMATION RECEIVED FROM THE VAT AUTHORITIES. THE A/R OF THE ASSESSEE HAS VEHEMENTLY OPPOSED THE A DDITIONS AND SUBMITTED THAT THE PURCHASES WERE GENUINE. IT WAS ALSO SUBMITTED THAT PAYMENT WAS ALL MADE THROUGH BANKING CHANNEL AND THE DELIVERY OF MATERIALS WAS SUPPORTED BY DELIVERY CHALLANS. IT IS STATED THAT THE A.O. HAD MADE ADDITION ON THE BASIS OF I NFORMATION RECEIVED FROM VAT AUTHORITIES WITHOUT AFFORDING OPPORTUNITY OF CROSS - EXAMINATION THE ASSESSEE. IT IS NOTED THAT THE ENTIRE MATTER PERTAINS TO HAWALA PURCHASES FROM SO CALLED SUSPICIOUS DEALERS AS PER THE INFORMATION OF VAT AUTHORITIES. THE A.O. HAS DISALLOWED THESE PURCHASES AS THE ASSESSEE COULD NOT PRODUCE THESE PARTIES FOR VERIFICATION. IT IS NOTED THAT PRIMARY ONUS TO ESTABLISH THAT THE PURCHASES WERE GENUINE , WAS ON THE ASSESSEE. THE ASSESSEE IS ONLY PAYABLE TO DISCHARGE THE COMPLETE ONUS. I T IS ALSO NOTED THAT A.O. HAS SIMPLY MADE ADDITION ON THE BASIS WITHOUT MUCH ENQUIRY INTO THE FACTS OF THE CASE. ON THE OTHER ASSESSEE HAS FILED COPIES OF BILLS, BANK STATEMENT ETC. TO ESTABLISH THAT PURCHASES WERE GENUINE. ON THE FACE OF THESE EVIDENCE TH E ENTIRE PURCHASES CANNOT BE HELD TO BE BOGUS MERELY ON THE BASIS OF A STATEMENT OF SELLER WHO WAS NEVER CROSS EXAMINED BY THE ASSESSEE. IT IS ALSO NOTED THAT THE ITEMS PURCHASED WERE USED AS INPUT INTO ASSESSEES PRODUCT FOR SALES WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT . 6. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE FIND THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION IN ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 5 THE CASE OF (I) CIT VS. BHOLANATH POLY FAB LTD. (2013) 355 ITR 290 (GUJ) (II) CIT VS. SIMIT P . SHETH (2013) 356 ITR 451 (GUJ) (III) CIT VS. SANJAY OIL CAKE INDUSTRIES (2009) 316 ITR 274 (GUJ) (IV) ITO VS. PERMANAND (2007) 107 TTJ 395 (JD) (TRIB) (V) SHRI MADHUKANT B. GANDHI VS. ITO ITA. NO. 1950/M/2009 BENCH B DATED 23.02.2010 (AY 2005 - 06) & (VI ) SANJEEV WOOLEN MILLS VS. CIT (2005) 279 ITR 434 (SC). THE CIT(A) HAS CONSIDERED THE GROSS PROFIT (G.P) RATIO OF THE BOGUS PURCHASE ITEMS. MOREOVER, WE ALSO FIND THAT THE ISSUE HAS DULY BEEN COVERED WITH THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO.2143/M/2017 & 2144/M/2017 DATED 30.12.2019. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERED WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. C.O. NO. 240/M/2018 THE ASSESSEE HAS FILED THE PRESENT CROSS OBJECTION AGAINST THE ORDER DATED 28.04.2017 PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) - 20 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12. 7. THE ASSESSEE HAS RAISED THE FOLLOWING CROSS - OBJECTIONS.: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE PROCEEDING INITIATED U/S 147 IS INVALID AND BAD IN LAW AND THE LD. CIT(A) ERRED IN UPHOLDING THE SAME AS VALID. ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 6 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ORDER PASSED U/S 143(3) R.W.S. 147 IS INVALID AND BAD IN LAW. 3. ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RETAINING ADDITION TO THE EXTENT OF RS.24,98,303/ - OUT OF ADDITION MADE AS BOGUS PURCHASE AND THAT TOO WITHOUT ASSIGNING ANY PROER REASON. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE INTEREST CHARGES 234B OF THE ACT. 8. THE ASSESSEE HAS FILED THE APPLICATION FOR CONDONATION OF DELAY . THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE NO DOUBT FILED THE PRESENT CROSS - OBJECTI ON DELAYED FOR THE PERIOD OF 32 DAYS BUT THE DELAY IS VERY MUCH EXPLAINED AND UNINTENTIONAL AND IN THIS REGARD THE FACTS HAVE ALREADY BEEN FILED , THEREFORE, T HE DELAY IS LIABLE TO BE CONDONED IN THE INTEREST OF JUSTICE . ON APPRAISAL OF THE APPLICATION AND AFFIDAVIT, WE NOTICED THAT THE APPEAL HAS BEEN FILED DELAYED ON ACCOUNT OF THE REASON THAT THE DEPARTMENTS APPEAL PAPERS FOR A.YS. 2009 - 10 & 2010 - 11 (THOUGH FILED PRIOR TO THE APPEAL FOR A.Y. 2011 - 12) WERE SERVED ON THE ASSESSEE ON 11 TH JULY, 2018 AND TH E ASSESSEE COMPANY INADVERTENTLY OVERLOOKED THE DATE OF RECEIPT OF THE FORM NO.36 & GROUNDS OF APPEAL FOR A.Y. 2011 - 12 AND TH E TIME LIMIT FOR FILING THE C.O , CONSOLIDATED AND FILED THE CROSS - OBJECTIONS FOR ALL THREE YEARS TOGETHER, THEREFORE, IN THE SAID C IRCUMSTA NCES AND ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 7 SPECIFICALLY CONSIDERING THIS FACT THAT THE D ELAY IS NOT SO LONG, WE CONDONE THE DELAY. C.O. NO.1 & 2 9. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. THESE ISSUES ARE DEALT AND DISCUSSED B Y THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NOS.2143/M/2017 & 2144/M/2017 DATED 30.12.2019 FOR THE A.Y.2008 - 09 & 2009 - 10 RESPECTIVELY. BY HONORING THE SAME WE DECIDE THESE ISSUES AGAINST ASSESSEE. C.O. NO. 3 10. ISSUE NO. 3 HAS ALREADY BEEN DECID ED IN ITA. NO.4858/M/2017 , THEREFORE, THERE IS NO NEED TO DECIDE THE SAME. ACCORDINGLY, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE. C.O. NO.4 11. ISSUE NO. 4 IS IN CONNECTION WITH THE INTEREST CHARGED U/S 234B OF THE ACT. IT IS CONSEQUENTIAL ON ACCOUNT OF T HE DEMAND RAISING IF ANY, THEREFORE, APPLICABLE IN ACCORDANCE WITH LAW, HENCE, NOWHERE REQUIRED FOR SPECIFIC ANY ADJUDICATION. ITA. NO.4858 /M/1 7 CO. NO. 240 /M/201 8 A.Y. 2011 - 12 8 1 2 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED AND CROSS - OBJECTION FILED BY THE ASSESSEE IS ALSO HEREBY DIS MISSED . ORDER PRONOUNCE D IN THE OPEN COURT ON 01 /04 /2021 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBA I DATED : 01 /04 /2021 VIJAY PAL SINGH (SR. PS) / 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