ASST CIT 25(2), MUMBAI V. RAMILA PRAVIN SHAH, MUMBAI

ITA 5246/MUM/2013

• Counselvise Citation: 524619914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Accommodation entries
• Section: 69C; 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, ( JM) . . , , ./I.T.A. NO.5246/MUM/2013 ( / ASSESSMENT YEAR : 2010-11) ASSTT.COMMISSIONER OF INCOME TAX-25(2), ROOM NO.108, 1 ST FLOOR, BLD. NO.C-11, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. / VS. SHRI RAMILA PRAVIN SHAH, 605, SHRADHA RESIDENCY, CHANDAVARKAR ROAD, BORIVALI (W), MUMBAI-400092 ( / APPELLANT) .. ( ! / RESPONDENT) ./ ' ./PAN/GIR NO. :ANVPS9225M # / APPELLANT BY SHRI LOVE KUMAR ! $ # / RESPONDENT BY SHRI BHUPENDRA SHAH % & $ '( / DATE OF HEARING : 5.3.2015 )* $ '( /DATE OF PRONOUNCEMENT : 5.3.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 21.5.2013 PASSED BY THE LD.CIT(A)-35, MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2010-11. ITA. NO.5246/MUM/2013 2 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD.C IT(A) IN DELETING THE DISALLOWANCE OF RS.28.08 LAKHS RELATING TO UNEX PLAINED EXPENDITURE MADE U/S 69C OF THE INCOME TAX ACT, 1961 (THE ACT). 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION UNDER THE NAME AND STYLE OF M/S KAILASH CONSTRUCTION CO. THE TOTAL PURCHASE EX PENDITURE CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WA S RS.8,62,68,891/-. THE AO NOTICED THAT THE SALES TAX DEPARTMENT OF GOV ERNMENT OF MAHARASHTRA HAS LISTED OUT NAMES OF CERTAIN DEALERS , WHO WERE ALLEGED TO HAVE BEEN PROVIDING ACCOMMODATION ENTRIES WITHOUT D OING ACTUAL BUSINESS. THE AO NOTICED THAT THE ASSESSEE MADE PURCHASES TO THE TUNE OF RS.28.08 LAKHS FROM SOME OF THE PARTIES, WHOSE NAMES FOUND P LACE IN THE LIST PROVIDED BY THE SALES TAX DEPARTMENT. THE AO ALSO C ONSIDERED THE STATEMENTS TAKEN BY SALES TAX DEPARTMENT FROM SOME OF THE PARTIES. DURING THE COURSE OF HEARING, THE AO DEPUTED INSPEC TOR OF INCOME TAX TO SERVE NOTICE U/S 133(6) OF THE ACT. HOWEVER, THE I NSPECTOR REPORTED THAT THESE PARTIES WERE NOT AVAILABLE AT GIVEN ADDRESS. THE AO ALSO ASKED THE ASSESSEE TO SUBMIT DELIVERY CHALLANS AND STOCK REGI STER TO PROVE THE MOVEMENT OF STOCK AND ALSO ASKED TO PRODUCE THESE P ARTIES. HOWEVER, THE ASSESSEE FAILED TO FURNISH THE DETAILS CALLED FOR. HENCE, BY PLACING THE RELIANCE ON THE STATEMENTS GIVEN BY THESE PARTIES B EFORE THE SALES TAX DEPARTMENT, THE AO TOOK THE VIEW THAT THE PURCHASES TO THE TUNE OF ITA. NO.5246/MUM/2013 3 RS.28.08 LAKHS HAVE TO BE TREATED AS UNEXPLAINED EX PENDITURE. ACCORDINGLY, HE ASSESSED THE SAME U/S 69C OF THE A CT. 4. THE LD. CIT(A) DELETED THE ADDITION AND HENCE T HE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. DR STRONGLY PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT TH E ADDITIONS MADE IN THE CASE OF SOME OTHER ASSESSES ON IDENTICAL REASON S HAVE BEEN DELETED BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE FOLL OWING CASES : A) RAMESH KUMAR AND CO V/S ACIT IN ITA NO.2959/MUM/ 2014 (AY-2010-11) DATED 28.11.2014; B) DCIT V/S SHRI RAJEEV G KALATHIL IN ITA NO.6727/ MUM/2012 (AY-2009-10) DATED 20.8.2014; AND C) SHRI GANPATRAJ A SANGHAVI V/S ACIT IN ITA NO. 2826/MUM/2013 (AY-2009-10) DATED 5.11.2014 IN ALL THE ABOVE SAID CASES, THE CO-ORDINATE BENCH ES OF THE TRIBUNAL HAS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE AD DITION ON THE BASIS OF STATEMENTS GIVEN BY THE THIRD PARTIES BEFORE THE SA LES TAX DEPARTMENT, WITHOUT CONDUCTING ANY OTHER INVESTIGATION. IN THE INSTANT CASE ALSO, THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMENTS GIVEN BY THE PARTIES BEFORE THE SALES TA X DEPARTMENT. WE NOTICE THAT THE LD.CIT(A) HAS PROPERLY ANALYSED THE FACTS PREVAILING IN THE INSTANT CASE AND FOR THE SAKE OF CONVENIENCE, WE EX TRACT THE SAME BELOW:- ITA. NO.5246/MUM/2013 4 5.3.11. I HAVE ALSO GONE THOUGH THE JUDICIAL PRON OUNCEMENTS RELIED UPON BY THE LD AR AND FIND THAT THE FACTS OF THE AB OVE REFERRED JUDICIAL PRONOUNCEMENTS ARE SIMILAR TO THE PRESENT FACTS OF THE CASE AND, THEREFORE THE RATIO OF JUDGMENTS OF THE ABOVE REFERRED TWO CASES ARE FULLY APPLICABLE IN THE PRESENT CASE. FUR THER, I HAVE ALSO TAKEN INTO CONSIDERATION THE DECISION OF JURISDICTI ONAL HIGH COURT AND ITAT I.E. THE COMMISSIONER OF INCOME TAX - 1 MUMBAI VS NIKUNJ EXIMP ENTERPRISES PVT, LTD. APPEAL NO ITA NO. 5604 OF 2010 (HON. MUMBAI HIGH COURT) AND BALAJI TEXTILE INDUSTRIES (P ) LTD. VS INCOME TAX OFFICER (1994) 49 LTD (BOM) 177. WHILE IN THE C ASE OF NIKUNJ EXIMP ENTERPRISES, THE HON'BLE BOMBAY HIGH COURT IN ITS LATEST JUDGMENT HAS HELD THAT ONCE THE SALES ARE ACCEPTED, THE PURCHASES CANNOT BE TREATED AS INGENUINE IN THOSE CASES WHERE THE APPELLANT HAD SUBMITTED ALL DETAILS OF PURCHASES AND PAYMENTS WERE MADE BY CHEQUES, MERELY BECAUSE THE SELLERS/SUPPLIERS COULD NOT BE PRODUCED BEFORE THE A.O. BY THE ASSESSEE. FURTHER, I HAVE AL SO GONE THROUGH THE JUDGMENT IN CASE BALAJI TEXTILE INDUSTRIES (P) LTD. VS INCOME TAX OFFICER BY HON. ITAT, MUMBAI (1994) 49 LTD (BOM) 17 7 WHICH WAS MADE AS LONG BACK AS 1994 AND WHICH STILL HOLDS GOO D IN WHICH WAS HELD THAT- 'ISSUING PRINTED BILLS FOR SELLING THE T EXTILE GOODS TO THE ASSESSEE-COMPANY AT BHIWANDI WAS NOT A CONCLUSIVE P ROOF BUT IT WAS A PRIMA FADE PROOF TO ARRIVE TO A CORREC T CONCLUSION THAT THE ASSESSEE PURCHASED CERTAIN GOOD S FROM CERTAIN PARTIES AT BHIWANDI. THE ASSESSEE SOLD THOS E GOODS TO 'S AND ADJUSTED THE SALE PROCEEDS AGAINST THE LOAN TAKEN BY IT FROM THAT PARTY. THE ASSESSEE'S BOOKS OF ACCOUNT AND THE BOOKS OF ACCOUNT OF 'S' IN WHICH THE ENTRIES OF SAL E AND ADJUSTMENT WERE MADE, COULD NOT BE DISCARDED MERELY BY SAYING THAT THEY WERE NOT GENUINE ENTRIES THOUGH NEITHER THE ASSESSING OFFICER NOR THE COMMISSIONER (APPEALS) OPINED ANYTHING IN RESPECT OF THOSE ENTRI ES. FURTHER, THE PURCHASE OF THE GOODS IN THE MONTH OF MARCH 1985 DID NOT MAKE ANY DIFFERENCE. THE ASSESSEE MIGH T NOT HAVE CARRIED ON ANY BUSINESS ACTIVITIES PRIOR TO MA RCH 1985, BUT THAT DID NOT MEAN THAT THE ASSESSEE WAS NOT ENT ITLED TO CARRY ON THE BUSINESS ACTIVITY IN MARCH 1985. THEY COULD NOT BE COMPELLED TO CARRY ON THE BUSINESS ACTIVITY THROUGH OUT THE YEAR. THERE WERE NO GOOD REASONS TO DISBELIEVE THE SALES MADE BY THE ASSESSEE TO 'S. NO SALES WERE LIKELY T O BE EFFECTED IF THERE WERE NO PURCHASES. A SALE COULD B E MADE IF THE GOODS WERE AVAILABLE WITH THE SELLER. FROM ALL THESE FACTS ON RECORD, A REASONABLE AND CONVINCING INFERE NCE WHICH COULD BE DRAWN, WAS THAT THE ASSESSEE PURCHAS ED THE TEXTILE GOODS, SOLD THEM AND ADJUSTED THE SAME TOWA RDS THE ITA. NO.5246/MUM/2013 5 LOAN TAKEN BY IT. THEREFORE, THE ASSESSEE WAS ENTIT LED TO GET THE ENTIRE DEDUCTION.' I HAVE ALSO TAKEN INTO CONSI DERATION, THE G.P RATIO/G.P. MARGIN OF THE APPELLANT IN THE PREVIOUS A.Y. AS WELL AS SUBSEQUENT ASSESSMENT YEAR. IF THE ADDITION MADE BY THE A.O. IS ACCEPTED, THEN G.P. RATIO OF THE APPELLANT DURING THE PRESENT A.Y.WILL BECOME ABNORM ALLY HIGH AND THEREFORE THAT IS NOT ACCEPTABLE BECAUSE I T ONUS OF THE A.O. BY BRINGING ADEQUATE MATERIAL ON RECORD TO PROVE THAT SUCH A HIGH G.P. RATIO EXISTS IN THE NATURE OF BUSI NESS CARRIED OUT BY THE APPELLANT. FURTHER, IT HAS TO BE APPRECIATED THAT (I)PAYMENTS WERE THROUGH BANKING CHANNEL AND BY CHEQUE,(II) NOTICES COMING BACK, DOES NOT MEAN , THOSE PARTIES ARE BOGUS, THEY ARE JUST DENYING THEIR BUSINESS TO AVOID SALES TAX/VAT ETC, (III) STATEMENT BY THIRD PARTIES CANNOT BE CONCLUDED ADVERSELY IN ISOLATION AND WITHOUT CORROBORATING EV IDENCES AGAINST APPELLANT,(IV) NO CROSS EXAMINATION HAS BEE N OFFERED BY AO TO THE APPELLANT TO CROSS EXAMINE THE RELEVANT PARTIES (WHO ARE DEEMED TO BE WITNESS OR APPROVER BEING USED BY AO AGAINST THE APPELLANT) W HOSE NAME APPEAR IN THE WEBSITE WWW.MAHAVAT.GOV.IN AND (V) FAILURE TO PRODUCE PARTIES CANNOT BE TREATED ADVERS ELY AGAINST APPELLANT. IN VIEW OF THE FACTS DISCUSSED ABOVE AS WELL AS BIN DING JUDICIAL PRONOUNCEMENTS OF THE JURISDICTIONAL ITAT MUMBAI BENCH AS WELL AS HONBLE MUMBAI HIGH COURT A ND OTHER LEGAL PRECEDENTS, THE ADDITION MADE BY THE AO AMOUNTING TO RS.28,08,071/- CANNOT BE SUSTAINED. ACCORDINGLY, THE ADDITION OF RS.28,08,071/- IS DELE TED. 7. HENCE, ON A CONSPECTUS OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD. CIT(A) ON THIS ISSUE. ITA. NO.5246/MUM/2013 6 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5TH MAR, 2015 . )* % + , -. 5 TH MARCH, 2015 * $ & / SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) 1 / JUDICIAL MEMBER / ACCOUNTANT MEMBER + % & MUMBAI:5TH MARCH,2015. . . ./ SRL , SR. PS !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. % 2' ( ) / THE CIT(A)- CONCERNED 4. % 2' / CIT CONCERNED 5. 34 '5 , ( 5 , + % & / DR, ITAT, MUMBAI CONCERNED 6. 6& / GUARD FILE. 7 % / BY ORDER, TRUE COPY 8 (ASSTT. REGISTRAR) ( 5 , + % & /ITAT, MUMBAI