Appeal details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 4038 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 6 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-02-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
E
Next Hearing Date
03-06-2015
Assessment Year
2010-2011
Appeal Filed On
31-07-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 5295/MUM/2013 ( / ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOME TAX - 25(2), ROOM NO.108, 1 ST FLOOR, BLDG. NO. C-11, PRATYAKSHAKAR BHAVAN,BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400 051. / VS. TARLA R SHAH PROP. OF M/S K R CONSTRUCTION A-1201, ADITYA TOWER, CHANDAVARKAR LANE ROAD, BORIVALI(W), MUMBAI-400 092. ./ ./PAN/GIR NO. AMOPS 3922M ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI J. SARAVANAN / RESPONDENT BY : SHRI BHUPENDRA SHAH / DATE OF HEARING : 15/12/2015 !'# / DATE OF PRONOUNCEMENT : 02/02/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21.05.2013 OF COMMISSIONER OF INCOME TAX (APPEALS)-35, MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 2 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A)ERRED IN DELETING THE ADDITION OF RS 87,24,259 WHICH WAS MADE BY INVOKING THE PROVISIONS SECTION 69C OF THE I.T. ACT BY TREATING THE PURCHASE ARE GENUINE.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS 14,36,653 WHICH WAS MADE BY INVOKING THE PROVISIONS OF SECTION 69C OF THE I.T. ACT BY TREATI NG THE PURCHASE ARE GENUINE WITHOUT APPRECIATING THE FACT THAT THE NOTICES U/S 133(6) ISSUED TO THE PARTIES WERE RETURNED UNNERVED AS ADDRESSEE WAS NOT AVAILAB LE AT THE GIVEN ADDRESS.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN GIVING RELIEF ON RS 74,08,737/- IN CASE OF VOLUNTARY DISCLOSURE BY THE ASSESSEE AGAINST NOTICE U/ S 131 OF IT ACT BY TREAT ING IT AS GENUINE CLAIMS.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS 20,00,000 WHICH WAS MADE BY INVOKING THE PROVISIONS OF SECTION 69C OF THE I.T. ACT BY TREATI NG THE SUBCONTRACT CHARGES AS GENUINE.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RELYING UPON JUDGMENTS OF THE CIT VS. NIKU NJ EXIMP ENTERPRISES PVT. LTD. WITHOUT APPRECIATING THAT THE FACTS INVOLVED I N THE OF THE APPELLANT'S CASE ARE DIFFERENT FROM THE FACTS OF THE ABOVE CASE LAWS '. 6. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PRODUCE THE PARTIES FROM WHOM THE ALLEGED BILL WERE RECEIVED DESPITE MAY OPPORTUNITIES ACCORDED TO HIM.' 7. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD .CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE FAILED TO RE BUT THE FINDINGS OF SALES TAX DEPARTMENT VIS-A- VIS BOGUS PURCHASES, DESPITE REAS ONABLE OPPORTUNITIES ACCORDED TO HIM.' 3 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH 8. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS GROSSLY ERRED IN ACCEPTING THE MISLEADING SUBMI SSIONS MADE BY THE ASSESSEE THAT THE DEPARTMENT DIDN'T MAKE AVAILABLE THE INFORMATION, PROVIDED BY SALES TAX DEPARTMENT.' 9. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS GROSSLY ERRED IN ACCEPTING THE ASSESSEE'S SUBMI SSION THAT OPPORTUNITY OF CROSS EXAMINATION WAS NOT GIVEN TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. 10. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O BE RESTORED.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE W AS IN THE BUSINESS OF CIVIL CONTRACTION AS PROPRIETOR UNDER THE NAME AND STYLE OF OF M/S. KR CONSTRUCTION COMPANY WHICH WAS ENGAGED IN THE INFRASTRUCTURE DEV ELOPMENT CONTRACTS WITH MUMBAI MUNICIPAL CORPORATION. THE ASSESSEE FILED IT S RETURN OF INCOME ON 21.09.2010 DECLARING TOTAL INCOME OF RS.5,51,44,870 /-. THE CASE OF THE ASSESSE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) & 142(1) OF THE INCOME TAX ACT, WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. FOLLOWING A SEARCH ACTION U/S 132 OF THE ACT IN THE CASE OF M/S. NEEV INFRASTRUCT URE (P) LTD. ON 22.09.2011, SURVEY WAS CONDUCTED ON SHRI MAFATLAL V. SHAH WHERE IN HE STATED THAT HE WAS PROVIDING ACCOMMODATION BILLS TO VARIOUS PARTIES. D URING POST SEARCH VERIFICATION IT WAS FOUND THAT THE ASSESSEE HAD ALSO RECEIVED ACCOM MODATION ENTRIES FROM SHRI MAFATLAL V. SHAH AND CONSEQUENTLY A STATEMENT ON OATH U/S 131 OF THE ACT OF THE 4 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH ASSESSEE, HE OFFERED ADDITIONAL INCOME OF RS.1,93, 71,170/- BY FURNISHING THE DETAILS OF BOGUS BILLS FOLLOWED BY THE REVISED R ETURN OF INCOME BY THE ASSESSEE AT RS.7,42,78,888/- ON 29.02.2012 OFFERING THE AMOUNT SURRENDERED ABOVE. 3. THE FIRST GROUND RELATES TO DELETION OF ADDITION OF RS.87,24,259/- MADE BY THE AO U/S 69 C ON ACCOUNT OF UNEXPLAINED EXPENDITURE. THE BRIEF FACTS OF THE CASE ARE THAT THE AO DURING THE COURSE OF SCRUTINY PROCEEDIN G NOTICED FROM THE LIST OF PARTIES FROM WHOM THE PURCHASES WERE MADE BY THE AS SESSEE THAT THERE WERE SOME SUSPICIOUS DEALERS WHO WERE INDULGING IN ISSUING BO GUS BILLS WITHOUT ANY DELIVERY OF THE MATERIALS ON A COMMISSION BASIS AS PER OFFIC IAL WEBSITE OF THE SALES TAX DEPARTMENT OF GOVT. OF MAHARASHTRA. THE AO ISSUED N OTICES TO ALL THESE 4 PARTIES U/S 133(6) WHICH WERE RETURNED UNSERVED WITH THE REMARK LEFT OR NOT KNOWN. THE AO ADDED RS.87,24,259/- AS UNEXPLAINED EXPENDI TURE U/S 69 OF THE ACT BY REJECTING THE REPLY OF THE ASSESSEE AS INCORPORATED IN PARA 5.4 OF THE ASSESSMENT ORDER BY HOLDING THAT THE BILLS FROM THESE PARTIES WERE FICTITIOUS WHICH WERE PROCURED WITHOUT PURCHASING ANY MATERIALS. SIMILARL Y, NOTICES U/S 133(6) OF THE ACT WERE SENT TO ALL THE PARTIES FROM WHOM THE PURCHASE S WERE MADE AND WHICH WERE APPEARING IN THE LIST OF THE PARTIES AS PUBLISHED B Y THE SALES TAX DEPARTMENT AND THE SAID NOTICES WERE ALSO RETURNED BY THE POSTAL A UTHORITIES WITH THE REMARK LEFT 5 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH OR NOT KNOWN. THE AGGREGATE OF THE TOTAL TRANSACT ION OF THESE 3 PARTIES WERE RS.14,36,653/- WHICH WAS RAISED IN THE 2 ND GROUND OF APPEAL. THE AO MADE THE ADDITION OF THE SAME U/S 69C OF THE ACT AS UNEXPLAI NED EXPENDITURE BY HOLDING THAT NO MATERIALS WERE PURCHASE AND THESE WERE ONLY FICT ITIOUS BILLS, AS INCORPORATED IN 6.1 OF THE ASSESSMENT ORDER. THE AO FURTHER NOTED I N PARA 6.2 THAT THE ASSESSEE HAD SHOWN SUB-CONTRACT EXPENSES AND THE PAYMENTS WERE M ADE TO VARIOUS PARTIES HAVING TURNOVER OF LESS THAN 40 LAKHS MOSTLY OFFERI NG INCOME AS PER SECTION 44 AD OF THE ACT. IT WAS HOWEVER, OBSERVED BY THE AO THAT NUMBER OF PARTIES BELONGING TO DIFFERENT GROUP OF FAMILIES WAS FOUND TO BE THE RECIPIENT OF PAYMENT FROM THE ASSESSEE AS WAS CLEAR FROM THE SURNAMES AND ADDRESS ES OF THE PARTIES AND THEREBY ASSESSEE HAD REDUCED OVERALL TAX LIABILITY AS MOST OF THESE PERSONS WERE BELOW TAXABLE LIMIT OR WERE TAXABLE AT LOWER RATE OF TAX VIS A VIS ASSESSEE. THE ASSESSEE FURNISHED THE CONFIRMATIONS FROM ALL THE SUB-CONTRA CTORS TO WHOM THE NOTICES U/S 133(6) OF THE ACT WERE ISSUED AND THE AO MADE THE A DDITION OF RS.20 LAKHS ON ACCOUNT OF BOGUS SUB-CONTRACT EXPENSES WHICH WAS AGITATED IN THE 4 TH GROUND. THE ISSUE RAISED IN 3 RD GROUND IS AGAINST NOT GIVING RELIEF OF RS.74,08,73 7/- AS DISCLOSED VOLUNTARILY AT THE TIME OF STATEMENT U/S 131 OF THE ACT. THE LD. CIT(A) DELETED THE ADDITIONS ON THE VARIOUS GROUNDS AS INC ORPORATED IN PARA 5.3.10, 6.1.5, 6 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH 7.3, 8.3 OF THE APPEAL ORDER AND THE REVENUE BEING AGGRIEVED BY THIS ORDER OF THE CIT(A) FILED AN APPEAL BEFORE US. 4. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSE SH RI. BHUPENDRA SHAH POINTED OUT THAT THE CASE OF THE ASSESSEE WAS COVERED IN HI S FAVOUR BY THE FOLLOWING DECISIONS OF THE CO-ORDINATE BENCHES IN WHICH IDEN TICAL ISSUES WERE DECIDED IN FAVOUR OF THE ASSESSEE:- ITA NO.6727/MUM/2012 (AY-2009-10) DATED 20.08.2014. ITA NO. 2826/MUM/2013 (AY-2009-10) DATED 05.11.2014 . ITA NO. 2959/MUM/2014 (AY-2010-11) DATED 28.11.2014 . ITA NO. 5920/MUM/2013 (AY: 2010-11) DATED 27.03.201 5. ITA NO. 5246/MUM/2013 (AY: 2010-11) DATED 05.03.201 5. ITA NO. 5706/MUM/2013 (AY: 2010-11)) DATED 13.05.20 15. ULTIMATELY, THE LD. COUNSEL SUBMITTED BEFORE US THA T SINCE THE ISSUES INVOLVED IN THE APPEAL OF THE REVENUE WERE FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE FOREGOING DECISIONS OF THE TRIBUNAL, MUMBAI BENCHES AND THEREFORE, THE CIT(A) ORDER DID NOT REQUIRE ANY INTERFERENCE AND BE CONF IRMED. PER CONTRA THE LD. DR RELIED ON THE ORDER OF THE AO AND PRAYED FOR SETTIN G ASIDE THE ORDER OF THE CIT(A) AND RESTORE THAT OF THE AO. 7 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD. WE FIND FROM THE RECORDS AND ORDERS OF THE AUTHORITIES BELOW THAT THERE THREE ADDITIONS MADE BY THE AO OF RS.87,24,259/- , RS.14,36,653/- AND RS.20 LAKHS U/S 69 C OF THE IT ACT AND IN RESPECT OF 4 TH ,THE AO DID NOT ALLOW ANY RELIEF IN RESPECT OF RS. 74,08,737/- WHICH WAS OFFERED A T THE TIME OF STATEMENT OF THE ASSESSEE U/S 131 BY REJECTING THE CLAIM OF THE ASSE SSEE TO ALLOW THE RELIEF IN RESPECT OF THE SAME. WE FIND THAT THERE WAS A SEARCH ACTION U/S 132 OF THE ACT IN THE CASE OF M/S. NEEV INFRASTRUCTURE (P) LTD. ON 22.09.2011 FOL LOWING WHICH SURVEY WAS CONDUCTED ON SHRI MAFATLAL V. SHAH WHEREIN HE STATE D THAT HE WAS PROVIDING ACCOMMODATION BILLS TO VARIOUS PARTIES AND DURING P OST SEARCH VERIFICATION IT WAS FOUND THAT THE ASSESSEE HAD ALSO RECEIVED ACCOMMODA TION ENTRIES FROM SHRI MAFATLAL V. SHAH AND VARIOUS OTHER SUPPLIERS WHO WE RE DECLARED A HAWALA DEALER BY SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA. THE STATEMENT OF HAWALA DEALER THAT HE PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE I S A GOOD MATERIAL FOR CONDUCTING FURTHER INVESTIGATION, VERIFICATION AND ENQUIRIES BUT AO INSTEAD MAKING FURTHER INVESTIGATION, THE AO COMPLETED THE ASSESSM ENT ON SUSPICION. THE ASSESSEE HAD SUBMITTED BEFORE THE AO THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES/ RTGS THROUGH BANKING CHANNEL AND MATERIALS WERE REC EIVED AND PROPERTY RECORDED IN THE BOOKS OF ACCOUNTS. THE AO HAD NOT MADE ANY F URTHER ENQUIRY/ INVESTIGATION 8 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH TO VERIFY THE SAME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE ON MERE SUSPICION. THE CIT(A) ALSO CONFIRMED THE ADDITION I N THE SAME FASHION I.E. ON SUSPICION BASIS THAT SUPPLIERS WERE ENGAGED IN SUPP LYING ACCOMMODATION BILLS TO THE ASSESSEE. 5.1 NOW THE ISSUE BEFORE US IS WHETHER THE AFORESAI D CASE OF THE ASSESSSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DE CISIONS CITED BY THE LD. COUNSEL. IN THE CASE OF ITA NO.6727/MUM/2012 (AY-2009-10) DA TED 20.08.2014 WE FIND THAT THE SIMILAR ADDITION WAS MADE ON THE BASIS OF INFORMATION AVAILABLE ON WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, WHICH WAS DELETED BY THE TRIBUNAL. THE RELEVANT PARA 2.4 IS EXTRACTED AS BEL OW. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVEST IGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FI ND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUN T. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO T HE SITE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECE IVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CA SE OF WESTERN EXTRUSION INDUSTRIES. WWW.TAXGURU.IN ITA/6727/MUM/2 012/RGK 4 (SUPRA)IS CONCERNED, WE FIND THAT IN THAT MATTER CA SH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING , IN THE ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN 9 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH DOUBT. THERERFORE, CONSIDERING THE PECULIAR FACTS A ND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF THE OPINION THAT T HE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE A O. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO. IN THE CASE OF ITA NO. 2826/MUM/2013 (AY-2009-10) D ATED 05.11.2014, SIMILAR ADDITION TO THE TUNE OF RS.1,74,01,436/- WAS DELETE D BY THE TRIBUNAL. THE RELEVANT PARA 8 IS EXTRACTED BELOW. 8. BE THAT AS IT MAY, ANOTHER IMPORTANT FACTOR THE BANK ACCOUNT COPIES COLLECTED BY THE ASSESSING OFFICER SHOWS THAT THE A SSESSEE HAD MADE THE A PAYMENTS TO THE ABOVE SAID PARTIES BY WAY OF ACCOUN T PAYEE CHEQUES. THUS, IT IS SEEN THAT THE TRANSACTIONS HAVE BEEN RO UTED THROUGH THE BANK ACCOUNTS. FURTHER, IT IS NOT THE CASE OF THE ASSESS ING OFFICER THAT THE ASSESSEE HAS INDULGED IN ACCOUNTING OF BOGUS PURCHA SES. WHEN THE ASSESSEE SUBMITTED THAT HE COULD NOT HAVE AFFECTED THE SALES WITHOUT MAKING CORRESPONDING PURCHASES, THE AO HAS TAKEN TH E VIEW THAT THE ASSESSEE COULD HAVE EFFECTED PURCHASES IN THE GREY MARKET, WHICH CONCLUSION IS, IN FACT, NOT SUPPORTED BY ANY MATERI AL. UNDER THIS IMPRESSION ONLY, THE AO HAS FURTHER EXPRESSED THE V IEW THAT THE ASSESEE WOULD HAVE PURCHASED THE MATERIALS BY PAYING CASH T HUS VIOLATING THE PROVISIONS OF SEC40A(3) OF THE ACT, WHICH IS AGAIN BASED ON ONLY SURMISES. IN THE ABSENCE OF ANY MATERIAL TO SUPPORT THE SAID VIEW, WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE TAX AUTH ORITIES THAT THE PURCHASES AMOUNT IS LIABLE TO BE DISALLOWED U/S40A( 3) OF THE ACT ON THE SAME IMPRESSION ONLY, THE AO HAS EXPRESSED THE VIE W IN THE REMAND REPORT THAT THE PURCHASES AMOUNT IS ALSO LIABLE TO ASSESSED U/S69C OF THE ACT AS THE SOURCE OF PURCHASES WERE NOT PROVED. AGA IN THE SAID CONCLUSION IS BASED UPON ONLY SURMISES, WHICH COULD NOT BE SUSTAINED. THUS, IT IS SEEN THAT THE ASSESSING OFFICER HAS ACC EPTED THE FACT THAT THE QUANTITY DETAILS OF PURCHASES AND SALES HAVE BEEN R ECONCILED BY THE ASSESEE. FURTHER, VARIOUS CASE LAW RELIED UPON BY T HE ASSESSEE ALSO SUPPORTS HIS CASE. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOW ANCE OF PURCHASES. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT( A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE DISALLOWANCE OF PURCHAS ES. 10 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH IN THE CASE OF ITA NO. 2959/MUM/2014 (AY-2010-11) D ATED 28.11.2014, SIMILAR ADDITION TO THE TUNE OF RS.4,98,80,892/- WAS DELETE D BY THE TRIBUNAL. THE RELEVANT PARA 8 IS EXTRACTED BELOW. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOW ER AUTHORITIES AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT BEFORE US. W E FIND THAT THE AO HAS MADE THE ADDITION AS SOME OF THE SUPPLIERS OF T HE ASSESSEE WERE DECLARED HAWALA DEALER BY THE SALES TAX DEPARTMENT. THIS MAY BE A GOOD REASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAKE ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSE SSMENT ON SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECORD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE, IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE AND A LSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS ANY IMMED IATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE. THE LD. CIT(A) HAS ALSO CONFIRMED THE ADDITION MADE BY THE AO BY GOING ON THE SUSPICION AND THE BELIEF THAT THE SUPPLIERS OF THE ASSESSEE A RE HAWALA TRADERS. WE ALSO FIND THAT NO EFFORT HAS BEEN MADE TO VERIFY TH E WORK DONE BY THE ASSESSEE FROM THE MUNICIPAL CORPORATION OF GREATER MUMBAI. WE AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL THAT IF THE RE WERE NO PURCHASES, THE ASSESSEE WOULD NOT HAVE BEEN IN A POSITION TO C OMPLETE THE CIVIL WORK. 8.1. ON CIVIL CONTRACT RECEIPTS OF RS. 32.05 CRORES , THE ASSESSEE HAS SHOWN GROSS PROFIT AT 14.2% AND NET PROFIT AT 9.72%. 8.2. EVEN IF FOR THE SAKE OF ARGUMENT, THE BOOKS OF ACCOUNTS ARE REJECTED, THE P ROFIT HAS TO BE COMPUTED ON THE SALES MADE BY THE ASSESSEE WWW.TAXG URU.IN 6 ITA NO. 2959/M/2014 U/S. 44AD OF THE ACT, THE PRESUMPTIVE P ROFIT IN CASE OF CIVIL CONTRACTORS IS 8% AND IN CASE OF A PARTNERSHIP FIRM , A FURTHER DEDUCTION IS ALLOWED IN RESPECT OF SALARY AND INTEREST PAID TO T HE PARTNERS. THE RATIO ANALYSIS OF THE PROFITABILITY IS ALSO IN FAVOUR OF THE ASSESSEE. IN OUR CONSIDERED OPINION, THE PURCHASES ARE SUPPORTED BY PROPER INVOICES DULY REFLECTED IN THE BOOKS OF ACCOUNT. THE PAYMENTS HAV E BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY REFLECTED IN TH E BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BOOK FROM THE SUPPLIERS. THE ADDITIONS HAVE BE EN MADE MERELY ON THE REPORT OF THE SALES TAX DEPARTMENT BUT AT THE S AME TIME IT CANNOT BE 11 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH SAID THAT PURCHASES ARE BOGUS. WE, THEREFORE, SET A SIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 4,98,80,892/-. IN THE CASE OF ITA NO. 5920/MUM/2013 (AY: 2010-11) DATED 27.03.2015, SIMILAR ADDITION TO THE TUNE OF RS.7,36,27,555/- WAS CONFIR MED BY THE TRIBUNAL. THE RELEVANT PARA 13 IS EXTRACTED BELOW. 13. 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 F OLLOWING 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/M UM/2012 (AY-2009- 10) DATED 20.8.2014; AND C) SHRI GANPATRAJ A SANGHAVI V/S ACIT IN ITA NO. 2 826/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 TAKEN NOTE OF THE FAC T THAT NO SALES COULD BE EFFECTED WITHOUT PURCHASES. HE HAS FURTHER PLACED R ELIANCE ON THE DECISION RENDERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M.K. BROTHERS (163 ITR 249). HE HAS FURTHER RELIED UPON THE DECISION RENDERED BY THE TRIBUNAL IN THE CAE OF ITO VS. PREM ANAND (2008)(25 SOT 11)(JODH), WHEREIN IT HAS BEEN HELD THAT WHERE THE AO HAS MADE ADDITION MERELY ON THE BASIS OF OBSERVATIONS MADE B Y THE SALES TAX DEPT AND HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRIES FOR MAKING THE ADDITION ESPECIALLY IN A CASE WHERE THE ASSESSEE HA S DISCHARGED ITS PRIMARY ONUS OF ITA. NO.5920/MUM/2013 AND 6203/MUM/ 2013 7 SHOWING BOOKS OF ACCOUNT, PAYMENT BY WAY OF ACCOUNT PAYEE CHEQUE AND PRODUCING VOUCHERS FOR SALE OF GOODS, SUCH AN ADDIT ION COULD NOT BE SUSTAINED. THE LD CIT(A) HAS ALSO APPRECIATED THE C ONTENTIONS OF THE ASSESSEE THAT HE WAS NOT PROVIDED WITH AN OPPORTUNI TY TO CROSS EXAMINE 12 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH THE SELLERS, WHICH IS REQUIRED TO BE GIVEN AS PER T HE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PONKUNNAM TRADERS (83 ITR 508 & 102 ITR 366). ACCORDINGLY, THE LD CIT(A) HAS DELETE D THE IMPUGNED ADDITION. ON A CAREFUL PERUSAL OF THE DECISION REND ERED BY LD CIT(A) WOULD SHOW THAT THE FIRST APPELLATE AUTHORITY HAS A NALYSED THE ISSUE IN ALL ANGLES AND APPLIED THE RATIO LAID DOWN BY THE HIGH COURTS AND TRIBUNALS IN DECIDING THIS ISSUE. HENCE, WE DO NOT FIND ANY R EASON TO INTERFERE WITH HIS ORDER ON THIS ISSUE. IN THE CASE OF ITA NO. 5246/MUM/2013 (AY: 2010-11) DATED 05.03.2015, THE TRIBUNAL CONFIRMED THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.28.08 LAKHS. IN THE CASE OF ITA NO. 5706/MUM/2013 (AY: 2010-11) DATED 13.05.2015, THE ORDER OF THE CIT(A) WAS CONFIRMED BY THE TRIBUNAL W HICH DELETED THE ADDITION OF RS.1,37,65,667/-. THE RELEVANT PARA 5 IS EXTRACTED BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD NOT DOUBTED THE GENUINE NESS OF THE PURCHASE BUT HAD MADE THE DISALLOWANCE OF RS.1.37 CRORES INV OKING THE PROVISIONS OF 69C OF THE ACT. WE FIND THAT IN SIMILAR CIRCUMST ANCES THE TRIBUNAL HAD DELETED THE ADDITION MADE BY THE AO IN THE CASES RE LIED UPON BY THE AR OF THE ASSESSEE. IN THE CASE OF RAJIV G KALATHIL (SUPR A),TO WHICH ONE OF US WAS PARTY IDENTICAL ISSUE HAS BEEN DECIDED AS UNDER :- 2.3.BEFORE US, DEPARTMENTAL REPRESENTATIVE ARGUED THAT BOTH THE SU PPLIERS WERE NOT PRODUCED BEFORE THE AO BY THE ASSESSEE, THAT ONE OF THEM WAS DECLARED HAWALA DEALER BY VAT DEPARTMENT, THAT BECAUSE OF CH EQUE PAYMENT MADE TO THE SUPPLIER TRANSACTION CANNOT BE TAKEN AS GENU INE. HE RELIED UPON THE ORDER OF THE G BENCH OF MUMBAI TRIBUNAL DELIVER ED IN THE CASE OF WESTERN EXTRUSION INDUSTRIES. (ITA/6579/MUM/2010-DA TED 13.11.2013).AUTHORIZED REPRESENTATIVE (AR) CONTENDE D THAT PAYMENTS MADE BY THE ASSESSEE WERE SUPPORTED BY THE BANKERS STATEMENT, THAT GOODS RECEIVED BY THE ASSESSEE FROM THE SUPPLIE WAS PART OF CLOSING STOCK, THAT THE TRANSPORTER HAD ITA/5706/MUM/2013,AY-2010- 11-PG 4 ADMITTED THE TRANSPORTATION OF GOODS TO THE SITE. HE RELIED UPON THE CASE OF BABULA BORANA (282 ITR251),NIKUNJ EXIMP ENTERPRISES (P) LT D. (216TAXMAN171)DELIVERED BY THE HONBLE BOMBAY HIGH COURT. 2.4.WE 13 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MA TERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SU PPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPI CION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FI ND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SI TE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECE IVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE O F WESTERN EXTRUSION INDUSTRIES. (SUPRA)IS CONCERNED, WE FIND THAT IN TH AT MATTER CASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THER E IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRAIAL. SECONDLY, P ROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE, CONSIDERING THE P ECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF T HE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INF IRMITY AND THERE ARE NOT SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND N O.1 AGAINST THE AO. 6. WE ARE OF THE VIEW THAT THE FACTS OF CASE OF THE AS SESSEE ARE SAME AS IN THE FOREGOING DECISIONS AND THUS THE CASE OF THE ASSESS EE IS SQUARELY COVERED BY THESE DECISIONS OF THE TRIBUNAL. WE, THEREFORE, FIN D NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A) AND UPHOLD THE SAME BY DISMISSI NG THE APPEAL OF THE REVENUE. THE AO IS DIRECTED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 14 ITA NO.5295/MUM/2013 ACIT VS. TARLA R SHAH ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND FEBRUARY, 2016 SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :02.01.2016 PS. ASHWINI GAJAKOSH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI
