ITO 19(1)(2), MUMBAI V. ATISH MAFATLAL NAHAR, MUMBAI

ITA 5570/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2231 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKKTAR H ANSARI LD
• Assessee Lawyers: NIRAV SANGHVI LD
• Keywords: Bogus purchase; Business income; Opportunity of cross examination
• Section: 142(1); 148; 144

Judgement Text

1 ITA NO.5570/MUM/2018 ATISH MAFATLAL NAHAR ASSESSMENT YEAR-2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5570/MUM/2018 ( / ASSESSMENT YEAR:2009-10) IT O - WARD 1 9 (1) (2), ROOM NO.204, MATRU MANDIR MUMBAI-400 007. / VS. ATISH MAFATLAL NAHAR 1308, B-2, 13 TH FLOOR, MATOSHRI BLDG, MP MILL COMPOUND, TARDEO, MUMBAI-400 007. !'# ./ ./PAN/GIR NO. ADUPN-6578-B ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ! / APPELLANT BY : SHRI AKKTAR H. ANSARI, LD. DR ' ! / RESPONDENT BY : SHRI NIRAV SANGHVI, LD.AR / DATE OF HEARING : 14/11/2019 / DATE OF PRONOUNCEMENT : 20/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-53, MUMBAI [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO.CIT(A)- 2 ITA NO.5570/MUM/2018 ATISH MAFATLAL NAHAR ASSESSMENT YEAR-2009-10 53/IT-347/ITO-19(1)(2)/2017-18 DATED 16/07/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCO UNT OF HOLDING THAT THE ADDITION MADE IN THE CASE IS FOUND TO BE UNSUPPORTED WITH EVIDENC ES DESPITE THE FACT THAT THE ADDITION IS MADE ON THE BASIS OF INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN NOT CONSIDERING THE ORDER OF HONBLE SUPRE ME COURT IN THE CASE OF N K PROTEIN LTD. DATED 16.01.2017, WHICH IS ON THE SIMILAR ISSU E OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND W HEN THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS PRONOUNCED ITS ORDER ON 16.07.2018 ? AS IS EVIDENT FROM GROUND OF APPEAL, THE ONLY ISSUE UNDER APPEAL IS ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE CARRYING OUT ITS BUSINESS U NDER PROPRIETARY CONCERN NAMELY M/S. TOYS CENTER, WAS ASSESSED FOR IMPUGNED AY U/S. 144 R.W.S. 147 ON 05/03/2015 WHEREIN THE INCOME OF THE ASSESSE E WAS DETERMINED AT RS.13.75 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.13.41 LACS AS AGAINST RETURNED INCOME OF RS.0.34 LACS FIE LD BY THE ASSESSEE ON 07/04/2014 PURSUANT TO NOTICE U/S 148. THE ASSESSEE IS STATED TO HAVE ANY NOT FILED ANY REGULAR RETURN OF INCOME IN VIEW OF T HE FACT THAT ITS INCOME WAS BELOW TAXABLE LIMIT. 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM THE DGIT (INV.), WING, MUMBAI/SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ACCOMMODATION PURCHAS ES BILLS FOR RS.13.41LACS STATED TO BE OBTAINED FROM AN ENTITY N AMELY M/S. AJINKYA 3 ITA NO.5570/MUM/2018 ATISH MAFATLAL NAHAR ASSESSMENT YEAR-2009-10 MULTI TRADE PVT. LTD. ACCORDINGLY, THE CASE WAS REO PENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 2 4/03/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 142(1) WHEREIN TH E ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE STATED PURCHASE TRANSACTIONS BY FILING THE DETAIL OF SELLER, INVOICES, DESCRIPTION OF GOODS WITH PROOF OF DELIVE RY OF MATERIAL. THE FAILURE ON THE PART OF THE ASSESSEE TO SUPPLY THE REQUISITE DETAILS AND SATISFACTORY DOCUMENTARY EVIDENCES LED LD. AO TO DISALLOW THE PU RCHASE OF RS.13.41 LACS AND ACCORDINGLY, THE SAME WAS ADDED TO THE INC OME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE STAND OF T HE LD. ASSESSING OFFICER BEFORE LEARNED FIRST APPELLATE AUTHORITY, W ITH SUCCESS VIDE IMPUGNED ORDER DATED 16/07/2018 WHEREIN THE ATTENTION WAS, INTER-ALIA, DRAWN TO THE FACT THAT THE ASSESSEE WAS NEITHER THE PROPRIETOR O F THE ENTITY I.E. M/S TOY CENTER NOR IT MADE ANY PURCHASES FROM THE STATED PA RTY AS ALLEGED BY LD.AO. IT WAS SUBMITTED THAT M/S TOY CENTER WAS REG ISTERED IN THE NAME OF SOME OTHER PERSON AND THE ASSESSEE HAD NO CONCERN W ITH THE SAME. THE SALES TAX DEPARTMENT HAD ERRED IN RECORDING THE INF ORMATION ABOUT THE PAN OF THE ASSESSEE AS PROPRIETOR OF M/S TOY CENTER . IT WAS SUBMITTED THAT THE SAID FACTS WERE BROUGHT TO THE NOTICE OF LD.AO, HOWEVER, HE FAILED TO VERIFY THE SAME. IN SUPPORT, AN AFFIDAVIT WAS ALSO FILED BEFORE LD. CIT(A). ACCORDINGLY, A REMAND REPORT WAS CALLED FROM LD. AO WHO SUPPLIED THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT. FIN ALLY, AFTER CONSIDERING THE SAME, LD. FIRST APPELLATE AUTHORITY DELETED THE IMPUGNED ADDITIONS BY OBSERVING AS UNDER: - 4 ITA NO.5570/MUM/2018 ATISH MAFATLAL NAHAR ASSESSMENT YEAR-2009-10 4.5 I HAVE CONSIDERED THE FACTS ON RECORD AND SUBMI SSIONS CAREFULLY. THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE CLAIM OF THE APP ELLANT THAT THE TRANSACTION ALLEGED IN RESPECT OF TOYS CENTRE DOES NOT PERTAIN TO IT. HE W AS ALSO DIRECTED TO MAKE ENQUIRIES WITH THE SALES TAX AUTHORITIES AND TO SUBMIT A FACTUAL P OSITION ALONG WITH EVIDENCE AFTER ALLOWING OPPORTUNITY TO THE APPELLANT. IT IS NOTED THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY WITH THE SALES TAX AUTHORITY. NO ENQUIR Y HAS BEEN MADE WITH AJINKYA MULTI TRADE PVT. LTD TO CONFIRM WHETHER ANY TRANSACTIONS WERE CARRIED OUT WITH THE APPELLANT. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT AN Y CONCERN BY THE NAME OF TOYS CENTRE BELONG TO THE APPELLANT. THERE IS NO EVIDEN CE OF ANY COPY OF BILL, BANK STATEMENT OR ANY OTHER EVIDENCE TO SHOW THAT THE APPELLANT HA D MADE ANY CLAIM OF SUCH PURCHASES OR WAS IN ANY WAY CONNECTED WITH THE TRANSACTION. O NLY MERE REFLECTION ON THE NAME OF THE APPELLANT IN THE MAHARASHTRA SALES TAX DEPARTMENT I S NOT ADEQUATE PROOF THAT SUCH TRANSACTION WAS CARRIED OUT BY THE APPELLANT WHEN T HE SAME IS SPECIFICALLY DENIED. EVEN AFTER OPPORTUNITY WAS PROVIDED TO THE AO TO BRING C REDIBLE EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT HAD TRANSACTIONS WITH AJINKYA MULTI T RADE PVT. LTD, THE A.O HAS FAILED TO DO SO. THE AR HAS FURTHER INFORMED THAT THE ASSESSING OFFICER DID NOT EVEN CALL THE APPELLANT IN THE REMAND PROCEEDINGS NOR HAD ANY CORRESPONDENC E WITH THE APPELLANT. WHEN NO PURCHASES ARE CLAIMED, THE QUESTION OF DISALLOWANCE OF THE SAME DOES NOT ARISE. WITHOUT ANY EVIDENCE OF ANY PAYMENT MADE FOR PURCHASES, IT CANNOT BE CONSTRUED THAT THERE WAS ANY UNRECORDED INVESTMENT. NO OPPORTUNITY OF CROSS EXAMINATION IS PROVIDED NOR THE APPELLANT HAS BEEN CONFRONTED WITH ANY CREDIBLE EVI DENCE TO SUPPORT THE ADDITION. IN THESE FACTS, THE ADDITION MADE IN THIS CASE IS FOUND BE U NSUPPORTED WITH ANY EVIDENCE. THE ADDITION MADE IS, THEREFORE, DELETED. GROUNDS OF AP PEAL ARE THEREFORE ALLOWED. AGGRIEVED, THE REVENUE IS UNDER APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY RESPECTI VE REPRESENTATIVES AND PERUSED RELEVANT MATERIAL ON RE CORD. 5. UPON DUE CONSIDERATION, THE FACT THAT THE ASSESS EE WAS NEITHER THE PROPRIETOR OF M/S TOY CENTER NOR MADE ANY PURCHASES FROM SUSPICIOUS DEALER AS ALLEGED BY REVENUE, REMAIN UNCONTROVERTED BEFORE US. THE RETURN OF INCOME FILED BY THE ASSESSEE REVEAL THAT THE ASS ESSEE HAS NOT REFLECTED ANY INCOME UNDER THE HEAD BUSINESS INCOME . EXCEPT FOR CERTAIN BALD INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA, THE REVENUE IS UNABLE TO BRING ON RECORD ANY MATERIAL TO SUBSTANTI ATE THE FACT THAT THE 5 ITA NO.5570/MUM/2018 ATISH MAFATLAL NAHAR ASSESSMENT YEAR-2009-10 ASSESSEE MADE THESE PURCHASES FROM THE STATED PARTY OR THE ASSESSEE WAS EVEN THE PROPRIETOR OF M/S TOY CENTER. IN THESE CIR CUMSTANCES, NO FAULT COULD BE FOUND IN THE CONCLUSION DRAWN BY LEARNED F IRST APPELLATE AUTHORITY AND WE SEE NO REASON TO DISTURB THE SAME. 6. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019 SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20/11/2019 SR.PS, PRADIP PAUL '&'()'( / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, % - , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.