YUNICORN SYNTHETICS MILLS PVT.LTD., MUMBAI V. ITO 4(3)(3), MUMBAI

ITA 6116/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3529 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 26-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Reopening of assessment; Depreciation; Set aside
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6116/MUM/2018 ASSESSMENT YEAR: 2010 - 11 M/S Y U NICORN SYNTHETICS MILLS PVT. LTD., BLOCK NO. 2A, JAI HIND BLDG NO. 1, DR. A.M. ROAD, BHELESHWAR, MUMBAI - 400002. VS. ITO - 4(3)(3), MUMBAI. PAN NO. AAACY03406A APPELLANT RESPONDENT ASSESSEE BY : MS. RITIKA AGARWAL, AR REVENUE BY : MR. V. VINOD KUMAR, DR DATE OF HEARING : 20/02/2020 DATE OF P RONOUNCEMENT : 24/02/2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 9, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). M/S Y U NICORN SYNTHETICS MILLS PVT. LTD ITA NO. 6116/MUM/2018 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : 1. THE CIT(A) HAS ERR ED IN LAW AND ON FACTS IN UPHOLDING REOPENING OF ASSESSMENT AS THE REQUISITE CONDITIONS OF REOPENING HAVE NOT BEEN FULFILLED. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY UPHOLDING THE VALIDITY OF REASSESSMENT ORDER BASED ON THE THIRD PARTY INFORMATION RECE IVED BY RESPONDENT 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PLANT AND MACHINERY HAS BEEN PURCHASED FROM GREY MARKET AT A LOW COST ALTHOUGH ACCEPTING THE VERACIT Y OF THE VOLUMINOUS MATERIAL FIL ED IN SUPPORT OF THE TRANSACTION, INCLUDING BANK CERTIFICATE. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE VALIDITY OF THE REASSESSMENT ORDER WHICH IS BASED SOLELY ON THE INFORMATION PROVIDED BY THE INVESTIGATION WING AND WITHOUT ANY INDEPENDENT ENQUIRY BY THE RESPONDENT. 5. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY UPHOLDING THE CHARGING OF INTEREST U/S 234B AND 234C OF THE INCOME TAX ACT, 1961. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 27.09.2010 DECLARING TOTAL INCOME OF RS.26,61,770/ - . THE ASSESSEE IMPORTS AND TRADES IN SPECTACLE FRAMES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAD PURCHASED PLANT & MACHINERY OF RS.1,66,39,941/ - FROM M/S MA DHUVAN CORPORATION. AGAIN ST THE SAID PURCHASES, PUNJAB NATIONAL BANK, BOMBAY SAMACHAR MARG BRANCH HAD DIRECTLY MADE RTGS/ACCOUNT PAYEE PAYMENT TO SAID PARTY FROM THE TERM LOAN SANCTIONED OF RS.42,04,818/ - (18.01.2010), RS.78,50,102/ - (22.01.2010) AND RS.39 ,45,080/ - (25.01.2010) AND THE BALANCE PAYMENT HAS BEEN MADE FROM M/S Y U NICORN SYNTHETICS MILLS PVT. LTD ITA NO. 6116/MUM/2018 3 THE CASH CREDIT ACCOUNT IN THE SAME BANK OF THE ASSESSE E OF RS.6,39,941/ - (25.01.2010). HOWEVER, THE AO OBSERVED THAT THOUGH THE ASSESSEE HAD PRODUCED THE BILLS AND PAYMENTS MADE BY CHEQUE, DETAILS OF FINANCE BY PUNJAB NATIONAL BANK, THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE PURCHASE MADE FROM THE ABOVEMENTIONED PART Y . THUS OBSERVING THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST UPON HIM, THE AO DISALLOWED THE CLAIM OF DEPRECI ATION OF RS.25,88,435/ - MADE BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 29.08.2018, THE LD. CIT(A) BY FOLLOWING THE PRINCIPLES LAID DOWN IN CIT V. SIMIT P. SHETH (2013) 38 TAXMANN.COM 385 (GUJ) RESTRICTED THE DISALLOWANCE TO 50% THEREOF I.E. UPTO RS.12,94,217/ - . 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE RELIES ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011 - 12. ON THE OTHER HAND, THE LD. DR SU PPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS MENTIONED EARLIER, IT HAS BEEN CLEARLY STATED BY THE LD. CIT(A) THAT THE ASSESSEE HAD PURCHASED PLANT & MACHINERY OF RS.1,66 ,39,941/ - FROM M/S MADHUVAN CORPORATION. AGAIN ST THE SAID PURCHASES, PUNJAB NATIONAL BANK, BOMBAY SAMACHAR MARG BRANCH HAD DIRECTLY MADE RTGS/ACCOUNT PAYEE PAYMENT TO SAID PARTY FROM THE TERM LOAN SANCTIONED OF RS.42,04,818/ - (18.01.2010), RS.78,50,102/ - ( 22.01.2010) AND RS.39,45,080/ - (25.01.2010) AND THE BALANCE PAYMENT HAS BEEN MADE FROM THE CASH CREDIT ACCOUNT IN THE SAME BANK OF THE ASSESSEE OF RS.6,39,941/ - (25.01.2010). FURTHER IT IS MENTIONED BY THE LD. CIT(A) THAT THE ASSESSEE FILED A COPY OF THE T ERM LOAN M/S Y U NICORN SYNTHETICS MILLS PVT. LTD ITA NO. 6116/MUM/2018 4 STATE MENT F ROM PUNJAB NATIONAL BANK, COPY OF PURCHASE INVOICE OF PLANT & MACHINERY, COPY OF DELIVERY CHALLAN, LEDGER ACCOUNT IN THE BOOKS OF THE ASSESSEE AND THE ASSESSEES AFFIDAVIT CONFIRMING THAT THE TRANSACTION OF PURCHASES ARE GENUINE AND NOT BOGUS ACCOMMODATION BILLS AND PAID BY CROSS ACCOUNT PAYEE CHEQUE/RTGS AND THAT THE SAID MACHINERY WAS INSTALLED AND PUT TO USE ETC. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS ONUS ON THE ABOVE. THE AO, WITHOUT MAKING EVEN ANY PRE LIMINARY INQUIRY HAS MADE DISALLOWANCE OF DEPRECIATION OF RS.25,88,435/ - . FURTHER, THE LD. CIT(A), ON PRESUMPTIONS , HAS SUSTAINED 50% OF THE DISALLOWANCE WHICH COMES TO RS.12,94,218/ - . IT IS RELEVANT TO MENTION HERE THAT SIMILAR ISSUE AROSE BEFORE THE IT AT SMC BENCH, MUMBAI IN ASSESSEES OWN CASE FOR 2011 - 12. THE TRIBUNAL VIDE ORDER DATED 06.11.2019 IN ITA NO. 6117/MUM/2018 ALLOWED THE APPEAL FILED BY THE ASSESSEE ON THE GROUND THAT : 9.3 WE ALSO NOTE THAT THE ASSESSEE BEFORE THE AUTHORITIES BELOW HAS FURNISHED THE NECESSARY DETAILS OF THE PARTY IN THE FORM OF PURCHASE INVOICE AND DELIVERY CHALLAN WHICH ARE PLACED ON PAGES 58 TO 70 OF THE PAPER BOOK AND THE AUTHORITIES BELOW HAS NOT POINTED OUT ANY DEFECT THEREIN. TO OUR MIND, THE ASSESSEE HAS DISCHARGE D HIS ONUS BY FURNISHING THE DETAILS OF THE PARTY AND HE CANNOT BE PENALIZED FOR NOT PRODUCING THE PARTY BEFORE THE AUTHORITIES BELOW. AS SUCH, THE AUTHORITIES BELOW WERE EMPOWERED UNDER THE PROVISIONS OF THE ACT I.E. UNDER SECTION 133(6)/131 OF THE ACT TO TAKE CONFIRMATION/ ENFORCE THE ATTENDANCE OF SUCH PARTY BUT THEY FAILED TO DO SO. IN VIEW OF THE ABOVE, WE ARE NOT IN AGREEMENT WITH THE ORDERS OF THE AUTHORITIES BELOW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LEARNED CIT (A) AND DIRECT THE AO M/S Y U NICORN SYNTHETICS MILLS PVT. LTD ITA NO. 6116/MUM/2018 5 TO DELE TE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. FACTS BEING IDENTICAL, WE FOLLOW THE ORDER OF THE CO - ORDINATE BENCH AND DELETE THE DISALLOWANCE OF RS.12,94,217/ - CONFIRM ED BY THE LD. CIT(A). 7. IN THE RESULT, THE APP EAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/02/2020. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 24/02/2020 RAHUL SHARMA, SR. P.S. 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI