SHAILESH D. MEHTA, MUMBAI V. INCOME TAX OFFICER 17(3)(3), MUMBAI

ITA 4913/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7558 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Onus to prove

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL EBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./4913/MUM/2017, /ASSESSMENT YEAR: 2010-11 SHRI SHAILESH D. MEHTA PROP. M/S. KALPANA ENTERPRISES, 26/12, SAKAR GALI,OPP. GIRIRAJ, CARNAC BUNDER MUMBAI-400 009. PAN:ACBPM 3982 A VS. ITO-17(3)(3), MUMBAI. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI V. JUSTIN -DR ASSESSEE BY: SHRI BHUPENDRA SHAH -AR / DATE OF HEARING: 13/03/2018 / DATE OF PRONOUNCEMENT: 04/04/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , - PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 05/04/2017 OF CIT(A)-28 , MUMBAI, THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,IS A WHOLE-SELLER O F IRON & STEEL,FILED ITS ETURN OF INCOME ON 28/09/2010 ,DECLARING TOTAL INCOME AT RS.5.05 LA KHS.THE ASSESSING OFFICER (AO)COMPLETED ASSESSMENT U/S.143(3)R.W.S.147 OF THE ACT ON 12/02/ 2016,DETERMINING THE INCOME OF THE ASSESSEE AT RS.90.85 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMING ADDI TION OF RS. 85.79 LAKHS.DURING THE ASSESSMENT PROCEEDINGS,THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT CERTAIN PARTIES WERE INDULGING IN ISSUING BOGUS BILLS,THAT THEY WERE NOT SUPPLIED GOODS TO THE PURCHAS -ERS,THAT THE MAHARASHTRA VAT DEPARTMENT HAD PREPAR ED A LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARIES OF SUCH TRANSACTIONS.HE DIRECTED THE ASSESSEE TO FURNISH DETAILS OF PURCHASES MADE FROM NINE PARTIES,AMOUNTING TO RS.6.86 CRORES. HE FURTHER DIRECTED IT TO PRODUCE THE PARTIES ALONG WITH THE BILLS,DELIVERY CHALLANS,PAYM ENT DETAILS ETC.FOR VERIFICATION.THE ASSESSEE DID NOT PRODUCE THE PARTIES FOR CONFIRMATION OF THE PURCHASES.HOWEVER,IT FURNISHED COPIES OF LEDGER ACCOUNT,BILLS AND BANK STATEMENTS.THE AO HAD ISSUED NOTICES U/S.133 (6) OF THE ACT. BUT,SAME REMAINED UNCLAIMED/UNSERVED.THE AO HELD TH AT THE SUPPLIERS WERE NOT GENUINE PARTIES,THAT THE ONUS TO PROVE THE PURCHASES WAS ON THE ASSESSEE, THAT THE PURCHASES AMOUNTING TO RS.6,86,39,723/-REMAINED UNVERIFIABLE,THAT SAME WERE INFLATED AND WERE DEBITED TO TRADING 4913/M/17-SHAILLESH D.MEHTA 2 ACCOUNT TO SUPPRESS THE TRUE PROFITS.ESTIMATING THE GP PERCENTAGE AT 12.5,HE MADE AN ADDITION OF RS.85,79, 965/-TO THE TOTAL INCOME OF THE ASSESS EE. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE SUBMISSIONS BEFORE HIM.AFTER CONSIDERING THE AVAILABLE MATERIAL,HE REFERRED TO CERTAIN CASE LAWS.RELYING U PON AN ORDER OF THE TRIBUNAL IN THE CASE OF KIRAN NAVIN DOSHI(ITA/2601/MUM/2016,DATED 18/01/201 7),HE CONFIRMED THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE (AR) CONTENDED THAT THE ASSESSEE HAD PURCHASED GOODS,THAT PAYMENTS WERE MADE THROUGH BANKING CHANNELS,THAT IT WAS A WHOLESALE TRADER OF IRON AND STEEL,THAT IT WA S MAINTAINING REGULAR STOCK REGISTER, THAT THE BOOKS WERE AUDITED, THAT NO MISTAKE WAS POINTED OUT IN THE BOOKS MAINTAINED BY IT, THAT THE FAA DID NOT CONSIDER THE SUBMISSIONS MADE BY THE AS SESSEE,THAT THE GP RETURNED BY THE ASSESSEE RANGED BETWEEN 0.5% - 0.7%, THAT THE AO HA D NOT GIVEN ANY COMPARABLE FOR ADOPTING GP RATE OF 12.5%.HE REFERRED TO THE CASE O F HIRALAL C.JAIN( ITA/4547/M/2014,DTD. 01.01.2016;AY-09-10);M/S. STEEL LINE (INDIA)(ITA/13 21-1323/ MUM/ 2016)AND STATED THAT IN SIMILAR TYPE OF CASES THE TRIBUNAL HAD HELD THAT AD DITION SHOULD BE RESTRICTED TO 2%.THE DR STATED THAT ASSESSEE HAD NOT PRODUCED THE PARTIES B EFORE THE AO,THAT GENUINENESS OF THE TRANSACTIONS WAS NOT PROVED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND THAT WH ILE DECIDING THE APPEALS THE FAA HAS NOT PASSED SPEAKING AND REASONED ORDER. IN HIS 21 P AGESORDER WE DO NOT FIND ANY LOGIC AS TO WHY HE WAS CONFIRMING THE ORDER OF THE AO.HE HAS RE PRODUCED ORDERS OF VARIOUS JUDICIAL AUTHORITIES WITHOUT MENTIONING AS TO HOW THEY WERE APPLICABLE TO THE FACTS OF THE PRESENT CASE. WE DO NOT WANT TO MENTION AS TO HOW AN FAA SHOULD W RITE HIS ORDER.BUT,WE WOULD LIKE TO MENTION THAT AS AN APPELLATE AUTHORITY,HE SHOULD GI VE THE REASONS FOR APPROVING OR REJECTING THE CLAIM MADE BEFORE HIM.WE WOULD LIKE TO REFER TO THE CASE OF BUILDWELL ASSAM P.LTD. (133 ITR 336),WHEREIN THE HONBLE GAUHATI HIGH COURT HAS HELD AS UNDER: SECTION 250(6) OF THE I.T. ACT, 1961, PRESCRIBES TH E MANNER OF DISPOSAL OF AN APPEAL. AN ORDER MUST BE IN WRITING CONTAINING THE POINTS FOR DETERMINATION AND DECISION. THE OBJECT IS OBVIOUS. IT ENABLES A PARTY TO KNOW THE PRECISE POI NTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF FORMULATION OF POINTS FOR DECISION OR WA NT OF CLARITY IN DECISION PUTS A PARTY IN A QUANDARY. A DECISION AGAINST A PARTY ENABLES HIM TO GO UP IN APPEAL. A DECISION BY ITS VERY NATURE MUST BE FIRM AND SHOULD NOT BE VAGUE AND UNC LEAR. IF THERE IS A DIRECTION BY THE APPELLATE AUTHORITY TO THE ITO, THE LATTER IS BOUND TO CARRY OUT THE DIRECTION. REFUSAL TO CARRY OUT A DIRECTION IS A DENIAL OF JUSTICE AND DESTRUCT IVE OF ONE OF THE BASIC PRINCIPLES IN THE ADMINISTRATION OF JUSTICE BASED ON THE HIERARCHY OF THE AUTHORITIES. THEREFORE, WHEN A SUBORDINATE AUTHORITY IS DIRECTED TO CARRY OUT CERT AIN DIRECTIONS BY A SUPERIOR AUTHORITY, THE 4913/M/17-SHAILLESH D.MEHTA 3 TENOR AND COLOUR OF THE ORDER OF THE SUPERIOR AUTHO RITY MUST BE FIRM, CLEAR, CERTAIN, DEFINITE AND WITHOUT ANY AMBIGUITY. CONSIDERING THE FACT THAT ORDER OF THE FAA IS NOT A REASONED ORDER,WE ARE OF THE OPINION THAT, IN THE INTEREST OF JUSTICE,THE MATTER SHOULD BE RES TORED TO HIS FILE FOR PASSING A REASONED AND SPEAKING ORDER.HE IS DIRECTED TO AFFORD A REASONABL E OPPORTUNITY TO ASSESSEE AND TO CONSIDER THE MATERIAL SUBMITTED BEFORE US BY THE ASSESSEE.EF FECTIVE GROUND OF APPEAL IS ALLOWED IN FAVOUR,OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FILED B Y THE ASSESSEE STANDS PARTLY ALLOWED. !' . ORDER PRONOUNCED I N THE OPEN COURT ON 4 TH APRIL , 2018. # $ % 04 ' , 2018 SD/- SD/- ( (( ( &'(! /PAWAN SINGH) ( )#* / RAJENDRA) # (+ / JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI; /DATED : 04/04/2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.