RAKESH S LILANI, ULHASNAGAR V. ITO WD 2(3), KALYAN

ITA 5425/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7977 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-09-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.5425/M/2016 (AY 2010 - 2011) MR. RAKESH S LILANI, BK NO.76, R.NO.4, ULHASNAGAR 421001. / VS. ITO - WARD 2(3), MOHAN PRIDE, KADAKPADA KALYAN (W). ./ PAN : AAFPL7145J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAJIV KHANDELWAL / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 09 .02.2017 / DATE OF PRONOUNCEMENT : 28 .02.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 6.9.2016 IS AGAINST THE ORDER OF THE CIT (A) - 3, MUMBAI DATED 1.7.2016 FOR THE ASSESSMENT YEAR 2011 - 12. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN UPHOLDING THE ADDITIONS MADE BY THE INCOME TAX OFFICER (AO) ON ACCOUNT OF EXPENSES. 2. THE LD CIT (A) UPHELD THE ADDITIONS MADE BY THE AO WITHOUT COSIDERIN THE FACTS OF THE CASE AND IGNORING THE VARIOUS DOCUMENTS PRODUCED AND VARIOUS EXPLANATIONS OFFERED TO HIM DURING THE COURSE OF HEARING. 2. BRIEFLY STATE D RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN EDIBLE OIL. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 7,99,700/ - . ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT AND THE A SSESSED INCOME WAS DETERMINED AT RS. 12,02,264/ - . DURING THE ASSESSMENT PROCEEDINGS, AO NOTED THAT THERE WERE PURCHASES AMOUNTING TO RS.4,02,564/ - INVOLVING M/S. SOMNATH INTERNATIONAL, A HAWALA DEALER. AFTER INVOKING THE PROVISIONS OF SECTION 133(6) OF T HE ACT, CONSIDERING THE NO REPLY FROM THE SAID PARTY, AO PROCEEDED TO MAKE ENTIRE AMOUNT AS ADDITION. ASSESSEE FAILED TO PRODUCE 2 MONEY RECEIPTS, STOCK REGISTER ETC AS PER THE AO. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDI NGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONFIRMED THE ADDITION MADE BY THE AO. IN THE PROCESS, CIT (A) HELD THAT GP RATE IN THE YEAR UNDER CONSIDERATION IS RELATIVELY LOWER WHEN COMPARED TO THAT OF THE ESTER ASSESSMENT YEARS IE 2.31% AND 2.26% FOR THE AYS 2009 - 10 AND 2010 - 11 RESPECTIVELY. IT IS AN UNDISPUTED FACT THAT SALES ACCOUNT OF THE ASSESSEE IS UNDISTURBED. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE ME, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MANNER, IN WHICH THE ENTIRE SALES FROM M/S. SOMNATH INTERNATIONAL IS ADDED, IS ABSOLUTELY AGAINST THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NIKUNJ EXIMP ENTER PRISES PVT LTD (216 TAXMAN.COM 171) (BOM.) , WHEN THE SALES ACCOUNT IS UNDISTURBED. FURTHER, LD AR FOR THE ASSESSEE BROUGHT OUR ATTENTION TO NUMBER OF DECISIONS WHEREIN SUCH ADDITIONS ARE NOT APPROVED BY THE TRIBUNAL AND RESTRICTED THE ADDITION TO THE GP RA TES OF THE ASSESSEE IN THE SIMILAR LINES OF BUSINESS. FURTHER , IT IS THE ARGUMENT OF THE LD AR THAT THERE IS AN EVIDENCE FOR TRANSPORT OF THE GOODS WHICH SHOWS THE GENUINENESS OF THE PURCHASES. HOWEVER, THERE IS NO EVIDENCE FURNISHED BEFORE US TO DEMONST RATE THE SAME. 5. AFTER HEARING THE LD REPRESENTATIVES OF BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, I AM OF THE OPINION, THE AO SHOULD NOT MAKE ENTIRE SUCH PURCHASES AS ADDIT IONS. HOWEVER, AO MAY STUDY THE GP RATES OF THE ASSESSEE AND ALSO APPLICABLE VAT RATES AND RESTRICT THE ADDITION, IF ANY, TO THAT EXTENT. ACCORDINGLY I ORDER. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPL ES OF NATURAL JUSTICE. THUS, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 2 8 T H FEBRUARY, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 28.02.2017 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI