ACIT, Circle-4(1), Kolkata, Kolkata V. M/s. Contemporary Industries Ltd., Kolkata

ITA 715/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6659 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Keywords: Bogus purchase; Business income
• Section: 40A(3); 143(3); 133(6); 147; 148

Judgement Text

ITA NO.715/KOL/2017 M/S CONTEMPORARY INDUSTRIES LTD . A.Y.2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI S.S.GODARA, JM & SHRI M.BALA GANESH, AM ] ITA.NO.715/KOL/2017 ASSESSMENT YEAR : 2009-10 A.C.I.T., CIRCLE-4 (1) VS M/S CONTEMPORARY INDUST RIES LTD. KOLKATA KOLKATA (PAN: AABCC 2982 M) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.DASGUPTA, ADDL. CIT(D R) FOR THE RESPONDENT: NONE DATE OF HEARING : 26.06.2018. DATE OF PRONOUNCEMENT : 29.06.2018. ORDER PER S.S.GODHARA, JM THIS REVENUES APPEAL FOR A.Y.2009-10 ARISES AGAIN ST THE CIT(A)-16, KOLKATAS ORDER DATED 17.02.2017 PASSED IN APPEAL N O.803/CIT(A)-16/KOL/2015- 16/C-4(1) REVERSING THE ASSESSING OFFICERS ACTION DISALLOWING/ADDING THE ASSESSEES ALLEGED BOGUS PURCHASE OF RS.12,22,587/-, CASH PAYM ENTS OF TEA LEAVES OF RS.32,58,648/- AND TRAVEL EXPENDITURE OF RS.7,17,31 2/-; RESPECTIVELY IN ASSESSMENT ORDER DATED 17.03.2015 INVOLVING PROCEEDINGS U/S 14 7 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT). WE HAVE HEARD LEARNED ADDL. CIT(DR) REITERATING REV ENUES THREE SUBSTANTIVE GROUNDS. CASE FILE PERUSED. THE ASSESSEE HAS NOT CO ME. THE REGISTRY HAS ISSUED RPAD NOTICE DATED 18.05.2018 TO THE ASSESSEE. IT IS ACCO RDINGLY PROCEEDED EXPARTE. 2. WE COME TO THE FIRST ISSUE OF BOGUS PURCHASES DI SALLOWANCE AMOUNTING TO RS.12,22,587/-. THIS ASSESSEE IS A TEA MANUFACTURER . IT FURTHER TRADES IN PLYWOOD, SHARES, EXPORT AND IN LEASING BUSINESS. THE DEPARTM ENT APPEARS TO HAVE RECEIVED INFORMATION FROM ITS INVESTIGATION WING THAT THE AS SESSEE HAD AVAILED BOGUS PURCHASE ENTRIES FROM VARIOUS HAWALA DEALERS SURAJ TIMBER MA RT, SHYAM TRADERS AND RONAK ENTERPRISES INVOLVING SUMS OF RS.1,50,175/-, RS.8,1 5,195/- AND RS.2,57,217/- ITA NO.715/KOL/2017 M/S CONTEMPORARY INDUSTRIES LTD . A.Y.2009-10 2 RESPECTIVELY. THIS CULMINATED IN SECTION 148 PROCEE DINGS BEING INITIATED THE TAX PAYERS CASE IN CONSEQUENTIAL REASSESSMENT PROCEEDI NGS WAS THAT IT HAD BEEN HAVING ALL THE RELEVANT DETAILS, ADDRESS, VAT, CST AND BILLS O F THE CONCERNED THREE PARTIES FOLLOWED BY PAYMENTS MADE TO HAVE DONE THROUGH ACCO UNT PAYEE CHEQUES. IT FURTHER STATED THAT THE RELEVANT PAYMENTS HAD ALSO BEEN MAD E THROUGH BANKING CHANNELS ONLY. THE ASSESSING OFFICER REJECTED ALL THE SAID PLEAS I N HIS ASSESSMENT ORDER. HE WENT BY INVESTIGATION WINGS INFORMATION ONLY TO CONCLUDE T HAT ALL OF THE ASSESSEES ABOVE PURCHASE TOTALLING TO RS.12,22,587/- WERE BOGUS SI NCE ROUTED THROUGH HAWALA DEALERS. 3. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) REVERS ED THE ASSESSMENT FINDINGS AS UNDER : I HAVE GONE THROUGH THE WRITTEN SUBMISSION OF THE APPELLANT AND THE ASSESSMENT ORDER. THE LD. A.O HAD NO EVIDENCE OR ANY OTHER MAT ERIAL AVAILABLE ON RECORD WHICH COULD ESTABLISH THE PURCHASES MADE BY THE APP ELLANT AS BOGUS. HE HAS MERELY ASSUMED THAT THE AFORESAID PURCHASES ARE BOG US RELYING ON THE INFORMATION PROVIDED BY THE INVESTIGATION WING AND NON-COMPLIAN CE OF NOTICES ISSUED U/S 133(6). NEITHER DID THE LD. A.O PROVIDE THE COPY OF INFORMATION AVAILABLE WITH HIM TO THE APPELLANT NOR DID HE GIVE AN OPPORTUNITY ' TO CROSS EXAMINE THE PRINCIPAL OFFICERS OF THE FIRMS WHO HAVE ADMITTED T O GIVE BOGUS ENTRIES. ON THE OTHER HAND, THE A/R OF THE APPELLANT HAD STATED THA T NO ADDITION CAN BE MADE MERELY ON THE BASIS OF NONCOMPLIANCE OF NOTICES ISS UED U/S 133(6) AND INFORMATION RECEIVED FROM INVESTIGATION WING WITHOU T CONDUCTING ANY INDEPENDENT INQUIRIES. HE HAS FURTHER STATED THAT T HE LD. A.O HAS TREATED THE SALE AS GENUINE AND EVERY SALE HAS CORRESPONDING PURCHAS E. I HAVE CONSIDERED THE WRITTEN SUBMISSION FILED BY THE APPELLANT AND ON TH E BASIS OF ARGUMENTS MADE BY THE APPELLANT AND CASE LAWS PROVIDED, I CONCUR WITH THE SUBMISSION OF THE A/R. HENCE, THE ADDITION MADE BY THE AO OF RS 1222587 IS DELETED AND THE GROUND NO 2 OF THE APPELLANT IS ALLOWED. 4. MR. DASGUPTA VEHEMENTS CONTENTION DURING THE CO URSE OF HEARING IS THAT THE ASSESSING OFFICER HAD RIGHTLY DISALLOWED THE IMPUGN ED PURCHASES SINCE ROUTED THROUGH HAWALA DEALERS IN QUESTION. WE DO NOT SEE ANY SUBST ANCE IN THE INSTANT ARGUMENT. IT IS EVIDENT FIRST OF ALL THAT THE ASSESSEES DETAILED E VIDENCE FILED BEFORE THE ASSESSING OFFICER HAVE NOT BEEN CONSIDERED EVEN NOR THE ASSES SING OFFICER EVER SUPPLIED RELEVANT INFORMATION NOTE(S) . HE DID NOT AFFORD CO RRESPONDING OPPORTUNITY TO CROSS EXAMINATION TO THE TAX PAYER AS PER IN HONBLE APE X COURTS DECISION IN ANDAMAN ITA NO.715/KOL/2017 M/S CONTEMPORARY INDUSTRIES LTD . A.Y.2009-10 3 TIMBER INDUSTRIES LTD. VS COMMISSIONER OF CENTRAL E XCISE (2015) 62 TAXMAN 3 (SC) ORDER DATED NOVEMBER, 16, 2015 . IT HAS FURTHER COM E ON RECORD THAT RELEVANT SALES ALREADY STAND ASSESSED AS GENUINE BUSINESS INCOME. WE TAKE INTO ACCOUNT OF ALL THESE FACTS AND CIRCUMSTANCES TO CONCLUDE THAT THE CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ALLEGED BOGUS PURCHASE DISALLOWANCE. 7. THE REVENUES SECOND SUBSTANTIVE GRIEVANCE SEEKS TO REVIVE SECTION 40A(3) DISALLOWANCE OF RS.32,58,648/- INVOKING ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAD MADE CASH PAYMENT EXCEEDING THE THRESHOLD LIMIT FOR PURCHASE OF TEA LEAVES. THE CIT(A) FIRST OF ALL HOLDS THAT THE SAID AMOUNT INVO LVED SALARY PAYMENT OF RS.3,28,648/- NOT COMING UNDER RULE 6DD OF INCOME T AX RULES. COMING TO THE BALANCE PAYMENTS, WE FIND THAT THE CIT(A) QUOTES T HE HONBLE APEX COURTS DECISION IN UNION OF INDIA VS BELGACHIA TEA CO. LTD. 304 ITR 1 (SC) THAT TEA LEAVES ARE AGRICULTURAL PRODUCE GIVING RISE TO AGRICULTURAL IN COME ONLY. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THAT RULE 6DD(E)(I) ITSELF EXCLUDES PAYMENT MADE FOR AGRICULTURAL PRODUCE FROM THE RIGOR OF SECTION 40A( 3) OF THE ACT. WE THEREFORE UPHOLD THE CIT(A) FINDINGS QUA THE SECOND ISSUE. 8. LEARNED DEPARTMENTAL REPRESENTATIVE THEREAFTER I NVITES OUR ATTENTION TO THIRD AND LAST SUBSTANTIVE GROUND SEEKING TO REVIVE TRAVE LLING EXPENDITURE DISALLOWANCE OF RS.7,17,312/- MADE BY THE ASSESSING OFFICER OUT OF ASSESSEES GROSS CLAIM OF RS.15,38,553/-. THE CIT(A) HAS PARTLY ACCEPTED ASS ESSEES ARGUMENTS IN THE LOWER APPELLATE PROCEEDINGS IN RESTRICTING IMPUGNED DISAL LOWANCE @5% ONLY AS AGAINST THE EARLIER ONE MADE BY THE ASSESSING OFFICER @ ALMOST 47%. WE DO NOT SEE ANY DETAILED DISCUSSION IN THE ASSESSMENT ORDER PINPOINTING TOWA RDS SPECIFIC MATERIAL WHILE TERMING THE ASSESSEES INSTANT EXPENDITURE TO HAVE BEEN INC URRED FOR PERSONAL PURPOSES. WE THUS FIND NO MERIT IN REVENUES INSTANT LAST SUBSTA NTIVE GROUND AS WELL. ITA NO.715/KOL/2017 M/S CONTEMPORARY INDUSTRIES LTD . A.Y.2009-10 4 9. THIS REVENUES APPEAL IS ACCORDINGLY DISMISSED. OR DER PRONOUNCED IN THE COURT ON 29.06.2018. SD/- SD/- [M.BALAGANESH] [ S.S.GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29.06.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M/S CONTEMPORARY INDUSTRIES LTD., 4C, WHITE HOUSE , 119, PARK STREET, KOLKATA- 700016. 2. A.C.I.T., CIRCLE-4 (1), KOLKATA. 3. C.I.T.(A)- 16, KOLKATA 4. C.I.T-2, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O, ITAT KOLKATA BENCHES