ITO 25(1)(2), MUMBAI V. PREM SAGAR PANDEY, MUMBAI

ITA 6150/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0086 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3); 142(1); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 6150 / MUM/ 20 1 4 ( / ASSESSMENT YEAR: 20 10 - 11 ) INCOME TAX OFFICER - 25(1)(2) , ROOM NO.204,C - 11, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 / VS. SHRI PREM SAGAR PANDEY, 503 - A, MILESTONR, BEHIND ANAND NAGAR, DAHISAR(E), MUMBAI - 400068. ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AAFPP9917Q ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJAT MITTAL /R E SPONDENT BY : SHRI ANANT PAI / DATE OF HEARING : 1 9.6 .2017 / DATE OF PRONOUNCEMENT : 21. 6 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 35, MUMBAI , DATED 28.07.2014 , PERTAINING TO THE ASSESSMENT YEAR S 20 10 - 11 WHICH IN TURN HA VE ARIS EN FROM THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2 ITA NO.6150/MUM/2014 2. THE ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.54,25,166/ - UNDER SECTION 69C OF THE AC T BY THE LD. CIT(A) AS MADE BY THE AO OUT OF RS.74,00,570/ - ON ACCOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE . 3 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL ENGINEERING AND CONTRACTOR RUNNING A PROPRIETARY CONCERN IN THE NAME OF M/S PRABHAT ENTERPRISES AND FILED ITS RETURN OF INCOME ON 16.09.2010 DECLARING A TOTAL INCOME OF RS.19,18,700/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE PURCHASES MADE BY THE ASSESSEE WERE NOT GENUINE ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND ACCORDINGLY ISSUED N OTICE TO THE ASSESSEE DATED 7.3.2011 CALLING UPON THE ASSESSEE AS TO WHY THE PURCHASES MA D E FROM 7 PARTIES WHO APPEARED IN THE LIST OF HAWALA OPERATORS /BOGUS/SUSPICIOUS PARTIES AS PER THE LIST OF VAT AND WHY THE AMOUNT OF RS.74,00,570/ - SHOULD NOT BE TREAT ED AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT AND BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE AO ISSUED NOTICE U/S 133(6) TO ALL PARTIES, WHICH WAS RETURNED UNSERVED EXCEPT IN THE CASE OF AAYUSHI ENTERPRISES WHO STATED THAT THE SAID ENT ERPRISES WAS NOT HAVING ANY DEALING WITH THE ASSESSEE DURING THE YEAR . THE ASSESSEE REPLIED THE SAID NOTICE VIDE HIS LETTER DATED 3 ITA NO.6150/MUM/2014 11.3.2011 WHICH IS INCORPORATED BY THE AO AT PAGE 4 OF THE ASSESSMENT ORDER. THE AO AFTER CONSIDER ING THE SUBMISSIONS AND CO NTENTION OF THE ASSESSEE DISALLOWED THE ENTIRE PURCHASES MADE FROM SEVEN PARTIES AGGREGATING TO RS.74,00,570/ - AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT BY FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 19. 03.2013 BY ASSESSING THE INCOME OF THE ASSESSEE AT RS. 92,58,090 / - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO IN TURN AFTER CONSIDERING THE VARIOUS CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE PARTLY AL LOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION TO THE EXTENT OF RS.19,75,404/ - AND DELETED THE ADDITION OF RS.54,25,166/ - BY OBSERVING AND HOLDING AS UNDER : 3. DECISION: I HAVE GONE THROUGH THE FACTS OF THE CASE, CONTENTION OF THE A O AN D THE SUBMISSIONS OF THE APPELLANT. FACT OF THE CASE IS THAT THE APPELLANT HAS MA DE THE PURCHASES FROM 7 PARTIES WHICH APPEARED IN THE LIST OF SUSPECTED BOGUS SUPPLI ERS OF THE SALES TAX DEPARTMENT, MAHARASHTRA. THE A O DID SEND 133(6) NOTICES WHICH REM AI NED UNSERVED EXCEPT ONE WHICH WAS SERVED TO M / 5 AAYUSHI ENTERPRISE . ON THE OTHER HAND, IT IS ALSO A FACT THAT THE APPELLANT HAS MADE THE PAYMENTS TO ALL THE PARTIES VIDE AN ACCOUNT PAYEE CHEQUES AND THERE IS NO EVIDENCE WHATSOE VER OF RECEIVING THE SA ID MONEY BACK AS CASH. THE A O HAS ALSO NOT DISPUTE D THE CONSUMPTION OF THE MATERIALS BY THE APPELLANT. HOWEVER, IN THE CASE OF M / S AAYUSHI ENTERPRISES, IT IS SEEN THAT THE PARTY HAS ITSELF CATEGORICALLY DENIED HAVING HAD ANY TRANSACTION WHATSOEVER WITH THE APPELLANT AND HAD FURTHER AGAIN SPECIFIED TH AT THIS FIRM REMAINED CLOSED DURING THE PERIOD 1.4.2009 TO 31.3.2010 CONFIRMING THEREBY , THAT THE APPELLANT COULD NOT HAVE HAD ANY BUSINESS TRANSACTIONS WITH M / S AAYUSH ENTERPRISES IN THE SAID PERIOD FOR WH ICH THE PAYMENT HAS BEEN MADE TO M /S AAYUSH ENTERPRISES IN THE PERIOD 1.2.2010 TO 9.3.2010. GOING 4 ITA NO.6150/MUM/2014 BY THE FACTS OF THE CASE AN D DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M / S NIKUNJ EXIMP ENTERPRISES REFERRED SUPRA, I AM OF THE CONSIDERED VIEW THAT IN CASE OF M / S AAYUSHI ENTERPRISES WHERE THERE IS A CLEAR - CUT FINDING AVAILABLE BEFORE THE A O WHICH THE APPELLANT HAS NOT BEEN ABLE TO REBUT, THE PURCHASES FROM M / S AAYUSHI ENTERPRISES STANDS TO BE DISALLOWED. OUT OF A TOTAL ADDITION OF RS.74, 00, 570/ - , THIS CONSTITUTES RS.19,75,404/ - . RESPECTFULLY FOLLOWING THE DECISION OF HON BLE BOMBAY HIGH COURT IN M / S NIKUNJ EXIM ENTERPRISES REFERRED SUPRA, IT IS HELD THAT SIMPLY BECAUSE THE NOTICE U / S 133(6) REMAINED UNSERVED, CANNOT BE HELD AS SUFFICIENT CAUSE T O ADD BACK THE ENTIRE PURCHASES IN LIGHT OF THE FACT THAT THE PAYMENTS HAVE ACTUALLY BEEN MADE, CONSUMPTION OF MATERIAL HAS BEEN SHOWN BY THE APPELLANT AND THE APPELLANT HAS NOT HAD AN OPPORTUNITY FOR CROSS - EXAMINING ANY OF THE PARTIES. THEREBY, THE APPELL ANT GETS A RELIEF OF RS.54,25,166/ - (RS.74, 00 ,570 - RS.19,75,404). AN ADDITION OF RS.19,75,404/ - IS UPHELD. 5 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND THE CASE LAW RELI ED UPON BY THE ASSESSEE. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS MADE PURCHASES FROM SEVEN PARTIES WHO WERE APPEARING ON THE LIST OF BOGUS/SUSPICIOUS PARTIES PUBLISHED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND HENCE THE AO ADDED TH E SAME TO THE INCOME OF THE ASSESSEE, WHEREAS THE LD.CIT(A) DELETED THE SAID ADDITION TO THE EXTENT OF RS.54,25,166/ - BY OBSERVING THAT THE ASSESSEE HAS MADE PAYMENT TO THESE PARTIES BY ACCOUNT PAYEE CHEQUES AND AO HAS FAILED TO PROVE THAT THE MONEY HA S COME BACK TO THE ASSESSEE IN CASH. THE AO BY NOT BRINGING ANY MATERIAL IN SUPPORT HIS FINDING, THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . THE ONLY ADDITION SUSTAINED BY THE LD.CIT(A) WAS IN RESPECT OF M/S AAYUSHI ENTERPRISES AMOUNTING TO RS.19,75,404/ - FOR WHICH THE PARTY IN REPLY TO THE NOTICE ISSUED UNDER 5 ITA NO.6150/MUM/2014 SECTION 133(6) STA T ED THAT IT HAS CLOSED ITS BUSINESS AND THEREFORE HAS NOT MADE ANY BUSINESS TRANSACTIONS AND SALE OR PURCHASE WITH T HE ASSESSEE. THE LD.CIT(A) BY FOLLOWING THE DECI SION IN THE CASE OF CIT V/S NIKUMJ EXIMP ENTERPRISES PVT LTD (BOM) (ITA 5604 OF 2010) CAME TO THE CONCLUSION THAT ONLY PURCHASES FROM THE SAID PARTY NEEDS TO BE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE HAS FAILED TO REBUT THE VARIOUS QUERIES RAISED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND T HE LD.CIT(A) FURTHER HELD THAT THE MERE NON - SERVICE OF NOTICE U/S 133(6) WAS NOT SUFFICIENT CAUSE TO ADD BACK THE ENTIRE PURCHASES IN THE HANDS OF ASSESSEE SPECIALLY WHE N THE PAYMENTS HAVE ACTUALLY BEEN MADE , CONSUMPTION OF MATERIAL HAS BEEN SHOWN BY THE ASSESSEE AND T HE ASSESSEE HAS NOT GIVEN ANY OPPORTUNITY TO CROSS - EXAMINE ANY OF T HE PARTY. IN OUR OPINION, THE ORDER PASSED BY THE LD.CIT(A) IS REASONABLE AND DO NOT CAL L FOR ANY INTERFERENCE AT OUR END. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE , 2017. SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21. 6 .2017 SRL,SR.PS 6 ITA NO.6150/MUM/2014 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI