DHARENDRA BABULAL MEHTA, THANE V. ITO WARD - 4(1), THANE, THANE

ITA 6439/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6957 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Initiation of penalty proceedings; Corroborative evidences; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 133(6); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN, AM ./ I.T.A. NO. 6439/MUM/2016 ( / ASSESSMENT YEAR: 2009 - 10 ) DHARENDRA BABU LAL MEHTA 6/B, NEW SANGAM BUILDING, SREEPAL COMPLEX, VIRAR (WEST), MUMBAI - 401 202 / VS. ITO WARD 4(1), THANE ./ ./ PAN/GIR NO. AFCPS 7516 N ( / APPELLANT ) : ( / RESPONDENT ) / APPELL ANT BY : SHRI BHUPENDRA SHAH / RESPONDENT BY : SHRI ANOOP HIWASE / DATE OF HEARING : 07.05.2018 / DATE OF PRONOUNCEMENT : 23.05 .2018 / O R D E R PER SA KTIJIT DEY , J . M.: THIS IS AN A PPEAL BY THE A SSESSEE AGAINST THE O RDER DATED 01.08.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , THANE , FOR THE ASSESSMENT YEAR 2009 - 10. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE AN INDIVIDUAL IS STATED TO BE A WHOLE SELLER I N IRON AND STEEL GOODS THROUGH HI S PROPRIETARY CONCERN M/S. PADMAN ENTERPRISES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME OF RS.2,77,220/ - . THE RETURN OF INCOME FILED BY TH E 2 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA ASSESSEE WAS INITIALLY PROC E SSE D U/S. 143 (1) OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, THE ASSES SING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT FOUND THAT THE PURCHASES WORTH RS.1,02,54,663/ - CLAIMED TO HAVE BEEN MADE FROM 13 PARTIES WERE NOT GENUINE , AS THE MAHARASHTRA SALES TAX DEPARTMENT HAVE FOUND THOSE PARTIES TO BE PROVIDING ACCOMMODATION ENTRIES/BILLS TOWARDS BOGUS PURCHASES WITHOUT PHYSICAL DELIVERY OF GOODS. AS PER THE INFORMATION RECEIVED , ONE OF THE BENEFICIARIES OF SUCH ACCOMMODATION ENTRIES /BILLS IS THE PRESENT ASSESSEE. HE ALSO FOUND THAT THE CONCERNED PARTIES FROM WHOM THE ASSESSEE CLAIMED TO HAVE PURCHASED GOODS HAVE FILED AFFIDAVITS BEFORE THE SALES TAX DEPARTMENT CONFIRMING THE FACT THAT THEY HAVE MERELY PROVIDED ACCOMMODATION ENTRIES W ITHOUT ACTUAL SALES AND DELIVERY OF GOODS AS MENTIONED IN THE PURCHASE BILLS ISSUED BY THEM. THUS, ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER HAVING REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT PROCEEDED TO RE OPEN T HE ASSESSMENT U/S. 147 OF THE ACT BY ISSUING A NOTICE U/S. 148 OF THE ACT. THE ASSESSEE COMPLIED WITH THE SAID NOTICE AND ALSO RAISED OBJECTION AGAINST THE REOPENING OF THE ASSESSMENT. AS IT APPEARS , VIDE ORDER DATED 03.02.2015, THE ASSESSING OFFICER DISPO SED OFF THE OBJECTIONS OF THE ASSESSEE AND PROCEEDED WITH THE ASSESSMENT PROCEEDINGS. AFTER CALLING UPON THE ASSESSEE TO FURNISH SUPPORTING DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES, TO VERIFY THE GENUINENESS OF THE PURCHASES, THE ASSE SSING OFFICER ALSO CONDUCTED ENQUIRY INDEPENDENTLY BY ISSUING NOTICES U/S. 133(6) OF THE ACT TO THE CONCERNED PARTIES. HOWEVER, AS OBSERVED BY THE 3 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA ASSESSING OFFICER , ALL SUCH NOTICES RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK UNCLAIMED/LE FT. CONSIDERING THE AFORESAID FACT, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH THE CONFIRMATIONS OF THE CONCERNED PARTIES , COPIES OF THE RETURN FILED BY THEM, COPIES OF THEIR BANK STATEMENTS AND OTHER DETAILS. HE ALSO CALLED UPON THE ASSES SEE TO PRODUCE THE CONCERNED PARTIES FOR VERIFYING THE AUTHENTICITY OF ASSESSEES CLAIM. BESIDES, THE ASSESSING OFFICER ALSO CALLED UPON THE ASSESSEE TO SUBMIT THE DELIVERY CHALLAN, TRANSPORTATION BILLS, GOODS INWARD NOTE , ETC. TO PROVE THE PHYSICAL DELIVE RY OF GOODS. AS OBSERVED BY THE ASSESSING OFFICER, THE ASSESSEE DID NOT COMPLY WITH ANY OF THE QUERIES RAISED BY THE ASSESSING OFFICER. AS A RESULT OF WHICH, HE WAS COMPELLED TO PROCEED FOR COMPLETING THE ASSESSMENT U/S. 144 R/W S. 147 OF THE ACT. I N VIEW OF THE REPEATED NONCOMPLIANCE BY THE ASSESSEE, AND NON PRODUCTION OF THE SUPPORTING DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASES, T HE ASSESSING OFFICER TREATED THE PURCHASES OF RS.1,02,54,663/ - AS NON GENUINE AND BY DISALLOWING SUCH PURC HASES, HE ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED OF SUCH ADDITION/DISALLOWANCE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 4. HOWEVER, LD. COMMISSIONER ( APPEALS) OBSERVING THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE PURCHASES THROUGH SUPPORTING EVIDENCE , CONFIRMED THE ADDITION. 4 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA 5. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 6. IN GRO UND NO. 1, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING U/S. 147 OF THE ACT. AT THE TIME OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE HAS NOT ADVANCED ANY SPECIFIC ARGUMENT IN RESPECT OF THIS GROUND. IN VIEW OF THE ABOVE, THIS GROUND IS DEEMED AS NOT PR ESSED, H ENCE, DISMISSED. 7. GROUND NOS. 2 TO 7 ARE AGAINST THE ADDI TION MADE ON ACCOUNT OF BOGUS PURCHASES. ADVANCING HIS ARGUMENTS IN RESPECT OF THESE GROUNDS, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PURCHASED THE GOODS FR OM THE CONCERNED PARTIES AND HAS MADE PAYMENT THROUGH CHEQUES. HE SUBMITTED , BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS MADE COMPLIANCE IN THE COURSE OF THE REASSESSMENT PROCEEDINGS WHICH IS EVIDENT FROM THE LETTER DATED 11.02.2015, COPY OF WHICH IS PLA CED AT PG. 39 OF THE PAPER BOOK. DRAWING OUR ATTENTION TO THE SAID LETTER, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN PURSUANCE TO AN INVESTIGATION UNDERTAKEN BY THE SALES TAX DEPARTMENT IN ASSESSEES BUSINESS PREMISES, ALL RECORDS, DOCUMENTS WERE S EIZED/IMPOUNDED. HE FURTHER SUBMITTED , IN JANUARY, 2012, THE ASSESSEE HAD LOST ALL REMAINING RECORDS, DOCUMENTS FOR WHICH IT HAD REGISTERED A COMPLAINT WITH THE CONCERNED POLICE STATION AND ISSUED PUBLIC NOTICE IN THE NEWSPAPER. HE SUBMITTED , DUE TO THE AF ORESAID REASON, THE ASSESSEE COULD NOT FURNISH THE DOCUMENTARY EVIDENCES CALLED FOR BY THE ASSESSING OFFICER AND, THEREFORE, REQUESTED THE ASSESSING OFFICER TO CONDUCT NECESSARY ENQUIRY WITH THE SALES TAX AUTHORITIES FOR VERIFYING ASSESSEES 5 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA CLAIM. HE SUBM ITTED , THE ASSESSEE BEING A WHOLESALER IN IRON AND STEEL GOODS, THE GP RATE NEVER EXCEEDS 4 TO 5%. HE SUBMITTED , THE RATE OF SALES TAX APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR IS 4%. WHEREAS, THE DEPARTMENT HAS ADDED THE WHOLE OF THE PURCHASES MADE BY T HE ASSESSEE BY TREATING THEM AS BOGUS. THEREFORE, HE SUBMITTED , IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE IS UNJUSTIFI ED . 8. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE OBSERVATIONS OF THE A SSESSING OFFICER AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SUBMITTED THAT NEITHER AT THE STAGE OF THE ASSESSMENT OR EVEN BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS PRODUCED ANY DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES. HE SUBMITTED EVEN THE BANK STATEMENTS WERE NOT PRODUCED TO PROVE THE FACT THAT THE PAYMENTS WERE MADE TO THE CONCERNED PARTIES THROUGH CHEQUE. HE SUBMITTED BEFORE THE ASSESSING OFFICER, THE ASSESSEE NEVER COMPLIED WITH THE VARIOUS QUERIE S MAD E . THEREFORE, THE ASSESSING OFFICER WAS COMPELLED TO COMPLETE THE ASSESSMENT U/S. 144 OF THE ACT. THEREFORE, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, THE ASSESSEES CLAIM OF PURCHASES BEING GENUINE COUL D NOT HAVE BEEN ACCEPTED. 9 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. I T IS EVIDENT , THAT ASSESSING OFFICER RECEIVED SPECIFIC INFORMATION FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT THAT CERTAIN DEALERS/ENTITIE S WERE ONLY INDULGING IN PROVIDING ACCOMMODATION ENTRIES/BILLS WITHOUT ACTUAL SALE TRANSACTION AND PHYSICAL DELIVERY OF GOODS. FROM THE INFORMATION RECEIVED, HE ALSO FOUND THAT THE 6 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA CONCERNED PARTIES THROUGH AFFIDAVITS SUBMITTED BEFORE THE SALES TAX AUTHORI TIES HAVE ALSO ADMITTED THAT THEY ARE ONLY PROVIDING ACCOMMODATION ENTRIES AND BI LLS. FROM SUCH INFORMATION HE ALSO FOUND THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES AS HE HAS PURCHASED GOODS OF RS.1,02,54,663/ - FROM 13 SUCH PART IES , IDENTIFIED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT. THEREFORE, HE REOPENED THE ASSESSMENT U/S. 147 OF THE ACT TO ASSESS THE INCOME WHICH ACCORDING TO HIM H AS ESCAPED ASSESSMENT AS A RESULT OF CLAIM OF BOGUS PURCHASES MADE BY THE ASSESSEE. ON A READING OF THE IMPUGNED ASSESSMENT ORDER, IT IS EVIDENT THAT DURING THE ASSESSMENT PROCEEDING TO VERIFY THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOTICES U/S. 133(6) OF THE ACT TO THE CONCERNED PARTIES. HOWEVER, A LL SUCH NOTICES WERE RETURNED BACK BY THE POSTAL AUTHORITIES SINCE THE CONCERNED PARTIES WERE NOT AVAILABLE IN THE GIVEN ADDRESSES. THUS, THE ASSESSING OFFICER HAVING FAILED IN HIS ATTEMPT TO VERIFY THE GENUINENES S OF THE PURCHASES, CALLED UPON THE ASSESSE E TO FURNISH VARIOUS DOCUMENTARY EVIDENCES , SUCH AS , DELIVERY CHALLANS, TRANSPORTATION BILLS, CONFIRMATION FROM THE CONCERNED PARTIES, GOODS ENTRY NOTE, ETC. BESIDES, THE ASSESSING OFFICER ALSO CALLED UPON THE ASSESSEE TO PRODUCE THE CONCERNED PARTIES BEFO RE HIM. AS IT APPEARS, THE ASSESSEE NEITHER PROPERLY COMPLIED TO THE NOTICES/ QUERIES OF THE ASSESSING OFFICER NOR PRODUCED ANY SUBSTANTIVE EVIDENCE TO PROVE THE GENUINENESS OF THE PURCHASES. THEREFORE, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESS MENT TO THE BEST OF HIS JUDGMENT U/S. 144 R.W.S. 147 OF THE ACT AND IN THE PROCESS ADDED BACK THE PURCHASES MADE FROM THE CONCERNED PARTIES BY TREATING 7 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA THEM AS BOGUS. EVEN , BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO THE ASSESSEE , WHO APPEARED IN PERSON , FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO PROVE THE PURCHASES. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RECORDED A CATEGORICAL FINDING THAT IN SPITE OF HIS DIRECTION TO THE ASSESSEE TO OBTAIN BANK STATEMENTS FROM THE BANK AND OTHER RELEVANT DOCUMENTS FROM THE SALES TAX DEPARTMENT TO PROVE THE GENUINENESS OF THE PURCHASES , THE ASSESSEE FAILED TO DO SO , EXCEPT STATING THAT ITS BANK ACCOUNT WAS LOST. THUS, FROM THE AFORESAID FACTS, IT IS EVIDENT THAT AT NO STAGE, THE ASSESSEE PRODUCE D A NY SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. BEFORE US ALSO NO DOCUMENTARY EVIDENCES HAVE BEEN BROUGHT ON RECORD TO PROVE THE GENUINENESS OF THE PURCHASES. THE LD. COUNSEL OF THE ASSESSEE REITERATING THE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHORITIES HAS SUBMITTED B EFORE US THAT THE ASSESSEE IS SERIOUSLY HANDICAP PED IN PRODUCING THE REQUIRED DOCUMENTARY EVIDENCES AS SOME OF THE RECORD S HAVE BEEN SEIZED BY THE SALES TAX DEPARTMENT AND IN ITS CUSTODY AND SOME OTHER DOCUMENTS HAVE BEEN LOST. BE THAT AS IT MAY, THE PRIMARY BURDEN IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES CLAIMED TO HAVE BEEN MADE BY HIM. AS PER MATERIALS ON RECORD, THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS. HOWEVER, CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE THAT THE ASSESSEE IS SERIOUSLY HANDICAP PED IN PRODUCING THE NECESSARY EVIDENCES IN VIEW OF THE FACT THAT NECESSARY AND RELEVANT DOCUMENTS/BOOKS OF ACCOUNTS ARE IN THE CUSTODY OF THE SALES TAX DEPARTMENT, W E ARE INCLINED TO AFFORD ON E MORE OPPORTUNITY TO THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES THROUGH PROPER 8 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA SUPPORTING EVIDENCES. THEREFORE, FOR ENABLING THE ASSESSEE TO DO SO, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER TO DECIDE AFRESH ON THE BASIS OF MATERIALS AND EVIDENCES TO BE PRODUCED BY THE ASSESSEE AND WHICH MAY OTHERWISE BE AVAILABLE ON RECORD. AS OBSERVED EARLIER, THE PRIMARY BURDEN IS ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES THROUGH PROPER DOCUMENTARY EVIDENCES. THEREFORE, IT IS THE DUTY OF THE ASSESSEE TO PRODUCE BEFORE THE ASSESSING OFFICER ALL RELEVANT AND NECESSARY EVIDENCE WHICH MAY PROVE THE GENUINENESS OF THE PURCHASES. THE ASSESSING OFFICER MAY ON HIS OWN PART CONDUCT NECESSARY ENQUIRY EITHER WITH THE SALES TAX DEPARTME NT OR ANY OTHER SOURCE TO VERIFY THE GENUINENESS OF THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE. WITH THE AFORESAID OBSERVATIONS, THE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 10 . GROUND NO. 8 IS AGAINST LEVY OF INTEREST U/S. 274 OF THE A CT AND INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT . IN VIEW OF OUR DECISION ABOVE , THESE GROU NDS HAVE BECOME INCONSEQUENTIAL, H ENCE, DISMISSED. 1 1 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.05.2018 SD/ - SD/ - ( N. K. PRADHAN ) (S A KTIJIT DEY ) / A CCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 23.05.2018 . . ./ ROSHANI , SR. PS 9 ITA NO. 6439/MUM/2016 DHARENDRA BABULAL MEHTA / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELL ANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI