DCIT CIR 15(1), MUMBAI V. HITASHA ASHWIN KUKREJA, MUMBAI

ITA 6647/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S D AVHAD
• Keywords: Corroborative evidences
• Section: 69C; 40A(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 6647/MUM/2011(A.Y. 2007-08) THE DY. COMMISSIONER OF INCOME TAX, CIR.15(1), ROOM NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI 400 007. (APPELLANT) VS. SMT. HITASHA ASHWIN KUKERAJA, SHOP NO.2, 392, E. LAXMI BLDG., OPP. SWASTIC CINEMA, LAMINGTON RD., MUMBAI . PAN: ALLPK 1318H (RESPONDENT) APPELLANT BY : SHRI RAKESH RANJAN RESPONDENT BY : SHRI S.D.AVHAD DATE OF HEARING : 08/11/2012 DATE OF PRONOUNCEMENT : 08 /11/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER DATED 01/07/2011 OF LD. CIT(A)-26, MUMBAI FOR THE ASSESSMENT YEAR 2007- 08. THE GROUND OF APPEAL RAISED BY THE REVENUE RE ADS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18, 28,500/- UNDER SECTION 69C OF THE I.T. ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS INVOLVED IN THE BUSINESS OF TRADING (WHOLESALER). DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE AO FOUND THAT CERTAIN PURCHASES WERE MADE BY THE ASSESSEE FROM M/S. I.T.MALL TO WHOM ALL THE PAYMENTS WERE MADE IN CASH. THE AO ASKED THE ASSESSEE TO SUBMIT CONFIRMATION AND ASSESSEE VIDE HIS LETTER DATED 7/1 2/2009 HAD SUBMITTED THAT ASSESSEE IS UNABLE TO OBTAIN ACCOUNT CONFIRMATION S TATEMENT FROM M/S. I.T.MALL AS THE SAID FIRM IS CLOSED AND IS NOT AVAILABLE AT THE ADDRESSED MENTIONED. IT ITA NO. 6647/MUM/2011(A.Y. 2007-08) 2 WAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED GOODS WORTH RS.19,46,851/-, WHICH WERE SOLD. STATEMENT OF PURCHASES MADE BY T HE ASSESSEE FROM THE SAID FIRM AND CORRESPONDING SALES WERE FILED. THE AO OB SERVED THAT CERTAIN CASH PAYMENTS HAD EXCEEDED A SUM OF RS.20,000/-; THE LOS S SHOWN BY THE ASSESSEE IN THESE SALES AND PURCHASES AT RS.90,099/- COULD N OT BE VERIFIED IN ABSENCE OF SUPPORTING EVIDENCE. HE, THEREFORE, ADDED AN AGGRE GATE OF RS.19,47,359/- TO THE INCOME OF THE ASSESSEE. THIS AMOUNT INVOLVES THREE COMPONENTS NAMELY (I) RS. 18,28,500/- BEING PAYMENT OUTSTANDING AGAIN ST THE PURCHASES AS ON THE LAST DAY OF THE YEAR BY APPLYING SECTION 69 OF THE ACT; (II) 20% OF SUM OF RS. 1,43,800/- (RS.38,800 + RS.78,000 +RS.27,000) BEING A SUM OF RS. 28,760/- UNDER SECTION 40A(3) OF THE ACT; AND (III) AMOUNT OF RS.90,099/- BEING LOSS CLAIMED BY THE ASSESSEE IN RESPECT OF THESE TRANSAC TIONS. IN THIS MANNER A CONSOLIDATED SUM OF RS.19,47,359/- WAS DISALLOWED. IT MAY BE MENTIONED THAT AO IN THE ASSESSMENT ORDER HAS RECORDED AS UNDER: SINCE SALES ARE GENUINE HENCE PURCHASES CANNOT BE HELD AS BOGUS AND THE ONLY UNVERIFIABLE FACTS REMAINS IS THE RATE AND DATE OF PAYMENT AND LIABILITIES SHOWN. SINCE ALL ARE UNVERIFIABLE. HE NCE LOSS CLAIMED IS DISALLOWED AND ADDED TOWARDS INCOME. 3. THE ADDITION WAS AGITATED IN APPEAL FILED BEFOR E LD. CIT(A). BEFORE LD. CIT(A) IT WAS SUBMITTED THAT TOTAL PURCHASE MADE BY THE ASSESSEE FROM THE SAID CONCERN ARE RS.20,36,950/- OF WHICH CASH PAYMENTS W ERE MADE TO THE TUNE OF RS.13,02,300/-. IT WAS SUBMITTED THAT THE SUPPLIER M/S. I.T.MALL HAD NEWLY STARTED THE BUSINESS, THEREFORE, INSISTED FOR CASH PAYMENTS. CASH PAYMENTS EXCEEDING RS.20,000/- WERE MADE FOR A SUM OF RS.7,0 0,150/- AND BALANCE AMOUNT OF RS.6,02,150/- WAS MADE THROUGH VARIOUS PA YMENTS BELOW RS.20,000/-. THUS IT WAS SUBMITTED THAT THE DISALL OWANCE UNDER SECTION 40A(3) WILL BE APPLICABLE TO A SUM OF RS.7,00,150/- . IT WAS FURTHER SUBMITTED THAT AS THE CORRESPONDING SALES HAVE BEEN MADE AGAI NST PURCHASES, THE AO HAD ACCEPTED THAT THE PURCHASES MADE BY THE ASSESSEE AR E NOT BOGUS. THE SAID CONCERN HAD DISCONTINUED BUSINESS IN FINANCIAL YEAR 2009 AND, THEREFORE, CONFIRMATION COULD NOT BE OBTAINED. THE ASSESSEE H AS PRODUCED CONFIRMATION ITA NO. 6647/MUM/2011(A.Y. 2007-08) 3 WITH REGARD TO ALL OTHER PURCHASES MADE FROM MAJOR CREDITORS. IT WAS ALSO SUBMITTED THAT THE SAID PARTY WAS ABSCONDING AND HA D DUPED SEVERAL SUPPLIERS AND SUCH FACTS CAN BE VERIFIED FROM THE MARKET. I T WAS SUBMITTED THAT THE PURCHASE MADE BY THE ASSESSEE ARE GENUINE HENCE, SE CTION 69 COULD NOT BE APPLIED. ON THESE SUBMISSIONS LD. CIT(A) HAS DELE TED THE ADDITION OF RS.18,28,500/-, AS ACCORDING TO LD. CIT(A) THE PRES UMPTION OF AO ON THE BASIS OF WHICH ADDITION HAS BEEN MADE IS NOT BASED ON ANY DIRECT OR INDIRECT EVIDENCE/ENQUIRY. THE CONTENTION OF THE ASSESSEE T HAT PAYMENTS AGAINST THE PURCHASES WERE MADE ON DIFFERENT SUBSEQUENT DATES A S SHOWN IN THE LEDGER ACCOUNT WAS CONVINCING AND REASONABLE BECAUSE ACCOR DING TO THE COMMON PRACTICE IF SOMEBODY HAS REGULAR TRANSACTIONS WITH A PARTY THEN IT IS NOT NECESSARY THAT ENTIRE PAYMENT WILL BE MADE ON THE S AME DATE. CREDIT PURCHASE IS A QUITE PREVALENT PHENOMENON IN THE TRA DE. THE ASSESSEE PURCHASED MATERIAL FROM THE SAID PARTY DURING THE P ERIOD OCTOBER 2006 TO MARCH 2007 ON 17 OCCASIONS, WHICH IS SUFFICIENT TO OBSERVE THAT THE ASSESSEE HAVING REGULAR TRANSACTIONS WITH THE SAID CONCERN. THEREFORE, ACCEPTING THE CASE OF THE ASSESEE ON THE ADDITION OF RS.18,28,500 /- LD. CIT(A) HAS DELETED THE ADDITION. HE HAS CONFIRMED THE ADDITION OF RS. 90,099/- ON THE BASIS THAT ASSESSEE COULD NOT FILE EVIDENCE FOR PROPER VERIFI CATION OF RATES OF PURCHASE AND SALE AS THE SALES AND PURCHASES WERE MADE IN C ASH. SO AS IT REGARDS TO ADDITION MADE UNDER SECTION 40A(3) THE SAME HAS BEE N ENHANCED BY LD. CIT(A) TO RS.1,40,030/- IN PLACE OF RS.28,760/- MADE BY TH E AO. IT IS AGAINST THE AFOREMENTIONED RELIEF GIVEN BY LD. CIT(A) THE DEPA RTMENT HAS FILED THE AFOREMENTIONED GROUND OF APPEAL. 4. LD. D.R AFTER NARRATING THE FACTS SUBMITTED THAT ADDITION WAS RIGHTLY MADE BY THE AO AND IT HAS WRONGLY BEEN DELETED BY L D. CIT(A). 5. ON THE OTHER HAND, LD. A.R SUBMITTED THAT LD. C IT(A) HAS RIGHTLY DELETED THE ADDITION AFTER PROPER APPRECIATION OF FACTS AND HIS ORDER SHOULD BE ITA NO. 6647/MUM/2011(A.Y. 2007-08) 4 UPHELD. HE SUBMITTED THAT THE ASSESSEE HAS NOT FI LED ANY APPEAL AGAINST THE IMPUGNED ORDER OF LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE RELEVANT OBSERVATIO N OF AO VIDE WHICH IT HAS BEEN OBSERVED THAT SALES MADE BY THE ASSESSEE ARE G ENUINE, THEREFORE, PURCHASES CANNOT BE HELD TO BE BOGUS CLEARLY SUGGE ST THAT AO HAD NO DOUBT IN HIS MIND THAT SALES AND PURCHASES HAVE ACTUALLY BEE N HAPPENED. THE ONLY DOUBT IN THE MIND OF AO WAS REGARDING VERIFICATION OF RATES OF SALES AND PURCHASES FOR WHICH SEPARATE ADDITION WAS MADE AND HAS ALSO BEEN CONFIRMED BY LD. CIT(A). THE ASSESSEE HAS ALSO ACCEPTED THE SAID ADDITION. THE ONLY BASIS ON WHICH THE ADDITION HAS BEEN MADE BY THE AO IS THAT ASSESSEE DID NOT MAKE PAYMENT WITHIN THE FINANCIAL YEAR. THIS ALONE CANNOT BE THE REASON FOR MAKING THE ADDITION UNLESS SOME POSITIVE MATERIAL IS BROUGHT ON RECORD TO SHOW THAT ASSESSEE DID NOT HAVE THE LIABILITY TO PA Y THE SAID AMOUNT PARTICULARLY WHEN AO HAD ACCEPTED THE GENUINENESS O F SALES MADE BY THE ASSESSEE. IN OUR OPINION LD. CIT(A) HAS RIGHTLY AR RIVED AT THE CONCLUSION THAT ADDITION CANNOT BE MADE ON THE FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE. FINDING NO INFIRMITY IN SUCH RELIEF GIVEN BY THE LD . CIT(A), WE DECLINE TO INTERFERE. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 8 TH DAY OF NOV. 2012 SD/- SD/- (RAJENDRA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 8 TH NOV. 2012 ITA NO. 6647/MUM/2011(A.Y. 2007-08) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R H BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.