DCIT CEN CIR 3(3), MUMBAI V. KANIYA ASSOCIATES P.LTD, MUMBAI

ITA 5032/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7872 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Bogus purchase; Rejection of books of accounts; Opportunity of being heard; Accommodation entries
• Section: 69C; 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5032/MUM/2015 ASSESSMENT YEAR: 2009 - 10 DCIT - 3(3) ROOM NO. 401, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. ROAD MUMBAI - 400020 VS. M/S KANIYA ASSOCIATES PVT. LTD. BUSINESS PARK, NEAR BALAJI BLDG., S V ROAD, MALAD (W) MUMBAI - 400064 PAN NO. AA ACK1478R APPELLANT RESPONDENT REVENUE BY : MR. RAJESH KUMAR YADAV, DR ASSESSEE BY : MR. RYAN SALDANHA , AR DATE OF HEARING : 07/11 /2017 DATE OF PRONOUNCEMENT : 27/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 51, MUMBAI AND ARISES OUT OF THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE SOLE GROUND RAISED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) DELETING THE ADDITION OF RS. 72,16,095 / - MADE BY ASSESSING OFFICER (AO) U/S 69C OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY FILED ITS RETURN OF INCOME FOR THE AY 2009 - 10 ON 03 .09.2009 DECLARING M/S KANIYA ASSOCIATES ITA NO. 5032/MUM/2015 2 TOTAL INCOME OF RS. 10,24,319 / - . THE ASSESSEE TRADES IN HARDWARE AND SANITARY MATERIALS. THE AO MADE THE ASSESSMENT U/S 143(3) ON 12.12.2011 ASSESSING THE TOTAL INCOME AT RS. 10,27,844 / - . SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE - COMPANY HAS MADE BOGUS PURCHASES OF RS. 72,16,095 / - FROM M/S SAMAY SALES CORPORATION. ON THAT BASIS, THE AO ISSUED NOTICE U/S 148 TO THE ASSESSEE ON 07.03.201 3 . DURING THE COURSE OF REASSESSM ENT PROCEEDINGS , THE ASSESSEE FILED BEFORE THE AO LEDGER ACCOUNT OF THE PARTY, BANK STATEMENT IN WHICH PAYMENT MADE IS REFLECTED TO THE PARTY, COPIES OF BILLS, VAT R EGISTRATION C ERTIFICATE, VAT RETURN FILED BY THE PARTY, VAT PAID CHALLAN, DETAILS OF QUANTI TY - WISE PURCHASES ALONG WITH CORRESPONDING SALES TO ANOTHER PARTIES. THE AO OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTY FOR VERIFICATION OF THE TRANSACTIONS. HE ALSO NOTED THAT THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA HAS COND UCTED INDEPENDENT INQUIRIES IN EACH OF THE HAWALA PARTIES AND FOUND THAT THESE WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ONLY. IN VIEW OF THE ABOVE, THE AO MADE AN ADDITION OF RS. 72,16,095 / - U/S 69C OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT THE ASSESSEE HAD SUBMITTED COMPLETE DOCUMENTARY EVIDENCE BEFORE THE AO. AS PER HIM, M/S KANIYA ASSOCIATES ITA NO. 5032/MUM/2015 3 THE AO HAS NOT DOUBTED THE SALES, NO R REJECTED THE BOOKS OF ACCOUNTS, NO R DISPUTED THE GROSS PROFIT SHOWN BY THE ASSESSEE. ALSO THE LD. CIT(A) OBSERVED THAT THERE IS NO ADVERSE REMARK BY THE AO ON THE AUDITORS REPORT AND THERE IS NO EVIDENCE THAT THE PAYMENT MADE BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN RECEIVED B ACK IN THE FORM OF CASH. THE LD. CIT(A) FOLLOWED THE ORDER OF HIS PREDECESSOR - IN - OFFICE FOR THE AY 2010 - 11 AND DELETED THE ADDITION MADE BY THE AO. 5. BEFORE US, THE LD. DR SUBMITS THAT THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTY BEFORE THE AO FOR VERI FICATION . HE ALSO SUBMITS THAT THE TIN NO. PROVIDED BY THE ASSESSEE IN THE AFOREMENTIONED CASE MATCHES WITH THE SAME AS AVAILABLE BEFORE THE AO. ALSO IT IS STATED BY HIM THAT THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA HAS CONDUCTED INDEPENDENT INQ UIRIES IN EACH OF THE HAWALA PARTIES AND THEN PROVED THAT THESE PARTIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ONLY. THUS HE SUPPORTS THE ORDER PASSED BY THE AO. 6. PER CONTRA , THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE LD. CIT(A). HE ALSO FILES A COPY OF THE ORDER OF THE ITAT SMC BENCH IN THE CASE OF THE ASSESSEE FOR THE AY 2010 - 11. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE DISCUSS NOW THE ORDER OF THE TRIBUNAL SMC BENCH, MUMBAI IN THE CASE OF THE ASSESSEE FOR THE AY 2010 - 11 (ITA NO. 7409/MUM/2014). IN THAT CASE THE ASSESSEE HAD MADE THE PURCHASES FROM SHRI GANESH TRADING CO. THIS IS NOT SO IN THE INSTANT APPEAL. M/S KANIYA ASSOCIATES ITA NO. 5032/MUM/2015 4 THEREFORE, THE CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE ABOVE ORDER OF THE TRIBUNAL. THERE IS NO DENYING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTY BEFORE THE AO FOR VERIFICATION . ALSO THE TIN NO. PROVIDED BY THE ASSESSEE MATCHES WITH THE INFORMATION AVAILABLE WITH THE AO. THERE WAS ALSO INDEPENDENT INQUIRY CONDUCTED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA HOLDING THAT SAMAY SALES CORPORATION WAS ENGAGED IN THE BUSI NESS OF PROVIDING ACCOMMODATION ENTRIES ONLY. WE ARE OF THE CONSIDERED VIEW THAT THE CONTENTIOUS ISSUES IN THE INSTANT CASE COULD BE RESOLVED BY EXAMINING SAMAY SALES CORPORATION BY THE AO. THEN A FINDING CAN BE ARRIVED AT ONLY AFTER GIVING REASONABLE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE IN THAT REGARD. THE HON'BLE SUPREME COURT IN STATE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECESSARILY CARRY WITH IT THE RIGHT TO EXAMINE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS - EXAMINE WITNESSES. IN ITO VS. M. PIRAI CHOODI (2012) 20 TAXMANN.COM 733 (SC), THE HON'BLE SUPREME COURT HAS HELD THAT ORDER OF ASSESSMENT PASSED WITHOUT GRANTING AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE, SHOULD NOT HAVE BEEN SET ASIDE BY HIGH COURT; AT MOST, HIGH COURT SHOULD HAVE DIRECTED ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE CONCERNED WITNESS . IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ASSESSMENT M/S KANIYA ASSOCIATES ITA NO. 5032/MUM/2015 5 AFTER EXAMINING THE ABOVE PARTY AND GIVING AN OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THE SAID PARTY. IT IS OBL IGATORY ON THE PART OF THE ASSESSEE TO FURNISH TO THE AO THE CORRECT ADDRESS OF THE SAID PARTY TO WHOM SUCH SUMMON IS TO BE ISSUED. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY, THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE ASSESSMENT ORDER. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/12/2017. SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/12/2017 RAHUL SHARMA, SR. P.S. 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