AVI WORLDWIDE, MUMBAI V. ASST CIT 19(2), MUMBAI

ITA 7077/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7856 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7077/MUM/2014 ASSESSMENT YEAR: 2009 - 10 M/S AVI WORLDWIDE 201, A - WING, BHAGTANI KRISHANG, DATTAATRAY ROAD, SANTACRUZ (W) MUMBAI - 400054 VS. ACIT - 19(2) MUMBAI PAN NO. AAFFA1100L APPELLANT RESPONDENT ASSESSEE BY : DR. K. SHIVARAM , & MR. RAHUL HAKANI, AR REVENUE BY : MR. RAJESH KUMAR YADAV, DR DATE OF HEARING : 28/12/2017 DATE OF PRONOUNCEMENT : 29/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LEARNED CIT(A) ERRED IN MAKING THE ADDITION OF RS.2,20,41,146/ - BEING PURCHASES FROM ARCHANA TRADERS AND GEMINI STEEL TUBES P. LTD. WITHOUT M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 2 APPRECIATING THAT ASSESSEE HAD FILED LEDGER COPY, THEIR PAN CARD COPY, THEIR TELEPHONE CONTACT NOS, EXCISE DETAILS, BANK STATEMENTS, CONFIRMATION BY ONE PARTY ETC., THUS THE PRIMARY ONUS WAS DULY DISCHARGED BY THE ASSESSEE, THEREFORE THE ADDITION OUGHT TO BE DELETED. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT MERELY BECAUSE THE PARTIES HAD NOT RESPONDED TO NOTICE ISSUED U/S. 133(6) OF THE ACT , ADDITION CANNOT BE MA DE, WHEN THE EXISTENCES OF PARTY IS PROVED AND PAYMENT ARE THROUGH BANKING CHANNEL. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT ONCE THE PRIMARY ONUS OF PROOF IS DISCHARGED BY THE ASSESSEE BY PRODUCING THE NECESSARY DETAILS , IT IS THE DUTY OF THE ASSESSIN G OFFICER TO ISSUE SUMMONS U/S. 131 AND INVOKE ATTENDANCE OF THE PARTIES, THOUGH THE ASSESSEE HAD REQUESTED FOR CALLING A REMAND REPORT FROM THE ASSESSING OFFICER, HOWEVER IT WAS DECLINED BY THE LEARNED CIT(A) WITHOUT ANY REASON. 4. WITHOUT PREJUDICE AND ALTE RNATIVELY, ADDITION OF ENTIRE PURCHASES OF RS.2,20,41,146/ - OF TWO PARTIES NOT JUSTIFIED. THIS GROUND THOUGH SPECIALLY RAISED IN GROUNDS OF APPEAL AND ARGUED BEFORE THE LEARNED CIT(A), HOWEVER T HE SAME WAS NOT ADJUDICATED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) ASKED THE ASSESSEE , DURING THE COURSE OF ASSESSMENT PROCEEDINGS , TO FURNISH DETAILS OF PARTIES FROM WHOM PURCHASES HAD BEEN MADE. AS PER THE DETAILS FILED, HE ISSUED NOTICE U/S 133(6) ON 07.01.2013 TO CERTAIN PA RTIES TO VERIFY THE PURCHASES. THE AO OBSERVED THAT IN THE CASE OF FOUR PARTIES, THE NOTICES CAME BACK UNSERVED/NOT CLAIMED. THE PARTIES WERE ARCHANA TRADERS, GEMINI STEEL TUBES PVT. LTD., ASSOCIATED INDUSTRIES AND BHARAT METAL INDUSTRIES. THEN, HE ASKED T HE ASSESSEE TO FILE FRESH ADDRESS OF THE ABOVE PARTIES. THE AO AGAIN SENT ON 07.03.2013 NOTICE U/S 133(6) TO THE ABOVE PARTIES IN THE NEW ADDRESS GIVEN BY THE M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 3 ASSESSEE. HE FOUND THAT NO REPLY WAS RECEIVED IN THE CASE OF THE FOLLOWING TWO PARTIES: SR. NO. NAME OF THE PURCHASE PARTIES AMOUNT (RS.) STATUS OF NOTICE 1. ARCHANA TRADERS 59,49,216 NOT CLAIMED 2. GEMINI STEEL TUBES P. LTD. 1,60,91,930 UNSERVED TOTAL 2,20,41,146 THEREAFTER, THE AO ASKED THE ASSESSEE TO PRODUCE THE ABOVE PARTIES FOR VERIFICATION. HOWEVER, THE ASSESSEE COULD FILE ONLY THE COPY OF THE PAN CARD OF SHRI DILIP DOSHI, PROP. OF ARCHANA TRADERS AND MOBILE NO. OF SHRI VINOD GUPTA, DIRECTOR OF THE GEMINI STEEL TUBES LTD. THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTIES BEFORE T HE AO FOR VERIFICATION. AS THE ASSESSEE FAILED TO PRODUCE THE ABOVE TWO PARTIES FOR VERIFICATION, THE AO MADE AN ADDITION OF RS.2,20,41,146/ - TO THE TOTAL INCOME SHOWN BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BE FORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE HIM, IT WAS SUBMITTED BY THE ASSESSEE THAT IT IS ENGAGED IN THE MANUFACTURING ACTIVITY AND ONCE GOODS ARE RECEIVED AND PAYMENT MADE, THE TRANSACTION IS COMPLETED, THEREFORE, MERELY BECA USE THE ABOVE TWO M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 4 PARTIES HAVE NOT RESPONDED TO THE NOTICE U/S 133(6), AND, WITHOUT SUMMONING THE ABOVE PARTIES AND OPPORTUNITY OF CROSS - EXAMINATION PROVIDED TO THE ASSESSEE, NO ADDITION CAN BE MADE ON THE ABOVE ACCOUNT. HOWEVER, THE LD. CIT(A) WAS NOT CONVINCED WITH THE ABOVE EXPLANATION , AS THE ASSESSEE FAILED TO PRODUCE THE ABOVE PARTIES BEFORE THE AO FOR VERIFICATION. HE AGREED WITH THE REASONS GIVEN BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSE SSE E FILES A PAPER BOOK CONTAINING (I) RETURN OF INCOME, COMPUTATION OF TOTAL INCOME, BALANCE SHEET AND PROFIT & LOSS ACCOUNT, (II) FORM NO. 3CEB, (III) NOTICE U/S 142(1) DATED 02.06.2011, (IV) LETTER DATED 18.03.2013 ADDRESSED TO ADDL. CIT ENCLOSING DETAI LS OF CREDITORS, ( A ) PAN CARD OF MR. DILIP KIKABHAI DOSHI (ARCHANA TRADER PROP.), ( B ) CONFIRMATION OF LEDGER ACCOUNT BY ARCHANA TRADER, ( C ) RETURN OF INCOME ACKNOWLEDGEMENT, ( D ) LEDGER OF ARCHANA TRADER IN ASSESSEES BOOKS, ( E ) BANK STATEMENT, ( V ) LETTER D ATED 07.03.2013 ADDRESSED TO ADDL. CIT ENCLOSING DETAILS OF CREDITOR, ( A ) LEDGER OF ARCHANA TRADERS IN OUR BOOKS 01.04.2008 TO 31.03.2008 & 01.04.2009 TO 31.03.2011, ( B ) INVOICES/BILLS COPIES, ( C ) BILLS/INVOICE COPIES OF GEMINI STEEL TUBES LTD., ( D ) LEDGER COPIES OF GEMINI STEEL TUBES LTD. 01.04.2007 TO 31.03.2009 & 01.04.2008 TO 31.03.2009 , ( E ) BANK STATEMENT, ( F ) TIN DETAILS AND ANNEXURES J2 OF VAT SHOWING TAX PAYABLE BY TWO PARTIES, ( 6 ) WRITTEN SUBMISSION BEFORE CIT(A). M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 5 IT IS CLARIFIED BY HIM THAT THE DOCUMENTS AT SERIAL NO. 1 - 5 WERE FILED BEFORE THE AO WHEREAS AT SERIAL NO. 1 - 6 WERE FILED BEFORE THE CIT(A). THE LD. COUNSEL ALSO FILES ANOTHER PAPER BOOK CONTAINING CASE LAWS. 6. ON THE OTHER HAND, THE DR RELIES ON THE ORDER OF THE LD. CIT(A). HE SUBMITS THAT AS THE ASSESSEE FAILED TO PRODUCE THE ABOVE TWO PARTIES BEFORE THE AO FOR VERIFICATION OF THE PURCHASES, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS.2,20,41,146/ - . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE FIND THAT THE NOTICE S ISSUED BY THE AO U/S 133(6) ON 07.01.2013 IN THE ADDRESS GIVEN BY THE ASSESSEE WERE RETURNED IN FOUR CASES BY THE POSTAL AUTHORITIES WITH THE REMARK UNSERVED/NOT CLAIMED. THE AO ASKED THE ASSESSEE TO FURNISH FRESH ADDRESS OF THE ABOVE PARTIES. AGAIN HE SENT NOTICES U/S 133(6) ON 07.03.2013 IN THE NEW ADDRESS GIVEN BY THE ASSESSEE. OUT OF FOUR PARTIES, THE AO COULD NOT RECEIVE ANY REPLY AS IN ONE CASE THE NOTICE WAS NOT CLA IMED AND IN THE OTHER CASE THE NOTICE WAS UNSERVED. THE ASSESSEE ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE AO COULD HAVE ISSUED SUMMON TO THE ABOVE TWO PARTIES AND THEN HE COULD HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THEM. HOWEVER , THE AO FAILED TO DO SO. WE REFER HERE TO PAGE 9 OF THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS ALSO TAKEN IT AS A GROUND IN THIS APPEAL. WE ARE OF THE CONSIDERED VIEW THAT THE CONTENTIOUS ISSUES IN THE PRESENT APPEAL COULD BE RESOLVED BY EXAMINING THE ABOVE TWO PARTIES. M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 6 A PROPER HEARING MUST ALWAYS INCLUDE A FAIR OPPORTUNITY TO THOSE WHO ARE PARTIES IN THE CONTROVERSY FOR CORRECTING OR CON TRADICTING ANYTHING PREJUDICIAL TO THEIR VIEW. CROSS - EXAMINATION IS ALLOWED BY PROCEDURAL RULES AND EVIDENTLY ALSO BY THE RULES OF NATURAL JUSTICE. ANY WITNESS WHO HAS BEEN SWORN ON BEHALF OF ANY PARTY IS LIABLE TO BE CROSS - EXAMINED ON BEHALF OF THE OTHER PARTY TO THE PROCEEDINGS. THE HON'BLE SUPREME COURT IN STATE OF KERALA V. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECESS ARILY CARRY WITH IT THE RIGHT TO EXAMINE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS - EXAMINE WITNESSES. IN ITO V. M. PIRAI CHOODI (2012) 20 TAXMANN.COM 733 (SC), THE HON'BLE SUPREME COURT HELD THAT ORDER OF ASSESSMENT PASSED WITHOUT GRANTING AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE, SHOULD NOT HAVE BEEN SET ASIDE BY HIGH COURT; AT MOST, HIGH COURT SHOULD HAVE DIRECTED ASSESSING OFFICER TO GRANT AN OPPORTUNITY TO ASSESSEE TO CROSS - EXAMINE CONCERNED WITNESS. 7.1 IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT AFTER EXAMINING THE ABOVE TWO PARTIES AND THEN GIVING OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THEM. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT D OCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY, THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE ASSESSMENT ORDER. M/S AVI WORLDWIDE ITA NO. 7077/MUM/2014 7 AS WE HAVE RESTORED THE MATTER TO THE FILE OF THE AO, WE ARE NOT ADVERTING TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/12/2017. SD/ - SD/ - ( D.T. GARASIA ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 29/12/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI