DCIT CC 3(4) CEN RG 3, MUMBAI V. STARLIGHT SYSTEMS P.LTD, MUMBAI

ITA 5028/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9869 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESHWAR YADAV LD DR
• Assessee Lawyers: RAKESH JOSHI LD
• Keywords: Principle of natural justice; Opportunity of cross examination; Third party statement
• Section: 143(3); 153A; 14A

Judgement Text

ITA NO.5028/M/2015 STARLIGHT SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 5028/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3(4) ROOM NO. 401 4 TH FLOOR AAYKAR BHAWAN MUMBAI 400 020 / VS. STAR LIGHT SYSTEMS PVT.LTD 5 TH FLOOR TO 9 TH FLOOR HOUSEFIN BHAWAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI-400 051 ./ ./PAN/GIR NO. AAFCS-7733-L ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : RAKESH JOSHI, LD. AR RE VENUE BY : RAJESHWAR YADAV, LD. DR (CIT) / DATE OF HEARING : 28/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 ITA NO.5028/M/2015 STARLIGHT SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)- 51 [CIT(A)], MUMBAI DATED 28/07/2015 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE AGAINST SECTION 14A DISALLOWANCE AND WORK-IN-PROGRESS. 2. FACTS LEADING TO THE SAME ARE THAT CONSEQUENT TO SEARCH ACTION ON 11/01/2012, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF RUNNING BUSINESS CENTRE WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 153A FOR IMPUGNED AY ON 28/03/2014. THE NOTICE U/S 153A AS ISSUED ON 28/02/ 2013, AGAINST WHICH THE ASSESSEE OFFERED RETURNED INCOME OF RS.2,62,61, 626/- WHICH WAS THE SAME AS ORIGINAL RETURN FILED U/S 139(1) ON 29/09/2 009. THE ORIGINAL RETURN WAS ASSESSED U/S 143(3) ON 07/12/2011 AT RS. 2,75,08,500/-. THE INCOME U/S 153A WAS ASSESSED AT RS.2,63,24,400/-. 3.1 DURING ASSESSMENT PROCEEDINGS U/S 153A, IT WAS NOTED THAT THE ASSESSEE DEBITED PURCHASES AND OTHER DIRECT EXPENSES UNDER THE HEAD WORK-IN-PROGRESS [WIP] FOR RS.96.96 CRORES. A PERUSAL OF THE SAME REVEALED THAT THE ASSESSEE PROCURED MATERIAL / SERV ICES FROM SIX PARTIES AGGREGATING TO RS.55,94,537/-. THESE PARTIES, AS PE R THE WEBSITE OF SALES TAX DEPARTMENT, MAHARASHTRA WERE LISTED AS BOGUS / SUSPICIOUS PARTIES AND CONSEQUENTLY, THE ASSESSEE WAS DIRECTED TO PRO DUCE THE SAID PARTIES. THE ASSESSEE, IN TURN, SUBMITTED LEDGER EXTRACTS, PURCHASE BILLS, DETAILS OF EXPENSES ETC. AND CONTENDED THAT THE PURCHASES WERE ITA NO.5028/M/2015 STARLIGHT SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 GENUINE. HOWEVER, NOT CONVINCED, LD. AO TREATED THE SAME AS NON- GENUINE PURCHASES AND REDUCED THE SAME FROM THE FIGURES OF CLOSING WIP ACCOUNT OF SIGNATURE ISLAND PROJECT, SINCE THE PROJECT WAS NOT COMPLETE AND THE INCOME THERE-FROM WAS NOT OFFERED TO TAX IN THE IMPUGNED AY AND THE EXPENSES INCURRED ON THE PROJEC T WERE REFLECTED UNDER THE HEAD WIP . 3.2 IT WAS FURTHER NOTED THAT THE ASSESSEE EARNED D IVIDEND INCOME OF RS.44.16 LACS AND MADE SUO-MOTO DISALLOWANCE OF RS.3,46,397/- UNDER RULE 8D, WHICH AS PER WORKING OF LD. AO CAME TO RS. 3,94,367/- AND THEREFORE, THE DIFFERENTIAL AMOUNT OF RS.47,970/- W AS FURTHER ADDED TO THE INCOME OF THE ASSESSEE. 4.1 AGGRIEVED, THE ASSESSEE CONTESTED BOTH THE ADDI TION WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 28/07/2 015. THE REDUCTION IN CLOSING WIP WAS CONTESTED ON THE GROUND THAT THE PURCHASES WER E TREATED AS NON-GENUINE MERELY ON THE BASIS OF WEBSITE INFORMATION AND STATEMENT OF THIRD PARTIES WHICH WERE NEVER CONFRON TED TO THE ASSESSEE IN CLEAR VIOLATION OF NATURAL JUSTICE AND THEREFORE , THE SAID INFORMATION COLLECTED AT THE BACK OF THE ASSESSEE COULD NOT BE USED AGAINST HIM. RELIANCE WAS PLACED ON SEVERAL JUDICIAL PRONOUNCEME NTS FOR VARIOUS CONTENTIONS. THE LD. CIT(A) NOTED THAT THE ASSESSEE SUBMITTED ALL DOCUMENTARY EVIDENCES IN SUPPORT OF PURCHASES VIZ. LEDGER EXTRACTS, PURCHASE INVOICES, BANK STATEMENT HIGHLIGHTING THE PAYMENT MADE TO THE PARTIES, DELIVERY CHALLANS, CONFIRMATIONS ETC. AND HENCE DISCHARGED THE PRIMARY ONUS OF PROVING THE SAME. SINCE, THE LD. AO COULD NOT REBUT THE EVIDENCES LED BY THE ASSESSEE, THE PURCHASES COULD NOT BE DOUBTED ITA NO.5028/M/2015 STARLIGHT SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 MERELY ON THE BASIS OF THIRD PARTY STATEMENT. FINAL LY, THE LD. CIT(A) CONCLUDED THE MATTER IN ASSESSEES FAVOR. 4.2 THE DIFFERENTIAL ADDITION OF RS.47,970/- U/R 8D COMPUTED BY LD. AO WAS DELETED ON THE PREMISES THAT THE LD. AO DID NOT POINT PUT ANY DEFECTS IN THE WORKING MADE BY THE ASSESSEE AND THE REFORE, THE SAME WAS NOT SUSTAINABLE. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEND ED THAT THE ASSESSEE FAILED TO PRODUCE ANY OF THE ALLEGED BOGUS SUPPLIERS AND THEREFORE, COULD NOT DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASES. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR], DREW OUR ATTENTION TO THE FACT THAT ALL DOCUMENTARY EVIDENCES WERE FUR NISHED BY THE ASSESSEE TO SUBSTANTIATE THE PURCHASES AND LD.CIT(A ), AFTER DUE APPLICATION OF MIND DECIDED THE MATTER IN ASSESSEE S FAVOR. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER CAREFUL CONSIDERATION OF THE SAME, WE ARE INCLINED TO DISMISS REVENUES APPEAL SINCE, AS RIGH TLY OBSERVED BY LD. CIT(A), THE ASSESSEE PRODUCED SUFFICIENT DOCUMENTAR Y EVIDENCES TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASE TRANSACTIONS, THE ONUS, THEREFORE, WAS SHIFTED ON REVENUE TO REBUT TH E SAME OR TO BRING ON RECORD ANY COGENT MATERIAL TO ESTABLISH THAT THE PU RCHASES WERE NON- GENUINE. DESPITE THE FACT THAT COMPLETE DETAIL OF T HE SUPPLIERS WAS AVAILABLE ON RECORD, THE LD. AO FAILED TO MAKE ANY FURTHER INQUIRY TO CORROBORATE HIS STAND. IT IS TRITE LAW THAT ADDITIO NS COULD NOT BE MADE SOLELY ON THE BASIS OF DOUBTS, CONJECTURE OR SURMIS ES. THE THIRD PARTY STATEMENTS WERE NOT CONFRONTED TO THE ASSESSEE AND NO OPPORTUNITY OF ITA NO.5028/M/2015 STARLIGHT SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR 2009-10 5 CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE WHIC H WAS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. QUA ADDITIONAL DISALLOWANCE U/R 8D, THE LD. AO, WITHOUT SPECIFYING ANY DEFECT IN ASSESSEES WOR KING, STRAIGHTWAY APPLIED RULE 8D, WHICH WAS NOT PROPER SINCE NO SATI SFACTION IN THIS REGARD WAS RECORDED BY LD. AO, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. THEREFORE FINDING NO SUBSTANCE IN REVENUE S APPEAL, WE DISMISS THE SAME. 7. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ! / 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