ITO 24(1)(4), MUMBAI V. EAGLE IMPEX, MUMBAI

ITA 5697/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1752 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-02-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 14-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEERAJA PRADHAN
• Assessee Lawyers: SATISH MODI EAGLE IMPEX
• Keywords: Bogus purchase; Additional evidence; Reasonable cause
• Section: 133(6); 144

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . , ! ! ! ! , ' ' ' ' #$ %& #$ %& #$ %& #$ %& , ,, , ' ! ' ! ' ! ' ! ( ( ( ( BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 5697/MUM./2010 ( '* + ',+ / ASSESSMENT YEAR : 200304 ) INCOME TAX OFFICER WARD24(1)4 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 .. -. / APPELLANT * V/S M/S. EAGLE IMPEX 401, MADHUBAN BUILDING JITENDRA CROSS ROAD, MALAD (E) MUMBAI 400 051 .... /0-. / RESPONDENT !- . / PERMANENT ACCOUNT NUMBER AAAFE4976B . / ITA NO. 5748/MUM./2010 ( '* + ',+ / ASSESSMENT YEAR : 200304 ) M/S. EAGLE IMPEX 401, MADHUBAN BUILDING JITENDRA CROSS ROAD, MALAD (E) MUMBAI 400 051 .. -. / APPELLANT * V/S INCOME TAX OFFICER WARD24(1)4 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 051 .... /0-. / RESPONDENT !- . / PERMANENT ACCOUNT NUMBER AAAFE4976B '* +2$ 3 4 / REVENUE BY : MRS. NEERAJA PRADHAN 5!' 3 4 / ASSESSEE BY : MR. SATISH MODI EAGLE IMPEX 2 *' 3 $ / DATE OF HEARING 04.02.2013 % 6, 3 $ / DATE OF ORDER 22.02.2013 % % % % / ORDER #$ %& #$ %& #$ %& #$ %& , ,, , ' ! ' ! ' ! ' ! 7 7 7 7 / PER AMIT SHUKLA, J.M. THESE CROSS APPEALS ARE AGAINST THE IMPUGNED ORDER DATED 28 TH APRIL 2010, PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXXIV, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 144 R/W SECTION 254 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), FOR THE ASSESSMENT YEAR 2003 04. THE DEPARTMENT, IN ITS APPEAL, HAS RAISED FOLLO WING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISALLO WANCE OF NON GENUINE AND BOGUS PURCHASES SHOWN BY THE ASSESSEE T O 25% ONLY WITHOUT APPRECIATING THE FACT THAT THE PURCHASES WE RE NOT PROVED TO BE GENUINE AND THE ASSESSEE WAS NOT ABLE TO PRODUCE AN Y EVIDENCE OR DETAILS IN SUPPORT THEREOF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE RELIEF OF ` 3,41,238 TO THE ASSESSEE ON ACCOUNT OF COMMISSION & BROKERAGE AS SA ME WAS NOT COVERED IN THE ASSESSMENT ORDER WHICH WAS SUBJECT M ATTER AS APPEAL BEFORE THE LEARNED CIT(A) AND IT WAS A COVERED ISSU E VIDE ORDER DT. 12.1.2007 OF THE LEARNED CIT(A) . THE ASSESSEE, IN ITS APPEAL, HAS RAISED FOLLOWING GROUNDS OF APPEAL: LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN 1. REJECTING THE ASSESSEES GROUND OF APPEAL THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 144 R.W.S. 254 OF THE ACT IS TO BE QUASHED AS VOID AB INITIO AND BAD IN LAW AS THE PRO VISIONS OF THE SAID SECTIONS ARE NOT ATTRACTED. 2. CONFIRMING THE DISALLOWANCE OF 25% OF THE VALUE OF PURCHASES FROM THE FOLLOWING PARTIES . EAGLE IMPEX 3 2. GROUND NO.1 OF REVENUES APPEAL AND GROUND NO.2, OF ASSESSEES APPEAL PERTAIN TO SAME ISSUE, THEREFORE, THEY ARE B EING DEALT WITH TOGETHER. BRIEF FACTS, APROPOS GROUND NO.1, IS THAT THE ASSES SEE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING / TRADING AND EXPORT OF STAINLESS STEEL CUTLERY. THE ASSESSEE HAS BOTH LOCA L SALES AS WELL AS EXPORT. THE PRESENT APPEAL IS ARISING OUT OF SECOND ROUND O F ASSESSMENT PROCEEDINGS IN PURSUANCE OF SETTING ASIDE BY THE TRIBUNAL. IN T HE ORIGINAL ASSESSMENT ORDER, THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBSTANTIATE THE PURCHASES MADE FROM THE FOLLOWING SEVEN PARTIES FOR SUMS AGGREGATING TO ` 1,75,10,053. S.NO. NAME OF PARTIES AMOUNT IN ` 1. M/S. POONAM ENTERPRISES 15,29,265 2. M/S. MONTEX ENTERPRISES 23,78,600 3. M/S. VEERA MERCANTILE P. LTD. 14,59,012 4. M/S. RAJ CORPORATION 29,17,620 5. MS. YASH IMPEX 31,16,252 6. M/S. CHANDAN INDUSTRIES 40,00,554 7. M/S. REGAL ENTERPRISES 21,08,750 TOTAL: 1,75,10,053 3. THE ASSESSING OFFICER CARRIED OUT ENQUIRIES BY ISSU ANCE OF NOTICE UNDER SECTION 133(6) OUT OF WHICH NONE OF THE PARTIES CON FIRMED THEIR TRANSACTIONS WITH THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICE R DEPUTED INCOME TAX INSPECTOR TO CARRY OUT ENQUIRY AND SUBMIT HIS REPOR T. OUT OF THE SEVEN PARTIES, FIVE PARTIES COULD NOT BE LOCATED EITHER D UE TO LACK OF PROPER ADDRESS OR THE PARTIES HAVE LEFT THE PREMISES. THE TWO PART IES HAD FILED THEIR CONFIRMATION LETTER. ACCORDINGLY, PURCHASES TO THE TUNE OF ` 82,84,497, APPEARING IN THE NAME OF THE FOLLOWING PARTIES WERE DISALLOWED. S.NO. NAME OF PARTIES AMOUNT IN ` 1. M/S. POONAM ENTERPRISES 15,29,265 2. M/S. MONTEX ENTERPRISES 23,78,600 3. M/S. VEERA MERCANTILE P. LTD. 14,59,012 4. M/S. RAJ CORPORATION 29,17,620 TOTAL: 82,84,497 EAGLE IMPEX 4 4. DESPITE SEVERAL OPPORTUNITIES GIVEN BY THE ASSESSIN G OFFICER THE ASSESSEE COULD NOT FURNISH ANY DETAILS OR VERIFICAT ION OF THE PARTIES. IN THE FIRST APPEAL, THE ASSESSEE FILED A DETAIL PAPER BOO K AND ADDITIONAL EVIDENCE TO SUPPORT THE GENUINENESS OF THE PURCHASES WITH THE S AID PARTIES ALONG WITH THE PETITION UNDER RULE 46A. THE COMMISSIONER (APPE ALS) REJECTED THE ASSESSEES APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A ON THE GROUND THAT THE ASSESSING OFFICER HAS GIVEN SUFFICIENT OPPORTUNITIES TO PRODUCE THE DETAILS AND THE ASSESSEE HAD FAILED TO PROVIDE REASONS FOR NOT PRODUCING THE DOCUMENTS BEFORE THE ASSESSING OFFICE R AND, ACCORDINGLY, HE REJECTED THE ENTIRE EVIDENCE PRODUCED BEFORE HIM. T HE ASSESSEE, BEFORE THE LEARNED COMMISSIONER (APPEALS), SUBMITTED THAT EVEN OTHERWISE ALSO, THE PURCHASES SHOULD BE TREATED AS GENUINE BECAUSE THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES WHICH HAVE BEEN DULY DEBITED FROM ITS BANK ACCOUNT. HOWEVER, THE COMMISSIONER (APPEALS) R EJECTED THE SAME AFTER DETAILED REASONS. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFERRED SECOND APPEAL BEFORE THE TRIBUNAL, WHEREIN THE TRIBUNAL RE STORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER AND DIRECTED HIM TO A DMIT THE ADDITIONAL EVIDENCE CONTAINED IN THE PAPER BOOK AND TO VERIFY THE VERAC ITY OF THE EVIDENCE FILED AND DECIDE THE ISSUE AFRESH. 5. DURING THE SECOND ROUND OF THE ASSESSMENT PROCEEDIN GS, IN PURSUANCE OF THE ORDER PASSED BY THE TRIBUNAL, THE ASSESSING OFFICER NOTED IN PARA4 OF THE ASSESSMENT ORDER, THAT DESPITE SEVERAL NOTICES AND OPPORTUNITIES GIVEN TO THE ASSESSEE, AGAIN THE ASSESSEE HAS FAILED TO COMP LY WITH THE NOTICE AND SUBSTANTIATE THE EVIDENCE. ACCORDINGLY, HE CONFIRME D THE ADDITION AS WAS CONFIRMED BY THE COMMISSIONER (APPEALS) DURING THE FIRST ROUND OF PROCEEDINGS. AGGRIEVED BY THIS, THE ASSESSEE PREFER RED APPEAL BEFORE THE COMMISSIONER (APPEALS) WHEREIN IT WAS SUBMITTED THA T THE ASSESSEE HAS BEEN MAINTAINING PROPER BOOKS OF ACCOUNT WHICH WAS DULY PRODUCED BEFORE THE ASSESSING OFFICER IN THE ORIGINAL ROUND OF PROC EEDINGS. THE ENTIRE EVIDENCE WHICH WAS FILED IN THE FORM OF PAPER BOOK I, II AND III IN THE FIRST ROUND BEFORE THE LEARNED COMMISSIONER (APPEALS) AND IN THE SECOND ROUND EAGLE IMPEX 5 WAS ALSO FILED BEFORE THE ASSESSING OFFICER WHICH C ONTAINED LEDGER EXTRACTS OF THE FOUR PARTIES, CONFIRMATION IN RESPECT OF PURCHA SES, SALES TAX REGISTRATION CERTIFICATE OF THE PARTIES, EXPORT INVOICES, BANK C ERTIFICATE CERTIFYING THE PAYMENT MADE THROUGH CHEQUES, THE COPY OF BANK STAT EMENT SHOWING CLEARANCE OF ACCOUNT PAYEE CHEQUES AND HOST OF OTHE R EVIDENCES. IT WAS VEHEMENTLY CONTENDED THAT ALL THESE DOCUMENTS WERE FILED BEFORE THE ASSESSING OFFICER, WHICH HAS NOT BEEN SEEN OR EXAMI NED. THE RELEVANT SUBMISSIONS OF THE ASSESSEE BEFORE THE COMMISSIONER (APPEALS) IN THIS REGARD ARE REPRODUCED HEREUNDER FOR BETTER APPRECIA TION OF THE FACTS. 4. FRESH ASSESSMENT PROCEEDINGS A. IN RESPONSE TO NOTICES, THE APPELLANT HAS ATTEND ED FROM TIME TO TIME AND SUBMITTED TO THE A.Q. THE ENTIRE SET OF FRESH E VIDENCE THAT WAS SUBMITTED BEFORE THE CIT(A) AND THE HONORABLE ITAT. B. THE SAID EVIDENCE COMPRISES OF VARIOUS DOCUMENTA RY EVIDENCE SUCH AS COPIES OF THE PURCHASE INVOICES, COPIES OF BANK STATEMENTS DEPICTING PAYMENTS MADE BY WAY OF ACCOUNT PAYEE CHE QUES, QUANTITATIVE DISPOSAL OF THESE PURCHASES SHOWING CO RRESPONDING EXPORTS MADE OUT OF THESE PURCHASES, COPIES OF EXPO RT INVOICES, BILL OF LADING, FOREIGN INWARD REMITTANCE CERTIFICATE, SALE S TAX REGISTRATION CERTIFICATES BOTH UNDER THE MAHARASHTRA SALES TAX A CT AS WELL AS THE CENTRAL SALES TAX ACT IN RESPECT OF SOME OF THESE P ARTIES, P.A.NO. OF ONE OF THE PARTY, LEDGER ACCOUNTS OF THE PARTIES, T HEIR CONFIRMATIONS ETC. THESE EVIDENCE CLEARLY SUPPORT AND SUBSTANTIAT E THE PURCHASES MADE BY THE APPELLANT. C. FURTHER EVIDENCE COMPRISES OF (A) CERTIFICATE OF BANK CERTIFYING THAT ACCOUNT PAYEE CHEQUES ISSUED BY THE ASSESSEE H AVE INDEED BEEN ENCASHED IN THE BANK ACCOUNTS OF THE VERY SAME PART IES, (B) COPIES OF ACCOUNT PAYEE CHEQUES ISSUED BY THE ASSESSEE AND TH EIR ENCASHMENT ALONG WITH THE RECIPIENT BANKS STAMP ETC. (C) DOCUM ENTS OF SALES TAX REGISTRATION OF VARIOUS PARTIES UNDER THE B.S.T. AN D/OR C.S.T. INCLUDING VERIFICATION REPORT OF THE SALES TAX INSPECTOR, PAR TIES AFFIDAVIT ETC . 6. THEREAFTER, IT WAS SUBMITTED THAT ALL THESE PARTIES WERE DULY REGISTERED WITH MAHARASHTRA SALES TAX ACT AND CENTRAL SALES TA X ACT AND THE ENTIRE PURCHASES ARE GENUINE ON THE BASIS OF FOLLOWING DOC UMENTARY EVIDENCE WHICH WAS SUBMITTED TO THE ASSESSING OFFICER. EAGLE IMPEX 6 A. COPIES OF THE PURCHASE INVOICES. B. COPIES OF BANK STATEMENTS DEPICTING PAYMENTS MAD E BY WAY OF ACCOUNT PAYEE CHEQUES. C. QUANTITATIVE DISPOSAL OF THESE PURCHASES SHOWING CORRESPONDING EXPORTS MADE OUT OF THESE PURCHASES. D. COPIES OF EXPORT INVOICES, BILL OF LADING, FOREI GN INWARD REMITTANCE CERTIFICATE. E. SALES TAX REGISTRATION CERTIFICATES BOTH UNDER T HE MAHARASHTRA SALES TAX ACT AS WELL AS THE CENTRAL SALES TAX ACT IN RESPECT OF SOME OF THESE PARTIES. F. PA NO. OF ONE OF THE PARTY. G. LEDGER ACCOUNTS OF THE PARTIES, THEIR CONFIRMATI ONS ETC. H. CERTIFICATE OF BANK CERTIFYING THAT ACCOUNT PAYE E CHEQUES ISSUED BY THE ASSESSEE HAVE INDEED BEEN ENCASHED IN THE BA NK ACCOUNTS OF THE VERY SAME PARTIES, I. COPIES OF ACCOUNT PAYEE CHEQUES ISSUED BY THE AS SESSEE AND THEIR ENCASHMENT ALONG WITH THE RECIPIENT BANKS STA MP ETC. J. DOCUMENTS OF SALES TAX REGISTRATION OF VARIOUS P ARTIES UNDER THE B.S.T. AND/CR C.S.T. INCLUDING VERIFICATION REP ORT OF THE SALES TAX INSPECTOR, PARTIES AFFIDAVIT ETC. 7. THE COMMISSIONER (APPEALS) APPRECIATED THE ASSESSEE S CONTENTIONS AND EVIDENCES AND DISALLOWED ONLY 25% OF THE PURCHA SES AFTER FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL, AHMEDABAD BENCH, I N VIJAY PROTEINS LTD. V/S ACIT, [1996] 58 ITD 428 (AHD.). HE ALSO GAVE FINDI NGS THAT THE ENTIRE PURCHASES FROM FOUR PARTIES CANNOT BE TREATED AS BO GUS, AS WITHOUT PURCHASES THERE CANNOT BE ANY SALES OR EXPORTS. THE RELEVANT FINDINGS AND THE OBSERVATIONS OF THE COMMISSIONER (APPEALS) WHIC H ARE RELEVANT ARE REPRODUCED HEREIN BELOW: 6. AFTER CONSIDERING THE AFORESAID WRITTEN SUBMISSI ONS AND VARIOUS EVIDENCES WHICH WERE FILED BEFORE CIT(A), ITAT AND AGAIN BEFORE ASSESSING OFFICER AS WELL AS BEFORE ME AND IN VIEW OF THE FACT THAT APPELLANT HAS MAINTAINED FULL QUANTITATIVE DETAILS AND NO GENUINENESS OF SALES HAS BEEN QUESTIONED. PAYMENTS WERE MADE TO FOUR PARTIES IN QUESTION BY ACCOUNT PAYEE CHEQUES AND MONEY WAS CRE DITED IN THE EAGLE IMPEX 7 BANK ACCOUNT OF THESE PARTIES WHICH HAS BEEN CERTIF IED BY THE BANKS. THOSE PARTIES ARE REGISTERED WITH SALES TAX AND CEN TRAL SALES TAX ACT. THEIR CONFIRMATIONS WERE ALSO FILED BUT IT APPEARS THAT THE PARTIES ARE NOT TRACEABLE AND THE APPELLANT HAS EXPRESS HIS INA BILITY TO PRODUCE THE PARTIES IN QUESTION. SO IN VIEW OF THESE FACTS AND DECISION OF HONBLE MUMBAI ITAT IN THE CASE OF BALAJI TEXTILE INDUSTRIE S PVT. LTD. V/S ITO, 49 ITD 177, THERE CANNOT BE SALES WITHOUT PURCHASES . THE APPELLANT HAS ALSO RELIED ON THE DECISION OF MUMBAI HIGH COUR T IN THE CASE OF SHRI BABULAL C. VORA V/S ITO, 282 ITR 251 (MUM.) AN D GUJARAT HIGH COURT IN THE CASE OF CIT VS JAY AMBEE. SO AFTER CON SIDERING THESE DECISIONS, ESPECIALLY THE DECISION OF MUMBAI ITAT I N THE CASE OF BALAJI TEXTILE INDUSTRIES PVT. LTD. VS ITO THERE CANNOT BE ANY SALES WITHOUT PURCHASES, I REACH ON THE CONCLUSION THAT ADDITION OF ENTIRE PURCHASES FROM FOUR PARTIES IN QUESTION CHASES IS NOT FULLY J USTIFIED. THE FOUR PARTIES WERE NOT FOUND ON THE GIVEN ADDRESS AND THE APPELLANT COULD NOT PRODUCE THEM BEFORE ASSESSING OFFICER AS WELL A S BEFORE THE UNDERSIGNED IN SPITE OF SPECIFIC OPPORTUNITIES GIVE N AND IT HAS STATED THAT THOSE PARTIES ARE NOT TRACEABLE. HENCE, THEY A RE UNABLE TO PRODUCE THEM FOR EXAMINATION. SO IN VIEW OF THESE F ACTS, TO MY MIND, THE APPELLANT HAS MADE PURCHASES FROM UNKNOWN PARTI ES. HOWEVER, IT HAS TAKEN BILLS FROM AFORESAID FOUR PARTIES AND BY DOING SO, IT HAS INFLATED THE PURCHASE PRICE. NOT ONLY THIS BUT IT H AS ALSO SAVED THE SALES-TAX AND OCTROI ETC. ON THESE PURCHASES. THERE FORE, APPELLANT WAS ASKED VIDE ORDER SHEET ENTRY DATED 27/4/2010 TO EXP LAIN AS TO WHY NOT DECISION OF AHMEDABAD ITAT 5998/AHD/1994 - 55 TTJ ( AHD) 76 : 58 LTD 428 SHOULD BE APPLIED AND 25% OF THE PURCHASES SHOULD NOT BE DISALLOWED KEEPING IN VIEW THE FACTS OF THIS CASE W HICH ARE SIMILAR TO THE CASE OF VIJAY PROTEINS. IN RESPONSE TO THIS QUE RY, THE AUTHORIZED REPRESENTATIVE HAS ARGUED THAT NO ADDITION SHOULD B E MADE IN VIEW OF THE DECISIONS RELIED BY HIM. 7. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND THE DIRECTIONS OF HONBLE ITAT. THE APPELLANT H AS FURNISHED FULL QUANTITATIVE DETAILS AND DETAILS OF SALES AND PAYME NTS WERE MADE BY CHEQUES. SO NO ADDITION OF FULL PURCHASE IS JUSTIFI ED. HOWEVER, THE FOUR PARTIES IN QUESTION WERE NOT FOUND AT THE TIME OF F ILED ENQUIRIES AND THEY WERE NOT PRODUCED BEFORE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS. NOT ONLY THIS, IN APPELLATE PROCEEDING S ALSO FURTHER OPPORTUNITY WAS OFFERED TO THE APPELLANT AND IT WAS REQUIRED TO PRODUCE FOUR PARTIES IN QUESTION BEFORE THE UNDERSI GNED. HOWEVER, THE APPELLANT HAS EXPRESSED ITS INABILITY TO PRODUCE T HE PARTIES IN QUESTION ON THE PLEA THAT THOSE PARTIES ARE NOT TRACEABLE. S O THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS OF THE CASE OF VIJAY PROTEINS LTD (SUPRA) DECIDED BY AHMEDABAD ITAT WHEREIN 25% DISALLOWANCE WAS CONSIDERED REASONABLE KEEPING IN VIEW VARIOUS FACTS AND INFLATED PURCHASES BY THE APPELLANT, I HAVE APPLIED THE DECI SION OF M/S. VIJAY PROTEINS IN THE CASE OF M/S COMPURE AND SEVERAL OTH ER ASSESSEES OF MUMBAI AND THE ADDITION IN THE CASE OF M/S COMPURE. TO MY KNOWLEDGE HAS BEEN CONFIRMED BY HONBLE ITAT. THERE FORE, IN VIEW OF AFORESAID DISCUSSION, THE ASSESSING OFFICER IS DIRE CTED TO RESTRICT THE DISALLOWANCE UPTO 25% OF THE TOTAL ADDITION OF ` 82,84,497 HELD BY HIM EAGLE IMPEX 8 AND ALLOW RELIEF FOR THE REMAINING AMOUNT. THUS THI S GROUND OF APPEAL IS PARTLY ALLOWED. 8. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE TRIBUNAL HAS GIVEN SPECIFIC DIRECTIONS THAT THE ONU S IS ENTIRELY ON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM TO THE SATISFACT ION OF THE ASSESSING OFFICER WHO WILL VERIFY THE VERACITY OF THE EVIDENCE FILED AND DECIDE THE ISSUE AFRESH. SHE POINTED OUT THE OBSERVATIONS OF THE ASSESSING O FFICER IN PARA4 OF THE SECOND ASSESSMENT ORDER AND SUBMITTED THAT THE ASSE SSING OFFICER HAS GIVEN SEVERAL OPPORTUNITIES AND EXCEPT FOR PART COMPLIANC E IN ONE OR TWO DATES, THE ASSESSEE HAS FAILED TO APPEAR BEFORE THE ASSESSING OFFICER AND WAS UNABLE TO SUBSTANTIATE ITS CLAIM FOR THE PURCHASES MADE FROM THE FOUR PARTIES. IN SUCH A SITUATION, THE FINDINGS OF THE COMMISSIONER (APPE ALS) IS WHOLLY ERRONEOUS. ONCE, THE ONUS WAS ON THE ASSESSEE, THE ASSESSEE SH OULD HAVE SUBSTANTIATED THE PURCHASES AND THEN ONLY THE ASSESSING OFFICER C OULD HAVE CARRIED OUT ENQUIRY AND VERIFY THE EVIDENCE. 9. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT ALL THE ADDITIONAL EVIDENCE WHICH WAS ADMITTED BY THE TRIBUNAL WAS FILED BEFORE THE ASSESSING OFFICER. IN SUPPORT OF THIS CO NTENTION, HE REFERRED TO SPECIFIC AVERMENT MADE IN THE STATEMENT OF FACTS FI LED BEFORE THE LEARNED COMMISSIONER (APPEALS). ON A PERUSAL OF THESE EVIDE NCES, IT CANNOT BE DOUBTED THAT THE PURCHASES ARE NOT GENUINE, SPECIFI CALLY WHEN THE SALES TAX REGISTRATION CERTIFICATE NUMBER, CONFIRMATION LETTE RS, BANK CERTIFICATE CERTIFYING THAT TRANSACTIONS HAD BEEN THROUGH ACCOU NT PAYEE CHEQUE DULY CLEARED FROM ASSESSEES BANK ACCOUNT AND CREDITED I N PARTYS ACCOUNT FROM WHOM PURCHASES HAD BEEN MADE. BEYOND THIS, IT CANNO T BE HELD THAT THE ONUS WHICH WAS CAST UPON THE ASSESSEE HAS NOT BEEN DISCHARGED FOR PROVING THE GENUINENESS OF THE PURCHASES. HE FURTHER SUBMIT TED THAT ONCE THE SALES HAVE BEEN ACCEPTED ALONG WITH THE TRADING RESULT, T HE PURCHASES CANNOT BE DISPUTED BY THE ASSESSING OFFICER. HE THUS, SUBMITT ED THAT THE ENTIRE PURCHASES DISALLOWED BY THE ASSESSING OFFICER SHOUL D BE DELETED. EAGLE IMPEX 9 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED C OMMISSIONER (APPEALS) AND THE MATERIAL PLACED ON RECORD. IN THE PRESENT C ASE, THE DISPUTE RELATES TO PURCHASES MADE FROM THE FOLLOWING FOUR PARTIES. S.NO. NAME OF PARTIES AMOUNT IN ` 5. M/S. POONAM ENTERPRISES 15,29,265 6. M/S. MONTEX ENTERPRISES 23,78,600 7. M/S. VEERA MERCANTILE P. LTD. 14,59,012 8. M/S. RAJ CORPORATION 29,17,620 TOTAL: 82,84,497 11. IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS, DUE T O NONVERIFICATION OF THE IDENTITY OF THE PARTIES, THE PURCHASES WERE DISALLOWED BY THE ASSESSING OFFICER. BEFORE THE COMMISSIONER (APPEALS), VARIOUS ADDITIONAL EVIDENCES WERE FILED WHICH HAS BEEN DISCUSSED IN THE FOREGOIN G PARAGRAPHS TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASES. THE SE ADDITIONAL EVIDENCES WERE REJECTED BY THE COMMISSIONER (APPEALS) ON THE GROUND THAT THERE WAS NO REASONABLE CAUSE FOR NOT PRODUCING THE SAME BEFO RE THE ASSESSING OFFICER. THEREAFTER, IN SECOND APPEAL, THE TRIBUNAL , AFTER ADMITTING THE ADDITIONAL EVIDENCES, AS FILED BY THE ASSESSEE BEFO RE THE COMMISSIONER (APPEALS), REMANDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH. IN THE SECOND ROUND, THE A SSESSEE, AS PER THE NOTING OF THE ASSESSING OFFICER, COULD NOT MAKE PROPER COM PLIANCE OF THE NOTICES AND DATES OF HEARING. AN AVERMENT HAS BEEN MADE BEF ORE US BY THE LEARNED COUNSEL AND ALSO IN THE STATEMENT OF FACTS FILED BE FORE THE COMMISSIONER (APPEALS), BY THE ASSESSEE THAT ALL THESE EVIDENCES AND DOCUMENTS HAVE BEEN FILED BEFORE THE ASSESSING OFFICER IN THE SECO ND ROUND. THIS FACT HAS BEEN ADMITTED BY THE COMMISSIONER (APPEALS) AND THE REVENUE HAS ALSO NOT CHALLENGED THIS ASPECT OF THE MATTER IN THE GROUNDS OF APPEAL. THUS, IT CAN EAGLE IMPEX 10 SAFELY BE INFERRED THAT ALL THE EVIDENCES WITH REGA RD TO THE PURCHASES MADE FROM THE AFORESAID FOUR PARTIES ARE ALSO IN THE REC ORD OF THE ASSESSING OFFICER. 12. FROM THE RECORD, IT IS SEEN THAT ALL THE PURCHASES MADE FROM THE FOUR PARTIES HAVE BEEN ROUTED THROUGH BANKING CHANNELS I .E., PAYMENTS WITH REGARD TO THE PURCHASES HAVE BEEN MADE THROUGH ACCO UNT PAYEE CHEQUES WHICH IS NOT DISPUTED. THE PHOTOCOPY OF THE CHEQUES HAVE ALSO BEEN PLACED IN PAPER BOOK FROM PAGES63 TO 73. THE COPY OF THE BANK STATEMENT ALSO SHOWS THAT THE CLEARANCE OF THESE CHEQUES HAVE BEEN MADE FROM THE ASSESSEES BANK ACCOUNT. THUS, FROM THESE DOCUMENTS , IT CANNOT BE HELD THAT THE TRANSACTIONS OF THE PURCHASES ARE NOT GENUINE. THE OTHER EVIDENCES LIKE SALES TAX REGISTRATION CERTIFICATE AND CONFIRMATION OF ACCOUNTS BY THE SAID PARTIES ALSO PRIMA FACIE PROVES THE IDENTITY OF THE PURCHASER. THE ASSESSEE HAS ALSO PRODUCED COPIES OF PURCHASE INVOICES AND A LSO THE ENTIRE QUANTITATIVE DETAILS WITH REGARD TO THE PURCHASE AN D CORRESPONDING EXPORTS MADE BY THE ASSESSEE. IN THIS CASE, THE ASSESSING O FFICER HAS DULY ACCEPTED THE SALES / EXPORT TURNOVER AND ALSO THE GROSS PROF IT RATE. THIS, INTERALIA, MEANS THAT THE ASSESSEE MUST HAVE MADE PURCHASES DU RING THE YEAR UNDER CONSIDERATION FOR WHICH THERE IS CORRESPONDING SALE S. ONCE THE GROSS PROFIT WHICH IS THE BALANCING FIGURE OF THE OPENING STOCK, PURCHASES AND DIRECT COST ON THE DEBIT SIDE AND SALES AND CLOSING STOCK ON TH E CREDIT SIDE, HAS BEEN ACCEPTED BY THE ASSESSING OFFICER, THEN IT WOULD BE FARFETCHED TO PERCEIVE THAT SUCH A HUGE QUANTITY OF PURCHASES HAVE NOT BEE N MADE. FURTHER, THESE EVIDENCES WITH REGARD TO THE PURCHASES WERE THERE W ITH THE ASSESSING OFFICER IN THE SECOND ROUND OF PROCEEDINGS, HE COULD HAVE A T LEAST MADE SOME EFFORTS TO VERIFY AS TO WHETHER THESE PURCHASES HAV E ACTUALLY BEEN ROUTED THROUGH BANKING CHANNEL I.E., WERE MADE THROUGH ACC OUNT PAYEE CHEQUES OR NOT OR WHETHER THE SALES TAX CERTIFICATES IN THE NA ME OF THESE FOUR PARTIES ARE GENUINE OR NOT, EVEN THOUGH THE ASSESSEE HAD FAILED TO PUT UP ANY APPEARANCE BEFORE HIM. THE PRIMARY ONUS WHICH LAID UPON THE ASSESSEE WAS DISCHARGED. IT WAS UPON THE ASSESSING OFFICER TO PR OVE THAT THESE DOCUMENTS ARE NOT GENUINE.ONCE THESE DOCUMENTS HAVE NOT BEEN ADVERSELY EAGLE IMPEX 11 COMMENTED, IT CANNOT BE HELD THAT THE ENTIRE PURCHA SES WITH THESE PARTIES ARE BOGUS. THUS, FROM THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO IN VIEW OF THE VARIOUS EVIDENCES, AS DISCUSSED ABOVE, WE PARTLY SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND HOLD THAT THE ENTIRE PURCHASES AGGREGATING TO ` 82,84,497, FROM THE FOUR PARTIES ARE GENUINE AND, THEREFORE, THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER AND PARTLY SUSTAINED BY THE COMMISSIONER (APPEALS) STANDS DELETED. THUS, GROUND NO.1, RAISED BY THE DEPARTMENT IS DISMISSED WHEREAS GROUND NO.2, OF THE ASSESSEE STANDS ALLOWED. 13. THE NEXT GROUND RELATES TO DELETION OF ` 3,41,238, ON ACCOUNT OF COMMISSION BROKERAGE. 14. THE MAIN CONTENTION OF THE DEPARTMENT IS THAT THIS ISSUE IS NOT COVERED BY THE ASSESSMENT ORDER WHICH WAS THE SUBJECT MATTE R OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS). IN THIS CASE, THE ASSES SING OFFICER, DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, HAS MADE A DISALLO WANCE OF ` 3,41,238, ON ACCOUNT OF EXPENDITURE TOWARDS BROKERAGE AND COMMIS SION UNDER THE HEAD OTHER INDIRECT EXPENSES . THIS ADDITION WAS CONFIRMED BY THE COMMISSIONER (APPEALS) ON THE GROUND THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THESE EXPENSES. BEFORE THE TRIBUNAL, THE ASSESSE E HAS TAKEN SPECIFIC GROUND AS GROUND NO.5. THE TRIBUNAL, IN ITS ENTIRET Y, HAS RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AND THE APPEAL WAS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. NO WHERE, IT HAS BEEN MENTIONED THAT THIS GROUND HAS NOT BEEN PRESSED. EV EN IN THE SECOND ASSESSMENT ORDER, THE ASSESSING OFFICER HAS COMPUTE D THE INCOME AT AN INCOME OF ` 92,43,126, WHICH ALSO INCLUDES THE SAID DISALLOWAN CE. BEFORE THE COMMISSIONER (APPEALS), THE ASSESSEE HAS RAISED SPE CIFIC GROUND BEING GROUND NO.3, BEFORE THE COMMISSIONER (APPEALS). THE COMMISSIONER (APPEALS) HAS DULY ADJUDICATED THIS ISSUE, THEREFOR E, THE SAID CONTENTION OF THE REVENUE THAT IT DOES NOT ARISE OUT OF THE ASSES SMENT ORDER, IS NOT TENABLE. EAGLE IMPEX 12 15. THE RELEVANT FACTS, APROPOS THIS ISSUE, ARE THAT DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INCURRED EXPENDITUR E ON BROKERAGE AND COMMISSION IN RESPECT OF THE FOLLOWING PARTIES WHIC H HAVE BEEN NOTED BY THE COMMISSIONER (APPEALS). S.NO. NAME OF PARTIES AMOUNT IN ` 9. M/S. POONAM ENTERPRISES 15,29,265 10. M/S. MONTEX ENTERPRISES 23,78,600 11. M/S. VEERA MERCANTILE P. LTD. 14,59,012 12. M/S. RAJ CORPORATION 29,17,620 TOTAL: 82,84,497 16. IT WAS SUBMITTED BEFORE THE COMMISSIONER (APPEALS) THAT THE ASSESSEE HAD FILED INCOME TAX RECORDS OF ALL THE FOUR PARTIE S AND THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THESE DETAILS W ERE FURNISHED BEFORE THE ASSESSING OFFICER ALSO. THE COMMISSIONER (APPEA LS) HAS DULY NOTED THE NATURE OF SERVICES RENDERED BY EACH AND EVERY PARTY WHICH HAS BEEN DISCUSSED FROM PAGES10 TO 13 OF THE IMPUGNED APPEL LATE ORDER. THESE DETAILS INCLUDE THE NATURE OF SERVICES, RATE OF COM MISSION AND THE WORK CARRIED OUT BY HIM IN RELATION TO THE VARIOUS PURCH ASES. AFTER APPRECIATING ALL THESE EVIDENCES, THE COMMISSIONER (APPEALS) DELETED THE SAID DISALLOWANCE ON THE BASIS OF AN AFFIDAVIT OF THESE PERSONS, PHOT OCOPY OF CHEQUES, INCOME TAX RECORDS AND NATURE OF SERVICES RENDERED. 17. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE REITERATED THE SAME ARGUMENTS THAT THESE DETAILS HAVE NOT BEEN EXA MINED BY THE ASSESSING OFFICER, AS THE ASSESSEE HAS FAILED TO PUT UP ANY A PPEARANCE. 18. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THESE EVIDENCES AND DOCUMENTS WITH REGARD TO THE GENUINEN ESS OF THE PURCHASES WERE FILED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER (APPEALS). HE STRONGLY RELIED UPON THE FINDINGS OF THE COMMISSIONER EAGLE IMPEX 13 (APPEALS) AS WELL AS THE RELEVANT DOCUMENTS PLACED IN THE PAPER BOOK WITH REGARD TO THE PAYMENT MADE TO THESE PERSONS. 19. WE HAVE HEARD THE RIVAL CONTENTIONS. ON A PERUSAL OF THE DOCUMENTS FURNISHED BY WAY OF PAPER BOOK, WHICH ARE UNDISPUTE D THAT THE SAME WERE FILED BEFORE THE ASSESSING OFFICER, WE FIND THAT AL L THESE PAYMENTS HAVE BEEN MADE TO THESE PERSONS THROUGH ACCOUNT PAYEE CHEQUE WHO ARE DULY ASSESSED TO TAX AND HAVE SHOWN THESE COMMISSIONS AS THEIR IN COME. THE LEARNED CIT(A) HAS NOTED THE NATURE OF SERVICES RENDERED WH ICH WAS MAINLY ON ACCOUNT OF NEGOTIATION OF THE RATES, TIMELY EXECUTI ON OF THE ORDER AND DELIVERY OF GOODS IDENTIFYING THE CUSTOMERS / PURCH ASES AND HOST OF OTHER RESPONSIBILITY. THE DETAILS OF TRANSACTIONS HAVE AL SO BEEN INCORPORATED BY THE LEARNED CIT(A). BASED ON THESE EVIDENCES AND NATURE OF SERVICES, THE LEARNED CIT(A) HAS DELETED THE SAID ADDITION. WE, T HUS, DO NOT FIND ANY REASON TO DEVIATE FROM SUCH FINDINGS AS THE SAME IS BASED ON APPRECIATION OF THE FACTS ON RECORD. ACCORDING, GROUND NO.2, IS DIS MISSED. 20. WITH REGARD TO GROUND NO.1, IN THE ASSESSEES APPEA L, NO ARGUMENTS HAVE BEEN PUTFORTH BY THE LEARNED COUNSEL FOR THE A SSESSEE, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED . 21. '* +8 %!'9 , 5!' 3 25 * 5$ :; ' '* +2$ 3 #% !'$ < * 5$ :; = 22. TO SUM UP, REVENUES APPEAL IS TREATED AS DISMISSED AND ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED. % 3 , > ? *@ 22 ND FEBRUARY 2013 3 A= ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY 2013 SD/- . .. . ! ! ! ! B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/- #$ #$ #$ #$ %& %& %& %& ' ! ' ! ' ! ' ! AMIT SHUKLA JUDICIAL MEMBER MUMBAI, ? * ? * ? * ? * DATED: 22 ND FEBRUARY 2013 EAGLE IMPEX 14 % 3 /'$#B CB,$ / COPY OF THE ORDER FORWARDED TO : (1) '* +2$ / THE ASSESSEE; (2) 5!' / THE REVENUE; (3) D () / THE CIT(A); (4) D / THE CIT, MUMBAI CITY CONCERNED; (5) B'GA /'$'* , , / THE DR, ITAT, MUMBAI; (6) AH+ I / GUARD FILE. 0B$ /'$ / TRUE COPY %* / BY ORDER / 5. J / PRADEEP J. CHOWDHURY '2K '*5 ' / SR. PRIVATE SECRETARY L / : 5 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI