ITO WD 21(1)(1), MUMBAI V. AREN PHARMACEUTICALS, MUMBAI

ITA 5607/MUM/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6706 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: REEPAL TRALSHAWALA LD
• Keywords: Retraction
• Section: 143(3); 133A

Judgement Text

ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5607/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER WARD - 21(1)(1) ROOM NO.603,6 TH FLOOR C-10,PRATYAKSHKAR BHAVAN BANDRA-KURLA COMPLEX BANDRA(E), MUMBAI-400 057 / VS. AREN PHARMACEUTICALS 102, KESAR VILLA PLOT NO.140A, MALVIYA ROAD VILE PARLE(E) MUMBAI-400 057 ! ./ ./ PAN/GIR NO.AAEFA-5572-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) REVENUE BY : N.HEMALATHA,LD.DR ASSESSEE BY : REEPAL TRALSHAWALA,LD.AR / DATE OF HEARING : 22/05/2018 / DATE OF PRONOUNCEMENT : 29/06/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY ] 2008-09 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-32 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)32/ITO-21(1)(1)/IT-231/10-11 DATED 08/06/2012 QUA DELETION OF CERTAIN ADDITIONS MADE IN THE QUANTUM 2 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 ASSESSMENT ORDER. THE ASSESSMENT FOR IMPUGNED AY WA S FRAMED BY LD. INCOME TAX OFFICER WARD -21(1)(1), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT,1961 ON 30/12/2010 WHEREIN THE ASSESSEE HAS BEEN SADDLE D WITH ADDITIONS OF RS,55,90,559/-, WHICH ARE THE SUBJECT MATTER OF THIS APPEAL. 2. DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT FIRM WAS ENGAGED AS WHOLESALE TRADER IN BULK DRUGS, MEDICINES, CHEMICAL S AND SUPPLIES TO MUNICIPAL HOSPITALS AND DISPENSARIES . DURING YEAR UNDER CONSIDERATION, THE ASSESSEE WAS SUBJECTED TO SURVEY ACTION U/S 133A ON 07/02/2008 WHEREIN THE ASSESSEE DECLARED AN AMOUNT OF RS.55,90,590/- T O ACCOUNT FOR DISCREPANCIES FOUND IN STOCK, CASH, INVESTMENT MADE IN RENOVATION OF OFFICE, FURNITURE AND FIXTURE AND LIABILITY WHICH CEASED TO EXIST. THE BREAK-UP OF THE SAME WAS AS FOLLOWS:- THE STATEMENT ON OATH OF THE TWO PARTNERS WAS ALSO RECORDED. HOWEVER, ONE OF THE PARTNER NAMELY SH. AMIT P.SHAH RETRACTED THE STATEMENT AFTER A PERIOD OF 20 DAYS. THE SAID RETRACTION, IN THE OPIN ION OF LD. AO, WAS NOT VALID KEEPING IN VIEW THE VARIOUS JUDICIAL PRONOUNC EMENTS WHICH HAVE BEEN EXTRACTED IN THE QUANTUM ASSESSMENT ORDER. IT WAS F URTHER NOTED THAT THE STATEMENT DURING SURVEY WAS NOT GIVEN UNDER ANY UND UE PRESSURE OR COERCION AND THE POST-DATED CHEQUES ISSUED BY ASSES SEE TOWARDS TAX NO. PARTICULARS AMOUNT (RS.) 1. EXCESS CASH FOUND AT THE PREMISES 8,99,749/- 2. INVESTMENT IN FURNITURE & FIXTURE 10,58,751/- 3. UNACCOUNTED STOCK 33,20,000/- 4. LIABILITY CEASED TO EXIST 3,12,059/- TOTAL 55,90,559/- 3 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 LIABILITY WERE CLEARED FOR PAYMENT SUBSEQUENTLY. IT WAS ALSO NOTED THAT THE OTHER PARTNER DID NOT RETRACT THE STATEMENT IN ANY MANNER. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE, VIDE LETTER D ATED 29/11/2010 CONTESTED THE AMOUNTS OFFERED DURING SURVEY PROCEED INGS AGAINST WHICH COMMENTS OF SURVEY OFFICER SHRI S.M.MORE WERE CALLED FOR WHO JUSTIFIED THE REVENUES STAND. AFTER CONSIDERING THE FACTUAL MATR IX, NOT CONVINCED WITH ASSESSEES SUBMISSIONS, LD. AO ADDED THE ABOVE AMOU NT OFFERED DURING SURVEY PROCEEDINGS TO THE INCOME OF THE ASSESSEE AD DETERMINED TOTAL INCOME AT RS.62.24 LACS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 08/06/2012 WHEREIN LD. CIT(A) DELETED ALL THE ADDITIONS ON THE PREMISE THAT ADDITIONS WIT HOUT ANY CORROBORATIVE EVIDENCE COULD NOT BE SUSTAINED IN LAW. THE OBSERVA TION AND THE BASIS OF CONCLUSION AS DRAWN BY LD. FIRST APPELLATE AUTHORIT Y HAS BEEN GIVEN IN PARA 3.3 OF THE IMPUGNED ORDER. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEST ED THE STAND OF LD. FIRST APPELLATE AUTHORITY BY SUBMITTING THAT THE CO NDUCT OF THE ASSESSEE DO NOT PROVE BONA FIDE OF RETRACTION OF STATEMENT AND THE ASSESSEE HAD NO PLAUSIBLE EXPLANATION FOR STATEMENT MADE DURING SUR VEY PROCEEDINGS AND THEREFORE, THE ADDITIONS WERE JUSTIFIED. IT WAS FUR THER CONTENDED THAT THE ASSESSEE WAS UNDER NO PRESSURE TO MAKE A SURRENDER OF THE IMPUGNED AMOUNTS AND RETRACTION OF THE STATEMENT AFTER LONG GAP OF 20 DAYS COULD NOT 4 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 BE RELIED UPON PARTICULARLY WHEN NO SUFFICIENT BONA FIDE REASON COULD BE DEMONSTRATED BY THE ASSESSEE TO MAKE A RETRACTION. THE SAME WAS CONTROVERTED BY LD. AUTHORIZED REPRESENTATIVE FOR A SSESSEE [AR], SH. REEPAL TRALSHAWALA BY SUBMITTING THAT THE LD. CIT(A) PROVIDED RELIEF T O THE ASSESSEE WITH DUE CONSIDERATION OF FACTUAL MATRIX A ND FURTHER THE STATEMENT MADE DURING SURVEY PROCEEDINGS COULD NOT HAVE MUCH EVIDENTIARY VALUE WITHOUT THERE BEING ANY CORROBORATIVE MATERIAL ON R ECORD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED RELEVANT MATERIAL ON RECORD. IT IS SETTLED PRINCIPL E THAT STATEMENT MADE DURING SURVEY PROCEEDINGS DO NOT HOLD MUCH EVIDENTI ARY VALUE UNLESS THE SAME IS DULY CORROBORATED WITH OTHER MATERIAL ON RE CORD. AT THE SAME TIME, THE ASSESSEE MUST HAVE SOME BONA FIDE REASONS / CIRCUMSTANCES TO RETRACT THE SAID STATEMENT AND MUST DEMONSTRATE THE ADVERSE CIRCUMSTANCES WHICH LED SUCH STATEMENT TO BE MADE. IN THE MATTER BEFORE HAND, WE FIND THAT THE REVENUE HAS MADE ADDITIONS BY HEAVILY RELYING UPON THE STATEMENT MADE BY THE PARTNERS DURING SURVEY PROCEEDINGS WITHOUT MAKI NG MUCH EFFORT TO CORROBORATE THE SAME WITH SOME FURTHER EVIDENCES, W HICH COULD BE FOUND DURING SURVEY PROCEEDINGS. AT THE SAME TIME, THE AS SESSEE HAS ALSO FAILED TO DEMONSTRATE ANY BONA FIDE OF THE RETRACTION MADE SUBSEQUENTLY AND THE REASONS GIVEN, IN THIS REGARD, ARE NOT MUCH PLAUSIB LE IN NATURE. THEREFORE, WE FIND THE MATTER TO BE MORE OF FACTUAL IN NATURE AND THE DECISION HAS TO BE ARRIVED AT ON THE BASIS OF FACTUAL MATRIX AND OBSER VATIONS MADE BY LOWER AUTHORITIES DURING ASSESSMENT & APPELLATE PROCEEDIN GS. 5 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 6. SO FAR AS THE ADDITION OF RS.10.58 LACS TOWARDS EXCESS INVESTMENT IN FURNITURE & FIXTURE IS CONCERNED, WE FIND THAT THE SAME HAS PURELY BEEN MADE ON AN ESTIMATED BASIS ONLY WITHOUT APPRECIATIN G THE BOOKS OF ACCOUNTS. NO WORKING HAS BEEN GIVEN ANYWHERE TO ARR IVE AT THE IMPUGNED AMOUNT. THE SAME APPEARS TO HAVE BEEN MADE MERELY O N A GUESS WORK IN A VERY MECHANICAL MANNER AND THEREFORE, THE SAME CO ULD NOT BE SUSTAINED. HENCE, THE STAND OF LD. FIRST APPELLATE AUTHORITY, IN THIS REGARD, STAND CONFIRMED. SIMILARLY, THE ADDITION OF RS.3.12 LACS U/S 41(1) ON ACCOUNT OF REMISSION OF TRADING LIABILITY COULD NOT BE SUSTAINED SINCE LD. FIRST APPELLATE AUTHORITY, AFTER APPRECIATING THE LEDGER OF THE CON CERNED ENTITY NAMELY STERLING LAB HAS NOTED THAT THE SAID PARTY HAD, IN FACT, DEBIT B ALANCE ON THE DATE OF SURVEY AND THE AMOUNT WAS NEVER WRITTEN OFF BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS. THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF FIRST APPELLATE AUTHORITY IN THIS REGARD. 7. THE THIRD ADDITION OF RS.33.20 LACS REPRESENTING EXCESS STOCK FOUND DURING SURVEY PROCEEDINGS COULD ALSO NOT BE SUSTAIN ED SINCE WE FIND THAT NO WORKING, WHATSOEVER, HAS BEEN GIVEN BY THE SURVEY T EAM SO AS TO ARRIVE AT THE IMPUGNED ADDITIONS. THE ASSESSEE HAS ALLEGED THAT THE STOCK WAS LYING AT THREE PLACES, WHICH WERE NEVER VISITED BY THE SU RVEY TEAM. OUT OF THESE THREE GODOWNS / WAREHOUSES, IT IS UNDISPUTED FACT T HAT THE SURVEY TEAM NEVER VISITED TWO PLACES AND ONLY DISPUTE IS WITH R EGARD TO GODOWN SITUATED AT BHIWANDI. THIS VERY FACT SUPPORTS THE STAND OF THE ASSESSEE T HAT NO EFFORT, WHATSOEVER, HAS BEEN MADE TO ARRIVE AT ACTU AL DISCREPANCY, IF ANY, 6 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 BETWEEN PHYSICAL STOCK VIS--VIS STOCKS AS PER BOOK S OF ACCOUNTS. THIS IS FURTHER CORROBORATED BY THE FACT THAT WORKING OF DI SCREPANCIES IN THE PHYSICAL STOCK, VALUATION THEREOF, POSITION AS PER BOOKS OF ACCOUNTS AND THE METHOD OF ARRIVING AT THE IMPUGNED ADDITION COULD NOT BE A DDUCED / DEMONSTRATED BY THE REVENUE. THEREFORE, WE FIND NO REASON TO INT ERFERE WITH THE STAND OF LD. CIT(A) IN THIS REGARD. 8. SO FAR AS THE LAST ADDITION OF EXCESS CASH FOUND DURING SURVEY PROCEEDINGS IS CONCERNED, WE FIND THAT STAND OF REV ENUE PLAUSIBLE ONE. IT IS NOTED THAT THE ADDITION REPRESENT EXCESS CASH FOUND AT THE TIME OF SURVEY PROCEEDINGS, WHICH THE PARTNERS OF THE ASSESSEE FIR M ALSO ADMITTED BY WAY OF STATEMENT DURING SURVEY. NOW, MERELY BY WAY OF R ETRACTION, THE AFORESAID FACT COULD NOT BE NEGATED. NO EFFORT HAS BEEN MADE BY THE ASSESSEE TO RECONCILE THE ACTUAL CASH FOUND VIS--VIS CASH AS P ER BOOKS OF ACCOUNTS ON THE DATE OF SURVEY RATHER THE LD. AR IS MERELY HARP ING ON THE POINT THAT THE STATEMENT WAS MADE BY THE PARTNERS UNDER PRESSURE. WE ARE NOT CONVINCED WITH THE SAME SINCE THE COMPLETE ONUS TO RECONCILE THE CASH BALANCE ON THE DATE OF SURVEY REST UPON ASSESSEE, WHICH HAS REMAIN ED UN-DISCHARGED. THEREFORE, THIS ADDITION TO THE EXTENT OF RS.8,99,7 49/- STAND CONFIRMED. THE STAND OF LD. FIRST APPELLATE AUTHORITY STAND REVERS ED TO THAT EXTENT. 9. RESULTANTLY, THE REVENUES APPEAL STAND PARTLY A LLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2018. 7 ITA NO.5607/MUM/2012 AREN PHARMACEUTICALS ASSESSMENT YEAR-2008-09 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 29.06.2018 SR.PS:-THIRUMALESH ! / 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