OSIAN'S CONNOSSEURS OF ART P.LTD, MUMBAI V. DCIT CEN CIR 11, MUMBAI

ITA 5959/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75739 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Keywords: Opportunity of being heard; Opportunity of cross examination; Additional evidence; Wrong claim; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.5959/M/2013 ( / ASSESSMENT YEAR: 2009 - 2010 ) M/S. OSIANS CONNOISSEURS OF ART PVT LTD., G - 2B, NARIMAN BHAVAN, GROUND FLOOR, NARIMAN POINT, MUMBAI - 21. / VS. DCIT, CC - 11, MUMBAI. ./ PAN : AAACO 3687 L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SHEKHAR GUPTA / RESPONDENT BY : SHRI A.C. TEJPAL , DR / DATE OF HEARING : 16 .1.2014 / DATE OF PRONOUNCEMENT : 28 .2.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 7.10.2013 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 12.8.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, ASSESEE RAISED THE ONLY EFFECTIVE GROUND READS AS UNDER: THE LD CIT (A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN SUSTAINING 25% OF THE IMPUGNED PURCHASES AS BOGUS. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF AUCTION HOUSE & CONSULTANTS DEALING IN ART, CINEMA AND RELATED AREAS AND A LSO IN PUBLICATION OF FILM MAGAZINES. A SEARCH AND SURVEY OPERATION WAS CARRIED OUT IN THE CASE OF THE ASSESSEE AND ITS ASSOCIATE CONCERNS INCLUDING RESIDENTIAL AND OFFICE PREMISES OF THE DIRECTORS. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL LOSS OF 2 RS. 10,21,83,672/ - . ASSESSMENT WAS COMPLETED AND THE ASSESSED INCOME WAS DETERMINED AT RS. 18,89,32,140/ - . DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH THE DETAILS REGARDING THE PURCHASES OF ART ITEMS SHOWN IN THE BOOKS OF AC COUNT. IN THIS REGARD, AO ISSUES NOTICES U/S 133(6) TO VARIOUS PARTIES TO VERIFY THE SAID PURCHASES. IN REPLY, ASSESSEE SUBMITTED BEFORE THE AO THAT SIMILAR ADDITIONS MADE FOR AYS 2006 - 2007 AND 2008 - 2009 HAD BEEN SET ASIDE BY THE ITAT. FURTHER, ASSESSEE COULD NOT COMPLY WITH THE DIRECTIONS OF THE AO TO PRODUCE THE PARTIES TO VERIFY THE SAID PURCHASES. NOT SATISFIED WITH THE REPLY OF THE ASSESSEE, AO DISALLOWED THE AMOUNT OF PURCHASES AMOUNTING TO RS. 21,03,67,319/ - . AGGRIEVED WITH THE DECISION OF THE A O, ASSESEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) , ASSESSEE MADE VARIOUS SUBMISSION S . THERE WAS A DISCUSSION IN THE IMPUGNED ORDER ABOUT THE REMANDING DIRECTIONS OF THE ITAT IN THE EARLIER ASSESSMENT YEARS 2006 - 07 AND 2008 - 09. CIT (A) IS AWARE OF THE FACT THAT IN THE FRESH ASSESSMENT ORDERS CONSEQUENT TO THE ORDERS OF THE ITAT, NO ADDIT IONS WERE REPEATED BY THE AO. FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE TABLES INSERTED IN PARA 5.4.1 OF THE IMPUGNED ORDER AND MENTIONED THAT THE PARTIES ARE BROADLY THE SAME AS THAT OF THE ONES WHICH SUPPLIED THE ART MATERIAL TO THE ASSESSEE IN T HE PAST AY 2006 - 07 ONWARDS, WHICH WERE ADJUDICATED BY THE TRIBUNAL. CIT (A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE ALTERNATIVE SUBMISSIONS OF THE ASSESSEE. IN THE ALTERNATIVE SUBMISSIONS, ASSESSEE ARGUED THAT CONSIDERING THE DEFICIENCY IN CONFIRMATIONS, THE ADDITION CAN ONLY BE RESTRICTED TO 2,81,14,500/ - . CIT (A) DISTINGUISHED THE FINDINGS OF THE AO FOR AY 2006 - 07 AND 2008 - 09 HOLDING THAT EVERY ASSESSMENT YEAR IS A DIFFERENT YEAR FOR THE PURPOSE OF INCOME TAX AND CONFIRMED THE ADDITIO NS PART. EVENTUALLY, CIT (A) RESTRICTED THE DISALLOWANCE TO 25% OF THE IMPUGNED PURCHASES IN THE CURRENT ASSESSMENT YEAR 2009 - 2010 AND GRANTED RELIEF OF RS. 15,37,81,739/ - I.E., 75% OF RS. 20,50,42,319/ - . RELEVANT DISCUSSION IS GIVEN IN PARA 5.5.1 TO 5.5 .3 OF THE CIT (A)S ORDER WHICH READ AS UNDER: 5.5.1 I HAVE PERUSED THE ORDERS OF THE HONBLE ITAT IN THE CASE OF THE APPELLANT FOR AY 2008 - 2009. THE HONBLE ITAT ACCEPTED THE PLEA OF THE APPELLANT AND REMITTED THE MATTER TO THE AO AND DIRECTED THE AO TO PROVIDE REASONABLE OPPORTUNITY TO THE APPELLANT. IN AY 3 2006 - 2007, THE HONBLE ITAT SET ASIDE THE ORDERS AND REMITTED THE MATTER TO THE ASSESSING OFFICER TO ALLOW ASSESSEE THE OPPORTUNITY OF CROSS EXAMINATION OF THE PERSONS WHO, IN THEIR STATEMENT RECORDED , HAD DENIED SALES TO APPELLANT. 5.5.2. IT IS A FACT THAT IN AY 2006 - 07 AND 2008 - 09, WHILE ALLOWING FRESH OPPORTUNITY TO APPELLANT TO PROVE THAT IS PURCHASES ARE GENUINE, THE ASSESSING OFFICER IN RESPECT OF PURCHASE DISALLOWED IN ASSESSMENT ORDER. IT IS T RITE LAW THAT EACH ASSESSMENT YEAR IS A DIFFERENT YEAR. EVEN IF PURCHASES FROM ANY PARTY WAS FOUND TO BE GENUINE IN ONE YEAR, IT DOES NOT FOLLOW THAT SIMILAR TRANSACTIONS SHOWN IN ANOTHER YEAR IS ALSO GENUINE. THIS IS MORE SO WHEN IN REMAND PROCEEDINGS T HE APPELLANT WAS ASKED TO PRODUCE ANY PARTY OF ITS CHOICE EACH DAY, BUT NONE OF THE PARTIES COULD BE PRODUCED. IT IS ALSO NOT CONVINCING, HOW A PARTY COULD BE PRODUCED TO VERIFY THE TRANSACTIONS IN EARLIER YEARS BUT NOT FOR AY 2009 - 2010. AFTER ALL, THE V ERIFICATIONS WERE CARRIED OUT BY THE ASSESSING OFFICER IN RESPECT OF SET ASIDE ASSESSMENTS VIDE ORDER DATED 30.3.2013, WHICH IN THE SAME PERIOD DURING WHICH ASSESSING OFFICER HAD BEEN ASKED TO GIVE OPPORTUNITY AND SUBMIT REMAND REPORT F THE PRESENT APPEAL FOR AY 2009 - 2010. IN THE AY 2009 - 2010 BEFORE ME, THE ASSESSING OFFICER PINPOINTED THE PURCHASES WHERE HE HAD DOUBTS BASED ON THE FACTS THAT NOTICES U/S 133(6) WERE RETURNED UN - SERVED, OR DID NOT RESPOND OR DID NOT CONFIRM THE TRANSACTIONS. THUS, THERE WA S A VALID BASIS TO DOUBT THE TRANSACTIONS CLAIMED IN RESPECT OF THESE PURCHASES / TRANSACTIONS. 5.5.3. IT IS NOTICED THAT, EVEN ACCORDING TO THE SUBMISSIONS OF APPELLANT, DISALLOWANCE TO THE EXTENT OF RS. 2,81,14,500/ - IS WARRANTED IF BOTH COMMON PARTIES A ND CONFIRMATIONS ARE CONSIDERED AND RS. 4,28,35,750/ - IF ONLY CONFIRMATIONS FILED AND ADDITIONAL EVIDENCE IS CONSIDERED. HOWEVER, I AM UNABLE TO CONSIDER THAT THE PURCHASE CAN BE TREATED AS GENUINE IN ENTIRETY IN CASES WHERE CONFIRMATIONS ARE FILED AS ADD ITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE HAS BEEN OBJECTED TO BY THE ASSESSING OFFICER AND I SEE NO REASON FOR ADMITTING THEM IN THE FACTS AND CIRCUMSTANCES DISCUSSED IN THIS ORDER. MERELY BECAUSE TRANSACTION WITH A PARTY WAS ACCEPTED AS GENUINE IN AY 2 006 - 2007, IT DOES NOT FOLLOW THAT TRANSACTIONS IN AY2009 - 2010 CAN BE CONSIDERED TO BE GENUINE WHEN EVEN CONFIRMATION COULD NOT BE FILED FROM SUCH PARTY. IT MAY BE THAT PURCHASE BILLS WERE OBTAINED FROM SOME PARTY, WHO DID NOT SUPPLY THE PAINTINGS / MATERI AL. THESE MAY BE ACCOMMODATION ENTRIES TO DISGUISE PURCHASES OR OUTRIGHT FALSE CLAIMS. IT S A FACT THAT IN AY 2006 - 2007, THE ASSESSING OFFICER HIMSELF CONSIDERED DISALLOWANCE AT 25% OF SUCH PURCHASES, WHICH WAS CONFIRMED BY THE CIT (A). IN AY 2008 - 2009, THE ASSESSING OFFICER CONSIDERED DISALLOWANCE AT 25% OF SUCH PURCHASES, WHICH WAS CONFIRMED BY THE CIT (A). IN AY 2008 - 2009, THE ASSESSING OFFICER CONSIDERED 100% AS DISALLOWABLE OUT OF SUCH PURCHASES. HOWEVER, THE CIT (A) VIDE HIS ORDER DATED 27.4.2011 IN ASSESSEES OWN CASE FOR AY 2008 - 2009, IN PARA 2.3.3 REDUCED THE DISALLOWANCE TO 25% OF IMPUGNED PURCHASES ON PRINCIPLES OF CONSISTENCY. KEEPING THE SAME IN VIEW, I ALSO HOLD THAT ONLY 25% OF THE IMPUGNED PURCHASES IN THE CURRENT YEAR AY 2009 - 2010 IS TO BE DISALLOWED. THE APPELLANT GETS A RELIEF OF RS. 15,37,81,739/ - (75% OF RS. 20,50,42,319/ - ). THE NET RESULT IS THAT OUT OF PURCHASE DISALLOWED AT RS. 21,03,67,319/ - IN THE ASSESSMENT ORDER, DISALLOWANCE AT RS. 5,12,60,80/ - IS CONFIRMED. THE APPELLANT GETS A TOTAL RELIEF OF RS. 15,91,06,739/ - (RS. 53,25,000/ - PLUS RS. 15,37,81,739/ - ) IN RESPECT OF GROUND NO.1 OF APPEAL. 4.1. NOT SATISFIED WITH THE RELIEF GRANTED BY THE CIT (A), ASSESSEE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO PAGES 52, 53, 64, 68 ETC OF THE PAPER BOOK AND MENTIONED THAT THESE CONSTITUTE FRESH ASSESSMENT ORDER PERTAINING TO THE AY 2006 - 07, 2007 - 08, 2008 - 0 9 AND 2009 - 10, WHEREIN IDENTICAL ADDITIONS WERE MADE IN THE FIRST ROUND AND THEY WERE DELETED BY THE AO WHEN THE MATTERS WERE SET ASIDE BY THE TRIBUNAL FOR THOSE ASSESSMENT YEARS. THIS IS THE CASE WHERE ASSESSEE PURCHASED ART ITEMS FROM VARIOUS SUPPLIERS AND FOR FAILURE OF THE ATTENDANCE OF THE SUPPLIERS BEFORE THE AO THE PURCHASES WERE HELD BOGUS. REFERRING TO THE CURRENT ASSESSMENT YEAR 2009 - 2010, WHERE THE AO DISALLOWED THE PURCHASES FOR VARIOUS REASONS SUCH AS (I) NON - RECEIPT OF THE NOTICES U/S 133(6) OF THE ACT; (II) NON - REPLY OF THE PARTIES TO THE NOTICES ISSUED BY THE REVENUE. AO MADE ADDITION OF RS. 21,03,67,319/ - , AS PER THE DISCUSSION GIVEN IN PARA 6.5 OF THE ASSESSMENT ORDER ON ACCOUNT OF UNREPORTED AND UNDER REPORTED PURCHASES. THE DETAI LS OF DISALLOWANCES AND THE REASONS FOR ADDITION ARE IN TABULAR FOR M IN PARA 3.1 OF THE IMPUGNED ORDER WHICH ARE AS UNDER: SL NO. CATEGORY AMT. DISALLOWED IN RS. 1. NOTICES WHICH COULD NOT BE SERVED AND RETURNED BACK UNSERVED 14,96,01,647/ - 2 NOTICES SERVED BUT NO REPLY RECEIVED 5,54,40,672/ - 3. NOTICES ISSUED BUT PARTIES REPORTED NO TRANSACTION WITH THE APPELLANT. 53,25,000/ - 6. FURTHER, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE THE FOLLOWING FACTS I.E., (I) AO HAS NOT DOUBTED THE S ALES OF THE ART ITEMS. IN THAT CASE, DISALLOWANCE OF PURCHASES AS BOGUS ONE IS NOT SUSTAINABLE. (II) MERELY BECAUSE OF NON ATTENDANCE OF SUPPLIERS OR NOTICES WERE SERVED BUT NOT RECEIVED BY THE PARTIES, IT CANNOT BE ASSUMED THAT THE PURCHASES ARE BOGUS. IN THIS REGARD, ASSES SEE RELIED ON VARIOUS DECISIONS. NO ADVERSE INFERENCE CAN BE DRAWN AGAINST ASSESSEE AS PER THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ANIS AHMAD AND SONS VS. CIT [2008] 297 ITR 441 (SC). FURTHER, HE MENTIONED THAT THIS IS THE CASE WHERE THE BOOKS OF ACCOUNTS WERE NOT REJECTED IDENTIFYING ANY DEFICIENCY OR INCOMPLETENESS OF THE BOOKS OF ACCOUNTS. IN SUCH CASES, BEST JUDGMENT ASSESSMENT BY CONFIRMING ONLY 25% OF THE PURCHASES IS NOT 5 SUSTAINABLE. THIS IS THE CASE WHERE THE CIT (A) ADOPTED THE FIGURE OF 25% OF THE TOTAL PURCHASES AS BOGUS, SIMPLY RELYING ON THE FINDINGS OF THE AO IN EARLIER ASSESSMENT YEARS, IGNORING THE FACT EVEN IN THE FRESH ASSESSMENTS NO SUCH DISALLOWANCES WERE FINALLY MADE IN ASSESSMENTS IN PURSUANT TO THE ORDERS OF ITAT. T HE PURCHASES WERE ACCEPTED AS GENUINE IN THE AY 2006 - 07, 2007 - 08, 2008 - 09 AND 2010 - 11 ETC. 7. ON THE OTHER HAND, LD DR BROUGHT OUR ATTENTION TO THE FACT THAT THIS IS A PECULIAR CASE ON TRADING IN ART ITEMS. THIS BUSINESS IS KNOWN FOR ROUTING THE UNACCOUNTED MONEY FOR CONVERTING THE SAME IN ACCOUNTED MONEY. THE ASSESSING OFFICER IS WITHIN THE JURISDICTION TO MAKE ADDITION NOTWITHSTANDING THE FACT THAT NO SUCH ADDITIONS ARE MADE IN THE EARLIER ASSESSMENT YEARS 2006 - 07, 2007 - 08, 2008 - 09 A ND 2010 - 11 ETC. THE FACT THAT ASSESSEE HAS NOT PRODUCED T HE PARTIES BEFORE THE AO AND THE PAYMENTS ARE MADE BY WAY O F PAY ORDERS NOT BY CHEQUES CONTRIBUTE TO THE SUSPICIOUS TRANSACTIONS OF THE PURCHASES. DIS TINGUISHING THE CASE LAWS CITED BY THE LD COUNS EL, LD DR MENTIONED THAT THE PARTIES IN THOSE CASES ARE IN EXISTENCE AND UNIDENTIFIED UNLIKE THE PARTIES IN THE PRESENT CASE, WHERE THE NOTICES COULD NOT BE SERVED IN SOME CASES AND THE CONFIRMATIONS ARE NOT IN ORDER. REFERRING TO THE 25%, THE FIGURE ADOP TED BY THE CIT (A), LD DR RELIED ON THE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF VIJAY PROTEINS LTD AND SANJAY OIL CAKE INDUSTRIES. DURING THE REBUTTAL TIME, LD COUNSEL MENTIONED THAT THE SAID JUDGMENT WAS SUBSEQUENTLY CONSIDERED IN ANOTHER JUDGMENT IN THE CASE OF CIT VS. NANGALIA FABRICS (P) LTD [2013] 40 TAXMANN.COM 206 (GUJARAT) . 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND THE PAPERS PLACED BEFORE US. AO MADE ADDITION OF RS. 21.03 CRS FOR FAILURES NON - PRODU CTION OF SUPPLIERS, FAILURE OF FILING CONFIRMATION LETTERS ETC. THESE ADDITIONS WERE MADE BEFORE THE COMPLETION OF THE SET ASIDE PROCEEDINGS CONSEQUENT TO THE DIRECTIONS GIVEN IN THE ORDERS OF THE TRIBUNAL FOR THE AY 2006 - 2007 AND SUBSEQUENT ASSESSMENT YE ARS. NO ADDITION ON ACCOUNT OF THE ISSUE UNDER CONSIDERATION WAS MADE EVENTUALLY BY THE AO IN THE SAID ASSESSMENT. HOWEVER, EVERY ASSESSMENT IS A INDEPENDENT AND THERE IS NO ESTOPPELS IN THE MATTERS OF INCOME TAX PROCEEDINGS. VIEWING THE ISSUE INDEPENDE NTLY, IT IS THE CASE OF THE CIT (A) THAT ADDITIONS TO THE 6 EXTENT OF 25% OF THE PURCHASES CAN STILL BE MADE IN VIEW OF THE ASSESSMENT MADE FOR THE ASSESSMENT YEAR 2006 - 2007. THE FACT IS THAT SUCH ADDITIONS WERE EVENTUALLY DELETED IN THE SAID ASSESSMENT YEA R BY THE TRIBUNAL AND THEREFORE, THE CIT (A) WRONGLY CONSIDERED THE ADDITIONS MADE IN THE ASSESSMENT YEAR 2006 - 2007 AS PRECEDENT. CIT (A) RESTRICTED THE 25% OF THE PURCHASES AND EVENTUALLY, NO ADDITION WAS MADE BY THE AO AFTER THE SAID ORDER OF THE CIT (A ) WAS SET ASIDE BY THE TRIBUNAL. RESTRICTING THE DISALLOWANCE OF PURCHASES TO 25% FOR THE AY UNDER CONSIDERATION BY RELYING ON THE ABOVE ASSESSMENT YEAR, IN OUR OPINION, IS NOT PROPER. HOWEVER, IT IS A FACT THAT IN PARA 5.5.3 OF THE IMPUGNED ORDER, CIT (A) MADE STATEMENT THAT IT IS NOTICED THAT, EVEN ACCORDING TO THE SUBMISSIONS OF APPELLANT, DISALLOWANCE TO THE EXTENT OF RS. 2,81,14,500/ - IS WARRANTED IF BOTH COMMON PARTIES AND CONFIRMATIONS ARE CONSIDERED AND RS. 4,28,35,75 0/ - IF ONLY CONFIRMATIONS FI LED AS ADDITIONAL EVIDENCE IS CONSIDERED. THUS, IT IS AN UNDISPUTED POSITION THAT THE ASSESSEE FAILED TO FURNISH CONFIRMATION IN RESPECT OF CERTAIN PURCHASES. 9. WE HAVE CONSIDERED THE DECISIONS RELIED UPON BY THE LD COUNSEL I.E., (I) JUDGMENT OF THE H ONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. NIKUNJ EXIMP ENTERPRISES PVT LTD (BOM) VIDE INCOME TAX APPEAL NO.5604 OF 2010 FOR THE PROPOSITION THAT MERE FAILURE TO PRODUCE THE PARTIES, ONE CANNOT REACH THE CONCLUSION THAT THE PURCHASES WERE NOT MADE BY THE ASSESSEE . WE HAVE ALSO EXAMINED THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ANIS AHMAD AND SONS VS. CIT [2008] 297 ITR 441 (SC), WHICH IS RELEVANT FOR THE PROPOSITION THAT WHEN SOME PARTIES ARE NOT APPEAR BEFORE THE REVENUE AUTHORITIES , ASSESSEE CANNOT BE HELD RESPONSIBLE. FURTHER, WE HAVE ALSO EXAMINED THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NANGALIA FABRICS (P) LTD [2013] 40 TAXMANN.COM 206 (GUJARAT) FOR THE PROPOSITION THAT THE ADDITION ON ACCOUNT OF PU RCHASES CAN BE DELETED WHEN ASSESSEE FURNISHED THE RELEVANT BILLS, BOOKS OF ACCOUNTS, PAYMENTS MADE BY BANKING CHANNELS ETC. THIS JUDGMENT ALSO REFERS TO THE ANOTHER DECISION IN THE CASE OF VIJAY PROTEINS LTD AND SANJAY OIL CAKE INDUSTRIES (SUPRA). HOWEV ER, THE FACT IN THIS CASE IS THAT THE CONFIRMATIONS ARE NOT FULLY FURNISHED IN RESPECT OF THE TOTAL CLAIM OF PURCHASES OF RS. 7 78.78 CRS. OUT OF THE ABOVE, AO MADE ADDITION OF RS. 21,03,67,319/ - AND BREAKUP OF THE SAME QUA THE FILING OF THE CONFIRMATIONS, OLD SUPPLIERS, NEW SUPPLIERS, APPLICATION OF THE ASSESSEE BEFORE THE REVENUE AUTHORITIES ARE AS UNDER: UNREPORTED / UNDER REPORTED PURCHASES AS PER THE AO ORDER RS. 21,03,67,319/ - LESS DELETED BY CIT (A) RS. 53,25,000 / - RS. 20,50,42,319/ - LESS CONFIRMATIONS FILLED BEFORE CIT (A) RS. 16,67,31,569/ - RS. 3,83,10,750/ - LESS PURCHASES MADE IN EARLIER YEARS FROM SAME PARTIES ACCEPTED AS GENUINE RS. 1,01,96,250/ - RS. 2,81,14,500/ - 10. FURTHER, IT IS NOTICED FROM THE RECORD THAT THE ASSESSEE FILED CONFIRMATIONS FOR THE FIRST TIME BEFORE THE CIT (A), ACCOUNTING FOR THE PURCHASES AMOUNTING TO RS. 16,67,31,569/ - . IT INCLUDES PARTLY NEW SUPPLI ERS AND REST OF THEM ARE OLD SUPPLIERS WHICH WERE ALREADY HELD GENUINE IN THE EARLIER YEARS. THESE CONFIRMATIONS EVENTUALLY WERE NOT ACCEPTED BY THE CIT (A) AFTER IGNORING THE FACT THAT THESE CONFIRMATIONS FORM AN IMPORTANT INFORMATION AND THEY GO TO THE ROOT OF THE MATTER. IN OUR OPINION, DECISION OF THE CIT (A) IS NOT FAIR, THEREFORE, WE DIRECT THE REVENUE AUTHORITIES TO ADMIT THE SAME AND ADJUDICATE THE ISSUE AFTER EXAMINING THE GENUINENESS OF THE CONFIRMATIONS AND ALSO GRANT A REASONABLE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. IT IS WORTH MENTIONING HERE THAT THE SAID OLD SUPPLIERS ACCOUNTS FOR RS. 13,00,88, 580/ - , WHICH WERE ACCEPTED IN EARLIER YEARS AS GENUINE, MUST SPECIFY THE PARTY WISE REASONS, IF THEY HAVE TO BE REJECTED FOR ANY REASONS. TH E DETAILS OF THE SAID OLD PARTIES ARE AS UNDER: SL.NO. NAME AMOUNT (RS.) 1 DINESH THACKER 12,00,000/ - 2 SAFFRON ART PVT LTD 3,68,00,500/ - 3 CABOCHON ARTS PVT LTD 1,44,00,000/ - 4 KASHINATH SALVE 13,20,000/ - 5 SKARTS 1,54,46,000/ - 6 STARX CREATION PVT LTD 6,09,22,080/ - TOTAL 13,00,88,580/ - 8 11. SIMILARLY, THERE IS ANOTHER SET OF OLD SUPPLIERS, WHICH WERE ALSO EXAMINED IN EARLIER YEARS, WHICH ACCOUNTS FOR RS. 1,01,96,250/ - . THESE ARE THE GROUP OF SUPPLIERS WHICH WERE ALSO ACCEPTED BY THE REVENUE IN T HE PAST AS GENUINE SUPPLIERS. HOWEVER, THE ASSESSEE HAS FAILED TO FILE CONFIRMATIONS IN SUPPORT OF THESE PURCHASES. IT IS CLEAR AS TO WHY THE CONFIRMATIONS SHOULD NOT BE FURNISHED MEANING THEREBY ASSESSEE FAILED TO DISCHARGE THE PRELIMINARY ONUS COST ON HIM IN MATTERS OF THE PURCHASES OF THIS KIND. AO SHOULD EXAMINE THE SAME AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND AO SHOULD SPECIFY THE PARTY WISE REASONS FOR FAILURE TO FURNISH THE CONFIRMATIONS IN ACCORDANCE WITH THE LA W. SO FAR AS THE BALANCE OF PURCHASES AMOUNTING TO RS. 2,81,14,500/ - , WE ARE OF THE OPINION THAT IT IS AN ADMITTED POSITION THAT THE ASSESSEE DOES NOT HAVE CONFIRMATIONS IN THIS REGARD. THEY ARE THE NEW SUPPLIERS. AO MAY EXAMINE THE CLAIM OF THE ASSESSE E AND GRANT HIM AN OPPORTUNITY TO SUBSTANTIATE THE CLAIM. WE ACCORDINGLY REMAND THIS MATTER TO THE FILES OF THE AO WITH ABOVE DIRECTIONS. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNC ED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2014. SD/ - SD/ - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 28 . 2 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, 9 ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI