NAROTTAM MORARJI BHANUSHALI, MUMBAI V. ITO 27(2)(4), MUMBAI

ITA 6868/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0860 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2016
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: VIMUL PUNMIYA
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Period of limitation; Time period of passing order; Reason to believe
• Section: 143(3); 234B; 147

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6868/MUM./2016 ( ASSESSMENT YEAR :1998 - 1999 ) NAROTTAM MORARJI BHANUSHALI, R.NO. 14, INDUMATI CHAWAL, NR. KAMAL KUNJM SOCIETY, ASALFA SHIVAJI NAGAR, GHATKOPAR (W) MUMBAI 400084 PAN AJKPB5114H . APPELLANT V/S ITO 27 (2)(4) MUMBAI . RESPONDENT ITA NO.7602/MUM./2006 ( ASSESSMENT YEAR : 2009 - 2010 ) ITO 27 (2)(4) MUMBAI . APPELLANT V/S NAROTTAM MORARJI BHANUSHALI, R.NO. 14, INDUMATI CHAWAL, NR. KAMAL KUNJM SOCIETY, ASALFA SHIVAJI NAGAR, GHATKOPAR (W) MUMBAI 400084 PAN AJKPB5114H . RESPONDENT ASSESSEE BY : SHRI. VIMUL PUNMIYA REVENUE BY : SHRI. SUMAN KUMAR DATE OF HEARING 24.04.2017 DATE OF ORDER 26.04.2017 NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 2 O R D E R PER: SHAMIM YAHYA THESE ARE CROSS - APPEALS BY ASSESSEE AND REVENUE ARISING OUT OF THE ORDER OF CIT - A DATED 23.04.2015 AND PERTAIN TO ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS OF APPEAL RAISED IN ASSESSEES APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE RE - ASSESSMENT PROCEEDING U/S 147 INITIATED BY THE LD. ASSESSING OFFICER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) FAILED TO CONSIDER THAT REASSESSMENT PROCEEDING CANNOT BE INITIATED: - A) NO REASSESSMENT CAN BE MADE JUST TO MAKE AN ENQUIRY OR VERIFICATION. B) REASSESSMENT PROCEEDING CANNOT BE INITI ATE MERELY ON THE INFORMATION RECEIVED FROM INVESTIGATION WING. C) REASSESSMENT PROCEEDING CANNOT BE INITIATED WHEN THE LD. AO HAVE REASON TO SUSPECT AND NOT REASON TO BELIEVE. NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 3 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND LAW, THE LD. CIT (A) ERRED IN C ONFIRMING THE ASSESSMENT ORDER PASSED BY LD. AO U/S 143(3) R.W.S 147 OF INCOME TAX ACT, WHICH IS PASSED AGAINST THE PRINCIPAL OF NATURAL JUSTICE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) ERRED IN CONFIRMING AND TREATING THE GE NUINE PURCHASES OF RS.2,21,21,064 AS BOGUS PURCHASES AND ADDED RS.55,30,266/ - TO TOTAL INCOME BEING THE @25% ON THE PURCHASES OF RS.55,30,266/ - WITHOUT ANY BASIS. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) ERRED IN CONFIRMING TH E ADDITION MADE ON ACCOUNT OF ESTIMATED ADHOC BASIS @2.5% ON ALLEGED PURCHASES MERELY ON ASSUMPTION BASIS. 6. THE LD. CIT(A) ERRED IN CONFIRMING THE INTEREST CHARGED U/S 234B & 234C OF THE IT ACT. 7. THE LD. CIT(A) ERRED CONFIRMING THE INITIATION OF THE PENALTY PROVISIONS U/S. 271(1)(C) OF THE INCOME TAX ACT. 8. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 4 THE GROUNDS OF APPEAL RAISED IN REVENUES APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,65,90, 798/ - ON ACCOUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASES BY DISALLOWING ONLY 25% OF THE BOGUS PURCHASES, AS EVEN THE BASIC ONUS OF PRODUCING BILL OF PURCHASES LEDGER ACCOUNT, TRANSPO RT BILLS DELIVERY CHALLANS WAS NOT FULFILLED BY THE ASSESSEE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY'. 3. THE ASSESSES HAS FILED FOLLOWING ADDITIONAL GROUND ALSO ON THE FACTS AND CIRCUMSTANCES OF THE ASSESS EES CASE AND UNDER LAW, THE ORDER DATED 2303.2015 PASSED BY LD. AO U/S. 143(3) R.W.S. 147 , OF THE INCOME TAX ACT, 1961 WAS NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 5 DISPATCHED ON 09.04.2015 WHICH IS BARRED BY LIMITATION U/S. 153(2) OF THE ACT AND HENCE ASSESSMENT OR DER IS REQUIRED TO BE QUASHED. 4. AT THE OUTSET IN THIS CASE WE TAKE UP THE ASSESSEE CHALLENGE TO THE VALIDITY OF REASSESSMENT ORDER PA SSED IN THIS CASE. WE NOTE THAT ASSESSEE HAS TAKEN SPECIFIC ADDITION AL GROUND WITH BEFORE US IN WHICH THE ASSESSEE STATES THAT ASSESSMENT ORDER WAS DISPATCHED ON 09.04.2015 WHICH IS BARRED BY LIMITATION U/S. 1 53(2) OF THE ACT. IN THIS REGARD WE NOTE THAT I SSU E IN THIS REGARD WAS ALSO RAISED BEFORE THE LD. CIT - A WHO HAS ADJUDICATED THIS ISSUE AS UNDER: - THE APPELLANT HAS ADMITTED IN THE SUBMISSION THAT THE ASSESSMENT ORDER WAS PASSED BEFORE THE END OF THE FINANCIAL YEAR 2014 - 15. HOWEVER, IT HAS BEEN CLAIMED THAT THE SAID ASSESSMENT ORDER WAS RECEIVED BY THE APPELLANT ONLY ON 10.04.2015. IN VIEW OF THIS, T HE AR OF THE APPELLANT HAS PRESUMED THAT THE AO MIGHT HAVE PASSED THE ORDER BEYOND 31ST MARCH, 2015 SINCE THE PROOF OF DISPATCH IS NOT PROVIDED TO HIM. IN THIS REGARD, I FIND THE PRESUMPTION OF PASSING THE ORDER BEYOND 31ST MARCH, 2016 BASELESS AND WITHOUT MERIT. IT IS ON RECORD THAT THE ASSESSMENT ORDER WAS PASSED ON 23RD MARCH, 2015. THE AR HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO ESTABLISH THAT THE ORDER WAS PASSED BEYOND 31ST MARCH, NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 6 2015 AND COMPLETELY IGNORED THE DELIVERY TIME TAKEN BY THE POSTAL DEPA RTMENT. THE CLAIM OF THE APPELLANT THAT AO HAS NOT PROVIDED THE DISPATCH PROOF WILL ACQUIRE CREDIBILITY ONLY WHEN IT WAS REFUSED BY THE AO WHILE BEING REQUESTED BY THE APPELLANT. BEFORE ME, IT IS NOT ESTABLISHED THAT SUCH REQUEST WAS MADE BY THE APPELLANT. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE ISSUED, THERE IS NO MERIT IN THE CLAIM OF THE APPELLANT. HENCE THIS GROUND OF APPEAL IS DISMISSED. 5 . FROM THE ABOVE WE FIND THAT THE SAID ADDITION AL GROUND WAS VERY MUCH BEFORE THE LD. CIT - A . HENCE WE FIND THAT THE SAME GOES TO THE ROOT OF THE MATTER AND HENCE DESERVES ADJUDICATION. ACCORDINGLY ON THE ANVIL OF HONBLE APEX COURT DECISION IN THE CASE OF NTPC LIMITED WE ADMIT AFORESAID GROUND OF APPEAL FOR ADJUDICATION . 6. W HILE CANVASSING THE AFORESAID GROUND THE LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED BEFORE US EVIDENCE IN THE FORM OF DOCUMENT SHOWING FILE MOVEMENT OF THE POSTAL AUTHORITY. REFERRING TO THIS DOCUMENT LD. COUNSEL OF THE ASSESSEE ASSAILED THAT THE ASSESSING OFFICER HAS NOT PAS SED THE ORDER WITHIN THE LIMITATION PERIOD. HE SUBMITTED THAT THE AFORESAID EVIDENCE OF THE LETTER FROM THE POSTAL AUTHORITY CLEARLY SHOW THAT THE SAID LETTER WAS DISPATCHED ON 9 TH NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 7 APRIL, 2015. HENCE THERE WAS NO QUESTION OF SERVING THE SAME TO THE ASSESSE E BEFORE THE 31 ST MARCH, 2015. 7 . PER CONTRA LD. DR SUBMITTED THAT THE AFORESAID DOCUMENT BEING SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE WAS NOT PRODUCED BEFORE THE LD. CIT - A. HENCE LD. DR WAS AGREEABLE TO THE PROPOSITION THAT THE ISSUE ALONG WITH THE ADDITION DOCUMENT SHOULD BE REMITTED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE SAME AND DECIDE AS PER LAW. LD. COUNSEL OF THE ASSESSEE WAS ALSO AGREEABLE TO THIS PROPOSITION. 8 . ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFIC ER . THE A.O SHALL EXAMINE AFRESH IN THE LIGHT OF THE AFORESAID DOCUMENT FROM THE POSTAL AUTHORITY AND DECIDE AS PER LAW, A FTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 9 . SINCE WE ARE REMITTING THE VALIDITY OF THE REASSESSMENT ITSELF TO THE FILE OF THE ASSESSING OFFICER ADJUDICATION ON OTHER ISSUE IN THE ASSESSEE S AS WELL AS REVENUE APPEAL AT PRESENT IS NOT REQUIRED. ACCORDINGLY , WE REFR AIN FROM ADJUDICATING OTHER ISSUES. CONSEQUENT UPON THE ADJUDICATION OF THE ISSUE REMITTED TO THE FILE OF THE ASSESSING OFFICER THE ASSESSEE IS AT LIBERTY TO TAKE NECESSARY GROUNDS OF APPEAL AS IT SO DESIRES. NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 8 IN THE RESULT OF THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2017 SD/ - SD/ - PAWAN SINGH SHAMIM YAH YA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.04.2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI NAROTTAM MORARJI BHANUSHALI ITA NO.6868 & 7602 /MUM./2016 9 DATE INITIAL 1. DRAFT DICTATED ON 24 .04.2017 SR.PS 2. DRAFT PLACED BEFORE AUTHOR .04.2017 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .04.0217 SR.PS 6. DATE OF PRONOUNCEMENT .04.2017 SR.PS 7. FILE SENT TO THE BENCH CLERK .04.2017 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER