DCIT 24(2), MUMBAI V. JITEN B. VORA, MUMBAI

ITA 6343/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75723 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 05-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Bogus purchase; Additional evidence; Wrong claim
• Section: 143(3); 142(1); 133(6)

Judgement Text

ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER ITA NO. 6343/MUM/2012 ASSESSMENT YEAR. 2008-09 ITA NO. 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 DY. CIT-24(2), C-13, 6 TH FLOOR, PRATYAKSHA KAR BHAVAN, BKC, BANDRA (EAST) MUMBAI 400 051. VS. JITEN B. VORA, 402, SARAL APT., MARVE ROAD, MALAD (W) MUMBAI 64. PAN:- AAAPV3821G APPELLANT RESPONDENT RE VENUE BY SHRI R.K. SAHU A SSESSEE BY DR. K. SHIVARAM ORDER PER VIJAY PAL RAO, JM THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE TWO SEPARATE ORDERS OF CIT(A) BOTH DATED 24.08.2012 ARI SING FROM THE ASSESSMENT ORDER PASSED U/S 143(3) AS WELL AS PENAL TY ORDER PASSED U/S 271(1)(C) FOR A.Y. 2008-09. IN THE QUANTUM APPEAL T HE REVENUE HAS RAISED FOLLOWING GROUNDS:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOU NT OF BOGUS PURCHASES OF RS. 25,72,999/- BY IGNORING THE FACT T HAT THE ASSESSEE DATE OF HEARING 05.03 .2014 DATE OF PRONOUNCEMENT 0 7 - 03 - 2014 ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 2 HAD NOT FILED ANY DETAILS BEFORE THE AO BUT HAD FIL ED BEFORE HIM. THUS, THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE U/S 46A WITHOUT GIVING OPPORTUNITY TO THE AO. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOU NT OF LABOUR CHARGES OF RS. 1,00,000/- BY IGNORING THE FACT THAT THE ASSESSEE HAD NOT FILED ANY DETAILS EARLIER BEFORE THE AO; BUT HA D FILED BEFORE HIM. THUS, THE LD. CIT(A) ADMITTED ADDITIONAL EVIDENCE U /S 46A WITHOUT GIVING OPPORTUNITY TO AO . 2. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN GS NOTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 9,00,03,090/- TO THE P&L ACCOUNT ON ACCOUNT OF PURCHASES. THE AO ISSUED NOTICE U./S 142(1) TO THE ASSESSEE AND ASKED TO FURNISH THE DETAILS OF PURCHASES. IN R EPLY THE ASSESSEE FILED THE DETAILS OF PURCHASES. THE AO ISSUED NOTICE U/S 133(6) OF THE INCOME TAX ACT, TO M/S H&R JOHNSON (INDIA) IN RESPECT OF W HICH THE ASSESSEE HAS SHOWN PURCHASES MADE DURING THE YEAR OF RS. 26,96,2 64/- AND RECEIVED THE REPLY WHEREIN IT WAS STATED THAT THE ASSESSEE HAS MADE THE PURCHASES FROM THE SAID PARTY ONLY TO THE TUNE OF RS. 1,20,26 5/- AND NOT RS. 26,93,264/- AS GIVEN IN THE DETAILS OF PURCHASES. A CCORDINGLY IN THE ABSENCE OF ANY CLARIFICATION AND EXPLANATION ON THE PART OF THE ASSESSEE, THE AO MADE THE ADDITION OF RS. 25,72,999/- BY TREA TING THE SAME AS INFLATED PURCHASE. 3. ON APPEAL, THE ASSESSEE EXPLAINED THAT DUE TO TY POGRAPHICAL ERROR THE AMOUNT WAS WRONGLY WRITTEN IN THE DETAILS OF PU RCHASES AS RS. 26,93,264/- INSTEAD OF RS. 1,20,260/-. CIT(A) AFTER CONSIDERING EXPLANATION AS WELL AS RECORD AND DELETED THE ADDITION MADE BY THE AO. 4. BEFORE US, THE LD DR HAS REFERRED THE ORDER OF A SSESSING OFFICER AND SUBMITTED THAT WHEN THE AO HAS POINTED OUT THE DISC REPANCY IN THE PURCHASES SHOWN BY THE ASSESSEE FROM M/S H&R JOHNS ONS (INDIA), THE ASSESSEE DID NOT RESPOND AND, THEREFORE, THE AO HA S RIGHTLY MADE THE ADDITION. HE HAS FURTHER SUBMITTED THAT CIT(A) HAS CONSIDERED FRESH EVIDENCE WITHOUT GIVING THE OPPORTUNITY TO THE AO T O REBUT THE EVIDENCE PRODUCED BY THE ASSESSEE, THEREFORE, THERE IS A VIO LATION OF RULE 46A ON THE ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 3 PART OF THE CIT(A) IN ADMITTING THE ADDITIONAL EVID ENCES. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE FOLLOWING DECISIO NS: I) CIT VS. MANISH BUILD WELL (P) LTD. (16 TAXMANN.COM 27) II) CIT VS. RANJIT KUMAR CHAUDHARY (162 TAXMAN 257) 5. ON THE OTHER HAND LD. AR OF THE ASSESSEE HAS SUB MITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY ADDITIONAL EVIDENCE B UT POINTED OUT THE TYPOGRAPHICAL MISTAKE OCCURRED IN THE DETAILS FILED BY THE ASSESSEE. THE CIT(A) HAS EXAMINED THE EVIDENCE ALREADY BEFORE THE AO AND FOUND THAT BECAUSE OF THAT ERROR THE ASSESSEE HAS NOT CLAIMED ANY EXCESS PURCHASES OR INFLATED PURCHASES BUT ERROR WAS ONLY IN RESPECT OF ONE PARTY AND BY TAKING THE CORRECT FIGURE THE TOTAL PURCHASE DEBITE D TO THE P&L ACCOUNT REMAINS THE SAME. THUS THERE IS NO VIOLATION OF RUL E 46A, WHILE CONSIDERING THE EXPLANATION FURNISHED BY THE ASSESSEE REGARDING THE TYPOGRAPHICAL ERROR IN WRITING THE FIGURE OF PURCHASE, WHICH WAS OTHERWISE TAKEN AS CORRECT FIGURE WHILE DEBITING TO THE P&L ACCOUNT. H E HAS REFERRED THE DETAILS FILED BEFORE THE AO IN RESPECT OF PURCHASES AS WELL AS RECONCILIATION FILED BEFORE CIT(A) AND SUBMITTED THAT EVEN BY WRIT ING A WRONG FIGURE IN THE DETAILS, THE CLAIM OF THE ASSESSEE WAS UNAFFECT ED BECAUSE THE DETAIL OF THE PURCHASES WERE TAKEN CORRECTLY WHILE DEBITING T HE P&L ACCOUNT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE RELEVANT RECORDS. WE FIND THAT THE ASSESSE IN THE D ETAILS FILED BEFORE AO HAS MENTIONED THE PURCHASES FROM M/S H&R JOHNSON (INDIA ) LTD AT THE RS. 26,93,264/- WHICH WAS ACTUALLY RS. 1,20,264/-. THUS THERE WAS A DIFFERENCE OF RS. 25,73,000/- DUE TO MISTAKENLY TAKEN AS A FI GURE OF SALES FROM M/S H&R JOHNSON (INDIA ) LTD. THE LD. AR HAS SUBMITTED THAT THE RECONCILIATION WAS EXAMINED BY CIT(A) AND IT WAS FOUND THAT THE PU RCHASE DEBITED TO THE P&L ACCOUNT IS BASED ON THE CORRECT FIGURE AND NOT ON THIS INCORRECT FIGURE DUE TO TYPOGRAPHICAL ERROR IN THE DETAILS FILED BEF ORE THE AO. 7. THE GRIEVANCE OF THE REVENUE IS THAT WHILE ADMIT TING THE ADDITIONAL EVIDENCE CIT(A) HAS NOT GIVEN ANY OPPORTUNITY TO T HE AO, AND THEREFORE, ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 4 THERE IS A VIOLATION OF RULE 46A. WE NOTE THAT THE MISTAKE WHICH WAS CLARIFIED BY THE ASSESSEE BEFORE THE CIT(A), WAS NO T AN EVIDENCE IN THE FORM OF INVOICE, LEDGER ACCOUNT OR ANY OTHER MATERI AL OF THE BOOKS OF ACCOUNTS BUT IT WAS ONLY A COMPARATIVE LIST SHOWING THE DETAILS OF PARTIES AND THE AMOUNT OF PURCHASES. THEREFORE, POINTING OU T THE TYPOGRAPHICAL ERROR IN THE DETAILS WHICH ARE INCONSISTENCE TO THE ACTUAL DETAILS RECORDED IN THE BOOKS OF ACCOUNTS WOULD NOT AMOUNT TO FURNISHIN G ANY ADDITIONAL EVIDENCE. THE CIT(A) HAS EXAMINED THE DETAILS ALONG WITH OTHER RELEVANT EVIDENCE/RECORD FROM THE BOOKS OF ACCOUNTS AND FOUN D THAT THIS TYPOGRAPHICAL MISTAKE IN WRITING THE AMOUNT OF PURC HASES IN THE DETAILS FURNISHED BY THE ASSESSEE BEFORE THE AO HAS NOT AFF ECTED THE TOTAL AMOUNT OF PURCHASES DEBITED TO THE P&L ACCOUNT. FROM THE P ERUSAL OF THE RECORD WE FIND THAT THIS TYPOGRAPHICAL MISTAKE IS INCONSEQ UENTIAL BECAUSE IT HAS NOT RESULTED INTO EXCESS OR INFLATED CLAIM OF PURCH ASE. WE FURTHER NOTE THAT THE ASSESSEE HAS PRODUCED THE RECONCILIATION BEFORE THE CIT(A) SHOWING THE DISCREPANCY IN THE FIGURE OF ONLY ONE PARTY IN QUESTION AND ALL OTHER PURCHASES IN RESPECT OF REMAINING PARTIES WERE TAKE N AT CORRECT FIGURE AND EVEN THIS INCORRECT FIGURE WRITTEN IN THE DETAILS D UE TO INADVERTENT TYPOGRAPHICAL MISTAKE HAVE NOT RESULTED IN ANY EXCE SS OR INFLATED CLAIM OF PURCHASE AS DEBITED IN THE P&L ACCOUNT. WHEN THE CL AIM OF THE ASSESSEE AS DEBITED IN THE P&L ACCOUNT IN RESPECT OF PURCHASES IS BASED ON THE CORRECT AMOUNT OF PURCHASES IN RESPECT OF EACH AND EVERY PA RTY THEN, POINTING OUT OF TYPOGRAPHICAL MISTAKE BEFORE CIT(A) WOULD NOT AM OUNT TO BE AN ADDITIONAL EVIDENCE. FURTHER WHEN IT IS APPARENT BY EXAMINING THE DETAIL ALREADY PLACED ON RECORD THAT IT WAS ONLY A TYPOGRA PHICAL MISTAKE AND HAS NOT RESULTED IN THE EXCESS CLAIM AND IN THE WISDOM OF CIT(A) IT WAS NOT REQUIRED TO BE INVESTIGATED BY THE AO THEN WE DO NO T FIND ANY ILLEGALITY ON THE PART OF THE CIT(A)WHILE DOING SO. EVEN BEFORE U S THE DEPARTMENT HAS NOT POINTED OUT AS TO WHY THE RECONCILIATION FURNIS HED BY THE ASSESSEE SHOULD NOT BE ACCEPTED AND THE CLAIM OF PURCHASES D EBITED TO THE P&L ACCOUNT IS NOT AS PER THE ACTUAL PURCHASES AND CORR ECT FIGURE. ACCORDINGLY WE FIND NO REASON TO INTEREFERE WITH THE ORDER OF C IT(A) QUA THIS ISSUE. 8. GROUND NO. 2 IS REGARDING DELETION OF LABOUR CHA RGES. THE AO HAS NOTED THAT THE ASSESSEE HAS DEBITED RS. 7.33 CRORES TOWARDS LABOUR CHARGES. THE AO VERIFIED THE VOUCHERS IN RESPECT OF THE LABOUR CHARGES AND ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 5 NOTICED THAT SOME OF THE VOUCHERS ARE SELF MADE, HE NCE THE AO MADE ADHOC DISALLOWANCE OF RS. 1,00,000/- TOWARDS LABOUR CHARGES. 9. ON APPEAL, CIT(A) NOTED THE FACT THAT THE ASSESS EE IS ENGAGED IN THE CIVIL CONSTRUCTION WORK WHICH INVOLVES LABOURERS ON DAILY PAYMENT BASIS AND THE ASSESSEE HAS BEEN MAINTAINING VOUCHERS SUPPORTI NG THE PAYMENTS TO THE DAILY WAGERS. ACCORDINGLY THE ADHOC DISALLOWANC E MADE BY THE AO WAS DELETED BY CIT(A). 10. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD, THE AO HAS MADE ADHOC DISALLOWANCE ON THE GORUND THAT SOME OF THE VOUCHERS WITH REGARD TO THE PAYMENT OF LABOUR CHARGES ARE SELF MADE AND ACCORDINGLY ADDITION OF R S. 1,00,000 WAS MADE, OUT OF THE TOTAL LABOUR CHARGES OF RS. 7.33 CRORES. THE AO HAS NOT EXAMINED THE ISSUE FROM THE ANGLE THAT THE LABOUR C HARGES CLAIMED BY THE ASSESSEE ARE BOGUS BUT THE ADHOC DISALLOWANCE OF RS . 1,00,000/- WAS MADE ON THE GROUND THAT SOME OF THE VOUCHERS ARE SE LF MADE. IT IS PERTINENT TO NOTE THAT IN THE NATURE OF CIVIL CONST RUCTION WORK, HIRING OF DAILY LABOURERS ON DAILY WAGES IS INEVITABLE AND, THEREFO RE, THE ADHOC DISALLOWANCE MADE BY THE AO IS WITHOUT ANY FINDING OF BOGUS CLAIM IS NOT JUSTIFIED. ACCORDINGLY IN THE FACTS AND CIRCUMSTANC ES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CIT(A) IN DELETING THE ADDITION AND THE SAME IS UPHELD. 11. IN THE PENALTY APPEAL THE REVENUE HAS RAISED FO LLOWING GROUNDS: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY TO THE TUNE OF RS. 8,74,563/- LEVIED BY THE AO ON ACCOUNT OF ADDITION MADE IN RES PECT OF BOGUS PURCHASES OF RS. 25,72,999/- WHICH AMOUNTS TO CONCE ALMENT OF INCOME AND ALSO FURNISHING OF INACCURATE PARTICULARS OF IN COME. 12. THE REVENUE HAS CHALLENGED IMPUGNED ORDER OF TH E COMMISSIONER WHEREBY THE PENALTY LEVIED U/S 271(1)(C) IN RESPECT OF THE ADDITION ON BOGUS PURCHASES WAS DELETED. ITA NO. 6343 & 6344/MUM/2012 ASSESSMENT YEAR. 2008-09 6 13. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IN VIEW OF OUR FINDING IN THE QUANTUM APPEAL ON THE ISSUE OF ADDITION ON ACCOUNT OF BOGUS PURCHA SES THE PENALTY WOULD NOT SURVIVE. ACCORDINGLY THE ORDER OF CIT(A) IS UPH ELD DELETING THE PENALTY. 14. IN THE RESULT BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/03/2 014 SD/- SD /- (N.K. BILLAIYA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 07 /03/2014 SKS SR. P.S COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI