LANESSH FLOOR, MUMBAI V. DCIT 15(3), MUMBAI

ITA 6462/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55642 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P NAIR
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI VIJAY PAL RAO(JUDICIAL MEMBER) ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 LANEESH FLOOR ...APPELLANT C/O NATVARLAL VEPARI & CO., 18-29, SEERVAL BUILDING SLEATER ROAD, GRANT ROAD (WEST) MUMBAI 400 007 ( PAN : AADFC 7238B) VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 15(3) , MUMBAI RESPONDEN T APPEARANCES: VIJAY MEHTA, FOR THE APPELLANT P NAIR, FOR THE RESPONDENT DATE OF HEARING : AUGUST 9, 2011 DATE OF PRONOUNCEMENT : OCTOBER 25, 2011 O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS D IRECTED AGAINST THE ORDER DATED 26 TH OCTOBER 2009 PASSED BY THE LEARNED COMMISSIONER (A PPEALS) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 PAGE 2 OF 5 2. GRIEVANCE RAISED BY THE ASSESSEE APPELLANT IS AS FOLLOWS: THE COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI , ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER AND E RRED: 1. IN TREATING PURCHASES FROM M/S KIARA AS BOGUS PURCH ASES BASED ON VARIOUS PRESUMPTIONS AND SURMISES, WITHOUT CONSIDER ING COMPLETELY THE SUBMISSIONS MADE BEFORE HIM AND THE EVIDENCES ADDUCED BY THE APPELLANT. 2. IN NOT APPRECIATING THAT THE APPELLANT WAS NOT IN T HE BUSINESS OF SELLING PLYWOOD AND THAT THE PLYWOOD PURCHASED WAS CONSUMED IN THE BUSINESS AS EXPLAINED IN THE SUBMISSIONS MADE. 3. IN NOT GIVING ANY SPECIFIC ADJUDICATION ON ADHOC DI SALLOWANCE OF EXPENSES AND IN ERRONEOUSLY TREATING GROUNDS 1 AND 2 AS BEING ON THE SAME ISSUE. HE FURTHER ERRED IN NOT CONSIDERING THAT SOME OF THESE EXPENSES HAD ALREADY BEEN CONSIDERED FOR COMP UTING FRINGE BENEFIT TAXATION AND THAT A DISALLOWANCE THEREFROM WILL AMOUNT TO A DOUBLE ADDITION. WITHOUT PREJUDICE, HE FAILED TO AD JUDICATE ON WHETHER THE SAID DISALLOWANCES WERE EXCESSIVE AND N EED TO BE SUITABLY REDUCED. 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND WORKS CONTRA CT IN LAMINATED AND NATURAL FLOORING. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PURCHASED PLYWOOD, AMOUNTING TO RS 14,66,429, FROM M/S KIARA, BUT NEITHER THE ABOVE GOODS WERE FOUND IN STOCK OF THE ASSESSEE NOR SALE OF THE ABOVE GOODS HAS BEEN DECLARED BY THE ASSESSEE NOR CONSUMP TION OF THE ABOVE GOODS WAS SHOWN BY THE ASSESSEE. IN RESPONSE TO ASSESSING O FFICERS REQUISITION FOR FURTHER DETAILS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PLYWOOD SO PURCHASED WAS USED IN MAKING SAMPLES, FLOOR COVERING, DISPLAY UNITS FOR D EALERS AND FOR FLOORING UNDERLAY. IT WAS STATED THAT THE BALANCE MATERIAL BECAME INFECTE D WITH WHITE ANTS, AND WAS CONSIDERED AS WASTAGES. THE ASSESSING OFFICERS RE QUISITION FOR FURNISHING OF DELIVERY CHALLAN AND EVIDENCE OF TRANSPORTING THE PLYWOOD RE MAINED UNCOMPLIED WITH. IT WAS IN THIS BACKGROUND THAT THE PURCHASES OF PLYWOOD AM OUNTING TO RS 14,66,426 WAS TREATED AS BOGUS AND DISALLOWED. THE ASSESSING OFFI CER ALSO DISALLOWED RS 15,000, OUT ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 PAGE 3 OF 5 OF SALES PROMOTION EXPENSES, AND RS 25,000, OUT OF PARTNERS FOREIGN TRAVEL EXPENSES, BY OBSERVING THAT PERSONAL USAGE CANNOT BE RULED OU T. AGGRIEVED BY THESE DISALLOWANCES, ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. WHILE THE CIT(A) DID NOT ADJUDICATE ON LAST TWO AD HOC DISALLOWANCES, THE CIT(A) ALSO UPHELD THE DISALLOWANCE OF PLYWOOD PURC HASES, ON MERITS. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT THE IMPUGNED ASSESSMENT ORDER WAS PASSED ON 2 ND DECEMBER 2008 , AND THE LAST DATE OF HEARING WAS FI XED ON 27 TH NOVEMBER 2008 THE DAY ON WHICH TERRORIST ATTACK ON SEVERAL IMPORTANT MUMBAI PLACES HAD SHOCKED THE NATION. AS EVIDENT FROM THE WRITTEN SUBMISSIONS FI LED BY THE ASSESSEE ( COPY FURNISHED AT PAGES 1 TO 28 OF THE PAPER-BOOK FILED BEFORE US), THE ASSESSEE DID TRY TO CALL ON THE ASSESSING OFFICER ON THAT DAY, BUT HE W AS NOT ALLOWED TO ENTER THE BUILDING BY THE SECURITY GUARD. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER WAS CERTAINLY IN ERROR IN PROCEEDING TO PASS THE ORDER WITHOUT GIVIN G ASSESSEE ANOTHER OPPORTUNITY FOR COMPLIANCE TO THE REQUISITION. THE ASSESSEE, ON HIS OWN, FILED ALL THESE DETAILS VIDE LETTER DATED 5 TH DECEMBER 2008 BUT BY THEN ASSESSMENT ORDER WAS PA SSED. ALL THE DETAILS WHICH THE ASSESSING OFFICER HAD REQUISITION ED WERE DULY FURNISHED BY THE ASSESSEE, AND COPIES OF THE SAME HAVE ALSO BEEN FIL ED BEFORE US. IN THESE DOCUMENTS, COPIES OF WHICH HAVE BEEN PLACED BEFORE US AS WELL, DELIVERY CHALLANS, ACKNOWLEDGEMENT FROM THE CUSTOMERS AND OTHER DETAIL S ARE PLACED ON RECORD. NO DOUBT THESE EVIDENCES HAVE BEEN CONSIDERED BY THE C IT(A) BUT THEN HE HAS PROCEEDED ON THE BASIS THAT IT IS DUTY OF THE APPELLANT TO P ROVE BEYOND DOUBT, WITH EVIDENCE, AND TO REBUT THE FINDINGS OF THE AO BUTTHE APPELLANT H AS FAILED TO PRODUCE THE EVIDENCES LIKE INWARD AND OUTWARD STOCK REGISTER, TRANSPORTAT ION BILLS/ VOUCHERS, EVIDENCES OF DISPATCH OF GOODS, RECEIPT OF GOODS BY ARCHITECT OR DEALER, EVIDENCES OF DAY TO DAY CONSUMPTION. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAS IMPORTED THE LAMINATED FLOORING WHICH NEEDS NO ADDITIONAL PACKIN G OR DISPLAY OF PLYWOOD TO ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 PAGE 4 OF 5 DEALERS. THIS APPROACH OF THE CIT(A) IS CLEARLY U NSUSTAINABLE IN LAW. AS TO WHETHER AN ASSESSEE REQUIRES AN ADDITIONAL PACKING OR NOT IS E SSENTIALLY HIS DECISION AND JUST BECAUSE HE CAN AS WELL DO WITHOUT SUCH ADDITIONAL M ATERIAL CANNOT BE A GOOD GROUND TO REJECT THE CLAIM OF EXPENDITURE ON SUCH, WHAT TH E REVENUE AUTHORITIES CONSIDER TO BE, AVOIDABLE EXPENSE. SIMILARLY, MERELY BECAUSE T HE ASSESSEE DOES NOT KEEP INWARD STOCK REGISTER, PURCHASES CANNOT BE DISREGARDED. WH AT IS ESSENTIALLY REQUIRED TO BE DONE IS TO EXAMINE THE EVIDENCES PRODUCED BY THE AS SESSEE AND UNLESS THERE IS AN INCONSISTENCY IN THE SAME OR THEY LACK CREDIBILITY, THE EVIDENCES ARE TO BE ACCEPTED IN THE LIGHT OF HUMAN PROBABILITIES. THE ASSESSEES WA Y OF CONDUCTING BUSINESS MAY BE LESS THAN WHAT SHOULD HAVE HAPPENED IN IDEAL CIRCUM STANCES BUT THEN WHATEVER EVIDENCE HE HAS PRODUCED ARE TO BE ANYWAY EXAMINED ON MERITS IN A FAIR AND OBJECTIVE MANNER. IN THIS VIEW OF THE MATTER, AND HAVING REGA RD TO THE FACT THAT THE ASSESSING OFFICER HAS NOT DEALT WITH THE EVIDENCES FILED BEFO RE US, WHICH WERE ALSO FILED BEFORE THE ASSESSING OFFICER- THOUGH AFTER THE DATE OF ASS ESSMENT ORDER, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSES SING OFFICER FOR FRESH EXAMINATION IN ACCORDANCE WITH THE LAW, BY WAY OF A SPEAKING ORDER AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GRIEVANCE REGARDING DISALLOWANCE OF ALLEGED BOGUS PURCHASES AMOUNTING TO RS 14,66,42 6 THUS STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 6. THE ONLY OTHER GRIEVANCE IS REGARDING ADHOC DIS ALLOWANCES FOR PERSONAL USE. AS THE MATTER IS GOING BACK TO THE FILE OF THE ASSESSI NG OFFICER ANYWAY, AND THIS GRIEVANCE HAS NOT EVEN BEEN EXAMINED BY THE CIT(A), WE SEE NO NEED TO DEAL WITH THE SAME ON MERITS. WE, HOWEVER, REMIT THIS ISSUE ALSO TO THE F ILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REDECIDE THE MATTER BY WAY OF A SPEAKI NG ORDER, AFTER TAKING INTO ACCOUNT SUBMISSIONS OF THE ASSESSEE- INCLUDING ON QUANTUM O F DISALLOWANCE, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 6462/MUM/2009 ASSESSMENT YEAR: 2006-07 PAGE 5 OF 5 7. IN THE RESULT, BOTH THE ISSUES STAND REMITTED TO THE FILE OF THE ASSESSING OFFICER , AND THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON _25 TH DAY OF OCTOBER, 2011 SD/- SD/- (VIJAY PAL RAO ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTA NT MEMBER MUMBAI; 25 TH DAY OF OCTOBER, 2011 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER , MUMBAI 4. COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH, MUMBAI 6. GUARD FILE TRUE COP Y BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI