ITO 14(3)(3), MUMBAI V. C. CHHOTALAL & CO., MUMBAI

ITA 5065/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71229 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2012
• Court: TRIBUNAL
• Department Lawyers: T RAMUAN PAITE
• Keywords: Reopening of assessment; Bogus purchase; Tax effect
• Section: 143(3); 133A; 131; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.3960 TO 3967/MUM/2012 (ASSESSMENT YEAR: 2002-03 TO 2009-10) M/S. C. CHOTALAL & CO. 15/23, L.K. HOUSE, 1 ST FLOOR GANESHWADI, ZAVERI BAZAR, KALBADEVI MUMBAI-400 002. PAN NO.AAAFC 0240 L VS. INCOME TAX OFFICER WARD 14(3)(3) EARNEST HOUSE, NARIMAN POINT MUMBAI-400 021. (APPELLANT) (RESPONDENT) ITA NO.4022 TO 4024/MUM/2012 (ASSESSMENT YEAR: 2002-03 TO 2004-05) ITA NO.4025/MUM/2012 (ASSESSMENT YEAR: 2006-07) ITA NO.3944, 3995 AND 5065/MUM/2012 (ASSESSMENT YEAR: 2007-08 TO 2009-10) INCOME TAX OFFICER WARD 14(3)(3) EARNEST HOUSE, NARIMAN POINT MUMBAI-400 021. VS. M/S. C. CHOTALAL & CO. 15/23, L.K. HOUSE, 1 ST FLOOR GANESHWADI, ZAVERI BAZAR, KALBADEVI MUMBAI-400 002. PAN NO.AAAFC 0240 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENU E BY : SHRI T. RAMUAN PAITE DATE OF HEARING : 24/09/2013 DATE OF PRONOUNCEMENT : 24 / 0 9 /2013 O R D E R PER BENCH: THESE FIFTEEN APPEALS BY THE ASSESSEE AND THE REVEN UE WERE HEARD TOGETHER AND ARE DISPOSED BY THIS COMMON ORDER, FOR THE SAKE OF .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 2 CONVENIENCE AND BREVITY AS THE ISSUES INVOLVED IN B OTH ASSESSEES APPEAL AS WELL AS REVENUES APPEAL ARE SAME. 2. IN ALL THE APPEALS FILED BY THE ASSESSEE FOR ASS ESSMENT YEARS FROM 2002-03 TO 2009-10 BEARING NO.3960 TO 3967/M/2012 T HE FIRST COMMON GROUND IS TO CHALLENGE THE LEGALITY AND VALIDITY OF THE ORDER PASSED U/S. 143(3) R.W.S. 147 OF THE ACT. 3. THE COMMON GROUND RAISED BY THE DEPARTMENT IN TH EIR APPEALS FOR THE ASSESSMENT YEARS 2002-03 TO 2009-10 EXCEPT IN A SSESSMENT YEAR 2005-06 IN ITA NO.4022 TO 4024/M/12 AND ITA NOS.402 5,3944, 3995 AND 5065/M/2012 IS INTERLINKED AND DIRECTLY RELATED TO OUTCOME OF THE SECOND GROUND IN ASSESSEES APPEAL WHICH WE WILL SE E HEREIN AFTER. 4. THE FIRST COMMON GROUND IN ASSESSEES APPEAL RE ADS AS UNDER :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE REOPENING OF ASSESSM ENT U/S. 147 OF THE ACT AS VALID MERELY ON GENERAL STATEMENT OF SHR I RAKESHKUMAR GUPTA THAT WAS MADE BY HIM IN THE COURSE OF SURVEY U/S. 133A AT HIS PREMISES. THE REOPENING OF ASSESSMENT IS BAD IN LAW AND NEEDS TO BE QUASHED. 4.1 THE COUNSEL BEFORE US STATED THAT UNDER THE INS TRUCTION FROM HIS CLIENTS THE ABOVE STATED COMMON GROUND FOR ALL THE YEARS IS NOT PRESSED. THIS GROUND FOR ALL THE YEARS IS ACCORDINGLY DISMIS SED. 5. GROUND NO.2 IN ASSESSEES APPEAL FOR ALL THE ASS ESSMENT YEARS UNDER CONSIDERATION READS AS UNDER, EXCEPT THAT, T HE FIGURES MAY DIFFER IN EVERY ASSESSMENT YEAR UNDER CONSIDERATION. WE AR E TAKING THE GROUND FOR ASSESSMENT YEAR 2002-03. .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING ARBITRARILY THE ADDITION TO THE EXTENT OF RS.1,46,190/- (ROUNDED OFF TO RS.1,50,000/-) BEING 10% OF PURCHASES OF RS.14,61,903/- HOLDING THAT THE ESTIMA TE OF PROFIT @ 10% OF DISPUTED PURCHASES WILL BE FAIR AND REASONAB LE TO COVER UP THE DIFFERENCE OF GP OF PURCHASES FROM SPECIFIC PAR TIES AS WELL AS TO PLUG ANY LEAKAGE OF REVENUE. ADDITION IS CONFIRMED ARBITRARILY IGNORING THE MERITS OF THE SUBMISSIONS AND IS BAD I N LAW AND THE SAME NEEDS TO BE DELETED. 5.1 THE REVENUES GROUND WHICH IS DIRECTLY RELATED TO THE OUTCOME OF ASSESSEES APPEAL READS AS READS AS UNDER :- 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS FA CT BY NOT SUSTAINING ADDITION U/S. 69 AFTER HAVING ACCEPTED T HE FINDING IN PRINCIPLE THAT THERE WAS INVOLVEMENT OF CASH TO HAV E PURCHASE MADE FROM UNDISCLOSED/UNVERIFIABLE PARTIES AND PURCHASES FROM THE CONCERNS OF SHRI RAKESH GUPTA AND FAMILY WAS ONLY A CCOMMODATION ENTRIES AND NOT BY ACTUAL PURCHASE. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS FACT BY N OT SUSTAINING ANY ADDITION ON THE PEAK VALUE OF CASH INVOLVED IN MAKING PURCHASE FROM THE SO CALLED UNIDENTIFIABLE PARTIES U/S. 69. THE DEPARTMENT HAS ALSO RAISED AN ADDITIONAL GROUN D IN THEIR APPEALS FOR ASSESSMENT YEARS 2002-03 TO 2008-09 (EX CEPT FOR ASSESSMENT YEAR 2005-06 FOR WHICH YEAR THERE IS NO DEPARTMENTA L APPEAL PRESUMABLY DUE TO TAX EFFECT) WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) AFTER HAVING ACCEPTED THE FACT THAT THE PURCHASE MA DE FROM OR THROUGH SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBE RS ARE BOGUS, ERRED IN LAW IN NOT CONFIRMING THE ADDITION AT LEAST TO THE EXTENT OF PEAK OF THE PURCHASES MADE FROM SUCH PART IES ON ACCOUNT OF BOGUS PURCHASES MADE IN CASH FROM THE OPEN MARKE T OUT OF UNACCOUNTED CASH IN VIEW OF THE DECISION HELD IN AH MEDABAD HONBLE ITATS C-BENCH DECISION DECIDED IN THE CAS E OF VIJAY PROTEINS LTD. VS. ACIT 58 ITD 428. .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 4 6. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE TRADING OF TEXTILE GOODS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS PURCHASED GOODS INTERALIA , FROM CERTAIN CONCERNS BELONGING TO ONE SHRI RAKE SHKUMAR GUPTA AND HIS FAMILY MEMBERS. AO FURTHER OBSERVED T HAT THE DEPARTMENT HAS SURVEYED THE BUSINESS PREMISES OF SHRI RAKESHKU MAR GUPTA ON 13/02/2009. DURING THE COURSE OF SURVEY A STATEMENT OF SHRI RAKESHKUMAR GUPTA WAS RECORDED IN WHICH HE HAS STAT ED THAT HE HAS ISSUED BOGUS BILLS TO VARIOUS PARTIES AND WAS INVOL VED IN ISSUING ACCOMMODATION BILLS. THE AO FURTHER OBSERVED THAT S HRI RAKESHKUMAR GUPTA LATER ON RETRACTED FROM HIS STATEMENT. THE AS SESSEE WAS ASKED TO JUSTIFY THE GENUINENESS OF PURCHASES MADE FROM SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBERS. THE ASSESSEE FILED A CONFIRMATION AND AN AFFIDAVIT OF SHRI RAKESHKUMAR GUPTA. THE ASSESSEE A LSO FILED COMPLETE DETAILS IN THE FORM OF INVOICE, CHALLANS, QUANTITAT IVE DETAILS OF GOODS. THE ASSESSING OFFICER DISCARDED ALL THESE EVIDENCES FIL ED BY THE ASSESSEE RELYING UPON THE STATEMENT OF SHRI RAKESHKUMAR GUPT A AND WENT ON TO MAKE AN ADDITION ON ACCOUNT OF ENTIRE AMOUNT OF PUR CHASES MADE FROM SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBERS. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND REITERATED WHAT HA D BEEN SUBMITTED BEFORE AO. AFTER CONSIDERING THE FACTS AND STATEMEN T MADE BY ASSESSEE, THE CIT(A) RELIED UPON THE DECISION OF HIS PEERS IN RESPECT OF SOME OTHER PARTIES WHO HAVE ALSO MADE PURCHASES FROM THE CONCE RNS OF SHRI RAKESHKUMAR GUPTA AND HIS FAMILY MEMBERS AND TAKING A CLUE FROM THE ORDERS OF HIS PEERS HE SUSTAINED THE ADDITION TO TH E EXTENT OF 10% AND DELETED THE REMAINING ADDITION MADE BY AO. THE COU NSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT ONE OF THE ORDERS CONSIDERED BY THE CIT(A) WHILE DISPOSING THE APPEAL WAS IN THE CASE O F M/S. JEETENDRA HARSHADKUMAR TEXTILES. THE COUNSEL FURTHER SUBMITTE D THAT IN THAT CASE THE TRIBUNAL HAD THE OCCASION TO CONSIDER THE VALID ITY OR OTHERWISE OF THE ADDITION MADE ON THE BASIS OF THE VERY SAME STATEME NT OF SHRI .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 5 RAKESHKUMAR GUPTA WHICH HAS BEEN RELIED UPON BY AO IN THE CASE OF THE ASSESSEE UNDER CONSIDERATION. THE COUNSEL SUBMI TTED THE ORDER OF THE TRIBUNAL IN ITA NO.2211/MUM/2011. IT IS THE SAY OF THE COUNSEL THAT IN ALL THE APPEALS UNDER CONSIDERATION FACTS AND IS SUES ARE IDENTICAL AND, THEREFORE, THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. JEETENDRA HARSHADKUMAR TEXTILES DESERVED TO BE FOLLOWED. 6.1 THE LD. DR COULD NOT BRING ANY DISTINGUISHING F ACTS OR DECISION PER CONTRA THE DR AGREED THAT FACTS AND ISSUES ARE IDE NTICAL WITH THE FACTS AND ISSUES IN THE CASE OF M/S. JEETENDRA HARSHADKUM AR TEXTILES. 7. WE HAVE PERUSED THE ASSESSMENT ORDER AND THE ORD ER OF CIT(A). WE HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL MUMBAI I BENCH IN THE CASE OF M/S. JEETENDRA HARSHADKUMAR TEXTILES IN ITA NO.771 AND 2211/MUM/2011 FOR ASSESSMENT YEAR 2007-08 DATED 21 /11/2012. WE FIND FORCE IN THE CONTENTIONS OF THE COUNSEL THAT T HE FACTS AND CIRCUMSTANCES ARE IDENTICAL THOUGH THE FIGURES MAY DIFFER. THE TRIBUNAL HAD GIVEN ITS FINDING AT PARA-8 ON PAGE-5 OF ITS OR DER WHICH READS AS UNDER :- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT WILL BE REL EVANT TO REPRODUCE THE LETTER RECEIVED BY THE AO FROM SHRI RAKESH KUMAR G UPTA, WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER: 1 AM IN RECEIPT OF YOUR SUMMONS U/S. 131 OF THE I. T.ACT. 1961 IN THE CASE OF M/S. JITENDRA HARSHAD KUMAR TEX TILE PVT. LTD. ASKING ME TO ATTEND BEFORE YOUR GOODSELF WITH THE DETAILS OF MY ACCOUNT WITH THE SAID M/S. JITENDRA HARSHAD K UMAR TEXTILE PVT. LTD. FOR A.Y.2002-03 & 2007-08. AS YOU ARE AWARE THAT MY ASSESSING OFFICER HAD RECO RDED ALLEGED STATEMENT U/S. 133A AND 131 OF THE I.T.ACT. 1961 1 HAVE BEEN RECEIVING WITNESS SUMMONS FROM ALL FOUR C ORNERS OF THE CITY ON THE GROUND THAT I HAVE GIVEN ACCOMMODAT ION BILL, .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 6 THOUGH I HAVE DENIED THE CONTENT OF THE STATEMENTS RECORDED BY A.O. U/S. 133A & 131 VIDE MY LETTER DATED 27.4.2 009 AND MY AFFIDAVIT DATED 20.2.2009 SUBMITTED TO WARD 14(3 )(2). IT IS PHYSICALLY IMPOSSIBLE FOR ME TO ATTEND BEFORE VARIO US INCOME TAX AUTHORITIES, AS I AM NOT FEELING WELL, IT WILL NOT POSSIBLE FOR ME TO ATTEND BEFORE YOUR GOODSEIF IN RESPONSE TO YO UR ABOVE MENTIONED SUMMONS. AS REGARDS M/S. JITENDRA HARSHAD KUMAR TEXTILES PVT . LTD. IS CONCERNED. I HAVE ALREADY GIVEN MY AFFIDAVIT WHEREI N I HAVE SPECIFICALLY STATED THAT I HAVE SOLD THE GOODS TO M /S. JITENDRA HARSHAD KUMAR TEXTILES P. LTD. AND THE CONSIDERATIO N IS RECEIVED TO ME BY CROSS ORDER CHEQUE. COPY OF THE S AID LEDGER ACCOUNT IS ALREADY SUBMITTED THE DEPARTMENT. 8.1 FROM THE ABOVE LETTER IT IS CLEAR THAT THE SAME WAS WRITTEN IN RESPONSE TO NOTICE ISSUED BY THE AO. NOT ONLY SHRI RAKESH KUMAR GUPTA HAS STATED THAT HE HAS RETRACTED FROM THE STA TEMENT RECORDED DURING THE SURVEY BUT ALSO FILED AN AFFIDAVIT DATED 20/2/2009 AND LETTER DATED 27/4/2009 TO DENY THE STATEMENT MADE D URING THE SURVEY UNDER SECTION 133A. HE HAS FURTHER CONFIRM ED THAT THE SALES MADE BY THE ASSESSEE WERE EFFECTED AND THE CONSIDER ATION WAS RECEIVED BY CROSS ORDER CHEQUES. THUS IT IS CLEAR THAT THERE IS NO MATERIAL ON RECORD TO SAY THAT THE PURCHASES MADE B Y THE ASSESSEE FROM THE SAID CONCERN WERE BOGUS EXCEPT THE GENERA L STATEMENT RECORDED BY THE DEPARTMENT IN THE CASE OF SHRI RAKE SH KUMAR GUPTA, WHICH WAS LATER ON RETRACTED. IN ABSENCE O F ANY MATERIAL BROUGHT ON RECORD AGAINST THE SUBMISSIONS MADE BY SHRI RAKESH KUMAR GUPTA IN HIS LETTER DATED 20/12/2009 FILED B EFORE THE AO OF THE ASSESSEE THE ADDITION, IF ANY, MADE IN THE CA SE OF THE ASSESSEE WILL BE BASED ON PRESUMPTION ONLY AND IT CANNOT BE SUSTAINED IN THE EYES OF LAW. AS AGAINST THAT ASSESSEE HAS SUBMITTE D VARIOUS EVIDENCES TO SHOW THAT THE ACTUAL DELIVERY OF THE G OODS WAS RECEIVED BY THE ASSESSEE FROM THE SAID PARTY WHICH HAS NOT B EEN DISCARDED BY THE AO. THE ADDITION SUSTAINED BY LD. CIT(A) I S ALSO ON PRESUMPTION BASIS. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT ADDITIONS MADE BY THE AO DESERVES TO BE DELETED IN ITS ENTIRETY. WE DECIDE ACCORDINGLY. .C.CHHOTALAL & COMPANY A.YS.02-03 TO 09-10 7 7.1 SINCE THE FACTS AND ISSUES BEING IDENTICAL, WE HAVE NO HESITATION IN FOLLOWING THE ORDER OF OUR CO-ORDINATE BENCH. RESPE CTFULLY FOLLOWING THE SAME ALL THE APPEALS FILED BY THE ASSESSEE ARE PART LY ALLOWED AND ALL THE APPEALS FILED BY THE REVENUE ARE ACCORDINGLY DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2013. SD/- SD/- (I.P. BANSAL ) JUDICIAL MEMBER (N.K. BILLAIYA ) ACCOUNTANT MEMBER MUMBAI, DATED: 24/09/2013. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.