ARCH PHARMALABS LTD, MUMBAI V. DCIT CENT. CIR. 5(1), MUMBAI

ITA 5980/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4864 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 07-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SACHIN BHAYJE SHRI S K MITRA
• Keywords: Bogus purchase; Principle of natural justice; Wrong claim; Right to appeal
• Section: 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5980 /MUM/201 6 ( / ASSESSMENT YEAR: 20 1 2 - 13 ) M/S. ARCH PHARMALABS LTD H - WING, 4 TH FLOOR, TEX CENTRE OPP. SAKI VIHAR ROAD, CHANDIVALI, ANDHERI (E), MUMBAI - 400072 . / VS. DCIT, CENTRAL CIRCLE - 5(1) AIR INDIA BUILDING, NARIMAN POINT MUMBAI. ./ ./ PAN/GIR NO. : AACCM0306Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 08 / 0 5 / 201 9 / DATE OF PRONOUNCEMENT : 22 / 05 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 29 . 07 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 53 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 12 - 1 3 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : - 1. THE LEARNED CIT (A) ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL BEFORE HIM ON THE GROUND THAT THE APPELLANT HAS NOT PAID DUE TAX IN FULL U/S 249(4)(A) FOR THE YEAR UNDER APPEAL. ASSESSEE BY : SHRI SACHIN BHAYJE REVENUE BY: SHRI S. K. MITRA ITA NO. 59 80 / M/201 6 A.Y.20 12 - 13 2 2. THE CIT (A) IGNORED THE FACT THAT THE APPELLANT HAS BEEN REGISTERED AS SICK COMPANY UNDER SICK INDUSTRIAL COMPANIES ACT BY BIFR AND HENCE PROTECTED AGAINST THE RECOVERY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (CIT - A) HAS GROSSLY ERRED SUM OF RS.1,87,47,906/ - AS BOGUS PURCHASES. 4. THE LEARNED CIT - A HAS ERRONEOUSLY RELIED UPON INFORMATION'S RECEIVED FROM SALES TAX DEPARTMENT AND NOT PROVED ANYTHING CONCRETE REGARDING ALLEGED BOGUS PURCHASES. 5. THE LEARNED CIT - A IS NOT JUSTIFIED IN IGNOR ING THE VARIOUS SUBMISSIONS FURNISHED BY THE APPELLANT IN RESPECT OF THE ALLEGED BOGUS PURCHASES. 6. THE LEARNED C1T (A) ERRED IN FAILING TO CONSIDER THE PURCHASE TRANSACTIONS OF THE APPELLANT WITH THE ALLEGED BOGUS SELLER WERE AT 'ARMS LENGTH' AND T HERE WAS ABSOLUTE NO 'RELATED PARTY' ASSOCIATION WITH THE SAID PARTY. 6.2 THE LEARNED CIT (A) ERRED IN FAILING TO CONSIDER THE TANGIBLE MITIGATING EVIDENCES AND CIRCUMSTANCES IN WHICH THE PURCHASE TRANSACTIONS WITH THE ALLEGED BOGUS SELLER WERE ENTERED INTO BY THE APPELLANT, LIKE ALL THE PAYMENTS TOWARDS PURCHASES BEING SETTLED THROUGH BANKING CHANNELS, COMPLETE QUANTITATIVE TALLY IN THE BOOKS, NON REJECTION OF THE BOOK RESULTS BY THE AO ETC. 7. THE LD. DCIT/CIT - A HAS NOT GIVEN AN OPPORTUNITY TO OF CROSS EXAMINATION OF THE SUPPLIERS TO THE APPELLANT. 8. THE APPELLANT SUBMITS THAT THE ABOVE GROUNDS OF APPEALS ARE ALTERNATE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 9. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER TO DELETE ANY OF THE ABO VE GROUNDS OF APPEALS. . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETU RN OF INCOME ON 29 . 09 .201 2 DECLARING TOTAL INCOME TO THE TUNE OF RS.97,83,98,610 / - . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND ITA NO. 59 80 / M/201 6 A.Y.20 12 - 13 3 TRADING OF PHARMACEUTICALS AND INTERMEDIATES AND OTHERS. THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE DGI T(INV.), MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRIES FROM THE FOUR PARTIES NAMELY M/S. DEEP ENTERPRISES AT RS.1,23,06,300/ - , M/S. SEJAL ENTERPRISES AT RS.29,376/ - , M/S. SANGHANI TRADING CO. AT RS.64,12,230/ - M/S. JANPATH ENTERPRISES . N OTICES U/S 133(6) OF THE ACT WERE ISSUED AND THE NOTICE WAS SERVED UPON THE M/S. JANPATH ENTERPRISES WHO EXPLAIN ED THE PURCHASE S BUT THE NOTICES U/S 133(6) WERE NOT SERVED TO M/S. SANGHANI TRADING CO., M/S. DEEP ENTERPRISES & M/S. SEJ AL ENTERPRISES, THEREFORE, IN THE SAID CIRCUMSTANCES, THE TOTAL PURCHASE FROM THESE PARTIES IN SUM OF RS.1,87,47,906/ - WAS ADDED TO THE INCOME OF THE ASSESSEE AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.99,71,46,514/ - . FEELING AGGRI EVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 249(4)(A) OF THE ACT ON ACCOUNT OF NON - PAYMENT OF SELF - ASSESSMENT TAX , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL B EFORE US. ISSUE NOS. 1 4. WE HAVE HEARD ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. MR. SACH IN BHAJJE MOVED AN APPLICATION FOR ADJOURNMENT ON THE GROUND OF PAYMENT OF SELF - ASSESSMENT TAX . IT IS NOTICED THAT AFTER FIL ING THE APPEAL, THE ASSESSEE WAS SEEKING THE ADJOURNMENT W.E.F. 02.05.2018 TO UPTO DATE. ALL THE ADJOURNMENT WAS SOUGHT ON THE BASIS OF THIS FACT BY ASSESSEE WAS TRYING TO MAKE THE PAYMENT OF OUTSTANDING SELF - ASSESSMENT TAX . CIT(A) HAS ALSO DISMISSED THE A PPEAL OF THE ASSESSEE ON ITA NO. 59 80 / M/201 6 A.Y.20 12 - 13 4 GROUND OF NON - PAYMENT OF SELF - ASSESSMENT TAX IN VIEW OF THE PROVISIONS U/S 249(4)(A) OF THE ACT. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 3.2 FROM PERUSAL OF FORM NO.3 5, IT IS O BSERVED THAT WHILE FILING THE PRESENT APPEAL, THE APPELLANT HAS CLAIMED TO HAVE PAID THE TAX CLUE IN FULL ON TOTAL INCOME DECLARED BY IT IN ITS RETURN OF INCOME FOR THE A.Y. UNDER CONSIDERATION. HOWEVER, IT IS NOTICED THAT THE A.O. HAD DETERMINED THE TAX P AYABLE BY THE APPELLANT AT RS.27,48,82,500/ - ON REGULAR ASSESSMENT EVEN THOUGH THE QUANTUM OF ADDITION MADE WAS ONLY RS. 1,87,47,906/ - . THUS, IT IS CLEAR THAT THE APPELLANT HAS MADE A FALSE CLAIM IN FORM NO.35 WITH REGARD TO PAYMENT OF TAX DUE ON THE RETUR NED INCOME, EVEN THOUGH SUCH TAX HAD NOT BEEN PAID IN FULL AT THE TIME OF FILING THE APPEAL ON 1(3.04.2015. IN THIS CONNECTION, IT DESERVES TO BE NOTED THAT THE PROVISION OF SECTION 249(4)(A) CLEARLY LAYS DO THAT NO APPEAL SHALL BE ADMITTED UNLESS AT THE T IME OF FILING THE APPEAL, THE ASSESSEE HAS PAID THE TAX DUE ON THE INCOME RETURNED BY HIM. AS THE APPELLANT IS FOUND TO HAVE NOT PAID THE TAX DUE ON THE RETURNED INCOME FOR THE A.Y. UNDER APPEAL AT THE TIME OF FILING THE APPEAL ON 16.04.2015, THE SAME CANN OT BE ADMITTED. 4.1 IT IS WELL - SETTLED THAT THE RIGHT TO APPEAL IS NEITHER AN ABSOLUTE RIGHT NOR AN INGREDIENT OF NATURAL JUSTICE THE PRINCIPLES OF WHICH MUST BE FOLLOWED IN ALL JUDICIAL AND QUASI - JUDICIAL ADJUDICATIONS. THE RIGHT TO APPEAL IS A STATUTORY RIGHT AND IT CAN BE CIRCUMSCRIBED BY THE CONDITIONS IN THE GRANT (VIJAY PRAKASH D. MEHTA V. COLLECTOR OF CUSTOMS - 175 ITR 540 SOT. THE PROCEEDINGS U/S.249(4)(A) HAS BEEN HELD TO BE IN THE NATURE OF A SCRUTINY OF APPEAL AND IF ON SUCH SCRUTINY, THE APPELLAT E AUTHORITY FINDS THAT TAX DUE ON THE INCOME ADMITTED IN THE RETURN IS NOT PAID AT THE TIME OF FILING THE APPEAL, HE HAS NO JURISDICTION TO ENTERTAIN THE APPEAL AND SUCH APPEAL HAS TO BE REJECTED IN LIMINE AS ONE NOT MAINTAINABLE (SUSHIL THOMAS ABRAHAM V. ACIT 308 ITR 346 '(KER.) THE FIRST APPELLATE AUTHORITY IS AUTHORIZED TO DISPOSE OF THE APPEAL AS MENTIONED U/S.250 ONLY IF IT IS ONE FOUND TO BE MAINTAINABLE, AMONG OTHER THINGS, IN REGARD TO SATISFACTION OF SECTION 249(4)(A) I.E. PAYMENT OF TAX ON THE ADM ITTED INCOME. PAYMENT OF TAX DUE ON THE INCOME RETURNED BY THE ASSESSEE BEFORE FILING AN APPEAL AGAINST THE ASSESSMENT ORDER IS THUS A CONDITION PRECEDENT U/S 249(4)(A). WHERE PETITIONER - ASSESSEE HAD NOT PAID THE TAX DUE AS PER THE RETURN FILED BY HIM, IT WAS HELD THAT THERE WAS NO ILLEGALITY OR IRREGULARITY OR ANY ARBITRARY EXERCISE OF POWER OR VIOLATION OF PRINCIPLES OF NATAL ITA NO. 59 80 / M/201 6 A.Y.20 12 - 13 5 JUSTICE IN THE ORDER DISMISSING THE APPEALS (259 ITR 215 (MAD.) AND 296 ITR 43 (MAD.)). IT HAS ALSO BEEN HELD THAT THE PROVISIONS O F SECTION 249(4) MAKING ADMISSION OF AN APPEAL SUBJECT TO PAYMENT OF TAX DUE ON THE INCOME RET LULLED IS A MANDATORY PROVISION (292 1TR 99 (KAR.) 4.2. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT WAS ASKED TO EXPLAIN AS TO WHY THE PRESENT SHOU LD NOT BE DISMISSED U/S 249(4)(A) OF THE ACT. THE APPELLANT HAS VIDE LETTER DATED 27.07.2016 SUBMITTED THAT OUT OF TOTAL DEMAND OF ITS.27.48 CRORES THE A.O. HAD ADJUSTED SOME OF THE REFUNDS WHICH WERE DUE. THE APPELLANT CLAIMS TO BE PAYING RS.10,00,000/ - P ER MONTH SINCE 01.12.2015. IT IS STATED THAT THE APPELLANT HAS APPLIED FOR CORPORATE DEBT RESTRUCTURING WITH ITS BANKER SO AS TO RELEASE SOME MONEY FOR WORKING CAPITAL AND PAYMENT OF TAX. IN OTHER WORDS, IT IS FOUND THAT THE APPELLANT HAS NOT PAID THE TAX DUE ON THE RETURNED INCOME FOR THE A.Y. UNDER CONSIDERATION IN FULL EVEN TILL DATE OF THIS ORDER. SINCE THE APPELLANT HAS NOT PAID DUE TAX IN FULL ON THE INCOME RETURNED BY IT FOR THE AN. UNDER CONSIDERATION, THE PRESENT APPEAL PREFERRED BY IT CANNOT BE EN TERTAINED IN VIEW OF MANDATORY PROVISIONS OF SECTION 249(411A). ACCORDINGLY, THE PRESENT APPEAL HAS TO BE DISMISSED AT THE VERY THRESHOLD AS NOT MAINTAINABLE. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSEE HAS FAILED TO PAY T HE SELF - ASSESSMENT TAX EVEN AT THE TIME OF DISPOSAL OF THE APPEAL BY LD. CIT ON 29.07.2016. THE SITUATION IS THIS, THE ASSESSEE HAS FAILED TO DEPOSIT TH E SELF - ASSESSMENT TAX TILL DATE, THE ASSESSEE IS SEEKING THE ADJOURNMENT FOR DEPOSITING THE TAX IN FUTUR E. ANYHOW, IT IS QUITE CLEAR THAT THE ASSESSEE HAS FAILED TO DE POSIT THE SELF - ASSESSMENT TAX TILL DATE. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO COMPLY THE MANDATORY PROVISIONS OF SECTION 249(4)(A) OF THE ACT, T HEREFORE, IN THE SAID CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE. THE CIT(A) HAS PASSED THE ORDER CORRECTLY AND JUDICIOUSLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE AFFIRM THE FINDING OF THE CIT(A ) ON THIS ISSUE AND DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO. 59 80 / M/201 6 A.Y.20 12 - 13 6 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 22 /05 /2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 22 /05 /2019 V IJAY / 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// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI