ITO -19(3)(1), MUMBAI V. RAMESH DHAWALCHAND JAIN, MUMBAI

ITA 5665/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3518 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHERA RAM
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries; Set aside
• Section: 142(1); 143(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5665/MUM/2018 ASSESSMENT YEAR: 2009 - 10 INCOME TAX OFFICER - 19(3)(1), MATRUMANDIR, TARDEORAOD , MUMBAI. VS. SHRI RAMESH DHAWALCHAND JAIN, 89, 2 ND PATHAN STREET, 5 TH KUMBHARWAD, MUMBAI - 400004 PAN NO. ABVPJ7944C APPELLANT RESPONDENT REVENUE BY : M R. BHERA RAM , DR ASSESSEE BY : NONE DATE OF HEARING : 21/11/2019 DATE OF PRONOUNCEMENT : 28/11/2019 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 30, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 144 R.W.S. 14 7 OF THE INCOME TAX ACT 1961, (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 21.11.2019 , NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE BENCH ON THE ABOVE DATE. AS THERE IS NON - COMPLIANCE ON THE PART OF THE ASSESSEE, WE A RE SHRI RAMESH DHAWALCHAND JAIN ITA NO. 5665 /MUM/2018 2 PROCEEDING TO DISPOSE OFF THIS APPEAL ON MERITS, AFTER EXAMINING THE DOCUMENTS AVAILABLE ON RECORD. 2. THE GROUNDS OF APPEAL FILED BY THE R EVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED I N RESTRICTING THE ADDITION MADE BY THE AO ON THE BASIS OF INFORMATION RECEIVED FROM EXTERNAL SOURCES IN THE NATURE OF LAW ENFORCEMENT AGENCIES. 2. WHETHER ON THE FACTS AND M THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT ERRED IN NOT CONSIDERING THE ORDE R OF HONBLE SUPREME COURT IN THE CASE OF N.K. PROTEIN LTD. DATED 16.01.2017, WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE LD. CIT(A) HAS PRONOUNCED HIS ORDER ON 06.07.2018? 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009 - 10 ON 25.09.2009 DECLARING TOTAL INCOME OF RS.4,43,930/ - . ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARA SHTRA, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE HAD OBTAINED BOGUS ACCOMMODATION ENTRIES FROM HAWALA DEALERS. THE DETAILS OF ACCOMMODATION ENTRIES OBTAINED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS RS.26,74,670/ - FROM VANDNA METALS SYNDICATE AND RS.5,55,519/ - FROM BHANDARI METAL CO.; THUS TOTALING TO RS.32,30,189/ - . ON THE BASIS OF THE ABOVE INFORMATION, THE AO ISSUED NOTICE U/S 148 DATED 07.03.2014 TO THE ASSESSEE. AS THERE WAS NO COMPLIANCE TO THE NOTICE U/S 143(2) & 142(1) DATED 13 .01.2015 AND TO THE SHOW CAUSE NOTICE DATED 20.02.2015 ISSUED, THE AO ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MADE AN ADDITION OF RS.32,30,189/ - . SHRI RAMESH DHAWALCHAND JAIN ITA NO. 5665 /MUM/2018 3 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. C IT(A). WE FIND THAT VIDE ORDER DATED 06.07.2018, THE LD. CIT(A) BY FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN CIT V. SIMIT P. SHETH 356 ITR 451 RESTRICTED THE DISALLOWANCE TO 12.5% OF THE DISPUTED PURCHASES OF RS.32,30,189/ - . 5. BEFORE US , THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITS THAT THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE NOTICE U/S 143(2) AND 142(1) ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING AND THEREFORE, THE ADDITION MADE BY THE AO OF RS.32,30,189/ - BE CONFIRMED. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE CASE OF N.K PROTEINS LTD . (SUPRA), THERE WAS SEARCH PROCEEDINGS CONDUCTED BY THE REVENUE AT THE OFFICE PREMISES OF THE ASSESSEE WHEREIN BLANK SIGNED CHEQUE BOOKS A ND VOUCHER OF NUMBER OF CONCERNS WERE FOUND. ACCORDINGLY, THE PURCHASES MADE FROM THESE CONCERNS WERE TREATED AS BOGUS BY THE AO AND THE ENTIRE DEPOSITS IN BANK ACCOUNTS OF THESE PARTIES WERE TREATED AS ASSESSEES INCOME ON PROTECTIVE BASIS. ON APPEAL, THE ITAT RESTRICTED THE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES AT 25% I.E. RS.73,23,322/ - OF THE TOTAL PURCHASES AMOUNTING TO RS.2,92,93,288/ - . ON FURTHER APPEAL, THE HONBLE HIGH COURT MODIFIED THE ORDER OF THE TRIBUNAL AND DIRECTED FOR ADDITION OF E NTIRE BOGUS PURCHASES. AFTER HEARING THE COUNSELS, THE HONBLE SUPREME COURT DISMISSED THE SLP FILED BY THE ASSESSEE AND CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDITION OF ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES. IN THE INSTANT CASE, THE LD. CI T(A) RELYING ON THE DECISION IN SIMIT P. SHET H (SUPRA) HAS RESTRICTED THE ESTIMATION TO 12.5% OF THE DISPUTED SHRI RAMESH DHAWALCHAND JAIN ITA NO. 5665 /MUM/2018 4 PURCHASES OF RS.32,30,189/ - . THE REASON GIVEN BY THE LD. CIT(A) IS THAT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES BE BROUGHT TO TAX. HOWE VER, WE FIND THAT THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE NOTICE U/S 143(2) AND 142(1) ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. UNLESS THERE IS COMPLIANCE BY THE ASSESSEE TO THE NOTICE U/S 143(2) AND 142(1), IT WOULD BE IMPOSSIB LE FOR THE AO TO COMPUTE THE PROPER INCOME. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE AN ORDER AFRESH, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESS EE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/11/2019. SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 28/11/2019 RAHUL SHARMA, SR. P.S. 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 . BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI