ITO,9(2)(2), MUMBAI, MUMBAI V. M/s. BRAVIA INTERIOR INFRASTUCTURE PVT. LTD., MUMBAI

ITA 6002/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2023 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 20-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Depreciation; Rectification of order
• Section: 143(3); 147; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6002/M/2019 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER- 9(2)(2), ROOM NO.610A, 6 TH FLOOR, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI - 400020 VS. M/S. BRAVIA INTERIOR INFRASTRUCTURE PVT. LTD., 409, LAXMI PLAZA, LAXMI INDUSTRIAL ESTATE, NEW LINK ROAD, ANDHERI (W), MUMBAI - 400053 PAN: AAFCA7661P (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MS. SMITA VERMA, D.R. DATE OF HEARING : 23.06.2021 DATE OF PRONOUNCEMENT : 23.06.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 14.06.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. AT THE TIME OF HEARING WHEN THE CASE WAS CALLED FOR HEARING, NEITHER ASSESSEE NOR HIS AUTHORISED REPRESENTATIVE WAS PRESENT TO ATTEND THE HEARING NOR ANY APPLICATION FOR ADJOU RNMENT WAS FILED. THEREFORE, WE ARE DECIDING THE ISSUE AFTER HEARING THE LD. D.R. ON MERITS. ITA NO.6002/M/2019 M/S. BRAVIA INTERIOR INFRASTRUCTURE PVT. LTD. 2 3. FIRST WE WOULD LIKE TO DECIDE THE ISSUE RAISED B Y THE REVENUE IN THE GROUND NO. 2. THE ISSUE IN GROUND NO .2 IS AGAINST THE ORDER OF LD. CIT(A) QUASHING THE ORDER PASSED U NDER SECTION 154 OF THE ACT AS PASSED BY THE AO TO RECTIFY THE M ISTAKE WHICH HAS CREPT IN THE ORDER FRAMED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT U/S.143(3) R.W.S. 147 OF THE IT ACT WAS FRAMED ON 25.03.2015 DETERMI NING THE TOTAL INCOME AT RS.29,00,555/- AFTER MAKING AN ADDI TION OF RS. 6,70,531/- BEING @12.5% ON ALLEGED BOGUS PURCHASES OF RS.53,64,255/-. THE AO ON PERUSAL OF THE RECORDS OB SERVED THAT OUT OF TOTAL ALLEGED BOGUS PURCHASES OF RS.53,64,25 5/-, AN AMOUNT OF RS.43,09,110/- HAD BEEN ADDED BY THE ASSE SSEE IN THE FIXED ASSETS AND CLAIMED DEPRECIATION @ 15% AMO UNTING TO RS.6,46,367/-. THE AO ACCORDINGLY ISSUED NOTICE U /S.154 OF THE ACT TO THE ASSESSEE TO RECTIFY THE MISTAKE. IN RESPONSE TO THE NOTICE, THE AR OF THE ASSESSEE FILED OBJECTIONS FOR PROPOSED RECTIFICATION ON THE GROUND THAT THE ASSESSEE HAD F ILED AN APPEAL BEFORE CIT(A) AGAINST THE ADDITION MADE @12.5% OF BOGUS PURCHASES AND THE MATTER IS SUB-JUDICE. THE SUBMIS SIONS OF THE ASSESSEE WAS CONSIDERED BY THE AO BUT WAS NOT FOUND TENABLE AS THE MISTAKE PROPOSED TO BE RECTIFIED WAS A MISTAKE APPARENT FROM RECORD. ACCORDINGLY, THE AO PASSED THE RECTIFI CATION ORDER U/S.154 OF THE IT ACT, 1961 DETERMINING THE TOTAL I NCOME OF THE ASSESSEE AT RS.30,08,280/- BY MAKING ADDITION OF RS .1,31,893/- TOWARDS DISALLOWANCES FOR BOGUS PURCHASES AND RS, 6 ,46,367/- TOWARDS DEPRECIATION CLAIMED. THE ASSESSEE WAS AGGR IEVED WITH THE ORDER PASSED U/S. 154 OF THE ACT BY THE A.O. A ND WENT IN APPEAL BEFORE THE LD. CIT(A). ITA NO.6002/M/2019 M/S. BRAVIA INTERIOR INFRASTRUCTURE PVT. LTD. 3 5. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) ALLO WED THE APPEAL OF THE ASSESSEE BY HOLDING AND OBSERVING AS UNDER: 4.1.1 VIDE THIS GROUND THE APPELLANT HAS CHALLENGE D THE LEGALITY OF PASSING THE RECTIFICATION ORDER U/S.154 OF THE I.T. ACT, 1961. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT COMPANY SUBMIT TED THAT THE APPELLANT SUBMITTED A LETTER TO THE ID. ASSESSING OFFICER ON 22/04/2014 ALONG WITH COPY OF COMPUTATION OF INCOME FILED U/S. 139, ACKNOWLEDGEME NT OF FILING RETURN OF INCOME, ANNUAL ACCOUNTS FOR YEAR ENDED 31.03.2009 AND TAX A UDIT REPORT FOR AY 09-10. THE ASSESSING OFFICER WAS INFORMED TO TREAT THE ORIGINA L RETURN OF INCOME FILED U/S. 139 AS RETURN FILED IN RESPONSE TO NOTICE U/S.148. THE CASE WAS DISCUSSED AND THE ORDER U/S. 143(3) R.W.S 147 OF THE ACT WAS ISSUED ON 25/0 3/2015 WHEREIN FOLLOWING ADDITIONS WERE MADE: ISSUE AMOUNT (IN RS) 12.5% ADDITION ON ALLEGED BOGUS PURCHASES 6,70,531/- TOTAL 6,70,53V- 4.1.2 HOWEVER, THE ASSESSEE FILED AN APPEAL BEFORE THE HON'BLE CIT(A) ON 24.04.2015 AGAINST THE ORDER ISSUED BY THE ASSESSIN G OFFICER IN REGARDS TO 12.5% DISALLOWANCE AGAINST THE BOGUS PURCHASES MADE BY TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION. FURTHER, BEFORE THE ASSESSEE COULD R EPRESENT BEFORE THE APPELLATE PROCEEDINGS, THE ID. ASSESSING OFFICER PASSED A REC TIFICATION ORDER U/S 154 DATED 6.04.2016. IN AFORESAID ORDER ISSUED U/S 154, THE I D. ASSESSING OFFICER FURTHER SUBSTITUTED THE ADDITION OF 12.50% TO 15% DISALLOWA NCE IN THE NATURE OF DEPRECIATION ON THE FIXED ASSETS. THE PROVISIONS OF SECTION 154 OF THE ACT APPLIES ONLY WHERE THERE IS A MISTAKE APPARENT FROM RECORD AND IN NO WAY CONSTITUTES ANY CHANGE IN THE OPINION OF THE ID. ASSESSING OFFICER AT A LATER STAGE. IN OTHER WORDS, ONCE THE BASIS/FOUNDATION OF ADDITION IS MADE IN TH E ORIGINAL ASSESSMENT ORDER THEN THE SAME BASIS/FOUNDATION CANNOT BE ALTERED UNDER T HE GARB OF PROVISIONS OF SECTION 154 OF THE ACT. IN THE PRESENT CASE, THE ID . ASSESSING OFFICER HAD EARLIER MADE AN ASSESSMENT OF THE PROFIT ELEMENT OF 12.50% ON THE ALLEGED FIXED ASSETS IN THE ORIGINAL ASSESSMENT ORDER WHEREAS IN THE ORDER PASSED U/S 154, THE ID. ASSESSING OFFICER COMPLETELY CHANGED HIS STAND TO D ISALLOWANCE DEPENDING ON SUCH FIXED ASSETS WHICH CLEARLY INDICATES THE CHANGE IN OPINION OF THE ID. ASSESSING OFIICER IN MAKING THE ADDITION. 4.1.3 IN VIEW OF THE AFORESAID, THE ORDER UNDER SEC TION 154 OF THE INCOME TAX ACT, 1961, PASSED BY THE A. O. AND WHICH IS IN DISPUTE U NDER APPEAL DOES NOT SURVIVE FOR THIS ISSUE. THE APPEAL OF THE APPELLANT IS ALLOWED. 6. AFTER HEARING THE LD. D.R. AND PERUSING THE ORDE R OF LD. CIT(A), WE FIND THAT LD. CIT(A) HAS QUASHED THE REC TIFICATION ORDER DATED 6.4.2016 PASSED UNDER SECTION 154 OF TH E ACT BY THE ITA NO.6002/M/2019 M/S. BRAVIA INTERIOR INFRASTRUCTURE PVT. LTD. 4 AO ON THE GROUND THAT ON THE DATE OF RECTIFICATION THE APPEAL OF THE ASSESSEE FILED AGAINST THE ORDER OF THE AO U/S 143(3) R.W.S. 147 OF THE ACT WAS PENDING WHEREIN THE ADDITION OF BOGUS PURCHASES WAS CHALLENGED. THEREFORE THE AO HAS EXC EEDED HIS JURISDICTION U/S 154 OF THE ACT. THE LD. CIT(A) QUA SHED THIS ORDER BY HOLDING THAT THE AO HAS NO POWER TO RECTIF Y THE ORDER WHICH IS SUB-JUDICE BEFORE THE LD. CIT(A). THEREFO RE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AS TH E ORDER PASSED UNDER SECTION 154 OF THE ACT IS WITHOUT VALID JURIS DICTION AND AO HAS OBVIOUSLY EXCEEDED THE JURISDICTION. ACCORDING LY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 7. SINCE WE HAVE UPHELD THE ORDER OF LD CIT(A) WHER EBY THE LD CIT(A) HAS QUASHED THE RECTIFICATION ORDER PASSED B Y THE AO UNDER SECTION 154 OF THE ACT. THEREFORE OTHER GROUN DS NEED NOT BE ADJUDICATED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.06.2021. SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23.06.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// ITA NO.6002/M/2019 M/S. BRAVIA INTERIOR INFRASTRUCTURE PVT. LTD. 5 [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.