GEL EXIM , MUMBAI V. ITO - 17 (1)(4), MUMBAI

ITA 5747/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9754 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Assessee Lawyers: PRAMITA RATHI
• Keywords: Reopening of assessment; Bogus purchase; Opportunity of being heard; Set aside
• Section: 143(3); 142(1); 133(6); 143(1); 201; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI S. RIFAUR RAHMAN (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 57 47 /MUM/2018 ASSESSMENT Y EAR: 2010 - 11 GEL EXIM, SHOP NO. 1, GROUND FLOOR, PARDA COTTAGE, 97 NARAYAN DHURU STREET, MU MBAI - 400003 PAN: AAIFG0588K VS. THE INCOME TAX OFFICER - 17(1)(4), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : PRAMITA RATHI (AR) REVENUE BY : SHRI C.S. SHARMA ( DR ) DATE OF HEAR ING: 26 /09 /201 9 DATE OF PRONOUNCEMENT: 31 / 10 /201 9 O R D E R PER RAM LAL NEGI, JM THE ASSESSEE HAS FILED THE PRESENT APPEAL CHALLENGING THE ORDER DATED 17.07.2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 28 ( FOR SHORT THE CIT(A) , MUMBAI , FOR THE ASSESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT(A) HAS DISMISSED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING IN HARDWARE AND LIGHT ENGINEERING GOODS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, DECLARING TOTAL INCOME OF RS. 59,505. THE RETURN WAS PROCESSE D U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM SALES TAX DEPARTMENT MAHARASHTRA THROUGH DGIT (INVESTIGATION) TO THE EFFECT THAT THE ASSESSEE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , OBTAINED BOGUS PURCHA SE BILLS AMOUNTING TO RS. 1,70,62,476/ - FROM M/S BHAVI SALES AGENCY PVT. LTD. , WHOSE 2 ITA NO. 5747 / MUM/2018 ASSESSMENT YEAR: 2010 - 1 1 NAME WAS THERE IN THE LIST OF HAWALA PARTIES PREPARED BY THE MAHARASHTRA SALES TAX DEPARTMENT. ON THE BASIS OF THE SAID INFORMATION, THE AO REOPENED THE ASSESSMENT U/S 1 47 AFTER ISSUING NOTICE U/S 148 OF THE ACT. THEREAFTER, THE AO ISSUED NOTICES U/S 143 (2) AND 142(1) OF THE ACT. IN RESPONSE THEREOF , THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO, SUBMITTED THE DETAILS CALLED FOR AND CONTENDED THAT THE ASSESSEE HAD MADE GENUINE PURCHASES FROM THE SAID PART Y . IN ORDER TO VERIFY THE GENUINENESS OF TRANSACTIONS, AO ISSUED NOTICE TO THE PARTY CONCERNED U/S 133(6) OF THE ACT. HOWEVER, THE NOTIC E W AS RECEIVED BACK UN - SERVED. THE AO REJECTED THE CLAIM OF TH E ASSESSEE AND TREATING THE PURCHASES AS BOGUS MADE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF AMOUNT OF BOGUS PURCHASES AND AFTER MAKING ADDITION OF THE SAID AMOUNT DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 21,92,315/ - IN THE FIRST APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO . AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3 . THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUND : - 1. ON THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) [CIT (A)] HAS ERRED IN DISMISSING THE APPEAL EX - PARTE, WITHOUT PROVIDING PROPER OPPORTUNITY OF BEING HEARD. 2. ON THE FACTS, CIRCUMSTANCES OF THE CASE AND IN LAW, THE H ONBLE CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE REOPENING OF ASSESSMENT DONE BY THE LEARNED ASSESSING OFFICER (AO) U/S 147/148 OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) HAS ERRED IN ESTIMATING THE ADDITIO NAL GROSS PROFIT OF THE APPELLANT AT THE RATE OF 12.5% OF THE ALLEGED BOGUS PURCHASES OF RS. 1,70,62,476/ - AND THEREBY SUSTAINING THE ADDITION AT RS. 21,32,810. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CONSIDERI NG THE ALLEGED 3 ITA NO. 5747 / MUM/2018 ASSESSMENT YEAR: 2010 - 1 1 BOGUS PURCHASES FROM M/S BHAVI SALES AGENCY PVT. LTD. AT RS. 1,70,62,476 AS AGAINST THE ACTUAL AMOUNT OF RS. 43,95,522. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NO. 1 AND 2 OF ITS APPEAL. HENCE, WE DISMISS GROUND NO. 1 AND 2 OF THE APPEAL AS NOT PRESSED. 5. VIDE GROUND NO. 3 AND 4 OF THE APPEAL , THE ASSESSEE HAS CHALLENGED THE ADDITION OF 12.5% CONFIRMED BY THE LD. CIT (A). AT THE OUTSET, THE LD. COUNSEL POINTED OUT THAT THE O RDER PASSED BY THE LD. CIT(A) IS APPARENTLY WRONG AND CONTRARY TO THE FACTS AS THE AUTHORITY BELOW HAVE WRONGLY MENTIONED THAT THE ASSESSEE HAD MADE PURCHASES IN QUESTION FROM BHAVI SALES AGENCIES PVT. LTD. WORTH RS. 1,70,62,476/ - AGAINST THE ACTUAL PURCHA SES AMOUNTING TO RS. 43,95,522/ - . THE LD. COUNSEL FURTHER SUBMITTED THAT THE PURCHASES AMOUNTING TO RS. 1,26,66,954/ - WERE MADE FROM MACOMA HARDWARE AND THE ASSESSEE HAS PROVED THE GENUINENESS OF TRANSACTION OF PURCHASE FROM THE SAID PARTY BY ADDUCING DOCU MENTARY EVIDENCE. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE FINDINGS OF THE AUTHORITIES BELOW ARE BASED ON THE WRONG FACTS , THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 6. O N MERIT, T HE LD. COUNSEL SUBMITTED THAT SINCE THE AO HAD MADE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF ALLEGED BOGUS PURCHASES WITHOUT TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BY THE ASSESSEE IN THE LIGHT OF THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES IN QUESTION, THE LD. CIT (A) OUGHT TO HAVE DELETED THE ADDITION. THE LD. COUNSEL FURTHER POINTED OUT THAT AO HAS NOT REJECTED THE SALES MADE BY THE ASSESSEE BUT, REJECTED THE PURCHASES IGNORING THAT THERE CANNOT BE ANY SALE WITHOUT PURCHASES. THE ASSESSEE APART FROM THE DETAILS OF THE WHEREABOUTS OF THE PART Y , HAS FURNISHED THE COPIES OF INVOICES, PAYMENT DETAILS AND STATEMENT OF BANK ACCOUNT BEFORE THE AUTHORITIES BELOW IN ORDER TO ESTABLISH THE GENUINENESS OF TRANSACTION OF PURCHASES. THE LD. COUNSEL FURTHER SUBMITTED THAT IN VIE W OF THE AFORESAID FACTS, THE ADDITION OF 12.5% SUS TAINED BY THE AO MAY BE DELETED. 4 ITA NO. 5747 / MUM/2018 ASSESSMENT YEAR: 2010 - 1 1 6 . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO D ISCHARGE THE ONUS OF PROVING GENUINENESS OF THE TRANSACTION, THE LD. CIT(A) HAS RIGHTLY SUSTAINED THE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES DETERMINED BY THE AO. THE LD DR FURTHER SUBMITTED THAT THE FINDINGS OF THE LD. DR ARE AS PER THE EVIDENCE ON RECORD AND IN ACCORDANCE WIT H THE SETTLED PRINCIPLES OF LAW; HENCE, THE APPEAL OF THE ASSESSEE DESERVES DISMISSAL BEING DEVOID OF ANY MERIT. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND CAREFULLY GONE THROUGH THE RELEVANT MATERIAL ON RECORD IN THE LIGHT OF THE CONTENTIONS OF THE PARTIES. WE NOTICE THAT THE AO HAS MENTIONED THE PURCHASES AMOUNTING TO 1,70,62,476/ - FROM M/S BHAVI SALES AGENCIES PVT. LTD., WHEREAS THE CONTENTION OF THE LD. COUNSEL IS THAT THE ASSESSEE HAD MADE PURCHASE S FROM BHAVI SALES AAGENCIES AMOUNTING TO RS. 43,95,522/ - . WE FURTHER NOTICE THAT THE ASSESSEE HAS POINTED OUT THIS FACT BEFORE THE AO VIDE LETTER DATED 16.02.2016. IN THE SAID LETTER, THE ASSESSEE HAS MENTIONED THAT PURCHASE AMOUNTING TO RS. 1,26,66,954/ - WERE FROM MACOMA HARDWARES AND THE FIGURE OF RS. 1,70,62,476/ - COMES ONLY AFTER INCLUDING THE PURCHASES FROM BHAVI SALES AGENCIES. HOWEVER, THE AUTHORITIES BELOW HAVE NOT DISCUSSED THIS ISSUE IN THEIR ORDERS. 8. AS POINTED OUT BY THE LD. COUNSEL, THE IM PUGNED ORDER APPEARS TO BE BASED ON INCORRECT FACTS AS THE AUTHORITIES BELOW HAVE NOT ADDRESSED THE ISSUE RAISED BY THE ASSESSEE VIDE LETTER DATED 16.02.2016 REFERRED ABOVE. UNDER THESE CIRCUMSTANCES, THE SAID ISSUE NEEDS PROPER VERIFICATION BY THE AO TO A SCERTAIN THE EXACT AMOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE DURING PREVIOUS YEAR. WE ACCORDINGLY, SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMAND THE APPEAL BACK TO THE AO WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE CONT ENTION OF THE ASSESSEE RAISED VIDE LETTER DATED 16.02.2016, AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 ITA NO. 5747 / MUM/2018 ASSESSMENT YEAR: 2010 - 1 1 IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 2011 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST . OCTOBER , 2019 . SD/ - SD/ - ( S. RIFAUR RAHMAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 10 / 201 9 ALINDRA, PS / 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, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI