JAYSHREE METAL, MUMBAI V. ITO - 19(2)(1), MUMBAI

ITA 5922/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0721 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 271(1)(c); 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & . ,#$#% SHRI G.MANJUNATHA, ACCOUNTANT MEMBER . 5922 / /2018(. . 2011-12 ) ITA NO.5922/MUM/2018 (A.Y.2011-12) M/S.JAYSHREE METAL, 82, GANESH BHAVAN, ADESHIR DADY STREET, MUMBAI 400 004 PAN: AABFJ3949E ...... - / APPELLANT VS. THE ITO 19(2)(1), AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 ..... .// RESPONDENT -0/ APPELLANT BY : NONE ./0/ RESPONDENT BY : MS. R.KAVITHA 1/ / DATE OF HEARING : 20/02/2020 234 1/ / DATE OF PRONOUNCEMENT : 12/06/2020 #/ ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, MUMBAI (IN SHORT THE CIT (A)) DATED 18/05/2018 FOR THE ASSESSMENT YEAR 2011-12. 2 ITA NO.5922/MUM/2018(A.Y.2011-12) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN F ERROUS AND NON-FERROUS METALS. ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INVESTIGATION), MUMBAI THE ASSESSMENT FOR ASSESSMENT YEAR 2011-12 W AS REOPENED ON THE GROUND THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FROM DECLARED HAWALA DEALERS. THE ASSESSING OFFICER IN REASSESSM ENT PROCEEDINGS FOUND THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS.1,45,80,351/- FROM VARIOUS HAWALA OPERATORS. T HE ASSESSING OFFICER ESTIMATED GP AT 12.5% ON NON-GENUINE PURCHASES AND THUS, MADE ADDITION OF RS.18,22,544/-. AGGRIEVED AGAINST THE ASSESSMENT O RDER DATED 05/12/2016 PASSED UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CI T(A). THE FIRST APPELLATE AUTHORITY DISMISSED THE APPEAL OF ASSESSEE AND CONF IRMED THE ADDITION. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 3. NOTICE OF HEARING OF THE APPEAL WAS SENT TO ASSE SSEE ON THE ADDRESS MENTIONED IN FORM NO.36. THE FIRST NOTICE WAS SENT ON 26/08/2019 FOR HEARING FIXED ON 18/09/2019. NONE APPEARED TO REPRESENT TH E ASSESSEE ON THE SAID DATE. THEREAFTER, NOTICES WERE SENT TO THE ASSESSE E THROUGH RPAD FOR THE RESPECTIVE DATES OF HEARING. HOWEVER, THE NOTICES SENT WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT. THE ASSESSEE HAS NOT TAKEN PAINS TO INFORM THE REGISTRY REGARDING CH ANGE OF ADDRESS OR THE CURRENT ADDRESS. IT SEEMS THAT THE ASSESSEE IS NOT KEEN TO PURSUE ITS APPEAL. UNDER SUCH CIRCUMSTANCES, THE APPEAL IS TAKEN UP FO R HEARING WITH THE ASSISTANCE OF LD. DR AND THE MATERIAL AVAILABLE ON RECORD. 4. MS. R. KAVITHA, REPRESENTING THE DEPARTMENT VEH EMENTLY SUPPORTED THE IMPUGNED ORDER. THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE 3 ITA NO.5922/MUM/2018(A.Y.2011-12) ASSESSING OFFICER HAS ESTIMATED GP ON BOGUS PURCHAS ES IN LINE WITH THE JUDGEMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH, 356 ITR 451(GUJ). THE LD. DR CONTENDED THAT THE ORDER OF ASSESSING OFFICER AND THE CIT(A) ARE JUSTIFIED AND REASONABLE . ON MERITS THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO SUBSTANTI ATE GENUINENESS OF THE PURCHASES AND SUPPLIERS. THE ASSESSEE COULD NEITHE R PRODUCE THE DEALERS FROM WHOM ALLEGED GOODS WERE PURCHASED, NOR THE ASSESSEE COULD PRODUCE VITAL DOCUMENTS SUCH AS DELIVERY CHALLANS, TRANSPORT RECE IPTS, OCTROI RECEIPTS, INWARD REGISTER, ETC. TO PROVE TRAIL OF GOODS. THE LD. DR SUBMITTED THAT THE CIT (A) WAS JUSTIFIED IN UPHOLDING THE ADDITION. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DEPART MENTAL REPRESENTATIVE AND HAVE EXAMINED THE MATERIAL AVAIL ABLE BEFORE US. THE ADDITION HAS BEEN MADE IN REASSESSMENT PROCEEDINGS IN RESPECT OF BOGUS PURCHASES AGGREGATING TO RS.1,45,80,351/-. THE ASSE SSING OFFICER HAS ESTIMATED GP @ 12.5% I.E. RS.18,22,544/- ON THE ALL EGED BOGUS PURCHASES. THE CIT (A) HAS CONFIRMED THE SAME. IT IS A WELL SETTL ED LAW THAT IN CASE OF BOGUS PURCHASES ONLY THE PROFIT EMBEDDED IN NON-GENUINE P URCHASES SHOULD BE BROUGHT TO TAX. IN OUR CONSIDERED OPINION, ESTIMAT ION OF GP @12.5% IS ON THE HIGHER SIDE KEEPING IN VIEW ASSESSEES NATURE OF BU SINESS. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, THE ENDS OF JUSTIC E WOULD MEET IF GP ON BOGUS PURCHASES IS ESTIMATED AT 5% OVER AND ABOVE THE GP DECLARED BY THE ASSESSEE. THE GROUND NO.1 OF THE ASSESSEE IS PARTLY ALLOWED I N THE TERMS AFORESAID. 6. IN GROUND NO.2 OF THE APPEAL THE ASSESSEE HAS AS SAILED INITIATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THIS G ROUND OF APPEAL IS PREMATURE AT THIS STAGE, HENCE, THE SAME IS DISMISSED, AS SUC H. 4 ITA NO.5922/MUM/2018(A.Y.2011-12) 7. THE GROUND NO.3 IS GENERAL IN NATURE, HENCE, REQ UIRE NO ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. THIS APPEAL WAS HEARD ON 20/02/2020. AS PER RUL E 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, (ITAT RULES, 1963), THE ORDER WAS REQUIRED TO BE ORDINARILY PRONOUNCED WITHIN A PER IOD OF 90 DAYS FROM THE DATE OF CONCLUSION OF THE HEARING OF APPEAL. THE IN STANT APPEAL WAS HEARD PRIOR TO THE LOCKDOWN DECLARED BY THE HONBLE PRIME MINIS TER ON 24-03-2020 IN VIEW OF COVID-19 PANDEMIC. THE LOCKDOWN WAS FORCED DUE T O EXTRA ORDINARY CIRCUMSTANCES CAUSED BY WORLD WIDE SPREAD OF COVID- 19. THEREAFTER, THE LOCKDOWN WAS EXTENDED FROM TIME TO TIME. THEREFORE , THE PRONOUNCEMENT OF ORDER BEYOND THE PERIOD OF 90 DAYS FROM THE DATE OF HEARING IS NOT UNDER ORDINARY CIRCUMSTANCES. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD., ITA NO.6264/MUM/2018 FOR A.Y 201 3-14 DECIDED ON 14/05/2020, UNDER IDENTICAL CIRCUMSTANCES, AFTER CO NSIDERING THE PROVISIONS OF RULE 34(5) OF THE ITAT RULES, 1963, JUDGEMENTS REND ERED BY HONBLE APEX COURT AND THE HONBLE BOMBAY HIGH COURT ON THE ISSU E TIME LIMIT FOR PRONOUNCEMENT OF ORDERS BY THE TRIBUNAL AND THE CIR CUMSTANCES LEADING TO LOCKDOWN HELD:- 10. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE O F THE CONSIDERED VIEW THAT RATHER THAN TAKING A PEDANTIC VIEW OF THE RULE REQUIRING P RONOUNCEMENT OF ORDERS WITHIN 90 DAYS, DISREGARDING THE IMPORTANT FACT THAT THE ENTI RE COUNTRY WAS IN LOCKDOWN, WE SHOULD COMPUTE THE PERIOD OF 90 DAYS BY EXCLUDING A T LEAST THE PERIOD DURING WHICH THE LOCKDOWN WAS IN FORCE. WE MUST FACTOR GROUND RE ALITIES IN MIND WHILE INTERPRETING THE TIME LIMIT FOR THE PRONOUNCEMENT OF THE ORDER. LAW IS NOT BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL OR DER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM, AND THAT IS HOW THE LAW IS REQUIRED TO INTERPRETED. THE INTERPRETATION SO ASSIGNED BY US IS NOT ONLY INCONS ONANCE WITH THE LETTER AND SPIRIT OF RULE 34(5) BUT IS ALSO A PRAGMATIC APPROACH AT A TI ME WHEN A DISASTER, NOTIFIED UNDER THE DISASTER MANAGEMENT ACT 2005, IS CAUSING UNPREC EDENTED DISRUPTION IN THE FUNCTIONING OF OUR JUSTICE DELIVERY SYSTEM. UNDOUBT EDLY, IN THE CASE OF OTTERS CLUB VS DIT [(2017) 392 ITR 244 (BOM)], HONBLE BOMBAY HIGH COURT DID NOT APPROVE AN ORDER 5 ITA NO.5922/MUM/2018(A.Y.2011-12) BEING PASSED BY THE TRIBUNAL BEYOND A PERIOD OF 90 DAYS, BUT THEN IN THE PRESENT SITUATION HONBLE BOMBAY HIGH COURT ITSELF HAS, VID E JUDGMENT DATED 15TH APRIL 2020, HELD THAT DIRECTED WHILE CALCULATING THE TIME FOR DISPOSAL OF MATTERS MADE TIME- BOUND BY THIS COURT, THE PERIOD FOR WHICH THE ORDER DATED 26TH MARCH 2020 CONTINUES TO OPERATE SHALL BE ADDED AND TIME SHALL STAND EXTENDED ACCORDINGLY . THE EXTRAORDINARY STEPS TAKEN SUO MOTU BY HONBLE J URISDICTIONAL HIGH COURT AND HONBLE SUPREME COURT ALSO INDICATE THAT THIS PERIO D OF LOCKDOWN CANNOT BE TREATED AS AN ORDINARY PERIOD DURING WHICH THE NORMAL TIME LIMITS ARE TO REMAIN IN FORCE. IN OUR CONSIDERED VIEW, EVEN WITHOUT THE WORDS ORDINA RILY, IN THE LIGHT OF THE ABOVE ANALYSIS OF THE LEGAL POSITION, THE PERIOD DURING W HICH ITA NO. 6103 AND LOCKOUT WAS IN FORCE IS TO EXCLUDED FOR THE PURPOSE OF TIME LIM ITS SET OUT IN RULE 34(5) OF THE APPELLATE TRIBUNAL RULES, 1963. VIEWED THUS, THE EX CEPTION, TO 90-DAY TIME-LIMIT FOR PRONOUNCEMENT OF ORDERS, INHERENT IN RULE 34(5)(C), WITH RESPECT TO THE PRONOUNCEMENT OF ORDERS WITHIN NINETY DAYS, CLEARLY COMES INTO PLAY IN THE PRESENT CASE. OF COURSE, THERE IS NO, AND THERE CANNOT BE A NY, BAR ON THE DISCRETION OF THE BENCHES TO REFIX THE MATTERS FOR CLARIFICATIONS BEC AUSE OF CONSIDERABLE TIME LAG BETWEEN THE POINT OF TIME WHEN THE HEARING IS CONCL UDED AND THE POINT OF TIME WHEN THE ORDER THEREON IS BEING FINALIZED, BUT THEN, IN OUR CONSIDERED VIEW, NO SUCH EXERCISE WAS REQUIRED TO BE CARRIED OUT ON THE FACTS OF THIS CASE. THUS, IN LIGHT OF ABOVE FACTS AND THE DECISION OF C OORDINATE BENCH, THE PRESENT ORDER IS PRONOUNCED BEYOND THE PERIOD OF 90 DAYS. 10. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. ORDER PRONOUNCED ON FRIDAY THE 12TH DAY OF JUNE, 2020. SD/- SD/- (G.MANJUNATHA) (VIKAS AW ASTHY) #$ / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 6'/ DATED 12/06/2020 VM , SR. PS(O/S) 6 ITA NO.5922/MUM/2018(A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT , 2. ./ / THE RESPONDENT. 3. 7/ ( )/ THE CIT(A)- 4. 7/ CIT 5. 89 ./' , . . . , / DR, ITAT, MUMBAI 6. 9:; <= / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI 7 ITA NO.5922/MUM/2018(A.Y.2011-12) DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER