PRAKASH M.JAIN, MUMBAI V. ITO 19 (2)(5), MUMBAI

ITA 5090/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1975 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BERA RAM
• Keywords: Bogus purchase; Tangible material; Corroborative evidences; Accommodation entries
• Section: 143(1); 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO . 5090 & 5091 / MUM . / 2018 ( ASSESSMENT YEAR : 20 09 10 & 2010 11 ) PRAKASH M. JAIN SHOP NO.2, SHREE KANAK BHAVA 6 TH KHETWADI BANK ROAD MUMBAI 400 004 PAN AABPJ4763G . APPELLANT V/S INCOME TAX OFFICER WARD 19(2)(5), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI BERA RAM DATE OF HEARING 18 . 11 .2019 DATE OF ORDER 28.11.2019 O R D E R THE AFORESAID APPEALS BY THE ASSESSEE ARE AGAINST TWO SEPARATE ORDERS , BOTH DATED 14 TH JUNE 2018, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10 AND 2010 11. 2. SINCE THE GROUNDS RAISED IN BOTH THE APPEALS ARE IDENTICAL, WE PROPOSE TO DISPOSE OFF THE GROUNDS TOGETHER. 2 PRAKASH M. JAIN 3. THE FIRST COMMON ISSUE IN GROUND NO.1, IN BOTH THE APPEALS IS CHALLENGING THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE A CT' ). 4. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON FERROUS METALS. FOR THE ASSESSMENT YEARS UNDER DISPUTE, THE ASSESSEE HAD ORIGINALLY FILED ITS RETURNS OF INCOME IN REGULAR COURSE. THE RETURNS OF INCOME WERE INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE OFFICE OF THE DGIT (INV.) INFORMING THAT AS COMMUNICATED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, CERTAIN ENTI TIES IDENTIFIED AS HAWALA OPERATORS WERE PROVIDING ACCOMMODATION BILLS IN THE GARB OF BOGUS PURCHASE. AS PER THE INFORMATION RECEIVED, THE ASSESSEE IS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES PROVIDED BY SUCH HAWALA OPERATORS AS IDENTIFIED BY THE SALES TAX DEPARTMENT. IT WAS FOUND THAT AS PER THE INFORMATION, PURCHASES WORTH ` 65,12,118, CLAIMED TO HAVE BEEN MADE FROM 10 PARTIES IN THE ASSESSMENT YEAR 2009 10 ARE NON GENUINE. SIMILARLY, PURCHASES WORTH ` 60,57,588 (WRONGLY MENTIONED AS ` 2,84,3 8,886, IN THE ASSESSMENT ORDER BUT SUBSEQUENTLY RECTIFIED IN THE ORDER PASSED UNDER SECTION 154 OF THE ACT ON 17 TH MARCH 2016) ARE NON GENUINE. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT AN D 3 PRAKASH M. JAIN ULTIMATELY PROC EEDED TO COMPLETE THEM BY ESTIMATING PROFIT @ 12.5% ON THE NON GENUINE PURCHASES. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER S SO PASSED BEFORE LEARNED COMMISSIONER (APPEALS) , BOTH , ON MERITS AS WELL AS ON THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. HOWEVER, LEARNED COMMISSIONER (APPEALS) DID NOT ENTERTAIN ASSESSEES PLEA ON BOTH THE ISSUES. 5. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE TO REPRESENT THE CASE. IT IS OBSERVED FROM THE RECORD T HAT THE HEARING NOTICE ISSUED PER REGISTERED POST WITH A/D, HAS RETURNED UN SERVED WITH THE POSTAL REMARK NOT KNOWN . IN VIEW OF THE ABOVE, WE PROCEED TO DISPOSE OF THE APPEALS EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, THE RETUR NS OF INCOME FILED BY THE ASSESSEE WERE NOT SUBJECTED TO SCRUTINY, BUT WERE ONLY PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREFORE, THE ASSESSING OFFICER NEVER HAD AN OCCASION TO VERIFY THE GENUINENESS OF PURCHASES AT THE TIME OF PROCESSING OF RETURNS O F INCOME UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED SPECIFIC INFORMATION INDICATING THAT CERTAIN PURCHASES 4 PRAKASH M. JAIN MADE BY THE ASSESSEE ARE NON GENUINE. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESS MENT UNDER SECTION 147 OF THE ACT. THUS, THERE CANNOT BE ANY DOUBT THAT AT THE T IME OF RE OPENING OF ASSESSMENT THE ASSESSING OFFICER HAD TANGIBLE MATERIAL IN HIS POSSESSION TO FORM THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THAT BEIN G THE CASE, WE DO NOT FIND ANY JURISDICTION AL ERROR OR INVALIDITY IN THE ACTION OF THE ASSESSING OFFICER IN RE OPENING THE ASSESSMENT S UNDER SECTION 147 OF THE ACT. ACCORDINGLY, GROUND NO.1, IN BOTH THE APPEALS IS DISMISSED. 7. IN GROUND NO.2 IN BOTH THE APP EALS, THE ASSESSEE HAS CHALLENGED THE ADDITION MADE @ 12.5% OF THE NON GENUINE PURCHASES. 8. THE FACTUAL MATRIX REVEALS THAT THE ASSESSING OFFICER HAD SPECIFIC INFORMATION FROM EXTERNAL SOURCE INDICATING THAT CERTAIN PURCHASES MADE BY THE ASSESSEE WERE NON GENUINE AND THE ASSESSEE IS MERELY A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY CERTAIN ENTITIES . I N THE GARB OF PURCHASE BILLS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD NOT ONLY CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES, BUT HE HIMSELF CONDUCTED INDEPENDENT ENQUIRY TO FIND OUT THE AUTHENTIC ITY OF P URCHASES MADE BY THE ASSESSEE. N EITHER THE ASSESSEE WAS ABLE TO CONVINCE THE ASSESSING OFFICER WITH SUPPORTING EVIDENCES REGARDING THE GENUINENESS OF 5 PRAKASH M. JAIN PURCHASES MADE NOR THE INDEPENDENT ENQUIRY CONDUCTED BY THE ASSESSING OFFICER ELICITED ANY INFORMATION REGARDING THE GENUINENES S OF PURCHASES CLAIMED TO H AVE BEEN MADE BY THE ASSESSEE, AS , THE CONCERNED SELLING DEALERS WERE NOT FOUND IN THE GIVEN ADDRESS. THEREFORE , THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE CANNOT BE ACCEPTED AS GENUINE WITHOUT PROPER CORROBORATIVE E VIDENCE. IN SUCH CIRCUMSTANCES, INSTEAD OF ADDING THE ENTIRE PURCHASES THE ASSESSING OFFICER HAS RESTRICTED THE ADDITION TO 12.5% OF SUCH PURCHASES WHICH HAS BEEN CONFIRMED BY LEARNED COMMISSIONER (APPEALS) . THE ASSESSEE HAS NEITHER APPEARED BEFORE US NOR HAS BROUGHT ANY CONVINCING MATERIAL TO ENABLE US TO RESTRICT THE ADDITION TO A LESSER PERCENTAGE. IN VIEW OF THE AFORESAID, WE ARE UNABLE TO ENTERTAIN THE GROUND S RAISED BY THE ASSESSEE. 9. IN THE RESULT, ASSESSEES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.11.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.11.2019 6 PRAKASH M. JAIN COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI