VEETEX SYNTHETICS, MUMBAI V. INCOME TAX OFFICER-24(2)(3), MUMBAI

ITA 5267/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9137 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 11-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKTHAR H ANSARI
• Assessee Lawyers: M P SHARMA
• Keywords: Set aside
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ./ I.T.A. NO. 5267 & 5268/MUM/2017 ( / ASSESSMENT YEARS : 1986-87 & 1987-88) VEETEX SYNTHETICS, 402, MAAN SAROVAR, CHINCHOLI FATAK, MALAD WEST, MUMBAI-400064. / VS. ITO 24(2)(3) C-10, PRATYAKSHAR BANDRA EAST, MUMBAI. ./ ./ PAN/GIR NO. : AAGFV7192Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.P SHARMA, AR / RESPONDENT BY : SHRI AKTHAR H ANSARI, DR / DATE OF HEARING 10/01/2020 !'# / DATE OF PRONOUNCEMENT 10 /01 /2020 / O R D E R PER R.C. SHARMA, A.M: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE ORDER OF THE LD. CIT(A) FOR THE A.Y 1986-87 & 1987- 88, IN THE MATTER ORDER PASSED U/S 144 OF THE ACT. 2. BOTH THESE APPEALS THE ASSESSEE IS AGGRIEVED FOR ADDITION MADE ON ACCOUNT OF HAWALA TRANSACTIONS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE FORM WAS ENGAGED IN TRADING OF YARN. ASSESSMENT U/S 144 WAS ITA NO S. 5267 &5268//MUM/2017. VEETEX SYNTHETICS, MUMBAI. - 2 - COMPLETED ON 20.03.1989 DETERMINING TOTAL INCOME AT RS. 29,01,286/-. THE SAID ORDER WAS SET ASIDE BY THE C IT(A) VIDE HIS ORDER DATED 16.12.1991. IN PURSUANCE, AGA IN ORDER U/S 144 WAS PASSED ON 25.03.1994 DETERMINING TOTAL INCOME OF RS. 20,84,008/- ON PROTECTIVE BASIS AND R S. 8,17,278/- ON SUBSTANTIVE BASIS. THE CIT(A) ADJUDI CATED AGAINST ORDER U/S 144 DATED 25.03.1994 VIDE HIS ORD ER DATED 26.02.1999 HOLDING THAT THE PROFIT SHOULD BE APPORTIONED EQUALLY BETWEEN M/S. VEE TEX SYNTHETICS AND DAGA GROUP OF CONCERN. APPEAL AGAINST THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT(A) WAS FILED BY BOTH THE REVENUE AND THE ASSESSEE AND THE TRIBUNAL SET ASIDE THE ORD ER OF THE CIT(A) DATED 26.02.1999 AND THE MATTER WAS REMITTED TO THE FILE OF THE A.O FOR PASSING A FRESH ASSESSMENT. AC CORDINGLY, HE PRESENT ORDER U/S 143(3) R.W.S 254 DATED 29.12.2 006 WAS PASSED BY THE A.O. 4. FROM THE RECORD I FOUND THAT A SEARCH AND SEIZUR E ACTION WAS CONDUCTED IN DAGA GROUP OF CASES. THE S AID GROUP WAS FOUND TO BE ROUTING ITS TRANSACTIONS THRO UGH SEVERAL NAME LENDERS. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE FIRM WAS MERE NAME LENDER TO DAGA GROUP. DAGA GROUP USED THE ASSESSEE FIRM AS INTER-MEDIARIES. A CTUAL PURCHASE AND SALES WAS MADE BY DAGA GROUP AND THE ITA NO S. 5267 &5268//MUM/2017. VEETEX SYNTHETICS, MUMBAI. - 3 - ASSESSEE FIRM HAS JUST RECEIVED COMMISSION OF 6% WH ICH HAD ALREADY BEEN OFFERED FOR TAXATION. THE AO HAS REFERRED TO EARLIER ASSESSMENT ORDERS DATED 28.02.1990 AND 25.03.1994 AND STATED THAT THIS POSITION (I.E ACTUA L TRANSACTIONS BELONG TO DAGA GROUP) HAS NOT BEEN ACC EPTED BY DAGA GROUP. ACCORDINGLY A.O MADE ADDITION OF RS . 28,94,157/-. 5. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE A CTION OF THE A.O. THE PRECISE OBSERVATION OF CIT(A) WAS AS UNDER: I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE FINDINGS OF THE A.O IN THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE APPEAL IS A VERY OLD ONE AND ONLY DECISION TO BE TAKEN IS WHETHER THE ASSESSMENT ORDER U/S 134 (3) R.W.S 254 DATED 29.12.2006 IS CORRECT OR NOT. TO TAKE TH IS DECISION, I DO NOT FIND ANY LOGIC TO WIAT FOR OUTCOME OF ADDITI ONS IN CASE OF DAGA GROUP FOR THE REASON THAT THE ISSUE INVOLVED I S WHETHER THE AFORESAID ORDER IS CORRECT IN VIEW OF FACTS AND CIR CUMSTANCES OF THE CASE. THE AFORESAID ASSESSMENT ORDER DOES NOT S UFFER FROM ANY FACTUAL OR LEGAL INFIRMITIES. THE A.O HAS ASSE SSED INCOME ARISING OUT OF SALES AND CIRCUMSTANCES OF THE CASE. THE AFORESAID ASSESSMENT ORDER DOES NOT SUFFER FORM ANY FACTUAL O R LEGAL INFIRMITIES. THE A.O HAS ASSESSED INCOME ARISING O UT OF SALES AND PURCHASE OF SYNTHETIC WASTES ON PROTECTIVE BASI S IN THE HAND OF THE APPELLANT BECAUSE THESE TRANSACTIONS ARE REC ORDED IN THE BOOKS OF THE APPELLANT. ONCE A TRANSACTION WAS REC ORDED IN THE BOOKS OF A PERSON, IT IS VERY MUCH JUSTIFIED TO ASS ESSEE THE INCOME ARISING OUT OF THE SAID TRANSACTIONS AT LEAS T ON PROTECTIVE BASIS IN THE HAND OF THE PERSON. THE A.O HAS ALSO CLARIFIED IN THE ORDER ITSELF THE ONCE ADDITIONS MADE IN DAGA GROUP ARE FINALLY SUSTAINED, THE TOTAL INCOME OF THE ASSESSEE WILL BE RECOMPUTED. ITA NO S. 5267 &5268//MUM/2017. VEETEX SYNTHETICS, MUMBAI. - 4 - OTHERWISE, IT WILL BE TREATED AS OWN INCOME OF THE ASSESSEE. THE ASSESSMENT ORDER IS PERFECTLY CORRECT AND HENCE THE SAME IS SUSTAINED. THE CLAIM OF THE ASSESSEE TO DELINK THE ASSESSMENT OF THE ASSESSEE FROM DAGA GROUP IS NOT AT ALL JUSTIFIE D BECAUSE THE ASSESSEE ITSELF HAS SUBMITTED THAT THE TRANSACTIONS RECORDED IN ITS BOOKS ACTUALLY PERTAIN TO DAGA GROUP WHICH HAS NOT BEEN ACCEPTED BY DAGA GROUP. IN VIEW OF THE ABOVE, ALL THE GROUNDS OF APPEAL ARE DISMISSED. 6. ASSESSEE IS IN FURTHER APPEAL BEFORE US. FROM TH E RECORD WE FOUND THAT THE ASSESSEE HAS BOOKED BOGUS EXPENSES AND ALSO OFFERED COMMISSION OF 6% ON THESE BOGUS TRANSACTIONS. HOWEVER, THE LOWER AUTHORITIES DID NO T ACCEPT THE SAME AND MADE ENTIRE ADDITION ON PROTECTIVE BAS IS IN THE HANDS OF THE ASSESSEE. EVEN THOUGH THE LD. CIT( A) HAS OBSERVED IN BOTH THE YEARS THAT THE A.O. HAS CLARIF IED IN THE ORDER ITSELF THAT ONCE THE ADDITION MADE IN THE DAG A GROUP ARE FINALLY SUSTAINED, THE TOTAL INCOME OF THE ASSE SSEE WILL BE COMPUTED ACCORDINGLY. SINCE THE MATTER ARE AS OL D AS 35 YEARS OLD, IT IS NOT ADVISABLE TO WAIT ANY MORE. T HEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTA NCES OF THE CASE, I DIRECT THE A.O. TO RESTRICT ADDITION TO THE EXTENT OF 12% INCOME ON THE ALLEGED BOGUS TRANSACTIONS. THE A .O. IS FURTHER DIRECTED TO GIVE CREDIT IN THE INCOME ALREA DY OFFERED BY THE ASSESSEE IN RESPECT OF SUCH ALLEGED BOGUS TRANSACTIONS. I DIRECT ACCORDINGLY. ITA NO S. 5267 &5268//MUM/2017. VEETEX SYNTHETICS, MUMBAI. - 5 - 7. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN P ART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2020. SD/- ( R.C. SHARMA ) ACCOUNTANT MEMBER MUMBAI, DATED 10 /01/2020 *RANJAN / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) $%, / ITAT, MUMBAI R