ESSENTURE TRADING P.LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 5936/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0261 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN LD
• Assessee Lawyers: VISHWAS V MEHENDALE LD

Judgement Text

ITA NO.5936/MUM/2012 ESSENTURE TRADING PRIVATE LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER I.T.A. NO.5936 &/MUM/2012 ( ASSESSMENT YEAR:2009-10) ESSENTURE TRADING PRIVATE LIMITED SHOP NO.5, GROUND FLOOR, SAPNA CHS LIMITED, GAOMDEVI ROAD, OFF MAROL MAROSHI ROAD, ANDHERI (E ) MUMBAI-400 053 VS. ACIT 10(2) ROAD NO.432, 4 TH FLOOR, M.G. ROAD, AAYAKAR BAVAN MUMBAI 400 020 !' # PAN/GIR NO. AABCE7373A ( '$ APPELLANT ) : ( %&'$ RESPONDENT ) ASSESSEE BY : SHRI VISHWAS V. MEHENDALE, LD. AR REVENUEBY : SHRI M.C. OMI NINGSHEN, LD. DR ' ( DATE OF HEARING : 15/06/2017 )*+ ( / DATE OF PRONOUNCEMENT : 09/08/2017 2 ITA NO.5936/MUM/2012 ESSENTURE TRADING PRIVATE LIMITED ASSESSMENT YEAR 2009-10 O R D E R PER SANJAY GARG (JUDICIAL MEMBER) 1 . THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 14/06/2016 OF LD. COMMISSIONER OF INCOME-TAX (APPEA LS)-21 [HEREINAFTER REFERRED TO AS CIT(A)] FOR ASSESSMENT YEAR 2009-10. THE SOLE ISSUE RAISED BY THE ASSESSEE THROUGH ITS VARIOUS GROUNDS OF APPE AL IS REGARDING THE DISALLOWANCE OF BUSINESS LOSS OF RS. 1,12,33,039/- 2. THE BRIEF FACTS OF THE CASE THAT ARE THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF TRADING IN HR & CR COILS AND GALVANIZED COIL/SHEETS. THE ASSESSEE RETURNED THE LOSS OF RS. 1,12,33,039/- FRO M ITS TRADING ACTIVITY WHICH WAS DISALLOWED BY THE ASSESSING OFFICER [AO] OBSERVING THAT THE ASSESSEE COULD NOT ESTABLISH PHYSICAL MOVEMENT OF GOODS AND FAILED TO FURNISH THE RELIABLE EVIDENCE REGARDING THE SALE AN D PURCHASE OF GOODS. HE ALSO OBSERVED THAT THERE WERE CIRCULAR TRANSACTIONS WHICH MEAN THAT THE GOODS PURCHASE FROM ONE PARTY WERE ULTIMATELY SOLD TO THE SAME PARTY. HE THEREFORE HELD THAT THE GENUINENESS OF TRANSACTIONS WAS NOT PROVED. ASSESSEE UNSUCCESSFULLY ASSAILED THE ORDER OF THE A O BEFORE THE LD. CIT(A) 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE COULD NOT SHOW THE EVIDENCE REGARDING MOVE MENTS OF GOODS FROM ONE LOCATION TO OTHER AS THE SAME WERE ACTUALLY NOT MOVED FROM THE 3 ITA NO.5936/MUM/2012 ESSENTURE TRADING PRIVATE LIMITED ASSESSMENT YEAR 2009-10 BUSINESS PREMISES OF THE ASSESSEE. IN FACT, THE AS SESSEE BOOKS THE ORDER AND ASKS THE DEALER TO DIRECTLY DELIVER THE GOODS T O THE PURCHASER AND IN THIS WAY THE ASSESSEE EARNS COMMISSION INCOME ON THE SAI D TRANSACTIONS. THE TRANSPORTATION CHARGES ARE BORNE BY THE PURCHASER O NLY. THE INCOME SO EARNED FROM ABOVE STATED TRADING ACTIVITY IS OFFERE D FOR TAXATION. ON THE OTHER HAND THE LD. DR HAS STATED THAT IF SUCH AN PLEA OF THE ASSESSEE IS TO BE ACCEPTED, THEN THERE WAS NO QUEST ION OF INCURRING ANY LOSS BY THE ASSESSEE AS NO PRUDENT MAN WILL BOOK AN ORDER ON LOSS BASIS, WHEN IN FACT THE GOODS ARE TO BE DIRECTLY DELIVERED BY THE DEALER TO THE PURCHASER. THE LOSS UNDER THE CIRCUMSTANCES CAN ON LY HAPPEN IF THE GOODS PURCHASED BY THE ASSESSEE ARE STORED IN HIS GODOWN BUT THEREAFTER THE PRICES OF THE GOODS FALL DOWN. HOWEVER, IT IS OWN CASE OF THE ASSESSEE THAT HE DOES NOT PURCHASE AND STORE THE GOODS RATHER ONL Y BOOKS ORDER FROM THE PURCHASER AND INSTRUCT THE DEALER TO THE SUPPLY THE GOODS DIRECTLY TO THE PARTY AND EARNS HIS CUT/COMMISSION ON THE TRANSACTI ON. THE LD. DR HAS FURTHER DEMONSTRATED TO US THAT IN FACT CERTAIN GOO DS HAVE BEEN PURCHASED FROM ONE PARTY AND SOLD TO OTHER PARTY AND THEREAFT ER PURCHASED FROM THAT OTHER PARTY AND RESOLD TO THE FIRST PARTY AND HENCE THERE WERE CIRCULAR TRANSACTIONS. THE LD. AR COULD NOT CONVINCES US ABOUT THESE TYPE OF CIRCULAR TRANSACTIONS AND THEREBY INCURRING OF LOSS, WHEN TH E ASSESSEE DOES NOT STORE GOODS AT ITS OWN. 4 ITA NO.5936/MUM/2012 ESSENTURE TRADING PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 AT THIS STAGE LD. AR HAS STATED THAT IN FACT THE ASSESSE TILL DATE HAS NOT MADE PAYMENTS RELATING TO THE ABOVE TRANSACTIONS TO THE CONCERNED PARTIES AND THAT THE SAME ARE STILL OUTSTANDING IN THE BOOK S OF THE ASSESSEE. HE HAS, THEREFORE, SUBMITTED THAT IF THE LOSS ON ACCOU NT OF THESE TRANSACTIONS IS TO BE DISALLOWED DURING RELEVANT YEAR UNDER CONSIDE RATION, THEN NO ADDITIONS SHOULD BE MADE IN SUBSEQUENT YEARS ON ACCOUNT OF CE SSATION OF LIABILITY RELATING TO THE OUTSTANDING AMOUNT IN RELATION TO T HE TRANSACTIONS IN QUESTION. 5. WE HAVE CONSIDERED ABOVE SUBMISSION OF LD. AR. AT THIS STAGE, THE QUESTION BEFORE US IS REGARDING THE GENUINENESS OF THE LOSS RETURNED BY THE ASSESSEE. WE FIND THAT THE LOWER AUTHORITIES HAVE RIGHTLY DISALLOWED THE ABOVE STATED LOSS AS THE ASSESSEE HAS MISERABLY FAI LED TO PROVE THE GENUINENESS OF THE TRANSACTIONS IN QUESTION RESULTI NG INTO THE ABOVE STATED LOSS. SO FAR AS THE PLEA OF THE ASSESSEE THAT THE LOSS DISALLOWED THIS YEAR SHOULD BE CONSIDERED IN THE SUBSEQUENT YEARS IF THE ASSESSEE WRITE OFF THE LIABILITY ARISING OUT OF THE ABOVE STATED TRANSACTI ONS IS CONCERNED, THE ISSUE IS LEFT OPEN TO THE DECIDED WHEN THE APPROPRIATE S TAGE COMES. THE ASSESSEE MAY TAKE THIS PLEA AT THE APPROPRIATE TIME IN APPROPRIATE PROCEEDINGS FOR THAT SUBSEQUENT RELEVANT YEAR, IF A NY SUCH ADDITION IS MADE BY THE AO DURING SUCH PROCEEDINGS ON THIS ACCOUNT. THE INCOME TAX AUTHORITIES WILL LOOK INTO THE ABOVE PLEA OF THE AS SESSEE AND DECIDE THE SAME IN ACCORDANCE WITH THE LAW. HOWEVER, SO FAR AS THE DISALLOWANCE OF 5 ITA NO.5936/MUM/2012 ESSENTURE TRADING PRIVATE LIMITED ASSESSMENT YEAR 2009-10 LOSS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS CONSIDERED, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE CIT (A), THE SAME IS ACCORDINGLY UPHELD. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH AUGUST, 2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ,' MUMBAI; DATED :09.08.2017 SR.PS:- THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. - / THE CIT(A) 4. - / CIT CONCERNED 5. . % ( / /+ ,' / DR, ITAT, MUMBAI 6. 01 ' GUARD FILE ! / BY ORDER, ' !# $ (DY./ASSTT.REGISTRAR) ,' / ITAT, MUMBAI