REMY DIAMONDS PVT. LTD., MUMBAI V. DCIT - CIRCLE - 5(3)(1), MUMBAI

ITA 5483/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0311 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTHILAKSHMI NAYAK
• Keywords: Bogus purchase; Search and seizure; Accommodation entries; Set aside
• Section: 40A(3); 115JB; 143(1); 147; 63; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 5483 / MUM ./201 8 ( ASSESSMENT YEAR : 20 10 11 ) REMY DIAMONDS PVT. LTD. JW 9010, B 14, J TOWER G BLOCK, BHARAT DIAMOND BOURSE BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 PAN AADCR2195R . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 5(3)(1), MUMBAI . RESPONDENT ASSE SSEE BY : NONE REVENUE BY : S MT. JYOTHI LAKSHMI NAYAK DATE OF HEARING 27 . 11 .2019 DATE OF ORDER 26.12.2019 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST A CONSOLIDATED ORDER DATED 29 TH JULY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 10 , MUMBAI , PERTAINING TO THE ASSESSMENT YEAR 2008 09, 20 09 10 AND 2010 11. HOWEVER, FOR THE PRESENT, WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2010 11 ALONE . 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: 2 REMY DIAMONDS PVT. LTD. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DISMIS SING THE APPEAL SOLELY ON THE PREMISES THAT THE VERY ISSUE IS PENDING BEFORE THE ASSESSING OFFICER AS A RESULT OF OFFSHOOT OF 263 PROCEEDINGS, WHILE THE APPEAL FILED WITH THE CIT(A) WAS AN EVENT ANTERIOR. WITHOUT PREJUDICE TO HE ABOVE, THE LEARNED CIT(A) DID NOT DEAL WITH ALL THE OTHER GROUNDS BEFORE HIM. 3. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. EVEN , THE ASSESSEE HAS NOT FILED ANY APPLICATION SEEKING ADJOURNMENT. ON A PERUSAL OF R ECORD, IT IS NOTICED THAT ON EARLIER OCCASIONS ALSO WHEN THE APPEAL WAS FIXED FOR HEARING, NO ONE APPEARED ON BEHALF OF THE ASSESSEE. THUS, THE REPEATED FAILURE ON THE PART OF TH E ASSESSEE TO REPRESENT ITS CAS E REVEALS COMPLET E LACK OF INTEREST IN PURSUING THE APPEAL. ACCORDINGLY, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE , A COMPANY , IS ENGAGED IN THE BUSINESS OF TRADING IN DIAMOND. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER 2010, DECLARING TOTAL INCOME OF ` 27,35,776, UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF ` 2 7,04,410, UNDER SECTION 115JB OF THE ACT. INITIALLY, THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE 3 REMY DIAMONDS PVT. LTD. BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION (WING) OF THE DEPARTMENT THAT INCRIMINATING MATERIALS FOUND IN THE COURS E OF SEARCH AND SEIZURE CONDUCTED UNDER SECTION 132 OF THE ACT IN CASE OF BHA N WARLAL J AIN GROUP, IT WAS FOUND THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY THE SAID GROUP, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTI ON 147 OF THE ACT. ULTIMATELY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 147 OF THE ACT DETERMINING THE TOTAL INCOME AT ` 28,32,360. AGAINST THE ASSESSMENT ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. 5. IN T HE COURSE OF APPEAL HEARING, LEARNED COMMISSIONER (APPEALS) HAVING FOUND THAT THE ASSESSMENT ORDER AGAINST WHICH THE APPEAL WAS FILED, IN THE MEANWHILE , HAS BEEN REVISED AND SET ASIDE BY THE LEARNED PRINCIPAL COMMISSION OF INCOME TAX IN EXERCISE O F POWER CONFERRED UNDER SECTION 263 OF THE ACT, TREATED THE APPEAL AS INFRUCTUOUS AND DISMISSED IT. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , WHEN THE ASSESSMENT ORDER UNDER CHALLENGE BEFORE THE FIRST APPELLATE AUTHORITY HAS BEEN SET ASIDE BY THE LEARNED PRINCIPAL COMMISSIONER UNDER SECTION 263 OF THE ACT, NOTHING REMAINED TO BE DECIDED BY THE FIRST APPELLATE AUTHORITY. FURTHER, SHE SUBMITTED , THE ORDER PASSED UNDER 4 REMY DIAMONDS PVT. LTD. SECTION 263 OF THE ACT HAS ALSO BEEN UPHELD BY THE TRIBUNAL WHILE DECIDING THE APPEALS FILED BY THE ASSESSEE. THUS, S HE SUBMITTED , THERE IS NO REASON TO IN TERFERE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS). 7. WE HAVE HEARD T HE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ONLY ADDITION MADE BY THE ASSESSING OFFICER IS ON ACCOUNT OF UNDISCLOSED PROFIT ON ACCOUNT OF ACCOMMODATION ENTRIES OBTAINED FROM BHA N WARLAL JAIN GROUP. I T IS NOTICED THAT THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER ON THE AFORESAID COMMON ISSUE FOR THE ASSESSMENT YEAR S 2008 09 AND 2009 10 AND 2010 11 WERE SUBJECTED TO PROCEEDINGS UNDER SECTION 2 63 OF THE ACT AND ULTIMATELY LEARNED PRINCIPAL COMMISSIONER SET ASIDE THE ASSESSMENT ORDERS WITH THE OBSERVATIONS THAT THE ASSESSING OFFICER WHILE ESTIMATING THE PROFIT ON BOGUS PURCHASE HAS FAIL ED TO MAKE PROPER ENQUIRY TO FI ND OUT THE SOURCE OF BOGUS PURCHASE AND ALSO FAILED TO EXA MINE THE APPLICABILITY OF SECTION 40A(3) OF THE ACT TO CASH PURCHASES MADE FROM GREY MARKET. AGAINST THE AFORESAID ORDER OF LEARNED PRINCIPAL COMMISSIONER, THE ASSESSEE CAME IN APPEAL BEFORE THE TRIBUNAL. WHILE DECIDING ASSESSEES APPEAL IN ITA NO.3898 TO 3900/MUM./2018, DATED 10 TH OCTOBER 2018, THE TRIBUNAL UPHELD THE ORDER PASSED UNDER SECTION 263 O F THE ACT. THUS, AS COULD BE SEEN FROM THE AFORESAID FACTS ON RECORD, 5 REMY DIAMONDS PVT. LTD. THE ONLY ISSUE ON THE BASIS OF WHICH ASSESSEES INCOME WAS ENHANCED BY THE ASSESSING OFFI CER IS ON ACCOUNT OF ESTIMATION OF PROFIT ON BOGUS PURCHASE. NOTABLY, WHILE SUBJECTING THE ASSESSMENT ORDER TO PROCEEDINGS U NDER SECTION 263 OF THE ACT, LEARNED PRINCIPAL COMMISSIONER HAS HELD THAT BEFORE ESTIMATING PROFIT ON BOGUS PURCHASE, THE ASSESSING OFFICER HAS NEITHER ENQUIRED INT O THE ACTUAL SOURCE OF PURCHASE NOR HAS EXAMINED THE APPLICABILITY OF SECT ION 40A(3) OF THE ACT. THUS, LEARNED PRINCIPAL COMMISSIONER HAS SET ASIDE THE ASSESSMENT ORDER BY DIRECTING THE ASSESSING OFFICER TO MAKE E NQUIRY ON THE ISSUE AND PASS FRESH ASSESSMENT ORDER. THAT BEING THE CASE, WHEN THE ASSESSMENT ORDER H AS ALREADY BEEN SET ASIDE BY LEARNED PRINCIPAL COMMISSIONER, NOT H ING SURVIVE S TO BE DECIDED BY THE FIRST APPELLATE AUTHORITY. MORE SO, WHEN THE ORDERS PASSED UNDER S ECTION 263 OF THE ACT HAVE BEEN UPHELD BY THE TRIBUNAL. THEREFORE , TILL THE DIRECTIONS OF LEARNED PRINCIPAL COMMISSIONER ON THE ISSUE OF BOGUS PURCHASE ARE IMPLEMENTED BY THE ASSESSING OFFICER , NOTHING SURVIVES BEFORE THE FIRST APPELLATE AUTHORITY. ACCORDI NGLY , WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF LEARNED COMMISSIONER (APPEALS) IN DISMISSING THE APPEAL OF THE ASSESSEE ON THE AFORESAID REASONING. GROUNDS ARE DISMISSED. 6 REMY DIAMONDS PVT. LTD. 8. IN THE RESULT, APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 26.12.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI