SHIVSHANKAR AGARWAL, MUMBAI V. ITO 20(3)(2), MUMBAI

ITA 5131/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1286 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN LD
• Assessee Lawyers: R C JAIN LD AR
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

ITA NO.5131/M/2016 SHIVSHANKAR AGARWAL ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , , ! BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5131/MUM/2016 ( / ASSESSMENT YEAR: 2011-2012) SHIVSHANKAR AGARWAL A-204 CORPORATE CENTRE PREMISES A.K.ROAD MAROL PIPE LINE ANDHERI(EAST) MUMBAI 400 059 / VS. INCOME TAX OFFICER 25(1)(3) C-10, ROOM NO. 404 PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA(E) MUMBAI 400 051 ' ./ ./PAN/GIR NO. ACWPA-8043-M ( ') /APPELLANT ) : ( *+ ') / RESPONDENT ) ') , / APPELLANT BY : SHRI R.C.JAIN, LD. AR *+ ') , / RESPONDENT BY : SHRI M.C. OMI NINGSHEN, LD. DR . , / / DATE OF HEARING : 10/04/2017 012 , / / DATE OF PRONOUNCEMENT : 17 /04/2017 ITA NO.5131/M/2016 SHIVSHANKAR AGARWAL ASSESSMENT YEAR 2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT Y EAR [AY] 2011-12 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-37 [CIT(A)], MUMBAI DATED 08/03/2016 QUA ADDITION OF RS.25,39,478/- WITH RESPECT TO BOGUS PU RCHASES. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT IND IVIDUAL, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) VIDE ASSESSING OFFICER [AO] O RDER DATED 28/03/2014 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3 7,33,970/- AFTER MAKING CERTAIN ADJUSTMENTS AND DISALLOWANCES AS AGAINST RETURNED I NCOME OF RS.4,89,320/- E-FILED BY THE ASSESSEE ON 30/09/2011. THE ASSESSEE WAS THE PROPRI ETOR OF AN ENTITY NAMELY M/S ANURADHA ENTERPRISES WHICH WAS ENGAGED AS TRADER OF IRON & STEEL AND AC HIEVED TURNOVER OF RS.27.83 CRORES AGAINST WHICH IT OFFERE D GROSS PROFIT & NET PROFIT OF RS.1.15 CRORES & RS.7.48 LACS RESPECTIVELY FOR THE IMPUGNED AY. AS PER THE INFORMATION RECEIVED FROM THE DGIT, MUMBAI, THE ASSESSEE WAS FOUND TO HAVE ENTERED INT O HAWALA TRANSACTIONS FOR PURCHASES AMOUNTING TO RS.2,03,15, 825/- FROM THE FOLLOWING TWO PARTIES:- UPON NOTICING THAT THE TIN NUMBERS OF BOTH THE PARTI ES WERE CANCELLED BY THE VAT DEPARTMENT, THE ASSESSEE WAS SHOW-CAUSED TO PRODUCE THE RESPECTIVE PARTIES TO SUBSTANTIATE THE PURCHASES. THE ASSESSEE, IN TURN, SUBMITTED THE DETAILS OF PURCHASES MADE FROM THESE PARTIES ALONG-WITH INVOICES AND COPIES O F LEDGER ACCOUNTS IN ASSESSEES BOOKS OF ACCOUNT AND CONTENDED THAT ALL THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND NO. NAME OF THE PARTY TIN NO. AMOUNT (RS.) 1. DARSHAN SALES CORPORATION 27920382883V 1,61,40,1 44/- 2. PAYAL ENTERPRISES 27870658730V 41,75,681/- TOTAL 2,03,15,825/- ITA NO.5131/M/2016 SHIVSHANKAR AGARWAL ASSESSMENT YEAR 2011-12 3 THEREFORE, THE PURCHASES WERE GENUINE. HOWEVER, NOT CONVINCED, LD. AO REJECTED VARIOUS CONTENTIONS RAISED BY THE ASSESSEE AND ESTIMATED DI SALLOWANCE AGAINST THE SAID PURCHASES AT RS.31,27,484/- WHICH COMPRISED OF PEAK PURCHASES OF RS.22,86,409/- MADE FROM THE TWO PARTIES AND GP ADDITION @ 4.14% ON TOTAL PURCHA SES OF RS.2,03,15,825/- WHICH AMOUNTED TO RS.8,41,075/-. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER WITH PARTIAL SUCCESS BEFORE THE FIRST APPELLATE AUTHORITY VIDE O RDER DATED 08/03/2016 AND RAISED VARIOUS SIMILAR CONTENTIONS IN SUPPORT OF HIS CLAIM AND RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS. HOWEVER, LD. CIT(A) WHILE NOTING THA T THE ASSESSEE COULD NOT SUBMIT THE DELIVERY PROOF BEFORE THE AO, APPRECIATED THE V ARIOUS CASE LAWS ON THE ISSUE AND APPLYING THE SAME TO THE FACTS OF THE CASE, RESTRIC TED THE SAID DISALLOWANCE TO 12.5% OF TOTAL PURCHASES, THUS PROVIDING PARTIAL RELIEF OF R S.5,88,006/- TO THE ASSESSEE. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR ASSESSEE [AR] PRIMARILY CONTE STED THE SAID ADDITIONS ON THE PREMISES THAT THE ASSESSEE PRODUCED SALE/PURCHASE I NVOICES, QUANTITATIVE DETAILS, BANK STATEMENTS, LEDGER STATEMENT ETC. AND THUS DISCHARG ED THE INITIAL ONUS OF PROVING THE PURCHASES AND THEREFORE, THE ONUS WAS SHIFTED ON AO TO NEGATE THE CLAIM OF THE ASSESSEE. FURTHER, OUR ATTENTION WAS DRAWN TO GP/NP RATE CHAR T FOR SEVERAL YEARS TO CONTEND THAT THE GP/NP RATE SHOWN IN THE IMPUGNED AY WAS COMMENSURAT E / IN LINE WITH THE RATES OF EARLIER YEARS AND THEREFORE, NO ADDITIONS QUA PURCHASES COULD BE MADE AND NOTHING MORE WAS REQUIRED FROM THE ASSESSEE TO SUBSTANTIATE HIS CLAIM REGARDING PURCHASES PARTICULARLY WHEN THE SALES WERE NOT DISPUTED BY THE REVENUE. PE R CONTRA, LD. DR PLACED RELIANCE ON THE ORDER OF LD. CIT(A) TO CONTEND THAT ADEQUATE REL IEF HAS ALREADY BEEN PROVIDE TO THE ASSESSEE AND THEREFORE, NO FURTHER RELIEF COULD BE GRANTED SINCE THE ASSESSEE COULD NOT PROVE ACTUAL DELIVERY OF GOODS AND MERELY STRESSED THE POINT THAT SUBMISSION OF INVOICES / LEDGER COPIES AND BANK STATEMENTS WERE SUFFICIENT E NOUGH TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE WITH RESPECT TO PURCHASES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE, THE ASSESSEE, ON ONE HAND, COULD NOT PROVE THE PURCHASES ITA NO.5131/M/2016 SHIVSHANKAR AGARWAL ASSESSMENT YEAR 2011-12 4 WITH COGENT MATERIAL AND SUBSTANTIATE THE SAME BY P RODUCING EVIDENCES AS TO ACTUAL DELIVERY OF MATERIAL. SIMILARLY, THE REVENUE, ON TH E OTHER HAND, HAS ALSO FAILED TO BRING ON RECORD ANY COGENT MATERIAL SO AS TO NEGATE THE CLAI M OF THE ASSESSEE AND MERELY PROCEEDED TO MAKE THE IMPUGNED ADDITIONS AS PER THE INFORMATION RECEIVED FROM VAT DEPARTMENT AFTER NOTICING THAT THE TIN NUMBERS OF T HE RESPECTIVE SUPPLIERS WERE CANCELLED BY THE VAT DEPARTMENT. PER QUERY FROM THE BENCH THAT WHETHER THE ASSESSEE HAS DEDUCTED ANY TDS FROM THE FREIGHT PAYMENTS OR COMPL IED WITH SERVICE TAX OBLIGATIONS ON FREIGHT / TRANSPORT PAYMENT, THE LD. AR COULD NOT PROVIDE A SATISFACTORY REPLY AND MADE A BALD ASSERTION THAT NO TDS WAS REQUIRED TO B E DEDUCTED ON THE SAID PAYMENT WITHOUT ADDUCING ANY EVIDENCE IN THIS REGARD. A PER USAL OF THE INVOICES ISSUED BY IMPUGNED SUPPLIERS REVEALS THAT DELIVERY DETAILS / MODE OF TRANSPORT / VEHICLE NUMBER ETC. WAS MISSING IN MOST OF THE INVOICES PARTICULARLY WH EN THE ASSESSEE WAS DEALING IN HEAVY ITEMS LIKE IRON AND STEEL. THE LD. AR RAISED ANOTHER CONTENTION THAT IT HAS PROVIDED ONE TO ONE CORRELATION BETWEEN IMPUGNED PURCHASES AND SALE AND EARNED HANDSOME GP OF 6% AGAINST THE SAME. HOWEVER, A PERUSAL OF THE SAME RE VEALS THAT NO QUANTITATIVE DETAILS WERE GIVEN IN THE CHART AND EVEN THE TAX AUDIT REPORT CO NTAINING VITAL QUANTITATIVE INFORMATION WAS MISSING. THE BENCH ALSO RAISED A QUERY WHETHER THE TIN NUMBERS OF THE IMPUGNED SUPPLIERS WERE ACTIVE AT THE TIME OF ACTUAL PURCHAS ES AND WHETHER THE ASSESSEE WAS SADDLED WITH DISALLOWANCE OF VAT CREDIT AGAINST THE IMPUGNED PURCHASES, NO SATISFACTORY REPLY THEREOF COULD BE GIVEN BY THE ASSESSEE. THE LE DGER ACCOUNT OF ONE OF THE SUPPLIER NAMELY M/S DARSHAN SALES CORPORATION REVEALS THAT THE ASSESSEE MADE THE IMPUGNED PURCHASES BETWEEN 01/10/2010 TO 23/12/2010 WHEREAS IT MADE THE FIRST PAYMENT TO THE AFORESAID PARTY ONLY ON 11/12/2011 I.E. MORE THAN O NE YEAR FROM THE DATE OF FIRST PURCHASE. SIMILAR IS THE POSITION WITH THE SECOND S UPPLIER. ALL THESE FACTORS WEAKEN THE STAND / VARIOUS CONTENTIONS RAISED BY THE LD. AR. SIMILARLY, WE FURTHER NOTE THAT THE LD. AO PROCEEDED TO DISALLOW THE PURCHASES MERELY UPON RECEIVING INFORMATION FROM VAT DEPARTMENT AND NOTICING THAT THE TIN NUMBERS OF THE IMPUGNED SUPPLIERS WERE CANCELLED WITHOUT INVESTIGATING THE MATTER FURTHER. THE LD. AO SHIFTED THE BURDEN ON THE ASSESSEE ITA NO.5131/M/2016 SHIVSHANKAR AGARWAL ASSESSMENT YEAR 2011-12 5 WHEREAS HE HIMSELF COULD HAVE OBTAINED CONFIRMATION FROM THE IMPUGNED SUPPLIERS IN THIS REGARD BY ISSUANCE OF NOTICES U/S 133(6) AND A DOPTING VARIOUS OTHER LEGAL MEANS AVAILABLE TO HIM, WHICH PRIMA FACIE SEEMS TO HAVE NOT BEEN UNDERTAKEN BY HIM. THEREFORE, THE ISSUE, IN OUR OPINION, REMAINS INCONC LUSIVE AND REQUIRES RE-APPRECIATION / RE-VERIFICATION AT THE LEVEL OF LD. AO. THEREFORE, W ITHOUT GOING ANY DEEPER INTO THE MATTER FURTHER, WE DEEM IT FIT TO RESTORE THE MATTE R BACK TO THE FILE OF AO FOR RE- ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE, IN TU RN, IS ALSO DIRECTED TO SUBSTANTIATE HIS CLAIM IN THIS REGARD FAILING WHICH THE AO SHALL BE AT LIBERTY TO DECIDE THE MATTER AS PER LAW ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. THE ASSESSEES APPEAL STANDS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER . MUMBAI; 4 DATED : 17.04.2017 SR.PS:- THIRUMALESH '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+ ') / THE RESPONDENT 3. 5/ ( ) / THE CIT(A) 4. 5/ / CIT CONCERNED 5. 89 */:; , :;2 , . / DR, ITAT, MUMBAI 6. < =. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , . / ITAT, MUMBAI