DCIT Rg - 7(2), V. M/s Supreme Telecommunications Pvt Ltd,

ITA 5857/MUM/2003

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0285 (ITAT-MUMBAI)
• Duration Of Justice: 13 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-03-2015
• Assessment Year: misc
• Appeal Filed On: 29-08-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Loose papers; Additional evidence; Block assessment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI P K BANSAL, VP & SHRI RAM LAL NEGI, JM ITA NO.5857/MUM/2003 FOR A.Y.1995-1996 ITA NO.6746/MUM/2004 FOR A.Y.1996-1997 ITA NO.6747/MUM/2004 FOR A.Y. 1997-1998 ITA NO.3928/MUM/2003 FOR A.Y. 1999-2000 ITA NO.3943/MUM/2004 FOR A.Y. 2000-2001 DY CIT RANGE 7(2) MUMBAI VS. M/S. SUPREME TELECOMMUNICATIONS P. LTD PRABHU DARSHAN, 230, LADY JAMSHDJI ROAD, DADAR (W) MUMBAI- 400 028 PAN AAACS9792A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJAT MITTAL (DR) RESPONDENT BY : SHRI HIRO RAI DATE OF HEARING : 12. 0 6 .2017 DATE OF PRONOUNCEMENT : 14 .0 6 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THESE APPEALS ARE BY THE REVENUE AGAINST DIFFERENT ORDERS OF THE CIT(A) PERTAINING TO AYS 1995-96, 1996-97, 1997-98, 1999-2000 AND 2000- 01. AS THEY PERTAIN TO COMMON ASSESSEE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. 2. THE ONLY GROUND IN A.YS. 1995-96, 1996-97, 1997- 98, 1999-2000 AND THE FIRST GROUND OF APPEAL FOR A.Y. 2000-01 RELATES TO ADDITION BEING MADE IN SUPREME TELECOMMUNICATIONS P LTD. 2 EACH OF THE ASSESSMENT YEARS ON ACCOUNT OF BOGUS PU RCHASES BEING FOUND DURING THE COURSE OF SEARCH BUT DELETED BY THE CIT( A), WHICH WAS AS UNDER: ASSESSMENT YEAR DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES 1995-1996 1,09,37,321 1996-1997 1,32,63,535 1997-1998 1,65,61,475 1999-2000 43,07,175 2000-2001 78,53,068 THE FACTS RELATING TO THESE ARE THAT THERE WAS A SE ARCH U/S. 132 OF THE I.T ACT IN THE CASE OF THE ASSESSEE IN JANUARY 2002. DURIN G THE COURSE OF SEARCH OPERATIONS, CERTAIN LOOSE PAPERS AND DIARIES WERE S EIZED, WHICH CONTAINED RECORD OF CERTAIN PAYMENTS. FROM THESE DIARIES AND PAPERS, IT TRANSPIRES THAT THE ASSESSEE HAD GENERATED UNACCOUNTED CASH BY INFL ATING ITS PURCHASES. THE PARTIES IN WHOSE NAMES THE BOGUS PURCHASES AND EXPE NDITURE WERE BOOKED ALSO INCLUDED THE NAMES OF THE PARTIES MENTIONED BY THE ASSESSING OFFICER IN EACH OF THE ASSESSMENT YEARS. THE ASSESSING OFFICE R WHILE MAKING BLOCK ASSESSMENT U/S. 158BC MADE ADDITION IN EACH OF THE ASSESSMENT YEARS VIDE ORDER DATED 28.03.2002, BUT WHILE COMPLETING ASSESS MENT U/S. 143(3), THE ADDITIONS WERE ALSO MADE ON PROTECTIVE BASIS IN EAC H OF THE ASSESSMENT YEARS. SUBSEQUENTLY, THE BLOCK ASSESSMENT WERE SET ASIDE BY THIS TRIBUNAL VIDE ITS ORDER DATED 30.11.2006, AS BEING BARRED BY LIMITATION U/S.158BE OF THE ACT. SUPREME TELECOMMUNICATIONS P LTD. 3 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. THE LEARNED DR BEFORE US EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE A SSESSING OFFICER, HE DID NOT DENY THE FACT THAT THE ADDITIONS WERE MADE BY T HE ASSESSING OFFICER ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE O F THE SEARCH. IT IS SETTLED LAW THAT WHEN THE SEARCH IS INITIATED U/S. 132 AFTE R 30 TH OF JUNE 1995 BUT BEFORE 1 ST DAY OF JUNE 2001, THE ASSESSMENT HAS TO BE MADE FO R THE BLOCK PERIOD UNDER CHAPTER XIV-B OF THE INCOME TAX ACT, O N THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH. THE AS SESSMENT HAS NOT TO BE MADE ON THE BASIS OF SUCH MATERIAL FOUND DURING THE COURSE OF SEARCH IN THE REGULAR ASSESSMENT PROCEEDINGS. IT IS NOT DENIED T HAT ALL THESE ADDITIONS HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH. IN VIEW OF THIS FACT, IF ANY ADDITION HAS TO BE MADE, THAT HAS TO BE MADE ONLY IN THE BLOCK ASSESSMENT, W HICH HAS TO BE FRAMED UNDER CHAPTER XIV-B OF THE INCOME TAX ACT, AS PER T HE PROVISIONS OF THE IT ACT, WHICH WERE IN EXISTENCE DURING THE AFORESAID A SSESSMENT YEARS. IN OUR VIEW, NO ADDITION CAN BE MADE IN THE REGULAR ASSESS MENT. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) DELETING THE SAID A DDITION IN EACH OF THE ASSESSMENT YEARS EVEN THOUGH ON A DIFFERENT GROUND. THUS, THE APPEAL FOR A.YS 1995-96, 1996-97, 1997-98 AND 1999-2000 AND GR OUND NO.1 FOR A.Y. 2000-01 STANDS DISMISSED. SUPREME TELECOMMUNICATIONS P LTD. 4 4. NOW ONLY GROUND NO.2 FOR A.Y. 2000-01 REMAINS FO R OUR ADJUDICATION, WHICH READS AS UNDER: ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING AN AMOUNT OF RS .28,55,562/- ON ACCOUNT OF BOGUS PURCHASES FROM M/S. ENES ORION CON STRUCTION P. LTD. BY RELYING ON THE ADDITIONAL EVIDENCE IN THE F ORM OF CONFIRMATION FROM THE PARTY AND PAN WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO CROSS-VERIFY THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS GROU ND AND NOTED THAT THE ASSESSEE HAD MADE PURCHASES AMOUNTING TO ` .28,55,562 FROM M/S. ENES ORION CONSTRUCTION P. LTD. THE ASSESSEE COULD NOT FILE CONFIRMATION FROM THE SAID PARTY AND EVEN THE INSPECTOR, WHO WAS DEPUTED FOR INQUIRY, REPORTED THAT SAID PARTY WAS NOT AVAILABLE AT THE GIVEN ADDRESS A ND THE ADDRESS PROVIDED BY THE ASSESSEE WAS OF THE RESIDENTIAL PREMISES. THE ASSESSEE EVEN THOUGH CLAIMED THAT M/S. ENES ORION CONSTRUCTION P. LTD WA S A SUB CONTRACTOR AND THE PAYMENTS IN QUESTION IS ON ACCOUNT OF THE SERVI CES PROVIDED BY IT IN RESPECT OF CABLE NETWORK PROJECT FOR M/S. HUGHES IN SPAT LTD. AND IT DOES NOT RELATE TO THE PURCHASES BUT TO THE EXPENDITURE INCU RRED BY THE ASSESSEE. WE NOTED THAT EVEN THE ASSESSEE HAS NOT GIVEN ANY PROO F IN RESPECT OF THE TAX DEDUCTED AT SOURCE FOR THE WORK CARRIED OUT BY THE PARTIES AS SUB CONTRACTOR. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, AN D THE EVIDENCES BEING BROUGHT ON RECORD IN THE FORM OF INVOICES ON M/S. H UGHES INSPAT LTD AND CONFIRMATION OF THE PAN OF M/S. ENES ORION CONSTRUC TION P. LTD, WE FIND IT SUPREME TELECOMMUNICATIONS P LTD. 5 APPROPRIATE THAT THE ADDITION BE REDUCED TO 12.5% O F THE SAID AMOUNT. AS IN OUR OPINION EVEN IF THE ASSESSEE WOULD HAVE NOT THE PURCHASES MADE FROM M/S. ENES ORION CONSTRUCTION P. LTD, THE ASSESSEE W OULD HAVE MADE PURCHASES FROM SOME PARTY AS THE RECEIPT MADE BY TH E ASSESSEE FROM M/S. HUGHES INSPAT LTD., HAS NOT BEEN DOUBTED. THE ASSE SSEE AT THE MOST WOULD HAVE MADE EXTRA SAVING BY WAY OF SAVING THE TAX ON SAID PURCHASES/EXPENDITURE. WE, THEREFORE, REDUCE THE A DDITION OF ` .28,58,562/- TO 12.5% THEREOF. THUS, THIS GROUND IS PARTLY ALLO WED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.5857/MUM/2003 FOR A.Y.1995-1996, ITA NO.6746/MUM/2004 FOR A.Y.1996-19 97, ITA NO.6747/MUM/2004 FOR A.Y. 1997-1998 AND ITA NO.3928 /MUM/2003 FOR A.Y. 1999-2000 ARE DISMISSED AND THE APPEAL IN ITA NO.39 43/MUM/2004 FOR A.Y. 2000-2001 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF JUNE, 2017. SD/- SD/- (RAM LAL NEGI) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 14 TH JUNE, 2017 SA SUPREME TELECOMMUNICATIONS P LTD. 6 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, C BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI