Harish Mittal, Faridabad V. ITO, Ward-1(3), Faridabad

ITA 5313/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5485 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: R K MALHOTRA
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Additional evidence; Reason to believe
• Section: 147; 148; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 5313/DEL/2018 ASSESSMENT YEAR: 2008-09 HARISH MITTAL, VS. ITO, WARD 1(3), C/O ADVOCATE, R.K. MALHOTRA, FARIDABAD 5D/8A, RAILWAY ROAD, NIIT FARIDABAD HARYANA 121001 (PAN: AASPM2262) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. R.K. MALHOTRA, ADV OCATE DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.6.2018 OF THE LD. CIT(A), FARIDABAD RELATING TO ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED: (I). IN CONFIRMING THE ILLEGAL AND UNCALLED FOR ADDITION OF RS. 4, 80, 000/- (FOUR LAKHS EIGHTY THOUSANDS ONLY) IN COMPLETE DISREGARDS AND CONTEMPTOUS MANNER TO THE LAW LAID 2 DOWN BY THE HONOURABLE APEX COURT AND VARIOUS HIGH COURTS. (II). IN CONCIDERING THE TRANSACTIONS RELATING TO THEALLEGED SO CALLED BOGUS PURCHASESAND CORRESPONDING SALES/CLOSING STOCK DULY RECORDED IN THE BOOKS OF ACCOUNT, AS NOT RECORDED (OUT OF BOOKS TRANSANCTIONS) AND UPHOLDING THE ADDITION UNDER APPEAL. (III). IN UPHOLDING THE COMPUTATION OF THE ALLEGED PROFIT @ 30% OF ALLEGED BOGUS PURCHASES. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED: A. IN UPHOLDING THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. B. IN NOT DECIDING THE REVISED GROUNDS NO. 1 TO 7 AND ALSO NOT CONSIDERING THE 3 WRITTEN SUBMISSIONS AND VARIOUS BINDING DECISIONS OF THE COURTS AND THE TRIBUNAL. C. IN UPHOLDING THE LEAVY OF INTEREST U/S 234A, 234B AND 234C AND ALSO IN NOT DELETING THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OF RS. 4, 80, 000/-. 3. ADDITIONAL/FRESH GROUND: SINCE THE INCOME TAX OFFICER, WARD-1(3) LACKED JURISDICTION OVER THE APPELLANT'S CASE FOR THE ASSESSMENT YEAR 2008-09 FOR WANT OF A TRANSFER ORDER U/S 127(1) OF THE ACT TRANSFERING THE CASE TO THIS WARD FROM INCOME TAX OFFICER, WARD-2(2), FARIDABAD, THE ASSESSMENT ORDER DATED 18.03.2016 FRAMED BY HIM IS ILEEGAL, BAD I LAW AND VOID AB INITIO. PRAYER: SINCE THE GROUND IS OF WHOLY LEGAL NATURE, GOES TO THE ROOTS OF THE CAUSE, ALL THE FACTS ARE EXISTING ON RECORDS AND REQUIRE 4 NO FURTHER INVESTIGATION, THE SAME MAY PLEASE BE ADMITTED AND ADJUDICATED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR WITHDRAW ANY OF THE ABOVE GROUNDS OR TO SEEK PERMISSION FOR RAISING ANY FURTHER GROUND WITH THE PERMISSION OF THE HONOURABLE TRIBUNAL. 2. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONVENIENCE. 3. LD. COUNSEL OF THE ASSESSEE STATED THAT LD. CIT( A) HAS PASSED THE ORDER AGAINST THE PRINCIPLES OF NATURAL JUSTICE BY W AY OF NOT CONSIDERING/COMMENTING UPON THE REVISED GROUNDS OF APPEAL FILED BEFORE HIM VIDE LETTER DATED 09.03.2018 BY THE ASSESS EE WHICH HE HAS ALSO RAISED BEFORE THE TRIBUNAL VIDE GROUND NO. 2. FOR THE SAKE OF READY REFERENCE, HE HAS ATTACHED THE COPY OF THE R EVISED GROUNDS IN THE PAPER BOOK, FILED BEFORE THE LD. CIT(A). HEN CE, HE REQUESTED THAT THE ISSUES IN DISPUTE MAY BE SET ASIDE TO THE FILE OF THE LD. CIT(A) ALONGWITH THE REVISED GROUNDS OF APPE AL RAISED BEFORE HIM BY THE ASSESSEE, WITH THE DIRECTIONS TO DE CIDE THE SAME, AFRESH AND PASS A SPEAKING ORDER THEREON. IN THIS RE GARD, HE FILED A PAPER BOOK CONTAINING PAGES 1 TO 65 HAVING THE COPY OF WRITTEN 5 SUBMISSION; ORDER OF THE CIT(A), APPEALED AGAINST; AS SESSMENT ORDER; MEMORANDUM OF APPEAL IN FORM 36; GROUNDS OF APPEAL; FORM 35 AND ORIGINAL GROUNDS OF APPEAL FILED BEFORE CIT(A); REVISED GROUNDS AND WRITTEN SUBMISSION FILED BEFORE CIT(A); DECISION OF HONBLE SUPREME COURT AND GUJARAT HIGH COURT RELIED UPON AND ADDITIONAL EVIDENCE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS O F THE AUTHORITIES BELOW 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECO RDS, ESPECIALLY THE IMPUGNED ORDER, REVISED GROUNDS RAIS ED BEFORE THE LD. CIT(A) AND THE PAPER BOOK FILED BEFORE ME, AS DISCUSSED ABOVE. I FIND CONSIDERABLE COGENCY IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ASSESSEE VIDE HIS LETTER DATED 09.03. 2018 HAS RAISED THE REVISED GROUNDS OF APPEAL BEFORE THE LD. CIT(A) WHICH ARE ALSO ATTACHED WITH THE PAPER BOOK, FILED BEFORE THE LD. CIT(A), HAVE NOT BEEN CONSIDERED/COMMENTED UPON BY THE LD. CIT (A) IN HIS IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE, I AM RE PRODUCING HEREUNDER THE SAID REVISED GROUNDS OF APPEAL:- 1. THE ASSESSING OFFICER HAVING INITIATED THE PROCEEDINGS U/S 147 FOR TAXING THE ALLEGED ESCAPED INCOME OF RS16,00,000/- ALLEGING THE SAME TO HAVE ESCAPED ASSESSMENT (BEING CONCEALED INCOME 6 BECAUSE OF THE ALLEGATION OF OBTAINING BOGUS PURCHASE BILLS), BUT HAVING NOT BEEN FOUND SAME TO BE ESCAPED INCOME CHARGEABLE TO TAX (HAVING NOT BEEN TAXED), PROCEEDINGS INITIATED U/S 147 OF THE ACT NOT RENDERED REDUNDANT AND LIABLE TO BE DROPPED'. 2. THE ASSESSING OFFICER HAVING INITIATED THE PROCEEDINGS U/S 147 FOR TAXING THE ALLEGED ESCAPED INCOME OF RS. 16,00,000/- ALLEGING THE SAME TO HAVE ESCAPED ASSESSMENT (BEING CONCEALED INCOME BECAUSE OF THE ALLEGATION OF OBTAINING BOGUS PURCHASE BILLS), BUT HAVING NOT BEEN FOUND SAME TO BE ESCAPED INCOME CHARGEABLE TO TAX (HAVING NOT BEEN TAXED), WAS NOT JUSTIFIED TO TAX AN INCOME OF RS. 4,80,000/- FROM ALTOGETHER DIFFERENT SOURCE UNDER DIFFERENT HEAD OF INCOME. IN THIS RESPECT, IT IS SUBMITTED SINCE THE ASSESSING OFFICER HAS FOUND THE ALLEGED ESCAPED INCOME OF RS. 16,00,000/- WHICH WAS THE BASIS FOR ENTERTAINING THE BELIEF / HAVING REASON TO BELIEVE RESULTING IN INITIATION OF THE PROCEEDINGS U/S 147 OF THE ACT, AS HAVING NOT ESCAPED ASSESSMENT AND THEREBY NOT LIABLE TO BE 7 ADDED, THE PROCEEDINGS ITSELF GET RENDERED NULL AND VOID AND THEREFORE, THERE IS NO QUESTION FOR MAKING ANY OTHER ADDITION FROM ANY SOURCE OR UNDER ANY HEAD OF INCOME. IN OTHER WORDS, THE SUM OF RS. 4,80,000/- BEING NOT THE BASISOF INITIATION OF THE PROCEEDINGS U/S 147, IS NOT LIABLE TO BE TAXED AND MAY BE DELETED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT HAVING ACCOUNTED FOR ALL THE ALLEGED BOGUS PURCHASES EITHER IN SALES OR IN CLOSING STOCK, PAYMENTS FOR PURCHASES HAVING BEEN MADE BY CROSSED CHEQUES AND THE ASSESSING OFFICER HAVING, NOT ONLY ACCEPTED THE SAME, RATHER HAVING TAXED THE PROFIT / LOSS ON SUCH SALE-PURCHASE, THERE WAS NO JUSTIFICATION FOR MAKING ANY FURTHER ADDITION ON THE BASIS OF THOSE TRANSACTIONS OR FROM ANY OTHER SOURCE OR UNDER ANY OTHER HEAD OF INCOME AND THEREFORE, ADDITION OF RS. 4,80,000/- WAS UNCALLED FOR AND ILLEGAL, WHICH IS LIABLE TO BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DISALLOWING THE PURCHASES OF RS. 4,80,000/- 8 EVEN THOUGH THE ASSESSING OFFICER DID NOT TRY TO FIND OUT THE TRUE FACTS, BUT SIMPLY RELIED ON THE STATEMENT OF SH. VINOD GOYAL PROP. OF M/S MAA DURGA TRADING CO. WHICH ON THE FACE OF IT IS NOT RELIABLE, THUS DISREGARDING THE FACT THAT WHERE SALES HAVE BEEN ACCEPTED, EVEN IF PURCHASES ARE NOT AVAILABLE, NO ADDITION COULD BE MADE MERELY ON THE ASSUMPTIONS OR PRESUMPTIONS OR SURMISES OR CONJECTURE ITO VS SURANA TRADERS 92 ITD 212 (MUM). 5. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN MAKING ADDITIONS OF RS. 4,80,000/- BY TREATING THE PURCHASES TO THE EXTEND OF RS. 4,80,000/- AS BOGUS. THE GROSS PROFIT RATE OF THE ASSESSEE COMES OUT TO 7.5% AS COMPARED TO ACTUAL GROSS PROFIT RATE OF 5.7% WHICH IS VERY REASONABLE WITHOUT BRINGING ANY MATERIAL ON RECORD IN SUPPORT OF THE ADDITION, WITHOUT CITING EVEN A SINGLE CASE SHOWING GROSS PROFIT RATE OF 7.5%. RELIANCE IS PLACED ON THE DECISION IN THE FOLLOWING CASES: 9 I. MLHANI DAL MILLS V. ITO (2013) 40 TAXMANN 1491156 TTJ (UO) 28 (JAB.) IN THIS CASE ASSESSING OFFICER HAD NOT MADE ANY ADDITION IN RESPECT OF ESCAPED INCOME FOR WHICH HE HAD RECORDED REASONS ASSESSMENT ORDER WAS LIABLE TO BE CANCELLED. FOR A BONA FIDE REASON IT IS NECESSARY THAT ANY ASSESSMENT MADE IN CONSEQUENCE OF SECTION. 147, INCOME AS ESCAPED IN OPINION OF ASSESSING OFFICER ON BASIS OF REASON RECORDED, ADDITIONS MUST HAVE BEEN MADE. FURTHER, IF ASSESSING OFFICER DID NOT MAKE ANY ADDITION IN RESPECT OF INCOME FOR ESCAPED AMOUNT OF WHICH ASSESSING OFFICER RECORDED REASONS TO BELIEVE AND ASSESSING OFFICER MADE ADDITION IN RESPECT OF ANY OTHER INCOME, REASONS SO RECORDED COULD NOT BE REGARDED TO BE A BONA FIDE ONE. THEREFORE, WHERE ASSESSING OFFICER HAD NOT MADE ANY ADDITION IN RESPECT OF ESCAPED INCOME FOR WHICH HE HAD RECORDED REASONS, ASSESSMENT ORDER WAS LIABLE TO BE CANCELLED. 10 ORIENTAL BANK OF COMMERCE V. ADDL. CIT (2014) 49 TAXMANN 485 I (2015) 228 TAXMANN 25 / (2014) 272 CTR 56 (DELHI) IN THIS CASE NO ADDITIONS WERE MADE IN RESPECT OF GROUNDS ASSIGNED FOR REOPENING / ASSESSMENT, IT WAS NOT OPEN TO ASSESSING OFFICER TO INDEPENDENTLY ASSESS SOME OTHER INCOME. HELD THAT FROM THE REVIEW OF CASE LAWS IT WAS EVIDENT THAT IF NO ADDITIONS WERE MADE IN RESPECT OF THE SAID REASONS, IT WAS NOT OPEN TO THE ASSESSING OFFICER TO MAKE ADDITIONS ON SOME OTHER GROUND SUCH AS THE DISALLOWANCE OF THE DEDUCTION U/S 36 (1)(VNA) WITHOUT FIRST ISSUING A NOTICE U/S 148 III. RANBAXY LABORATORIES LTD. V. CIT (2011) 242 CTR 117 I 336 ITR 1361 200 TAXMANN 242157 DTR 281 (DELHI) (HIGH) S. 147 : ASSESSMENT - REASSESSMENT - IF ASSESSING OFFICER DOES NOT ASSESS INCOME FOR WHICH THE REASONS WERE RECORDED U/S 147, HE CANNOT ASSESS OTHER INCOME UNDER SEC. 147 THOUGH EXPLANATION 3 TO SECTION 147 INSERTED BY THE F.A. 2009 W.E.F. 1.4.1989 PERMITS THE ASSESSING 11 OFFICER TO ASSESS OR REASSESS INCOME WHICH HAS ESCAPED ASSESSMENT EVEN IF THE RECORDED REASONS HAVE NOT BEEN RECORDED WITH REGARD TO SUCH ITEMS, IT IS ESSENTIAL THAT THE ITEMS IN RESPECT OF WHICH THE REASONS HAD BEEN RECORDED OR ASSESSED. IF THE ASSESSING OFFICER ACCEPTS THAT THE ITEMS FOR WHICH REASONS ARE RECORDED HAVE NOT ESCAPED ASSESSMENT, IT MEANS HE HAD NO REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND THE ISSUE OF THE NOTICE BECOMES INVALID. IF SO, HE HAS NO JURISDICTION TO ASSESS ANY OTHER INCOME. (JET AIRWAYS 331 ITR 236 (BOM) FOLLOWED. 5.1 AFTER PERUSING THE AFORESAID REVISED GROUNDS RAIS ED BEFORE THE LD. CIT(A) BY THE ASSESSEE WHICH ARE FILED BEFORE TH E TRIBUNAL VIDE PAPER BOOK AND ALSO RAISED BEFORE THE TRIBUNAL VIDE GROUND NO. 2 AND AFTER PERUSING THE IMPUGNED ORDER AND IN THE I NTEREST OF JUSTICE, I AM OF THE CONSIDERED VIEW THAT THE ABOVE ME NTIONED REVISED GROUNDS RAISED BEFORE THE LD. CIT(A) ARE VER Y MUCH ESSENTIAL TO BE CONSIDERED/ ADJUDICATED BY THE LD. CIT (A) IN THE IMPUGNED ORDER, WHICH HE HAS NOT CONSIDERED/ADJUDIC ATED IN HIS IMPUGNED ORDER. HENCE, IN THE INTEREST OF JUSTICE , I SET ASIDE THE ISSUES IN DISPUTE BEFORE THE TRIBUNAL TO THE FILE OF THE LD. CIT(A) 12 ALONGWITH THE AFORESAID REVISED GROUNDS OF APPEAL R AISED BEFORE LD. CIT(A) BY THE ASSESSEE, WITH THE DIRECTIONS TO DECIDE THE SAME AFRESH AND PASS A SPEAKING ORDER THEREON, AFTER CO NSIDERING ALL THE AFORESAID DOCUMENTARY EVIDENCES AND THE CASE LAW REF ERRED ABOVE, AND GIVE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FULLY COOPERATE WITH THE LD. CIT(A) IN THE PROCEEDINGS AND DID NOT TAKE ANY UNNECESSARY ADJO URNMENT AND FILE THE NECESSARY DOCUMENTS TO SUBSTANTIATE HIS CASE BEFORE HIM. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 05/02/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED:05/02/2019 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR 13