REGAL SHOES (I) P LTD, MUMBAI V. DCIT 5(3), MUMBAI

ITA 6408/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2648 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BISTSR
• Keywords: Reopening of assessment; Bogus purchase; Principle of natural justice; Tangible material; Onus to prove; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.6408 /MUM/2014 ( / ASSESSMENT YEAR : 2009-10) M/S REGAL SHOES (I) PVT. LTD., 36, AI MEHRAB, 3ED PEERKHAN STREET, NAGPADA, MUMBAI 400 008. / V. DEPUTY COMMISSIONER OF INCOME TAX 5(3), AAYAKAR BHAVAN, 5 TH FLOOR, M.K. ROAD, MUMBAI 400020. ./ PAN : AABCV9451E ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI PRAKASH PANDIT DEPARTMENT BY : SHRI B.S. BIST,SR. DR / DATE OF HEARING : 11-05-2016 / DATE OF PRONOUNCEMENT : 25-07-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 6408/MUM/2014, IS DIRECTED AGAINST THE APPELLATE OR DER DATED 20 TH AUGUST, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 9, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2009-10, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE ASSESSMENT ORDER DATED 18 TH FEBRUARY, 2014 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 6408/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE THE CIT (APPEALS) HAS FAILED TO APPRECIATE THAT THE NOTICE ISSUED UNDER SECTION 148 WAS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDING THAT TH E ASSESSING OFFICER WAS JUSTIFIED IN INITIATING ACTION UNDER SEC TION 147 OF THE ACT AND THE SAME CANNOT BE CONSIDERED TO BE BAD IN LAW AND CONTRARY TO THE PROVISIONS OF THE ACT. 3. THE CIT (APPEALS) HAS FAILED TO APPRECIATE THAT THE PROCEEDINGS HAVE BEEN INITIATED MECHANICALLY ON THE INFORMATION RE CEIVED FROM THE SALES TAX DEPARTMENT, WHO HAD CALLED THE CONCERNED SU PPLIER AS 'SUSPICIOUS', WITHOUT HAVING ANY TANGIBLE MATERIAL TO FOR M A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT 4. THE CIT (APPEALS) HAS FAILED TO APPRECIATE THAT THE DY. CIT OUGHT TO HAVE DEALT WITH THE OBJECTIONS THAT HAD BEEN RAISED BY APPELLANT AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS BEFO RE PROCEEDING TO FRAME THE REASSESSMENT ORDER. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION THAT HA S BEEN MADE BY THE ASSESSING OFFICER RELYING SOLELY ON THE STATEMENT RECORDED BY THE SALES TAX AUTHORITIES AT THE BACK OF APPELLANT AND HAS FAILED TO APPRECIATE THAT NEITHER A COPY OF THE SAID STATEMENT WAS MADE AVAILABLE NOR AN OPPORTUNITY WAS GIVEN TO CROSS EXAMINE THE PER SON, WHICH VITIATES THE PROCEEDINGS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT (APPEALS) HAS FAILED TO APPRECIATE THAT ADDITION HA S BEEN MADE BY THE ASSESSING OFFICER WHILE PLACING RELIANCE ON IRRE LEVANT NOTORISED AFFIDAVIT CUM DECLARATION OF SOME THIRD PARTY VIZ. A D IRECTOR OF MILESTONE CORPORATION (WITH WHOM APPELLANT HAD NO DEALING) FIL ED BEFORE SALES TAX AUTHORITIES. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWAN CE OF RS. 5,70,214 BEING THE PURCHASE OF GOODS THAT HAS BEEN MADE BY THE ASSESSING OFFICER ALLEGING THE SAID PURCHASES TO BE FICTITIOUS. ITA 6408/MUM/2014 3 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER AND THE CIT (APPEALS) BOTH HAVE FAILED TO TAKE COGNISANCE OF THE MATERIAL THAT WAS PLACED ON RECORD TO ESTABLISH RECEIP T OF THE GOODS AND THE SALES THEREOF. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS 5,70,214 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED BOGUS PURCHASES ON WRONG AND INSUFFICIENT SURMISES. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY HAS FILED RETURN OF INCOME WITH REVENUE U/S 139(1) OF THE ACT ON 30 TH SEPTEMBER, 2009 DECLARING INCOME OF RS. 57,61,640/- WHICH WAS PROCESSED U/S 1 43(1)(A) OF THE ACT. THE CASE WAS REOPENED U/S 147 OF THE ACT AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 11 TH MARCH, 2013 WHICH WAS SERVED UPON THE ASSESSEE COM PANY ON 14 TH MARCH, 2013 I.E. WITH A PERIOD OF FOUR YEARS FROM END OF THE RELEVANT ASSESSMENT YEAR. THE ASSESSEE COMPANY IS PRIMARILY ENGAGED IN THE BUSINESS OF RETAIL DEALERSHIP OF FOOTWEAR, LADIES BAGS AND O THER ALLIED ITEMS. THE ASSESSEE COMPANY HAS ALSO DERIVED INCOME BY WAY OF SHARE OF PROFIT FROM A PARTNERSHIP FIRM NAMELY REGAL SHOES ENGAGED IN A SIMILAR LINE OF BUSINESS. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITTED THAT HE IS NOT PRESSING GROUND NO. 1 TO 6 AND THE SAME M AY BE DISMISSED AS NOT PRESSED. THE LD. D.R. HAS ALSO NOT RAISED ANY OBJE CTION WITH RESPECT THERERO. AS SUCH, GROUNDS NO. 1 TO 6 ARE DISMISSED AS NOT BE ING PRESSED. 5. INFORMATION WAS RECEIVED FROM THE OFFICE OF THE DGIT (INVESTIGATION), MUMBAI REGARDING BOGUS PURCHASES OF RS. 5,70,214/- MADE BY THE ASSESSEE COMPANY FROM THE HAWALA OPERATOR M/S BIG STEP INTER NATIONAL. THE INFORMATION WAS BASED ON THE DATA OF BOGUS BILLS SU PPLIERS RECEIVED FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA. AS PER THE RECORDS OF THE SALES TAX DEPARTMENT, M/S BIG STEP INTERNATIONAL IS ONE O F THE PARTIES INVOLVED IN BOGUS BILLING. THEY JUST ISSUES BILLS FOR COMMISSI ON WITHOUT ACTUAL SUPPLY OF GOODS. IN A NOTARIZED AFFIDAVIT CUM DECLARATION FI LED BEFORE SALES TAX ITA 6408/MUM/2014 4 INVESTIGATION BRANCH, MUMBAI AND IN DEPOSITION BEFO RE THE ASSISTANT COMMISSIONER OF SALES TAX (I-27), INVESTIGATION BRA NCH, MUMBAI THE DIRECTOR OF M/S MILESTONE CORPORATION HAVE ADMITTED OF ISSUI NG ONLY INVOICES/BILLS WITHOUT DELIVERY OF GOODS. THE SAID HAWALA BILL PRO VIDERS HAVE CATEGORICALLY ADMITTED DURING DEPOSITION BEFORE THE SALES TAX AUT HORITIES THAT THESE BILLS ARE PROVIDED JUST FOR THE SAKE OF ENTRY AND AS SUCH NO MATERIALS WERE SUPPLIED BY THEM. THEY HAD ONLY SUPPLIED BILLS ON RECEIPT OF CH EQUES AND LATER ON CASH WAS WITHDRAWN FROM THE BANKS AND AFTER DEDUCTION OF AGREED COMMISSION BALANCE MONEY WAS RETURNED IN CASH. THE ASSESSEE COMPANY WAS SPECIFICALLY ASKED TO PROD UCE THE FOLLOWING INFORMATION: (A) PURCHASE BILLS (B) QUANTITATIVE DETAILS OF EACH COMMODITY IN THE O PENING STOCK, PURCHASES, SALES AND CLOSING STOCK (C) RECORDS MAINTAINED FOR RECEIPT AND DISPATCH OF GOODS (D) CONSUMPTION AND PRODUCTION OF GOODS (E) TIN & PAN OF EACH PARTY FROM WHOM PURCHASES HAV E BEEN MADE (F) COPIES OF ACCOUNTS OF ALL PARTIES FROM WHOM PUR CHASES ARE MADE INCLUDING THE BOGUS PARTIES FROM WHOM THE PURCHASES ARE MADE (G) DOCUMENTS RELATING TO TRANSPORTATION AND RECEI PT OF GOODS (H) COPY OF BANK ACCOUNTS FROM WHOM PAYMENTS AGAINS T PURCHASES ARE MADE (I) THE ADDRESS OF THE BROKER THROUGH WHOM PURCHASE S ARE MADE. THE ASSESSEE COMPANY SUBMITTED THE COPY OF PURCHASE BILLS, LEDGER EXTRACTS. NO DETAILS REGARDING RECORDS MAINTAINED FOR RECEIPT AND DISPATCH OF GOODS, THE ADDRESS OF THE BROKER THROUGH WHOM THE PURCHASES WE RE MADE, COPIES OF BANK STATEMENT FROM WHERE THE PAYMENT FOR PURCHASES WERE MADE. THE ITA 6408/MUM/2014 5 ASSESSEE COMPANY SUBMITTED THAT IT HAS MADE VALID P URCHASE AND GOODS WERE USED FOR THE PURPOSES OF BUSINESS. THE A.O. REJECTED THE CONTENTIONS OF THE ASSESSEE C OMPANY IN VIEW OF THE STATEMENT OF HAWALA DEALER RECORDED UNDER OATH BY S ALES TAX AUTHORITY DURING SURVEY ACTION CONDUCTED IN THEIR PREMISES. THE ONUS TO PROVE THAT THE EXPENDITURE MADE ON ACCOUNT OF PURCHASES IS GENUINE AND TO PROVE THE GENUINENESS OF TRANSACTIONS MADE WITH THE ABOVE SAI D PARTIES ADMITTED TO BE BOGUS BY THE PARTIES THEMSELVES LIES UPON THE ASSES SEE COMPANY, WAS THE OBSERVATIONS OF THE AO. NO EVIDENCE HAS BEEN PRODUC ED BY THE ASSESSEE COMPANY. THE ASSESSEE COMPANY FAILED TO PRODUCE AN Y INDEPENDENT EVIDENCE IN ITS SUPPORT AND DISCHARGE THE ONUS DESPITE SUFFI CIENT OPPORTUNITY BEING GIVEN TO THE ASSESSEE COMPANY. THE CONTENTIONS OF T HE ASSESSEE COMPANY THAT THE MATERIAL WAS PURCHASED FROM THESE PARTIES WAS N OT EVIDENCED FROM STOCK REGISTER.THE STOCK REGISTER WAS NOT SUBMITTED BEFOR E THE AO. THE ASSESSEE COMPANY DID NOT PRODUCED PURCHASE ORDERS, VAJAN KAT A RECEIPTS OR TRANSPORTERS BILLS FOR VERIFICATION BY THE AO. THE CONTENTIONS OF THE ASSESSEE COMPANY THAT PURCHASES AND SALES ARE RECONCILED WER E NOT EVIDENCED BY ANY COGENT MATERIAL PRODUCED BEFORE THE AO.THE DETAILS FOR MAKING PAYMENT TO THIS PARTY BIG STEP INTERNATIONAL WAS NOT PRODUCED BEFORE THE AO, WHILE THE STATEMENT OF HAWALA OPERATOR CLEARLY ESTABLISHES TH AT THESE PURCHASES WERE BOGUS PURCHASES. THE A.O. ACCORDINGLY DISALLOWED A N AMOUNT OF RS. 5,70,214/- ON ACCOUNT OF BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE COMPANY VIDE ASSESSMENT ORDER DATED 18-02-2014 PASSED U/S 143(3) R.W.S. 147 OF THE ACT. 6.AGGRIEVED BY THE ASSESSMENT ORDER DATE 18-02-2014 PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESS EE COMPANY FILED FIRST APPEAL BEFORE THE LEARNED CIT(A). ITA 6408/MUM/2014 6 7. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE COMPANY HAS PURCHASED MATERIAL FROM BIG STEP INTERNATIONAL AND THE A.O. OBSERVED THAT THE SAID PURCHASES APPEARS TO BE BOGUS. THE ADDITI ONS HAVE BEEN MADE ON THE BASIS OF SUSPICION WHILE RE-OPENING CAN BE DONE BASED ON REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND HENC E RE-OPENING IS INVALID. THE ADDITIONS HAVE BEEN MADE RELYING ON THE NOTARIZ ED AFFIDAVIT CUM DECLARATION OF THE STRANGER COMPANY MILESTONE CORP ORATION FURNISHED BEFORE SALES TAX AUTHORITIES , WHILE PURCHASES WERE MADE B Y THE ASSESSEE COMPANY FROM BIG STEP INTERNATIONAL. IT WAS SUBMITTED THA T THE SAID AFFIDAVIT OF M/S MILESTONE CORPORATION WAS NOT BROUGHT TO THE NOTICE OF THE ASSESSEE COMPANY AND THE ASSESSEE COMPANY HAD NO OCCASION TO REFUTE THE SAME, HENCE, IT CANNOT BE RELIED UPON TO MAKE THE ADDITIONS. THE AS SESSEE COMPANY ALSO SUBMITTED THAT IT HAS NO DEALINGS WITH M/S MILESTON E CORPORATION. THUS, THE ASSESSEE COMPANY CONTENDED THAT THE A.O. ERRED IN M AKING THE ADDITION AND ALSO THE REOPENING IS NOT VALID. THE ASSESSEE COMPA NY SUBMITTED THAT THE GOODS INWARD REPORTS FROM THE CONCERNED OUTLETS SHO WING THE RECEIPT OF THE GOODS DELIVERED TO LINKING ROAD, BANDRA RETAIL OUTL ET AND VASHI RETAIL OUTLET AND DELIVERED TO INORBIT MALL, MALAD WERE SUBMITTED BEFORE THE A.O. WHICH WERE NOT CONSIDERED BY THE AO. THUS, THE ASSESSEE C OMPANY HAS GIVEN ALL THE DETAILS AND SALES COULD NOT HAVE BEEN AFFECTED WITH OUT THE CORRESPONDING PURCHASES. IT WAS SUBMITTED THAT THE GP RATIO ACCO UNTED DURING THE YEAR WAS 31.08% ON THE SAID GOODS PURCHASED FROM M/S BIG STE P INTERNATIONAL AND THUS, THE LD. CIT(A) IS NOT JUSTIFIED IN TREATING T HE TRANSACTION AS BOGUS. THE GP RATIO FOR THE LAST FOUR YEARS IS AS UNDER:- ASST. YEAR G.P. RATIO 2009-10 38.89% 2008-09 36.36% 2007-08 36.55% 2006-07 38.47% ITA 6408/MUM/2014 7 THE ASSESSEE COMPANY SUBMITTED THAT FROM THE ABOVE , IT CAN BE SEEN THAT THE GP RATIO OBTAINED DURING THE YEAR UNDER CO NSIDERATION IS BETTER THAN THE CORRESPONDING RATIO FOR ALL THE PREVIOUS THREE YEARS. IT WAS SUBMITTED THAT DURING THE COURSE OF FINANCIAL YEAR 2011-12 IT WAS LEARNT THAT THE SAID SUPPLIERS M/S BIG STEP INTERNATIONAL DID NOT PAY VA T ON THE ABOVE SUPPLIES OF RS.5,70,214/- MADE DURING THE IMPUGNED PREVIOUS YE AR AND THE ASSESSEE COMPANY DEPOSITED THE VAT WITH SALES TAX AUTHORITIE S BY WITHDRAWING THE VAT CREDIT CLAIM IN THE RETURNS. THE AMOUNT OF VAT CREDIT CLAIM WHICH WAS WITHDRAWN WAS AMOUNTING TO RS. 63,358/- AND THE SAM E WAS DEBITED TO SUPPLIER ACCOUNT. COPY OF ACCOUNTS WERE FURNISHED FOR FINANCIAL YEAR 2011-12 WHEREIN THE BALANCE AMOUNT OF RS. 5,06,785/- PAYABL E TO BIG STEP INTERNATIONAL AFTER THE ABOVE DEBIT OF RS.63,358/- WHICH HAS BEEN WRITTEN BACK IN THE ACCOUNTS IN THE FINANCIAL YEAR 2011-12 AND HAS BEEN OFFERED TO TAX IN THE ASSESSMENT YEAR 2012-13, HENCE, ADDITION IN THIS REGARD LEADS TO DOUBLE TAXATION OF THE SAME AMOUNT . IT WAS SUBMIT TED THAT THE DEPARTMENT ON MERE SUSPICION AND BASED ON THE ALLEGED STATEMEN T OF A THIRD PARTY DISALLOWED THE PURCHASES MADE BY THE ASSESSEE COMPA NY WHEREAS ALL EVIDENCES WERE SUBMITTED BEFORE THE A.O. THE LD. CI T(A) UPHELD THE REOPENING OF ASSESSMENT RELYING ON THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF M/S RAJESH JHAVERI BROKERS PVT. LTD. (2007)291 ITR 500(SC). ON MERITS, IT WAS HELD BY THE LD. CIT(A) THAT BIG STEP INTERNATIO NAL HAVE BEEN PROVED TO BE A HAWALA ENTRY PROVIDER AND THE INVESTIGATION WING OF INCOME TAX AND SALES TAX AUTHORITY HAVE INFORMED THAT THE ASSESSEE COMP ANY IS ALSO A BENEFICIARY OF THE RACKET OF HAWALA. THE ASSESSEE COMPANY COUL D NOT PROVIDE ANY DOCUMENTARY EVIDENCE OF ACTUAL DELIVERY OF MATERIAL ALLEGEDLY PURCHASED FROM THE SAID PARTY. THE LD. CIT(A) ALSO RELIED ON THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL, (1995)214 ITR 80 1(SC) AS WELL AS IN THE CASE OF P. MOHANKALA, (2007)291 ITR 278(SC) TO CONT ENT THAT ONE HAS TO CONSIDER ALL SURROUNDING CIRCUMSTANCES FOR ACCEPTIN G THE GENUINENESS OF A ITA 6408/MUM/2014 8 TRANSACTION. THE LD. CIT(A) OBSERVED THAT DETAIL E NQUIRIES WERE MADE BY THE SALES TAX DEPARTMENT AND IT WAS REVEALED THAT THE P ARTY FROM WHOM THE ASSESSEE COMPANY HAS PURCHASED GOODS DO NOT HAVE AN Y CAPACITY AND ONLY EXIST IN PAPER. IT WAS OBSERVED BY THE LD. CIT(A) T HAT THE ASSESSEE COMPANY HAS ALSO NOT MADE ANY PAYMENT FOR THE SAID PURCHASE ON THE GROUND THAT THE QUALITY OF GOODS WAS NOT UP THE MARK WHICH IS CLEAR LY AN AFTERTHOUGHT BECAUSE IT IS UNBELIEVABLE THAT AN ACTUAL SUPPLIER WILL NOT INSIST FOR PAYMENT OF GOODS SUPPLIED BY IT. THE LD. CIT(A) ACCORDINGLY UPHELD THE ADDITION MADE BY THE A.O. VIDE APPELLATE ORDERS 20-08-2014 PASSED BY LEARNED CIT(A). 8.AGGRIEVED BY THE APPELLATE ORDER DATED 20-08-2014 PASSED BY THE LD. CIT(A), THE ASSESSEE COMPANY IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE COMPANY SUBMITT ED THAT THE CASE WAS REOPENED MERELY ON THE BASIS OF INFORMATION RECEIVE D FROM THE SALES TAX AUTHORITIES. THE REVENUE RELIED UPON THE STATEMENT OF A THIRD PARTY I.E. M/S MILESTONE CORPORATION. THE LD. COUNSEL SUBMITTED T HAT THE ASSESSEE COMPANY HAS NO DEALINGS WITH THE SAID PARTY M/S MILESTONE C ORPORATION. THE ASSESSEE COMPANY HAS PURCHASED THE MATERIAL FROM M/S BIG STE P INTERNATIONAL. THE SAID STATEMENT OF M/S MILESTONE CORPORATION HAS NOT BEEN CONFRONTED TO THE ASSESSEE COMPANY. CROSS EXAMINATION WAS NOT ALLOWED TO THE ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS RAISED OBJECTION ON THIS POINT BEFORE THE A.O. AND EVEN COMPLETE DETAILS WERE FURNISHED VIDE ASSESSEE COMPANYS LETTER DATED 23 RD JULY, 2013, WHICH IS PLACED IN PAPER BOOK PAGE 12 TO 14. THE ASSESSEE COMPANY HAS ALSO PRODUCED THE LEDGER ACCOU NTS OF THE SAID M/S BIG STEP INTERNATIONAL VIDE PAPER BOOK PAGE 15 AS WELL AS TAX INVOICE OF BIG STEP INTERNATIONAL VIDE PAPER BOOK PAGE 16 TO 20 WHICH ARE ALSO PLACED ON RECORD. IT WAS ALSO SUBMITTED THAT STOCK REGISTER WAS PRODU CED TO SHOW THE GOODS RECEIVED WHICH IS PLACED ON PAPER BOOK PAGE 21 TO 2 4. SIMILARLY, OTHER INVOICES HAVE ALSO BEEN PRODUCED VIDE PAPER BOOK PA GE 25 TO 42 ALONG WITH ITA 6408/MUM/2014 9 DAILY SALES BOOK. THE ASSESSEE COMPANY SUBMITTED T HAT THE GOODS SUPPLIED BY THE SAID PARTY WAS NOT UP TO THE MARK AND HENCE THE ASSESSEE COMPANY DID NOT PAY THEM. THE ASSESSEE COMPANY HAS ALSO WI THDRAWN THE CLAIM OF VAT ADJUSTMENT. THE AMOUNT HAS BEEN WRITTEN BACK A ND TAXES HAVE BEEN TO THE REVENUE IN THE FINANCIAL YEAR 2011-12. THE LD. COUNSEL HAS ALSO RELIED UPON VARIOUS CASE LAWS. 10. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE COMPANY IS NOT ABLE TO CO-RELATE PURCHASES WITH THE RELEVAN T SALES. THE ASSESSEE COMPANY HAS NOT GIVEN COMPLETE DETAILS AT THE TIME OF THE ASSESSMENT PROCEEDINGS. NO PAYMENT HAS BEEN MADE TO THE SAID PARTY ON THE GROUND THAT QUALITY WAS DEFICIENT WHICH IS AN AFTERTHOUGHT. 11. IN THE REJOINDER, THE LD. COUNSEL SUBMITTED THA T THE ASSESSEE COMPANY HAS MAINTAINED COMPLETE STOCK RECORDS WHICH ARE PRO DUCED BEFORE THE AUTHORITIES BELOW AS WELL BEFORE THE TRIBUNAL. THE SE RECORDS ARE MAINTAINED ELECTRONICALLY. DUE TAXES HAVE BEEN PAID TO THE REV ENUE. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSE SSEE COMPANY HAS MADE PURCHASES FROM M/S BIG STEP INTERNATIONAL TO THE TU NE OF 5,70,214/- WHICH HAS BEEN DOUBTED BY THE REVENUE BASED ON THE INFORM ATION RECEIVED FROM SALES TAX AUTHORITIES. THE SALES TAX AUTHORITIES H AVE FORWARDED THE INFORMATION TO THE REVENUE AND BASED UPON THIS THE CASE WAS REOPENED WITH IN A PERIOD OF FOUR YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR. ORIGINAL ASSESSMENT WAS NOT FRAMED U/S. 143(3) OF T HE ACT RATHER THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. NO OPINION WAS FORMED BY THE A.O. WHILE PROCESSING THE RETURN U/S 143(1) OF THE ACT. THE LD. CIT(A) UPHELD THE REOPENING OF ASSESSMENT RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S RAJESH JHAVERI BROKERS PVT. LTD. (SUPRA). THE A.O. HAS ITA 6408/MUM/2014 10 RECEIVED TANGIBLE MATERIAL FROM THE INVESTIGATION W ING. HOWEVER, WE HAVE OBSERVED THAT COPY OF STATEMENT RECORDED WHICH WAS RELIED UPON BY THE REVENUE OF M/S MILESTONE CORPORATION WAS NOT FORWAR DED TO THE ASSESSEE COMPANY NOR CROSS EXAMINATION WAS OFFERED TO THE AS SESSEE COMPANY, WHILE THE ASSESSEE COMPANY HAS PURCHASED THE MATERIAL FRO M M/S BIG STEP INTERNATIONAL AND THE ASSESSEE COMPANY CONTENDED TH AT THERE IS NO DEALINGS WITH M/S MILESTONE CORPORATION. THE REVENUE HAS CO NTENDED THAT THE ASSESSEE COMPANY HAS NOT PROVIDED THE COMPLETE DETA ILS TO THE AUTHORITIES BELOW TO RECONCILE THE PURCHASES MADE WITH THE SALE S RECORDED IN THE BOOKS OF THE ACCOUNTS . IT IS THE CONTENTION OF THE ASSESSE E COMPANY THAT IT HAS DULY SUBMITTED THE DETAILS WITH THE AO WHEREBY PROPER RE CONCILIATION OF PURCHASES MADE FROM BIG STEP INTERNATIONAL WITH CORRESPONDING SALES IN BOOKS OF ACCOUNTS HAVE BEEN FURNISHED. THE GP RATIO IN THE I MPUGNED ASSESSMENT YEAR IS ALSO STATED TO BE BETTER IN COMPARISON TO LAST T HREE YEARS AS SET OUT IN PRECEDING PARAS. IN OUR CONSIDERED VIEW INTEREST OF JUSTICE WILL BE BEST SERVED IN THE INSTANT APPEAL IF THE MATTER IS SET ASIDE AN D RESTORED TO THE FILE OF AO FOR NECESSARY VERIFICATION AND RECONCILIATION REGAR DING THE PURCHASES MADE BY THE ASSESSEE COMPANY FROM M/S BIG STEP INTERNATIONA L TO THE TUNE OF RS.5,70,214/- WITH CORRESPONDING SALES RECORDED IN BOOKS OF ACCOUNTS TO MATCH AND RECONCILE THE SAME, HENCE, THE ORDER OF L EARNED CIT(A) IS SET ASIDE AND MATTER IS RESTORED TO THE FILE OF THE A.O. FOR DE NOVO DETERMINATION OF THE ISSUE ON MERITS TO RECONCILE AND MATCH THE SALES WI TH CORRESPONDING PURCHASES FROM M/S BIG STEP INTERNATIONAL AS RECORD ED IN THE BOOKS OF ACCOUNTS . THE ASSESSEE COMPANY IS ALSO DIRECTED T O PRODUCE NECESSARY EVIDENCES AND EXPLANATION BEFORE THE A.O. IN ITS DE FENSE. NEEDLESS TO SAY THE A.O. SHALL PROVIDE PROPER AND SUFFICIENT OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE COMPANY IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. ITA 6408/MUM/2014 11 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE COMPANY IN ITA N0. 6408/MUM/2014 FOR THE ASSESSMENT YEAR 2009-10 IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY , 2016. # $% &' 25-07-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 25-07-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI D BENCH 6. (BC / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI