ACIT 25(1), MUMBAI V. OM GANGANGIRI DEVELOPMENT CORPORATION, MUMBAI

ITA 5687/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2788 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2001-2002
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARAN G
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained expenditure; Principle of natural justice
• Section: 69C; 133(6); 69

Judgement Text

, LH LHLH LH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH , IOU FLAG IOU FLAG IOU FLAG IOU FLAG BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH,JUDICIAL MEMBER /.ITA NO.5687/MUM/2014, /ASSESSMENT YEAR-2011-12 ACIT 25(1), PRATYAKSHA KAR BHAVAN, ROOM NO. 202, 2 ND FLOOR, BKC, BANDRA(EAST), MUMBAI-400051 VS M/S OM GAGANGIRI DEVELOPMENT CORPORATION, 102-B, ATLANTA BUILDING, MITHAGAR ROAD, DAHISAR (W), MUMBAI-400068. PAN:AAAFO1526B ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : MS. RADHA KATYAL NARANG (DR) /ASSESSEE BY : SHRI M. SUBRAMANIAN (AR) ' / DATE OF HEARING : 27 - 06 -2016 / DATE OF PRONOUNCEMENT : 30 -06-2016 ORDER/ % & IOU FLAG IOU FLAG IOU FLAG IOU FLAG PER PAWAN SINGH, JM - 1. THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-35, MUMBAI DATED 30.06.2014 FOR ASSESSMENT YEAR (AY)-2011-12. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: I. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,41,57,197/- U/S.69C OF THE I.T. ACT AS UNEXPLAINED EXPENDITURE.' II. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT T HE ALLEGED PURCHASE BILLS WERE NOT SUPPORTED BY THE SUPPLY OF GOODS.' III. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RELYING UPON JUDGMENTS IN THE CA SE OF CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD. WITHOUT APPRECIATING TH AT THE FACTS INVOLVED IN THE APPELLANT'S CASE ARE DIFFERENT FROM THE FACTS OF TH E ABOVE CASE LAW.' IV. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) GROSSLY ERRED IN NOT APPRECIATING THE FACT T HAT THE NOTICES UNDER 133(6) ISSUED TO THE PARTIES FROM WHOM ALLEGED BILLS WERE RECEIVED WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES AND THE ASSES SEE HAS ALSO FAILED TO PRODUCE THE PARTY BEFORE THE AO.' V. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) ERRED IN NOT CONSIDERING THAT THE ASSESSEE TRIED TO CAMOUFLAGE THE NON-GENUINE TRANSACTIONS AS GENUINE TO INTRODUCE THE UNEXPLAINE D MONEY.' VI. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD(CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE B Y THE AO OVERLOOKING THE STATEMENT GIVEN BY THE PARTIES AND EXPLICIT FINDING OF THE INVESTIGATION CARRIED ITA NO.5687/MUM//2014- M/S OM GAGANGIRI DEVELOP MENT CORPORATION. 2 OUT BY THE SALES TAX DEPARTMENT AND CORROBORATED BY THE ENQUIRIES OF THE AO.' VII. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTOR ED.' X. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND.' 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN BUSINESS OF BUILDERS AND DEVELOPERS FILED RETURN OF INCOME FOR RELEVANT AY O N 16.09.2011. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. WHILE FRAMING ASS ESSMENT ORDER, THE ASSESSING OFFICER (AO) ASKED THE ASSESSEE TO FURNISH THE LIST OF THE PERSONS FROM WHOM THE ASSESSEE PURCHASED THE MATERIAL. THE ASSESSEE SUBMI TTED THE LIST OF PERSONS FROM WHOM THE PURCHASES WERE MADE ON RECEIPT OF THE LIST OF S UCH PERSON, THE AO ASKED THE ASSESSEE THAT OUT OF THE LIST SUBMITTED BY ASSESSEE , THE NAME OF 9 PERSONS ARE APPEARING IN THE LIST SUSPICIOUS DEALERS WHO INDULGE IN ISSUI NG ONLY BILLS WITHOUT SUPPLYING ANY GOODS OR MATERIALS FOR A COMMISSION AS PER THE OFFI CIAL WEBSITE OF THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE ALLEGED PURCHASES FROM 9 PARTIES AGGREGATING TO RS. 1,41,57,197/- SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. THE ASSESSEE SU BMITTED ITS REPLY AND CONTENDED THAT THE ASSESSEE HAS ACTUALLY PURCHASED BUILDING M ATERIAL FROM THE SUPPLIER AND THE ASSESSEE HAS RECEIVED THE MATERIAL AT SITE WHICH IS VISIBLE ON THE DELIVERY CHALLANS. AGAINST THE SUPPLY, THE ASSESSEE HAS MADE THE PAYME NT WHICH IS DULY REFLECTED FROM LEDGER ACCOUNT. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO AND THE AO MADE THE ADDITION OF AGGREGATE AMOUNT OF THE PURCHASE OF TOTAL RS. 1,41,57,197/- TREATING AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT, IN THE ASSESSMENT ORDER DATED 17.02.2014. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED TH E PRESENT APPEAL BEFORE THE CIT(A), WHEREIN THE ENTIRE ADDITION WAS DELETED BY CIT(A) I N ITS ORDER DATED 30.06.2014, AGAINST WHICH THE PRESENT APPEAL IS FILED BEFORE US . 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE. LD DR FOR REVENUE ARGUED THAT NO CONFIRMATION WAS FILED BY THE ASSESSEE. THE ASSESSE E HAS OBTAINED ACCOMMODATION BILLS ONLY NO PURCHASES WAS MADE AND FURTHER RELIED UPON THE ORDER OF AO. LD. AR OF ASSESSEE ARGUED THAT AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE REVENUE HAS NOT DISPUTED USE OF THE BUILDING MATERI AL. THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH CO URT IN CIT VS. NIKUNJ EXIMP ENTERPRISES (P) LTD. [2015] 372 ITR 619 (BOM) AND T HE DECISION OF CO-ORDINATE BENCH ITA NO.5687/MUM//2014- M/S OM GAGANGIRI DEVELOP MENT CORPORATION. 3 IN ITA NO. 6727/MUM/2012 IN DCIT VS. RAJEEV G. KAL ATHIL (WHICH IS AUTHORED BY LD. AM). 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DURING T HE ASSESSMENT PROCEEDING ASKED THE ASSESSEE TO FURNISH THE LIST OF THE PERSONS FROM WH OM PURCHASES (BUILDING MATERIAL) WERE MADE. THE ASSESSEE SUBMITTED THEIR LIST AND DE TAILS OF THE PARTIES FROM WHOM ASSESSEE MADE THE PURCHASES. THE AO FURTHER NOTICED THAT OUT OF THOSE PARTIES, THE NAMES OF 9 PARTIES WERE APPEARING IN THE LIST OF SU SPICIOUS DEALERS WHO INDULGED IN ISSUING ONLY BILLS WITHOUT SUPPLY OF GOODS OR MATER IAL FOR COMMISSION, IN THE WEBSITE OF SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT HE HAS ACTUALLY PURCHASED VARIOUS BUILDING MATERIALS FROM THE SUPPLIER. THE DELIVERY CHALLANS CONTAINED THE SIGNATURE ALONG WITH SEAL AT THE TIME OF DELIVERY OF GOODS. THE ASSESSEE MADE THE PAYMENTS AGAINST THE SUPPLIES TO THE PARTIES WHICH ARE DULY REFLECTED IN THEIR RESPECTIVE LEDGER ACCOUNTS. THE ASSESSEE FURTHER CONTENDED THAT FOR ASSESSMENT YEAR 2010-11. THE SIMILAR ADDITIONS WERE MADE IN THE SCRUTINY ASSESSMENT PROCEEDING UND ER SECTION 143(3). THE ASSESSEE PREFERRED APPEAL BEFORE COMMISSIONER OF INCOME TAX APPEALS, WHEREIN THE ADDITIONS WERE DELETED, COPY OF THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS WAS ALSO FILED. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO, AND AO MADE THE ADDITION OF AGGREGATE OF THE PURCHASES OF RS. 1,41,57,197/- TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69 C OF THE ACT. BEFORE F IRST APPELLATE AUTHORITY(FAA), THE ASSESSEE REPEATED THE CONTENTION AS SUBMITTED BEFOR E THE AO AND FURTHER RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE O F NIKUNJ EXIM ENTERPRISES PRIVATE LIMITED 372 ITR 619 (BOMBAY). AFTER CONSIDERING THE CONTENTION OF ASSESSEE, LD CIT APPEALS COMES TO THE CONCLUSION THAT AO MADE THE AD DITION ON THE BASIS THAT THE 9 PARTIES APPEAR IN THE LIST SUSPICIOUS DEALERS, IN S ALE TAX DEPARTMENT OF GOVT. OF MAHARASHTRA. THE AO ISSUED NOTICE UNDER SECTION 133 (6) OF THE ACT, TO THESE 9 PARTIES WHICH WERE RETURN UNANSWERED. THE ASSESSEE DURING T HE COURSE OF ASSESSMENT PROCEEDING SUBMITTED PURCHASE INVOICES WITH SIGNATU RE OF THE RECIPIENT ALONG WITH COPY OF DELIVERY CHALLAN AND COPIES OF THE BANK STA TEMENT FROM WEIRD THE PAYMENTS WERE MADE TO THESE 9 PARTIES ALONG WITH DELIVERY CH ALLAN WITH THE SIGNATURE OF SITE SUPERVISOR. THE LD. CIT FURTHER CONCLUDED THAT IN T HE CASE OF ASSESSEE, THE PROJECT WAS SUPERVISED BY A PROJECT MANAGEMENT CONSULTANT (PMC) VIZ. YASH CONSULTANTS AND THE ITA NO.5687/MUM//2014- M/S OM GAGANGIRI DEVELOP MENT CORPORATION. 4 SIGNATURE OF YASH CONSULTANTS SUPERVISOR ARE ALSO AVAILABLE ON THE PURCHASE BILLS. THE PERCENTAGE OF THE SALES PER PROJECTS SHOWN BY THE A SSESSEE IS 24.33%, WHICH CANNOT BE TAKEN TO BE TO LOW PROFIT RATIO. THE AO HAVE NOT FO UND AND ANY REASON TO QUESTION THE VARIOUS EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HI M. THE ISSUE THAT NOTICES UNDER SECTION 133 (6) RETURN UNSERVED BEING ENOUGH TO DIS BELIEVE THE ACCOUNTS AND OTHER EVIDENCE PRODUCED BY THE ASSESSEE, HAS ALREADY BEEN DECIDED BY JURISDICTIONAL HIGH COURT IN CASE OF NIKUNJ EXIM ENTERPRISE PRIVATE LIM ITED(SUPRA), AND ACCEPTED THE ARGUMENTS ADVANCED BEFORE HER AND ALLOWED THE APPEA L OF THE ASSESSEE. THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 6727/MUM /2012 IN DCIT VERSUS RAJEEV G. KALATHIL (SUPRA) HELD AS UNDER: 5.1 NOW THE ISSUE BEFORE US IS WHETHER THE AFORESA ID CASE OF THE ASSESSSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS CITED BY THE LD. COUNSEL. IN THE CASE OF ITA NO.6727/MUM/2012 (AY-2009-10) DATED 20.08.20 14 WE FIND THAT THE SIMILAR ADDITION WAS MADE ON THE BASIS OF INFORMATION AVAIL ABLE ON WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, WHICH WAS DE LETED BY THE TRIBUNAL. THE RELEVANT PARA 2.4 IS EXTRACTED AS BELOW. 2.4. 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SU PPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATION AND TAKE IT TO LOGICAL END. BUT, HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TA KE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FIND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SI TE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECEIVED BY THE ASSESSEE WAS FORMING P ART OF CLOSING STOCK. AS FAR AS THE CASE OF WESTERN EXTRUSION INDUSTRIES. WWW.TAXGURU.I N ITA/6727/MUM/2012/RGK 4 (SUPRA) IS CONCERNED, WE FIND THAT IN THAT MATTER C ASH WAS IMMEDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT, IN THE CASE BEFORE US, THERE IS NOTHING, IN THE ORDER OF THE AO, ABOUT THE CASH TRAIL. SECONDLY, PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE, CONSI DERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL, WE ARE OF T HE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY AND TH ERE IS NO SUFFICIENT EVIDENCE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO, CONFI RMING THE ORDER OF THE FAA, WE DECIDE GROUND NO.1 AGAINST THE AO.' FURTHER THE COORDINATE BENCH IN CASE OF PRATAP U. P UROHIT, THE CO-ORDINATE BENCH OF ITAT, MUMBAI, HOLDING AS UNDER: 13. IN SUMMARY, WE ARE OF THE OPINION, CONSIDERING THE ORDERS OF THE TRIBUNAL IN MANY CASES OF ADDITIONS INVOLVING THE SALES TAX DEPARTMENT, THE DISCLOSURE OF BLACK-LISTED SUPPLIERS AND WHEN THE ASSESSING OF FICER FAILED TO DISCHARGE THE ONUS AS DISCUSSED ABOVE, THE ADDITIONS MADE U/S 69C AMOUNTING TO RS. 12,01,91,407/- OUT OF TOTAL ADDITION OF RS. 13.03 C RS IS REQUIRED TO BE DELETED. CIT(A) IS DIRECTED TO EXAMINE THIS ISSUE AND PASS A SPEAKING ORDER ON THE ISSUES RELATING TO THE ASPECTS OF GP AND THE OTHER INDEPENDENT ADDITION OF RS. ITA NO.5687/MUM//2014- M/S OM GAGANGIRI DEVELOP MENT CORPORATION. 5 1,00,86,929/- AFTER GATHERING RELEVANT FACTS FROM T HE SURVEY STATEMENTS, IF ANY. CIT (A) SHALL GRANT A REASONABLE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDIN GLY, GROUNDS RAISED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . 5. NOW, ON COMING TO THE FACTS OF THE PRESENT CASE, WE FIND THAT AO HAD MADE THE ADDITION AS 9 OF THE PARTIES, WHO WERE DECLARED AS A HAWALA DEALER BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE AO MAD E THE ADDITION OF AGGREGATE VALUE OF THE PURCHASES FROM THOSE IMPUGNED SUPPLIER INSTEAD OF MAKING ANY INVESTIGATION, IF ANY SUCH PAYMENT WERE CREDITED TO THEIR ACCOUNTS OR THE SAME WAS WITHDRAWN IMMEDIATELY. THE BOOKS OF ACCOUNT OF ASSE SSEE WERE NOT REJECTED BY AO. THE SALES OF ASSESSEE WERE NOT DISPUTED. USE OF BUI LDING MATERIAL WAS ALSO NOT DISPUTED. THE PROOF OF DELIVERY OF THE PURCHASED GO ODS/MATERIAL IS NOT DISPUTED BY AO. THE CIT(A) CONSIDERED ALL THE MATERIAL FACT BEFORE HER. THUS, CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE STATED IN THE PRESENT APP EAL, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY CIT(A). HENCE THE APPEAL FILED BY REVENUE IS DISMISSED. AS A RESULT, APPEAL FILED BY THE REVENUE IS STANDS DISMISSED. % & '( *+ , -.. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE,2016. 1 2 *3 4+ 30 TWU TWUTWU TWU ,20 16 '( 8 SD/- SD/ ( /RAJENDRA) ( IOU FLAG IOU FLAG IOU FLAG IOU FLAG / PAWAN SINGH) & / ACCOUNTANT MEMBER / JUDICIAL MEMBER * 2 +( /MUMBAI, 4+ /DATE: 30.06.2016 SK ' '() *) / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ +%: 2 ; , 4. THE CONCERNED CIT / +%: 2 ; 5. DR C BENCH, ITAT, MUMBAI / <=' >: , LH LHLH LH + , . . . * 2 +( 6. GUARD FILE/ ' ( < //TRUE COPY// 1 2 / BY ORDER, / - + DY./ASST. REGISTRAR >: , * 2 +( /ITAT, MUMBAI.