SHRI. RAJESH C SHETH, Mumbai V. ITO 29(3)(1), Mumbai

ITA 4952/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3789 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Tangible material; Reason to believe
• Section: 143(3); 250; 143(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND RAM LAL NEGI, JM ITA NO. 4952/MUM/2019 (ASSESSMENT YEAR: 2010-11) RAJESH C. SHETH 10, GIRI VIHAR, SEVARAM LALVANI ROAD, MULUND (W), MUMBAI-400 080 VS. ITO-29(3)(1) KAUTILYA BHAWAN, G BLOCK BKC, BANDRA MUMBAI-400 051 PAN/GIR NO. AALPS6553M ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI BHARAT ANDHALE - DR DATE OF HEARING : 10/03/2021 DATE OF PRONOUNCEMENT : 01 /06/2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-40, MUMBAI (L D.CIT(A) FOR SHORT) DATED 02.05.2019 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2010-11. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN (A) ARRIVING AT THE CONCLUSION THAT PURCHASES MADE OF RS. 3895686/-FROM PARTIES MENTIONED IN ASSESSMENT ORDER ARE NON-GENUINE (B) CONFIRMING ESTIMATION OF PROFIT ELEMENT @ 6.03% ON ALLEGED NON GENUINE PURCHASES OF RS.3895686/- (C) CONFIRMING ADDITION OF RS. 243910/- ON ABOV E BASIS MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE APPELLANT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN AND FAILED TO APPRECI ATE THAT THE ASSESSMENT MADE UNDER SECTION 143(3) RWS 147 OF THE ACT IS WITHOUT JURISDICTION, BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT IN AS MUCH AS THE LEARNED ASSESSING OFFICER FAI LED TO ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT PRIOR TO MAKING ASSESSMENT U/S 143(3) RWS 147 O F THE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN AND FAILED TO APPRECI ATE THAT (A) THE LEARNED ASSESSING OFFICER FAILED TO PR OVIDE COPY OF REASON, RECORDED BY HIM BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT, WHICH THE APPELLANT HAS ASKED FOR, WHICH MAKES ASSESSMENT ORDER WITHOUT JURISDICTION, NULL AND VOI D (B) PROCEEDING INITIATED UNDER SECTION 147 /14 8 OF THE ACT IS ON THE BASIS OF REASON TO SUSPECT AND NOT ON REASON TO BELIEVE. 2 4952/MUM/2019 (C) THERE IS NO NEW TANGIBLE MATERIAL IN POSSE SSION OF THE ASSESSING OFFICER WHICH JUSTIFY ISSUANCE OF NOTICE U/S 148 OF THE ACT (D) THE INITIATION OF PROCEEDING UNDER SECTION 147 OF THE ACT AND ISSUANCE OF NOTICE UNDER SECTION 148 IS WITHOUT JURISDICTION, BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT AND LIABLE TO BE CANCELLED / ANNULLED 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ORDER MADE UNDER SECTION 143(3) RWS 147 OF THE ACT BY THE LEARNED ASSESSING OFFICER WHICH IS WITHOUT JURI SDICTION, ILLEGAL, BAD-IN-LAW, ULTRA VIRES AND WITHOUT ALLOWING REASONABLE OPPORTUNITY OF THE HEAR ING, WITHOUT APPRECIATING THE FACTS, SUBMISSION AND EVIDENCES IN THEIR PROPER PERSPECTIVE, WITHOUT PROVIDING COPIES OF MATERIAL USED AGAINST THE APPELLANT AND WITHOUT PROVIDING CROSS EXAMINATION O F PERSONS WHOSE STATEMENTS ARE RELIED UPON, IS LIABLE TO BE ANNULLED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO ADJUDICATING GROUNDS OF APPEAL NO.2, NO. 3, NO. 4, NO. 5 AND ADDITIONAL GROUNDS OF APPEAL RAISED BEFORE HIM. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE ADJUDICATED THESE GROUNDS OF APPEALS BEFORE PASSING ORDER UNDER SECTION 250 OF THE ACT. 6. THE LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST UNDER SECTION 234A, 234B, 234C AND 234D OF THE ACT. 3. ALTHOUGH, THE ASSESSEE HAS RAISED VARIOUS GROUN DS, THE ISSUE RAISED IS THAT LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF BOGUS PURCHASE OF RS.243910/- WITHOUT DEALING WITH THE ISSUES AND GROUNDS RAISED BEFORE HIM. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFICER IN THIS CASE UPON INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE IS INDULGING INT O BOGUS PURCHASES MADE DISALLOWANCE OF 6.03% OF THE BOGUS PURCHASE. 5. THE LD.CIT(A) NOTED THE FOLLOWING FACTS. THE AO MADE AN ADDITION OF RS, 2,34,910/- ON ACCOUN T OF BOGUS PURCHASES BEING 6.03% OF RS.38,95,686/- PROFIT EMBEDDED IN THE ALLEGED BO GUS PURCHASES FROM THE 8 PARTIES AMOUNTING TO RS. 38,95,686/-. THE AO ON RECEIPT OF INFORMATION FROM DGIT(INV), MU MBAI THAT THE ASSESSEE MADE PURCHASES FROM ALLEGED BOGUS PARTIES AS UNDER ; NO NAME OF PARTY AMOUNT 1 OM CORPORATION 42,792 2 UNIQUE ENTERPRISES 3,73,838 3 K K ENTERPRISES 14, 343 4 PALAK ENTERPRISES 28,28,863 5 PRAVESH ENTRPRISES 1,37,475 6 ROOP INTERNATIONAL 43,200 3 4952/MUM/2019 7 PACASSO MERC. PVT LTD 51,975 8 ARIHANT CORP 4,03,200 TOTAL 38,95,686/- THE AO REOPENED THE ASSESSMENT U/S. 148 AND MADE TH E ADDITION @6.03% OF THE ALLEGED BOGUS PURCHASES BEING THE GROSS PROFIT ADOPTED BY THE ASS ESSEE HIMSELF. THE AO ISSUED NOTICE U/S. 133(6} TO THE ABOVE PARTIES. NONE OF THEM APPEARED NOR RESPONDED TO THE NOTICES ISSUED BY THE AO NOR COULD THE ASSESSEE PRODUCE THE PARTIES FOR VERIFICATION. IN THE ABSENCE OF DETAILS FROM THE ABOVE PARTIES, THE AO 6.03% AS GP ON THE ALLEGE D BOGUS PURCHASES AND ACCORDINGLY, ADDED TO THE INCOME OF THE APPELLANT. 6. THEREAFTER, LD.CIT(A) SUMMARILY DISMISSED THE A SSESSEES APPEAL WITHOUT DEALING WITH ANY OF THE ISSUES RAISED BY THE ASSESSEE. THE ORDER OF THE LD.CIT(A) IS AS UNDER:- THE AR OF THE APPELLANT FILED HIS OBJECTIONS ON R EOPENING THE ASSESSMENT AND ALSO FILED ADDITIONAL GROUND DURING THE COURSE OF APPELLATE PR OCEEDINGS. HOWEVER, THE SAME ARE DISMISSED AS THE AO IN POSSESSION OF INFORMATION RECEIVED FRO M DGIT(INV), THE AO IS BOUND TO VERIFY THE DETAILS BY REOPENING THE ASSESSMENT. ACCORDINGLY, T HE AO ISSUED NOTICE U/S 148 AND MADE THE ADDITION ON THE PROFIT EMBEDDED IN THE CORRESPONDIN G SALES TO THE PURCHASES MADE FROM HAWALA DEALER/BOGUS PURCHASE PARTIES. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATI VE. NONE APPEARED ON BEHALF OF THE ASSESSEE. 8. WE FIND THAT IT IS SETTLED LAW THAT EVEN AN ADM INISTRATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. WE FAIL TO UNDER STAND, HOW THE AFORESAID CRYPTIC ORDER DEALS WITH THE ISSUE OF CHALLENGE TO REOPENING AND MERITS OF ADDITION RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS BEFORE THE LD.CIT(A ). SUCH A CRYPTIC ORDER IS IN FACT LIABLE TO BE DISMISSED, FOR BEING INCONSISTENT WITH THE RULES OF NATURAL JUSTICE. MOREOVER, IT MAKES IT AMPLY CLEAR THAT LD.CIT(A) HAS FAILED TO D ISCHARGE THE STATUTORY DUTY CAST UPON HIM BY PERFORMING PERFUNCTORILY. HOWEVER, IN THE IN TEREST OF JUSTICE, WE ARE REMITTING THIS ISSUE TO THE FILE OF LD.CIT(A). LD.CIT(A) IS DIRECT ED TO CONSIDER THE ISSUE ON MERITS AND PASS A PROPER AND SPEAKING ORDER AFTER GIVING THE A SSESSEE PROPER OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. 4 4952/MUM/2019 ORDER PRONOUNCED IN THE OPEN COURT ON 1.6.2021. SD/- SD/- (RAM LAL NEGI) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 24.05.2021 THIRUMALESH , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI