SHREE GANESH DATT TULARAM PATHAK, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 31(1), MUMBAI

ITA 620/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2810 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE LD
• Assessee Lawyers: N R AGRAWAL; JENISHA MEHTA
• Keywords: Reasonable cause
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JM & SHRI M.BALAGANESH, AM ITA NO. 620 / MUM/20 1 8 ( ASSESSMENT YEAR : 2009 - 10 ) SHREE GANESH DATT TULARAM PATHAK, C/O. PRASHANT S MEHTA & ASSOCIATES 201, REDDY SHREE SHIV DATTA BUILDING, OPP. LORDS COLLEGE STATION ROAD, GOREGAON (W) MUMBAI 400 062 VS. ACIT - 31, C - 11, BUILDING PRATYAKSHAR BHAVAN BANDRA - KURLA COMPLEX BANDRA (E) MUMBAI - 51 PAN/GIR NO. ALCPP1015F ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI N.R. AGRAWAL & MS. JENISHA MEHTA REVENUE BY SHRI SATISH RAJORE , LD. DR DATE OF HEARING 12 / 06 /201 9 DATE OF PRONOUNCEMENT 14 / 06 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 620/MUM/2018 FOR A.Y. 2009 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 42, MUMBAI IN APPEAL NO. CIT(A) - 42/IT - 18/15 - 16 DATED 27/12/2016 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED ITA NO. 620/MUM/2018 SHREE GANESH DATT TULARAM PATHAK 2 17/03/2015 BY THE LD. ASST. COMMISSIONER OF INCOME TAX - 31(1) (HEREINAFTER REFERRED TO AS LD. AO). 2. AT THE OUTSET, WE FIND THAT THERE IS A DELAY OF 222 DAYS IN FILING OF THE APPEAL BY THE ASSESSEE BEFORE US. THE ASSESSEE HAS FILED AN AFFIDAVIT WHEREIN HE HAD STATED THAT HE WAS NOT PAID HIS REGULAR DUES BY ONE OF THE CUSTOMERS WHICH EVENTUALLY LED HIM TO A HUGE FINANCIAL CRUNCH LEADING TO NON - PAYMENT OF CONTRACTUAL OBLIGATIONS INCLUDING STATUTORY DUES IN HIS BUSINESS AND THIS FINANCIAL CRUNCH HA D EVENTUALLY LED TO DEPRESSION AND HENCE, ASSESSEE COULD NOT CONCENTRATE ON THE AFFAIRS OF HIS BUSINESS INCLUDING THE INCOME TAX MATTERS WHICH HAD RESULTED IN DELAY IN FILING OF APPEAL BEFORE US BY 222 DAYS. WE FIND THAT THE LD. AR ALSO PLACED ON RECORD TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VIJAY VISHIN MEGHANI & ANR. VS. DEPUTY COMMISSIONER OF INCOME TAX & ANR REPORTED IN 398 ITR 250 (BOM) WHEREIN THE DELAY OF 2984 DAYS WAS CONDONED BY THE HONBLE COURT ON THE SET OF FACTS BEFORE IT. WE FIND THAT THE ASSE SSEE HAD ADDUCED REASONABLE CAUSE FOR THE DELAY AND IN THE INTEREST OF SUBSTANTIAL JUSTICE, THE ISSUE REQU IRES TO BE ADJUDICATE D ON MERITS AFTER CONDONING THE DELAY THEREOF , A CCORDINGLY, WE ADMIT THE APPEAL FOR ADJUDICATION. 2.1. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF CLAIM OF PURCHASES OF RS.42,31,698/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE IS A CIVIL CONTRACTOR, INTERIOR DECORATOR DEALING IN MINERAL FIBRE SHEET, METAL GRIDS ETC., AND FILED ITS RETURN OF INCOME IN THE A.Y.2009 - 10 ON 26/08/2009 DECLARING TOTAL INCOME OF RS.25,64,260/ - . BASED ON THE INFORMATION RECEIVED FROM DGIT (INVESTIG ATION), MUMBAI, ASSESSMENT OF THE ASSESSEE ITA NO. 620/MUM/2018 SHREE GANESH DATT TULARAM PATHAK 3 WAS REOPENED U/S.147 OF THE ACT BY ISSUANCE OF NOTICE U/S.148 OF THE ACT ON 05/03/2014. THE LD. AO OBSERVED THAT ASSESSEE HAS ALSO EXECUTED ACOUSTICAL AND FAL SE CEILING CONTRACT DURING THE YEAR. ASSESSEE PRODUCED THE VARIOUS DETAILS INCLUDING THE BOOKS OF ACCOUNTS, TAX AUDIT REPORT TOGETHER WITH ITS ANNEXURES, QUANTITATIVE DETAILS OF PURCHASE AS WELL AS CONSUMPTION ,QUANTITATIVE DETAILS OF SALES, ETC., BEFORE THE LD. AO WHICH WAS DULY EXAMINED BY THE LD. AO IN RE - A SSESSMENT PROCEEDINGS. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT ASSESSEE HAD MADE PURCHASES FROM THE FOLLOWING PARTIES WHO WERE SUPPOSED TO BE INVOLVED IN THE PROVIDING BOGUS BILLS AS PER THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, MUMBAI AS AVAILABLE IN THE OFFICIAL WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. HAWALA TIN NAME OF HAWALA PARTY HAWALA PAN F.Y. AMOUNT 27680662278V MARSHAL ENTERPRISE AAJPS0689J 2008 - 09 707,720 27410583032V TARA ENTERPRISE AWTPS0269A 2008 - 09 489,944 27750595164V DEEP ENTERPRISE AMTPS9884P 2008 - 09 466,882 27580551753V SUN ENTERPRISE BFLPSS041C 2008 - 09 649,106 27710551730V MR CORPORATION BFLPS4883N 2008 - 09 866,866 27490547195V S M TRADING CO. AAVPS1344J 2008 - 09 90,610 27 650549144V MAHAVEER ENTERPRISES AACPT9032D 2008 - 09 960,570 TOTAL 42,31,698 3.1. THE LD. AO ALLEGED THAT ASSESSEE HAD ISSUED CHEQUES TO THE AFORESAID PARTIES FOR MAKING PURCHASES AND HAD RECEIVED THE CASH BACK IN LIEU OF THE SAME FROM THOSE PARTIES. T HE LD. AO ALSO SOUGHT TO VERIFY THESE PARTIES BASED ON THE VARIOUS DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE BY ISSUANCE OF NOTICE U/S.133(6) OF THE ACT FOR VERIFYING THE VERACITY OF THE DOCUMENTS FILED. ALL THE NOTICES WERE EITHER RETURNED UNSERVED WITH THE REMARK OF THE POSTAL AUTHORITIES MARKED AS NOT KNOWN OR UNCLAIMED. THE ASSESSEE WAS CONFRONTED IN THIS REGARD BY THE LD. AO. ITA NO. 620/MUM/2018 SHREE GANESH DATT TULARAM PATHAK 4 THE ASSESSEE SUBMITTED THAT HE HAD MADE GENUINE PURCHASES FROM THE AFORESAID PARTIES AND THE GOODS HAVE BEEN MOVED REG ULARLY TO HIM; THE GOODS HAD BEEN DULY ENTERED IN THE STOCK MOV EMENT REGISTER AND THE SAME HAD BEEN DULY CONSUMED IN THE MANUFACTURING PROCESS OF THE ASSESSEE AND THE PAYMENTS FOR THE SAME WERE DULY MADE BY ACCOUNT PAYEE CHEQUES TO THE CONCERNED PARTIES. H ENCE, NO ADVERSE INFERENCE COULD TO BE DRAWN IN THE HANDS OF THE ASSESSEE. IT WAS ALSO POINTED OUT THAT ASSESSEE HAS BEEN MAKING PURCHASES FROM VARIOUS PARTIES AND MERELY BECAUSE SOME OF THE PARTIES WHO DID NOT RESPOND TO THE NOTICE U/S.133(6) OF THE ACT, THE ASSESSEE CANNOT BE INVOKED WITH DISALLOWANCE OR ADDITION DUE TO DEFICIENCIES FROM THE SIDE OF THE THIRD PARTY. 3.2. IT WAS ALSO POINTED OUT BY THE ASSESSEE THAT ASSESSEE HAD ACTUALLY MADE SALES OUT OF THESE PURCHASES AND NO INFIRMITY IS FOUND THEREON BY THE REVENUE. THE LD. AO DID NOT HEED TO ANY OF THESE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO DISALLOW THE ENTIRE PURCHASES OF RS.42,31,698/ - MADE FROM THE AFORESAID 7 PARTIES TREATING THEM AS BOGUS IN THE ASSESSMENT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT ASSESSEE HAD FURNISHED THE ENTIRE QUANTITATIVE DETAILS IN HIS TAX AUDIT REPORT AND THE ASSESSEE ALSO DREW OUR ATTENTION TO T HE SPECIFIC ITEMS THAT WERE BROUGHT FROM THE AFORESAID 7 PARTIES WHICH WERE ALSO REFLECTED IN THE STOCK MOVEMENT DETAILS ATTACHED IN THE TAX AUDIT REPORT. WE FIND THAT THE SALES MADE OUT OF SUCH PURCHASES HAD BEEN ACCEPTED AS GENUINE BY THE REVENUE. THE E NTIRE STOCK MOVEMENT DETAILS BOTH INWARD, CONSUMPTION AND OUTWARD WERE PRODUCED BEFORE THE LOWER AUTHORITIES WHICH WERE NOT APPRECIATED. IT IS NOT IN DISPUTE THAT THESE DOCUMENTS WERE ALSO PLACED ITA NO. 620/MUM/2018 SHREE GANESH DATT TULARAM PATHAK 5 BEFORE THE LOWER AUTHORITIES. HOWEVER, AS A MATTER OF CONC ESSION, THE LD. AO IN ORDER TO PUT THE ENTIRE DISPUTE ON THE IMPUGNED ISSUE TO REST AGREE D FOR REASONABLE ESTIMATE OF PROFIT ON THE AFORESAID PURCHASES. WE FIND THAT THIS TRIBUNAL IN HUGE NUMBER OF CASES HAD BEEN ESTIMATING THE PROFIT ON SUCH PURCHASES @12 .5%. WE FEEL THAT ADDITION OF 12.5% ON PURCHASE OF 42,31,698/ - , IF MADE, WOULD MEET THE ENDS OF JUSTICE WHICH IS ALSO IN LINE WITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS HARIRAM BAMBANI IN ITA NO. 313 OF 2013 DATED 4.2.2 015. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 / 06 /201 9 SD/ - ( PAWAN SINGH ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 14 / 06 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD F ILE. //TRUE COPY//