Madhuban Trade Steels Private Limited, Pune V. Deputy Commissioner of Income-tax, Circle - 9, Pune

ITA 554/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6141 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-09-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS SHABANA PARVEEN
• Assessee Lawyers: RAJEEV THAKKAR
• Keywords: Reassessment proceedings; Set aside
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.554/PUN/2018 / ASSESSMENT YEAR : 2009-10 MADHUBAN TRADE STEELS PVT. LTD., C/O. M/S. SHAH KHANDELWAL JAIN & ASSOCIATES, LEVEL-3, RIVERSIDE, BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE-411001. PAN : AABCM8512H ....... / APPELLANT / V/S. DCIT, CIRCLE-9, PUNE. / RESPONDENT ASSESSEE BY : SHRI RAJEEV THAKKAR REVENUE BY : MRS. SHABANA PARVEEN / DATE OF HEARING : 29.07.2019 / DATE OF PRONOUNCEMENT : 19.09.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-6, PUNE DATED 04.12.2017 FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT THE ASSESSMENT FRAMED UNDER SECTION 147 READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) IS IMPROPER, ILLEGAL, WITHOUT FOLLOWING THE PROVISIONS OF SECTION 147 OF THE ACT. THE ASSESSMENT FRAMED BY THE AO U/S. 143(3) R.W.S. 147 BE SET ASIDE. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, ADDITION OF RS. 1,70,034/- (I.E. 7% OF RS.24,29,062/-) MADE BY THE AO ON THE ACCOUNT OF ALLEGED 2 ITA NO.554/PUN/2018 BOGUS & NON-GENUINE PURCHASES AND UPHELD BY THE CIT(A) AS COMMISSION PAID FOR AVAILING THE BOGUS BILLS FROM THE ENTRY PROVIDERS IS INCORRECT, IMPROPER AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE ADDITION MADE BY THE AO AND UPHELD BY CIT(A) BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 3. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, AD HOC ADDITION OF RS. 1,70,034/- (I.E. 7% OF RS.24,29,062/-) MADE BY THE AO IS INCORRECT, IMPROPER AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE AND IS A MATTER OF GUESSWORK AND SURMISES. THE ADDITION MADE BY THE AO AND UPHELD BY CIT(A) BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT 4. WITHOUT PREJUDICE TO OTHER GROUNDS RAISED, ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT, IF IT IS HELD THAT THE ADDITION OF PROFIT EMBEDDED BEING 7% ON UNPROVED PURCHASES OF RS.24,29,062/-IS LIABLE TO BE MADE, ONLY A DIFFERENCE AMOUNT BETWEEN THE PROFIT RATE ADOPTED FOR ALLEGED UNPROVED PURCHASES AND PROFIT RATE ALREADY DISCLOSED IN THE BOOKS SHOULD HAVE BEEN ADDED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 5. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.1 RELATES TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. MENTIONING THAT THE ASSESSING OFFICER FAILED TO RECORD SATISFACTION FIRST AND ISSUE OF NOTICE U/S 147 OF THE ACT LATER, LD. COUNSEL SUBMITTED THAT SUCH INITIATION OF PROCEEDINGS AND THE ISSUANCE OF NOTICE IS BAD IN LAW. THEREFORE, AS PER THE ASSESSEE, THE REASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT SHOULD BE HELD AS INVALID AND UNSUSTAINABLE IN LAW. IN THIS REGARD, LD. COUNSEL RELIED ON VARIOUS DECISIONS TO SUPPORT HIS ARGUMENTS. 4. COMING TO THE RELATED FACTS, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGE 9 TO 12 OF THE PAPER BOOK AND SUBMITTED THAT THE REASONS ARE ACTUALLY RECORDED ON 20.08.2013 AS EVIDENT FROM THE FACE OF PAGE 9 AND 11 OF THE PAPER BOOK. FURTHER, BRINGING OUT ATTENTION TO PAGE 3 ITA NO.554/PUN/2018 13 OF THE PAPER BOOK, LD. COUNSEL SUBMITTED THAT THE NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30.07.2013 . THEREFORE, TO SUM UP, THIS IS A CASE WHERE THE NOTICE WAS FIRST ISSUED ON 30.07.2013 AND THE REASONS WERE SUBSEQUENTLY RECORDED ON 20.08.2013 . THE LD. COUNSEL VEHEMENTLY SUBMITTED THAT THIS IS A CASE OF RECORDING OF REASONS BEFORE ISSUANCE OF NOTICE U/S 148 OF THE ACT. FURTHER, LD. COUNSEL RELIED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT BOROSIL LTD. VS. DCIT, 35 TAXMANN.COM 646, COPY OF WHICH IS PLACED AT PAGE 41 TO 44 OF THE PAPER BOOK AND ALSO ON THE OTHER JUDICIAL PRECEDENTS ON THIS ISSUE. 5. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 6. WE HEARD BOTH THE SIDES ON THIS LIMITED LEGAL ISSUE AND CONSIDERED THE PAPER BOOK AS WELL AS CASE LAWS FILED BEFORE US. ON PERUSING THE JUDGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT BOROSIL LTD. (SUPRA), WE FIND, IN THE SAID CASE THE HONBLE HIGH COURT HELD THAT WHERE AT TIME OF ISSUANCE OF NOTICE FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER HAD NOT RECORDED THE REASONS, NOTICE ITSELF WOULD BE RENDERED INACTIVE . FURTHER, ON PERUSAL OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. BLUE STAR LTD. , 61 TAXMANN.COM 248 (MUMBAI TRIB.), WE FIND THE TRIBUNAL IN THE SAID DECISION HELD THAT THE REASONS TO BELIEVE MUST BE RECORDED BEFORE ISSUE OF NOTICE U/S 148 OF THE ACT AND, THEREFORE, THE NOTICE ISSUED U/S 148 OF THE ACT BEFORE RECORDING REASONS WAS NOT A LEGALLY VALID NOTICE . 4 ITA NO.554/PUN/2018 7. CONSIDERING THE ABOVE SETTLED LEGAL PROPOSITION ON THIS ISSUE, WE FIND THE NOTICE ISSUED BY THE ASSESSING OFFICER ON 30.07.2013 U/S 148 OF THE ACT IS INVALID AND ILLEGAL. THEREFORE, THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS BECOME INVALID. THUS, THE GROUND NO.1 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 8. CONSIDERING THE RELIEF GRANTED TO THE ASSESSEE ON TECHNICAL ISSUE BY WAY OF GROUND NO.1 (ABOVE), WE ARE OF THE OPINION THAT THE ADJUDICATION OF OTHER REGULAR GROUNDS BECOMES AN ACADEMIC EXERCISE ONLY. ACCORDINGLY, OTHER REGULAR GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 19 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 19 TH SEPTEMBER, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-6, PUNE. 4. THE PR.CIT-5, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.