SMT.RAJLAKSHMI B., Mumbai V. PR.CIT-29, Mumbai

ITA 6188/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1437 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: HITESH SHAH LD
• Keywords: Bogus purchase; Search and seizure; Reassessment proceedings; Set aside
• Section: 143(3); 147; 263; 63; 2

Judgement Text

ITA NO.6188MUM/2018 SMT. RAJLAKSHMI B. ASSESSMENT YEAR :2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6188/MUM/2018 ( / ASSESSMENT YEAR:2010-11) SMT. RAJLAKSHMI B. UNIT NO.132B NAHAR & SHETH IND. ESTATE PANNALAL COMPOUND, LBS MARG BHANDUP(W), MUMBAI-400 078. / VS. PR. C IT - 29 ROOM NO. C-10, 3 RD FLOOR, PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400 051. ./ ./PAN/GIR NO. AFGPB-1497-M ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : HITESH SHAH - LD.AR RESPONDENT BY : D.G. PANSARI- LD.DR / DATE OF HEARING : 14/03/2019 / DATE OF PRONOUNCEMENT : 18/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE VALIDITY O F ORDER OF LD. PR. COMMISSIONER OF INCOME-TAX-29, MUMBAI [IN SHORT REF ERRED TO AS PR.CIT] IN INVOKING REVISIONAL JURISDICTION U/S 2 63 VIDE ORDER DATED 28/03/2018. ITA NO.6188MUM/2018 SMT. RAJLAKSHMI B. ASSESSMENT YEAR :2010-11 2 2. AGITATING THE SAME, LD. AUTHORIZED REPRESENTATIV E FOR ASSESSEE [AR] SUBMITTED THAT THE JURISDICTION U/S 263 AS INV OKED BY LD. PR. CIT ON IDENTICAL FACTS HAS BEEN SET ASIDE BY THE TRIBUNAL IN THE CASE OF RAJAL ENTERPRISES VS. PR.CIT [ITA NO. 2273/MUM/2018 DATED 31/10/2018]. THE COPY OF THE ORDER HAS BEEN PLACED ON RECORD. ALTHOUGH LD. DEPARTMENTAL REPRESENTATIVE [DR] SUPPORTED THE IMPUGNED ORDER, H OWEVER, COULD NOT POINT OUT ANY DISTINGUISHING FACTS OR FEATURES. 3. THE FACTS ON RECORD REVEAL THAT THE ASSESSEE WAS SUBJECTED TO REASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 FOR THE IMPUGNED AY VIDE ORDER DATED 30/01/2016 WHEREIN THE ASSESSEE WAS SADDLED WITH ESTIMATED ADDITION OF 12.5% ON ACCOUNT OF CERTAIN ALLEGED BOGUS PURCHASES. WHILE ESTIMATING THE SAME, LD. AO RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN SIMIT P.SHETH 356 ITR 451. 4. HOWEVER, SUBSEQUENTLY, UPON PERUSAL OF CASE RECO RDS, LD. PR.CIT NOTED THAT THE ASSESSEE WAS NOT MAINTAINING ANY QUA NTITATIVE REGISTER AND COULD NOT SUBSTANTIATE THE DELIVERY OF THE MATE RIAL AND THEREFORE, THE FULL DISALLOWANCE WAS TO BE MADE AS AGAINST 12.5% E STIMATED BY LD. AO KEEPING IN VIEW THE DECISION HONBLE APEX COURT REN DERED IN N.K.PROTEINS LTD. VS. DCIT [84 TAXMANN.COM]. THEREFORE, APPLYING CLAUSE (A) AND (D) OF EXPLANATION 2 TO SECTION 263( 1), THE ORDER WAS TREATED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ORDER ON THE STATED ISSUE WAS SET ASIDE FOR RE- ADJUDICATION. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CITED CASE OF RAJAL ENTERPRISES VS. PR.CIT [ITA NO. 2273/MUM/2018 DATED ITA NO.6188MUM/2018 SMT. RAJLAKSHMI B. ASSESSMENT YEAR :2010-11 3 31/10/2018] , ON IDENTICAL SET OF FACTS, QUASHED THE REVISIONAL PROCEEDINGS U/S 263, BY OBSERVING AS UNDER: - 5.WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. FACTUAL MATRIX OF THE CASE REVEALS THAT ON THE BASIS OF SPE CIFIC INFORMATION RECEIVED INDICATING THAT THE PURCHASES MADE BY THE ASSESSEE ARE BOGUS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 O F THE ACT. IT IS ALSO EVIDENT, IN COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFIC ER HAS CONDUCTED NECESSARY INQUIRY BY CALLING FOR VARIOUS INFORMATION FROM THE ASSESSEE AS WELL AS INDEPENDENTLY TO ASCERTAIN THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE. AFTER EXAMINING THE MATERIAL AVAILABLE ON RECORD THE ASSE SSING OFFICER, THOUGH, WAS OF THE VIEW THAT THE ASSESSEE HAS FAILED TO PROVE THE GENU INENESS OF PURCHASES MADE, HOWEVER, HE FOUND THAT NOT ONLY THE ASSESSEE HAS SH OWN THE PURCHASES MADE IN THE BOOKS OF ACCOUNT BUT HAS ALSO RECORDED THE CORRESPO NDING SALES EFFECTED. THUS, HE PROCEEDED TO MAKE ADDITION OF THE PROFIT ELEMENT EM BEDDED IN THE BOGUS PURCHASES BY ESTIMATING THE SAME AT 10%. THUS, A READING OF T HE ASSESSMENT ORDER MAKES IT CLEAR, THE ASSESSING OFFICER NOT ONLY HAS CONDUCTED DUE INQUIRY TO ASCERTAIN THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE B UT HAS MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES IN TERMS WITH THE PRINCI PLE LAID DOWN IN VARIOUS JUDICIAL PRECEDENTS. IT IS OBSERVED, LEARNED PCIT HAS HELD T HE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E PRIMARILY FOR TWO REASONS. FIRSTLY, DUE TO NON-CONSIDERATION OF THE DECISION O F HONBLE SUPREME COURT IN CASE OF N. K. PROTEIN (SUPRA) AND SECONDLY, DUE TO LACK OF PROPER INQUIRY. AS REGARDS THE SECOND ALLEGATION OF THE PCIT, WE ARE UNABLE TO AGR EE WITH THE SAME. THE ASSESSMENT ORDER CLEARLY REVEALS THAT THE ASSESSING OFFICER MADE NECESSARY INQUIRY TO FIND OUT GENUINENESS OF PURCHASES. AS REGARDS T HE ALLEGATION OF NON- CONSIDERATION OF THE DECISION IN CASE OF N.K. PROTE IN (SUPRA), IT IS RELEVANT TO NOTE, THE SAID DECISION WAS RENDERED BY THE HONBLE APEX COURT ON 16.01.2017 WHICH IS MUCH AFTER THE COMPLETION OF ASSESSMENT ON 02.03.20 16. THEREFORE, THERE IS NO OCCASION ON THE PART OF THE ASSESSING OFFICER TO CO NSIDER THE SAID DECISION. THAT BEING THE CASE, THE EXERCISE OF POWER UNDER SECTION 263 OF THE ACT FOR NON- CONSIDERATION OF THE AFORESAID DECISION OF THE HON BLE APEX COURT IS WHOLLY MISCONCEIVED. IN ANY CASE OF THE MATTER, THE ADDIT ION TO BE MADE ON THE BASIS OF BOGUS PURCHASE IS A PURELY FACTUAL ISSUE AND VARIES FROM CASE TO CASE DEPENDING UPON THE FACTS OF EACH CASE. IN CASE OF N.K. PROTE IN (SUPRA) THE FACTS INVOLVED CLEARLY REVEAL THAT THERE WAS A SEARCH AND SEIZURE ACTION CARRIED OUT IN CASE OF N.K. PROTEIN DURING WHICH VARIOUS INCRIMINATING MATERIAL INCLUDING BLANK CHEQUE BOOKS IN THE NAME OF DIFFERENT ENTITIES WERE FOUND WHICH CON CLUSIVELY PROVED THAT THE ASSESSEE HAD NOT MADE ANY PURCHASES. THUS, IN THE CONTEXT OF THOSE FACTS 100% ADDITION ON ACCOUNT OF BOGUS PURCHASES WAS UPHELD. WHEREAS, IN THE CASE OF THE PRESENT ASSESSEE NO SUCH FACTS ARE INVOLVED. IN AN Y CASE OF THE MATTER, WHEN THE ASSESSEE WAS ABLE TO LINK THE PURCHASES WITH CORRES PONDING SALES, THE LOGICAL CONCLUSION WHICH ONE CAN ARRIVED AT IS, THE ASSESSE E MIGHT NOT HAVE PURCHASED GOODS FROM THE DECLARED SOURCE BUT FROM SOME OTHER PARTIES. IN THAT EVENT, ONLY THE PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, THE DECISION OF THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 10% OF THE BOGUS PURCHASES IS IN TUNE WITH THE CONSISTENT VIEW OF THE TRIBUNAL AND DIFFERENT HIGH ITA NO.6188MUM/2018 SMT. RAJLAKSHMI B. ASSESSMENT YEAR :2010-11 4 COURTS IN SIMILAR NATURE OF CASES. THAT BEING THE CASE, IN OUR VIEW, THE EXERCISE OF POWER UNDER SECTION.263 OF THE ACT IN THE FACTS OF THE PRESENT CASE IS INVALID. ACCORDINGLY, THE IMPUGNED ORDER PASSED BY THE LEANE D PCIT UNDER SECTION 263 OF THE ACT DESERVES TO BE QUASHED. ACCORDINGLY, WE DO SO. CONSEQUENTLY, THE ORDER PASSED BY THE ASSESSING OFFICER IS RESTORED. FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL ARE PARI-MATERIA THE SAME. NO DISTINGUISHING FEATURES COULD BE POINTED O UT BY THE REVENUE. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW OF CO-OR DINATE BENCH OF THE TRIBUNAL, WE QUASH THE IMPUGNED ORDER PASSED U/S 26 3 AND RESTORE THE ORDER OF LD. AO. 6. THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18/03/2019 SR.PS, JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.