RAMESH L JAIN (HUF), MUMBAI V. INCOME TAX OFFICER 19(3)(1), MUMBAI

ITA 7057/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4279 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: PRAFUL L VORA
• Keywords: Bogus purchase; Principle of natural justice; Set aside
• Section: 133(6); 143(1); 148

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ./ I.T.A. NO.7057/ MUM/2017 ( / ASSESSMENT YEAR : 2010 - 11) SHRI. RAMESH L. JAIN (HUF), PROP. M/S. RAMDEV IMPEX , 138/30, 3 RD KUMBHARWADA, MUMBAI 400 004 / V S . ITO 19(3)(1) MUMBAI ./ PAN : AAJHR8745Q ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. PRAFUL L. VORA REVENUE BY : SHRI. D.G. PANSARI / DATE OF HEARING : 07 .03.2019 / DATE OF PRONOUNCEMENT : 13 .0 3 .2019 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER : THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 29, MUMBAI DATED 08.09.2017 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A . O U/S. 14 3 (3) R.W.S 147 OF THE INCOME - TAX ACT 1961 , ( FOR SHORT I T ACT ), DATED 20.01.2016 FOR A . Y 2010 - 11 . THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : 1. LD. A.O. HAS NOT MAINTAINED DATE WISE PROCEEDING SHEET, HAS NOT RECORDED THE REASONING FOR REOPENING OF THE CASE BEFORE ISSUE OF NOTICE U/S. 147/148 OF THE ACT. SUBSEQUENT RECORDING OF REASONING AFTER ISSUANCE OF NOTICE IS NOT PERMISSIBLE, ANY ADDITIONS OR AMENDMENTS IN REASONS TO BELIEVE IS ALSO NOT PERMISSIBLE LD. A.O. HAS MERELY RELIED ON DIGT(I) MUMB AI AND SALES TAX SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 2 2 DEPARTMENT INFORMATIONS, HAS NOT MADE ANY INQUIRIES IN THAT RESPECT, RELIED ON BORROWED INFORMATIONS AND OPINIONS OF OTHER AUTHORITIES, ARE ALSO NOT ALLOWED FOR REOPENING OF THE COMPLETED ASSESSMENT PROCEEDINGS. THEREFORE, NOTICE U/S. 147/ 148 IS LIABLE TO BE QUASHED AND ALL COLLATERAL PROCEEDINGS ARE ALSO LIABLE TO BE ANNULLED AND / OR SET ASIDE. THIS GROUND IS NOT DECIDED BY LD. CIT(A), MUMBAI WHICH GOES TO THE ROOT OF THE MATTER. A.O. HAS NOT GIVEN THE COPY OF REASONS RECORDS AT THE TIME OF ISSUING OF NOTICE U/S/7/148 OF THE ACT. TO THE APPELLANT. 2. LD. A.O. HAS NOT BROUGHT ANY DOCUMENTS AND EVIDENCE IN RESPECT OF INFORMATIONS IN RESPECT OF VENDORS IN DISPUTE, NO MATERIALS ARE AVAILABLE ON RECORD AND IF AVAILABLE NOT GIVEN TO THE APP ELLANT AT ANY STAGE OF PROCEEDINGS, THEREFORE, THERE IS A CLEAR VIOLATION OF RULES OF NATURAL JUSTICE BY LD. A.O. AND FOR THE REASONS ASSESSMENT ORDER PASSED IS LIABLE TO BE SET ASIDE ON THIS COUNT ALSO WITH IMPUGNED APPEAL ORDER. 3. LD. A.O. AND LD - CIT (APPEALS) DID NOT CONSIDERED THE PAPER BOOK SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AT ALL AND/OR NOT PROPERLY CONSIDERED WHILE DECIDING THE MATTER OF THE APPELLANT. ALLEGATIONS OF NON PRODUCTIONS OF DETAILS CALLED FOR ARE FALSE, BASEL ESS AND AGAINST THE EVIDENCE ON RECORD. 4. ADDITIONS MADE BY LD. A.O. AND SUSTAINED BY LD. CIT(A) ARE BASED ON SUSPICION, CONJECTURES, SURMISES BASED ON THIRD PARTIES OPINION. APPELLANT HAS DISCLARED AND DISCLOSED HIS INITIAL BURDEN BY ADDUCING AND PRODUCING THE DETAILS ASKED FOR AND THEREFORE, FURTHER BURDEN IS ON THE AUTHORITIES TO BRING SUFFICIENT MATERIALS TO DISCARD THE EVIDENCES SUBMITTED WITH THE PAPER - BOOK, WHICH HAS NOT BEEN DONE BY THE LOWER AUTHORITIES, THEREFORE, BOTH ORDERS PASSED BY THE LOWER AUTHORITIES MAY BE SET ASIDE, ADDITIONS MAY BE DELETED OR MAY BE REDUCED TO TOKEN AMOUNT IN THE INTEREST OF JUSTICE, THE OBJECTIONS OF NON PRODUCTION OF TRANSPORT RECEIPTS, APPELLANT SAYS THAT THE PURCHASED EFFECTED ARE FROM LOCAL MARKET AND SALES A RE ALSO EFFECTED TO LOCAL VENDEES, HENCE, TRANSPORTATION OF GOODS ARE EFFECTED BY HAND HANDCART OR SMALL TEMPOS AND THE CHARGES PAID TO THEM ARE DEBITED TO PROFIT AND LOSS ACCOUNTS. AS REGARDS PRODUCTION OF DELIVERY CHALLANS WITH INVOICES, BOTH LOWER AUTHO RITIES ARE GROSSLY ERRED IN MAKING SUCH ALLEGATIONS AS THEY FAILED TO VERIFY THE DETAILS SUBMITTED. IN ANY CASE THE WARD DELIVERY CHALLAN IS NOT DEFINED IN THE IT ACT. APPELLANT REFERS THE MEANING OF THE SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 3 3 WORD 'CHALAN' AS GIVEN IN THE LAW OF LEXICON 2ND EDI TION BY SHRI P. RAMANTHA AIYAR AT PAGE - 299 IS AS UNDER: - 'CHALAN' : AN INVOICE OF GOODS ETC. IN REVENUE MATTER. THUS TAX INVOICES SUBMITTED WITH THE DETAILS ARE SUFFICIENT FURTHER BOTH THE LOWER AUTHORITIES HAVE NOT CONSIDERED THE JUDGMENTS CITED, ESPEC IALLY COPIES OF JUDGMENTS SUBMITTED BY LD. A.R. WITH HIS LETTER DATED 09.01.2017 TO CIT (A) - 30, TARDEO, MUMBAI IN WHICH IT IS CATEGORICALLY HELD THAT WHEN PAYMENTS MADE TO THE VENDORS HAVE BEEN PROVED SUCH PURCHASES CANNOT BE DENIED NOR CAN BE CONSIDERED A S BOGUS PURCHASES IN ABSENCE OF ANY CORROBORATIVE EVIDENCE BROUGHT BY THE DEPARTMENT. THEREFORE, ADDITIONS MADE BY LD. AO AND SUSTAINED BY LD. CIT(A) IN APPEAL ORDER MAY BE DELETED. 6. APPELLANT CRAVES THE LIBERTY WITH PRAYER TO ALLOWE D TO ADD OR TO ALTE R OR TO AMEND OR TO CHANGE ANY GROUNDS OF APPEAL ON OR BEFORE OF THE HEARING OF THIS APPEAL. 7. APPELLANT MAY BE ALLOWED TO SUBMIT AN APPLICATION FOR ISSUING OF AN AD - INTERIM STAY ORDER AND AN ABSOLUTE STAY ORDER AND PAPER - BOOK AFTER FILING OF THIS APPEA L. 8. COST MAY BE AWARDED TO APPELLANT 2. BRIEFLY STATED , THE ASSESSEE HUF WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS & NON - FERROUS METAL S HAD FILED ITS RETURN OF INCOME FOR A . Y 2010 - 11 ON 25.09.2010, DECLARING TOTAL INCOME AT RS. 5,27,930/ - . T HE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH U/S. 143(1) OF THE I.T ACT. SUBSEQUENTLY , ON THE BASIS OF THE INFORMATION RECEIVED BY THE A . O FROM THE DGIT (INV) WING, MUMBAI , THAT THE ASSESSEE HAD PROCURED BOGUS PURCHASE BILLS FROM CERT AIN HAWALA DEALERS, ITS CASE WAS REOPENED U/S. 147 OF THE I.T ACT. THE ASSESSEE IN COMPLIANCE TO THE NOTICE ISSUED U/S. 148 OF THE I.T ACT , DATED 26.02.2015 REQUESTED THAT ITS O RIGINAL RETURN OF INCOME MAY BE TREATED A S THE RETURN FILED IN RESPONSE THERE TO. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE AO CALLED UPON THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASE S AGGREGATING TO AN AMOUNT OF RS. 3,8 6,87,9 72 / - MADE FROM SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 4 4 49 PARTIES. IN REPLY , THE ASSESSEE FURNISHED THE AD DRESSES OF THE PARTIES UNDER CONSIDERATION. THE A . O IN ORDER TO VERIFY THE AUTHENTICITY OF THE PURCHASE TRANSACTION S WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES ISSUED NOTICES U/S. 133(6) OF THE IT ACT TO THEM . H OWE VER , ALL THE NOTICES WERE RETURN ED UNSERVED BY THE POSTAL AUTHORIT IES WITH THE REMARK S NOT KNOWN , NO SUCH ADDRESS, LEFT ETC. THE ASSESSEE IN ORDER SUBSTANTIATE THE PURCHASE S WHICH WERE CLAIM ED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES PLACE D ON RECORD CERTAIN DOCUMENTARY EVIDENCES VIZ. (I) COPIES OF BANK STATEMENT EVIDENC ING PAYMENTS MADE TO THEM THROUGH BANKING CHANNELS BY ACCOUNT PAYEE CHEQUES ; AND (II) DETAILS OF THE PURCHASES MADE FROM THE AFOREMENTIONED PARTIES ALONGWITH THE CORRESPONDING SALES. HOWEVER, THE A . O NOT BEING SATISFIED WITH THE EVIDENCES THAT WERE PRODUCE BY THE ASSESSEE IN ITS ATTEMPT TO BUTTRESS ITS CLAIM OF HAVING MADE GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES, DECLINED TO ACCEPT THE SAME. IN THE BACKDROP OF THE AFO RESAID FACTS THE A . O CONCLUDED THAT THE ASSESSEE HAD NO T MADE ANY GENUINE PURCHASES FROM THE AFOREMENTIONED PARTIES. THE A.O O BSERVING THAT THE ASSESSEE HAD CARRIED OUT PURCHASES OF THE GOOD S UNDER CONSIDERATION FROM UNIDENTIFIED SOURCES, THEREFORE, CONCLU DED THAT IT WOULD HAVE BENEFITED BY PROCURING THE GOODS FROM THE OPEN/GREY MARKET AT A DISCOUNTED VALUE AS AGAINST THAT SHOWN IN ITS BOOKS OF ACCOUNTS. IN THE BACKDROP OF HIS AFORESAID DELIBERATIONS THE A.O RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) AND QUANTIF IED THE PRO FIT ELEMENT THAT THE ASSESSEE WOULD HAD MADE BY CARRYING OUT PURCHASES FROM UNDISCLOSED SOURCES @ 12.5% OF THE AGGREGATE VALUE OF SUCH PURCHASES OF RS. 3,86,87, 972/ - , RESULTING TO A CONSEQUENTIAL ADDITION OF RS. 48,35,997/ - IN THE HAND S OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). HOWEVER, AS THE ASSESSEE FAIL ED TO PUT UP A N APPEARANCE BEFORE SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 5 5 THE CIT(A) ON VARIOUS OC CASIONS WHEN THE MATTER WAS FIXED FOR HEARING, THEREFORE, THE APPELLATE AUTHORIT Y HOLDING A CONVICTION THAT THE ASSESSEE HAS ADOPTED A LACKADAISICAL APPROACH WITH REGARD TO THE APPEAL PROCEEDING , DISMISS ED THE APPEAL. 5. THE ASSESSEE BEING A G G R IEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE ( FOR SHORT A . R ) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE CIT(A) HAD ERRED IN DISPOSING OF F THE APPEAL WITHOUT ADJUDICATING THE SAME ON MERITS . IT WAS SUBMITTED BY THE LD. A . R THAT THOUGH THE ASSESSEE DUE TO CERTAIN COMP ELLING CIRCUMSTANCES COULD NOT PUT UP A N APPEARANCE BEFORE THE APPELLATE AUTHORITY, HOWEVER, THE LAT T ER REMAINED UNDER A STATUT ORY OBLIGATION TO HAVE DISPOSED OFF THE APPEAL AFTER DELIBERATING ON THE MERITS OF THE CASE IN THE BACKDROP OF THE GROUNDS WHICH WERE RAISED BY THE ASSESSEE BEFORE HIM. 6. PER CONTRA, THE LD. DEPARTMENT REPRESENTATIVE ( FOR SHORT D . R) RELIED ON THE ORDERS O F THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES , PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY , A PERUSAL OF THE ORDER OF THE CIT(A) REVEALS THAT THE ASSESSEE DES PITE HAVING BEEN AFFORDED SUFFICIENT OPPORTUNITY HAD FAIL ED TO PUT UP AN APPEARANCE BEFORE THE FIRST APPELLATE AUTHORITY. IN FACT, EXCEPT FOR ON ONE OCCASION I.E. ON 17.05.2017, WHEREIN AN APPLICATION FOR ADJOURNMENT WAS FILED BY THE ASSESSEE, ON ALL OTHER DATE S THE ASSESSEE HAD NEITHER PUT UP AN APPEARANCE OR SOUGHT AN ADJOURN MENT BEFORE THE SAID APPELLATE AUTHORITY. WE ARE ABSOLUTELY IN AGREEMENT WITH THE OBSERVATION OF THE CIT(A) THAT THE ASSESSEE HAD ADOPTED A LACKADAISICAL APPROACH WITH REGARD TO THE A PPEAL PROCEEDING S BEFORE HIM. HOWEVER, AT THE SAME TIME WE ALSO CANNOT REMAIN OBLIVIOUS OF THE FACT THAT DESPITE SUCH NON - COOPERATION ON THE PART OF THE ASSESSEE THE CIT (A) STILL REMAINED SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 6 6 UNDER A STATUTORY OBLIGATION TO HAVE DISPOSE D OF F THE APPEAL AFTER ADDRESSING THE RESPECTIVE GROUND S OF APPEAL RAISED BY THE ASSESSEE , IN THE BACK DROP OF THE FACTS AND THE MATERIAL AVAILABLE ON RECORD. IN THE CASE BEFORE US , WE FIND THAT THE CIT(A) HAD MERELY REFERRED TO THE FACTS OF THE CASE AND THE OB SERVATIONS DRAWN BY THE A . O AND HAD FAILED TO ADJUDICATE THE APPEAL ON MERITS, AS WAS REQUIRED UNDER THE LAW. W E ARE UNABLE TO PER SUADE OUR SELVES TO SUBSCRIBE TO THE AFORESAID APPROACH OF THE CIT(A) , AS THE LATTER AS OBSERVED BY U S HEREINABOVE REMAINED UND ER A STATUTORY OBLIGATION TO HAVE DISPOSED OFF THE APPEAL ON MERITS B Y WAY OF A SPEAKING ORDER . OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. PREMKUMAR ARJUNDAS LUTHRA (HUF)(2016) 240 TAXMAN 133 (BOM). WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS RESTORE THE APPEAL TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DISPOSE OFF THE SAME ON MERITS. NEEDLESS TO SAY, THE CIT(A) IN THE COURSE OF THE SET ASIDE PROCEEDINGS SHALL AFFORD AN OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. 8 . THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 13 .0 3 .2019. 13 .0 3 .2019 SD/ - SD/ - (B.R. BASKARAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13 .03.2019 NISHANT VERMA SR. PRIVATE SECRETARY SHRI RAMESH LAL JAIN (HUF) VS. ITO 19(3)(1), MUMBAI ITA NO. 7057/MUM/2017 7 7 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT - CONCERNED, MUMBAI 5. THE DR BENCH, 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI