SHANTILAL LACHAND JAIN, Mumbai V. ITO 18 (3)(3), Mumbai

ITA 5722/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3874 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL DESHPANDE
• Assessee Lawyers: RITIKA AGGARWAL
• Keywords: Reopening of assessment; Bogus purchase; Capital asset; Depreciation; Valuation report; Accommodation entries
• Section: 143(3); 133(6)

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 5678 / /2019(). . 2010-11 ) ITA NO.5678/MUM/2019 (A.Y.2010-11) INCOME TAX OFFICER-18(3)(3), ROOM NO.606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. ...... + / APPELLANT ) VS. SHRI SHANTILAL LALCHAND JAIN, ROOM NO.11-A, 1 ST FLOOR, HAJI KASAM BUILDING(NO.645), JSS ROAD, NEXT TO ALLAHABAD BANK, JAMBULWADI CORNER, DHOBITALAO, MUMBAI 400 002 PAN: AABPJ9086G ..... ,-/ RESPONDENT . 5722 / /2019(). . 2010-11 ) ITA NO.5722/MUM/2019 (A.Y.2010-11) SHRI SHANTILAL LALCHAND JAIN, ROOM NO.11-A, 1 ST FLOOR, HAJI KASAM BUILDING(NO.645), JSS ROAD, NEXT TO ALLAHABAD BANK, JAMBULWADI CORNER, DHOBITALAO, MUMBAI 400 002 PAN: AABPJ9086G ..... + / APPELLANT ) VS. INCOME TAX OFFICER-18(3)(3), ROOM NO.606, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. ..... ,-/ RESPONDENT 2 ITA NO.5678/MUM/2019 (A.Y.2010-11) ITA NO.5722/MUM/2019 (A.Y.2010-11) DEPARTMENT BY : SHRI SUNIL DESHPANDE ASSESSEE BY : MS. RITIKA AGGARWAL ).- / DATE OF HEARING : 30/07/2021 /01 .- / DATE OF PRONOUNCEMENT : 08/ 10/2021 / ORDER THESE CROSS APPEALS BY THE REVENUE AND THE ASSESS EE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-53, MUMBAI (IN SHORT THE CIT(A)) DATED 14/6/2019 FOR THE ASSESSM ENT YEAR 2010-11 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE : THE ASSESSEE IS ENGAGED IN TRADING AND PROCESSING OF GREY CLOTHS AND FILM PRODUCTION. THE ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT Y EAR 2010-11 WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVES TIGATION WING, MUMBAI. AS PER THE INFORMATION RECEIVED THE ASSESSEE HAS OBTAI NED ACCOMMODATION ENTRIES AMOUNTING TO RS.68,20,649/- FROM AJINKYA MU LTI TRADE PVT. LTD. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEA L, THE ASSESSEE HAD ALLEGEDLY PURCHASED PLANT AND MACHINERY FROM THE AF ORESAID HAWALA OPERATOR. THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF DEPRECIATION RS.10,60,990/- ON AFORESAID PLANT AND MACHINERY AND ALSO THE INTEREST EXPENDITURE CLAIMED ON LOAN TAKEN AGAINST THE SAID MACHINERY. THUS, IN TOTAL THE ASSESSING OFFICER DISALLOWED RS.11,71,078/- ON ACCOUNT OF BOGUS PURCHASE OF PLANT AND MACHINERY. AGAINST THE ASSESSMENT ORD ER DATED 17/3/2016 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOM E TAX ACT,1961 ( IN SHORT 'THE ACT'), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING REOPENING OF ASSESSMENT AS WELL DISALLOWANCE /ADDITION ON MER ITS. IN FIRST APPELLATE PROCEEDINGS THE CIT(A) REJECTED ASSESSEES GROUND R AISED AGAINST REOPENING OF 3 ITA NO.5678/MUM/2019 (A.Y.2010-11) ITA NO.5722/MUM/2019 (A.Y.2010-11) ASSESSMENT. ON MERITS OF THE ADDITION THE CIT(A) RESTRICTED DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE OF MACHINERY TO 12.5% AND DIRECTED THE ASSESSING OFFICER TO DISALLOW DEPRECIATION PROPORTIONATELY. T HE REVENUE IS IN APPEAL AGAINST THE RELIEF GRANTED BY THE CIT(A). THE ASSES SEE HAS FILED CROSS APPEAL ASSAILING THE ADDITION/DISALLOWANCE CONFIRMED BY TH E CIT(A). 3. SHRI SUNIL DESHPANDE REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDING THE ASSESSMENT ORDER SUBMITTED THAT T HE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE DE ALER AND THE CAPITAL ASSET PURCHASED. THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT BY THE ASSESSING OFFICER TO THE DEALER WAS RECEIVED BACK UNSERVED. THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE OR THE CONFIRMATIO N FROM THE DEALER IN SUPPORT OF PURCHASE OF MACHINERY. THE NAME OF DEA LER FROM WHOM THE ASSESSEE HAS ALLEGEDLY PURCHASED PLANT AND MACHIN ERY APPEARS IN THE LIST OF HAWALA OPERATORS COMPILED BY THE SALES TAX DEPART MENT, GOVERNMENT OF MAHARASHTRA. 4. ON THE OTHER HAND, MS. RITIKA AGGARWAL APPEARIN G ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FURNISHED VARIOUS RELEVANT DOCUMENTS TO DISCHARGE HIS ONUS IN PROVING GENUINEN ESS OF PURCHASE TRANSACTION OF PLANT AND MACHINERY. THE PLANT AND MACHINERY HAS BEEN FINANCED BY PUNJAB NATIONAL BANK. THE BANK HAD SAN CTIONED TERM LOAN FOR PURCHASE OF PLANT AND MACHINERY. THE AMOUNT WAS DIR ECTLY PAID BY THE BANK TO AJINKYA MULTI TRADE PVT. LTD. THROUGH RTGS. THE AS SESSEE HAD FURNISHED COPY OF TERM LOAN STATEMENT FROM PUNJAB NATIONAL BANK, C OPY OF PURCHASE INVOICE OF PLANT AND MACHINERY, COPY OF DELIVERY CHALLAN BE FORE THE ASSESSING OFFICER . THE ASSESSEE HAD ALSO FURNISHED CERTIFICATE FROM TH E BANK AND INSPECTION 4 ITA NO.5678/MUM/2019 (A.Y.2010-11) ITA NO.5722/MUM/2019 (A.Y.2010-11) REPORT BEFORE THE CIT(A). MERELY FOR THE REASON T HAT THE VENDOR HAS NOT RESPONDED TO NOTICE ISSUED BY ASSESSING OFFICER UND ER SECTION 133(6) OF THE ACT, THE TRANSACTION CANNOT BE HELD TO BE BOGUS. TH E LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PRAYED FOR DELETING THE ENTIRE ADDITION IN RESPECT OF PURCHASE OF PLANT AND MACHINERY. 5. SUBMISSIONS MADE BY RIVAL SIDES HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. DURING FIRST APPELLATE PROCEEDINGS THE ASSESSEE PRODUCED COPIES OF PURCHASE BILLS/DELIVERY CHALLAN ISSUED BY THE VENDO R, LEDGER ACCOUNT ABSTRACTS IN THE BOOKS OF ASSESSEE FOR RELEVANT PERIOD, TERM LOAN STATEMENT FROM PUNJAB NATIONAL BANK REFLECTING THE PAYMENTS MADE IN RESPE CT OF PURCHASE OF PLANT AND MACHINERY, CERTIFICATE FROM PUNJAB NATIONAL BAN K SUGGESTING THAT THE TERM LOAN WAS SANCTIONED FOR PURCHASE OF MACHINERY AND AFTER INSPECTION OF THE PLANT AND MACHINERY THE VALUATION REPORT. THE CIT (A) FURTHER OBSERVED THAT THE PAYMENT WAS DISBURSED BY THE BANK TO THE VENDO R THROUGH RTGS. THE CIT(A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFI CER IN RESPECT FOR THE DOCUMENTS FURNISHED BY THE ASSESSEE DURING FIRST AP PELLATE PROCEEDINGS. THE ASSESSING OFFICER SUBMITTED THE REMAND REPORT VIDE LETTER DATED 12/03/2018. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE DOCUMENTS ON RECORD AND THE REMAND REPORT GRANTED PART RELIEF TO THE ASSESSEE BY RESTRICTING DISALLOWANCE ON PLANT AND MACHINERY T O 12.5% AND DISALLOWING PROPORTIONATE DEPRECIATION OF THE SAID PLANT AND MACHINERY AND THE PAYMENT FOR PURCHASE OF MACHINERY WAS DIRECTLY MADE BY BANK TO THE VENDOR. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD TAKEN TERM L OAN FROM PUNJAB NATIONAL BANK FOR THE PURCHASE OF PLANT AND MACHINERY. THE BANK HAS CONFIRMED THAT THE MACHINERY PURCHASED WAS INSPECTED AND THE VALU ATION REPORT WAS MADE THEREAFTER. THE REPORT OF THE BANK CANNOT BE SUMM ARILY REJECTED. MERELY FOR 5 ITA NO.5678/MUM/2019 (A.Y.2010-11) ITA NO.5722/MUM/2019 (A.Y.2010-11) THE REASON THAT ASSESSEE HAS FAILED TO PRODUCE LOA N SANCTION LETTER OR THE VENDOR HAS FAILED TO RESPOND TO THE NOTICE OF ASSES SING OFFICER CANNOT BE A REASON TO SUSPECT THAT THE TRANSACTION OF PURCHASE OF PLANT AND MACHINERY IS BOGUS. I FIND NO REASON TO REJECT ASSESSEES CONTE NTION. CONSEQUENTLY, THE IMPUGNED ORDER IS QUASHED AND THE APPEAL BY ASSESSE E IS ALLOWED. AS A COROLLARY, THE APPEAL BY REVENUE IS DISMISSED. 6. TO SUM UP, APPEAL BY THE REVENUE IS DISMISSED AN D APPEAL BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON F RIDAY THE 08 TH DAY OF OCTOBER,2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3)/ DATED 08/10/2021 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT , 2. ,- / THE RESPONDENT. 3. 4- ( )/ THE CIT(A)- 4. 4- CIT 5. 56,-) , . . . , / DR, ITAT, MUMBAI 6. 6789: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI