AMIT ASHOK GOLWALA, MUMBAI V. ITO - 25 (2)(1), MUMBAI

ITA 7265/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2787 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Bogus purchase; Initiation of penalty proceedings; Accommodation entries
• Section: 142(1); 133(6); 143(1); 143(2); 147; 145; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI, R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 7265/MUM/2018 (ASSESSMENT YEAR 2011-12 ) AMIT ASHOK GOLW ALA 11, KAMALKUNJ, 4 TH FLOOR, N.S. ROAD, JUHU SCHEME, VILE PARLE (W), MUMBAI- 400056 PAN: AAYPG1455B VS. ITO-25(2)(1) MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : NONE RESPONDENT BY : SHRI SATISHCHANDRA RAJORE (DR) DATE OF HEARING : 26.02.2020 DATE OF PRONOUNCEMEN T : 02.03.2020 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-53, MUMBAI [LD. CIT(A)] DATED 17.10.2018 FOR ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW: 1. THE ORDER OF THE LEARNED CIT(A) IS BASED ON INCO RRECT INTERPRETATION OF LAW AND FACTS AND THEREFORE IS BAD IN LAW. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS IN UPHOLDING THE AD-HOC DISALLOWANCE OF INR 5,35,385, I.E., 25% OF THE VALU E OF PURCHASE OF MATERIAL MADE BY THE APPELLANT, THEREBY CONFIRMING THE ORDER OF THE LEARNED AO. 3. THE LEARNED CIT(A) HAS ERRED, IN LAW AND FACTS, IN HOLDING THAT INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(..)(C) OF THE ACT BY THE LEARNED AO IS PREMATURE IN NATURE. ITA NO. 7 265 MUM 2018-AMIT ASHOK GOLWALA 2 THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND / OR TO ALTER, AMEND, RESCIND, MODIFY, THE GROUNDS HEREIN ABOVE OR PRODUCE FURTHER DOCUMENTS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 23.09.2011 DECLARING TOTAL INCOME OF R S. 4,73,980/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THE RE TURN OF INCOME WAS PROCESSED UNDER SECTION 143(1). THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATION RECEIVED FR OM SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERATORS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHAR ASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INVESTIGATION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST O F BENEFICIARY. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, THEREFORE, RE-OPEN ED THE ASSESSMENT UNDER SECTION 147. THE NOTICE UNDER SECTION 148 DATED 22. 02.2016 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 FILED ITS REPLY AND SUBMITTED THAT RETURN FILED ON 23.09.2011 SHOULD BE TREATED AS RETURN IN RESPONSE TO THIS NOTICE. THE A SSESSING OFFICER AFTER SERVING NOTICE UNDER SECTION 143(2) AND 142(1) DATE D 17.08.2016 PROCEEDED FOR RE-ASSESSMENT. DURING THE ASSESSMENT, THE ASSES SING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS. 21,41,539/- FROM THE FOLLOWING ITA NO. 7 265 MUM 2018-AMIT ASHOK GOLWALA 3 PARTIES, WHICH WERE DECLARED AS HAWALA DEALERS BY T HE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. NAME OF THE PARTY VAT NO. TRANSACTION AMOUNT (RS.) 1 ASHOK TRADING CO. 27440561142V 1,36,500 2 ANIKET INDUSTRIES 27960621869V 4,80,789 3 UJWAL ENTERPRISE 27940626827V 5,26,492 4 PRIME STEEL IMPEX 27910581593V 6,75,558 5 KANAK GURU TUBES & METALS PVT. LTD. 27240657864V 3,22,200 GRAND TOTAL 21,41,539 3. THE ASSESSING OFFICER IN ORDER TO VERIFY THE TRANSA CTION ISSUED NOTICE UNDER SECTION 133(6) TO ALL THE PARTIES. THE NOTICE SENT THROUGH REGISTERED POST WAS RETURNED BACK WITH THE REMARK NOT KNOWN, NOT CLA IMED OR LEFT. THE ASSESSEE WAS ASKED TO SHOW-CAUSE DATED 14.12.2016 A S TO WHY THE PURCHASES SHOWN FROM ALL THE PARTIES SHOULD NOT BE TREATED AS NON-GENUINE. THE ASSESSING OFFICER HAS NOT RECORDED, IF ANY REPL Y TO THE SHOW-CAUSE NOTICE DATED 14.12.2016 WAS FURNISHED OR NOT OR ANY DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE PURCHASES WAS FILED O R NOT BEFORE HIM. THE ASSESSING OFFICER ON THE BASIS OF REPORT OF SALE TA X DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND THE ENQUIRY CONDUCTED BY HIM BY ISSUING NOTICE UNDER SECTION 133(6) RECORDED THAT ASSESSEE FAILED TO PRODUCE THE PARTIES AND TO SUBSTANTIATE THE GENUINENESS OF TRAN SACTION. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY INVOKING T HE PROVISION OF SECTION 145 OF THE INCOME TAX ACT. THE ASSESSING OFFICER BY REFERRING THE DECISION ITA NO. 7 265 MUM 2018-AMIT ASHOK GOLWALA 4 OF AHMEDABAD TRIBUNAL IN VIJAY PROTEINS VS. ACIT (5 8 ITD 428), DISALLOWED 25% OF THE PURCHASES SHOWN FROM TAINTED/ HAWALA DEALERS. THE ASSESSING OFFICER WORKED OUT THE DISALLOWANCE OF RS . 5,35,385/- (25% OF RS. 21,41,539/-). ON APPEAL, THE ACTION OF ASSESSIN G OFFICER WAS CONFIRMED. 4. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REV ENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE THE SER VICE OF NOTICE THROUGH RPAD. THEREFORE, WE PROCEEDED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE SUBMISSION OF LD. DR FOR THE REVENUE. THE LD. DR SUPPORTED THE ORDER OF LOWE R AUTHORITIES. THE LD. DR SUBMITS THAT INVESTIGATION WING OF DEPARTMENT CO NDUCTED FULL-FLEDGED INVESTIGATION ABOUT THE HAWALA TRADERS, WHO WERE EN GAGED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GO ODS. BEFORE ASSESSING OFFICER, THE ASSESSEE FAILED TO BRING ANY EVIDENCE ABOUT ACTUAL DELIVERY OF GOODS BY THE ASSESSEE. THE ASSESSING OFFICER DISALL OWED ONLY PROFIT MARGIN EMBEDDED IN SUCH TAINTED/BOGUS PURCHASES. THE ASSES SING OFFICER REASONABLY ESTIMATED THE DISALLOWANCE @ 25%. THE AS SESSEE IS NOT ENTITLED FOR FURTHER RELIEF. 6. WE HAVE CONSIDERED THE SUBMISSION OF LD. DEPARTMENT AL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAIL ABLE ON RECORD. DURING THE RE-ASSESSMENT, THE ASSESSING OFFICER ON THE BAS IS OF INVESTIGATION CONDUCTED UNDER SECTION 133(6) AND THE REPORT OF SA LE TAX DEPARTMENT ITA NO. 7 265 MUM 2018-AMIT ASHOK GOLWALA 5 REJECTED THE BOOKS OF ACCOUNT. THOUGH THE ASSESSING OFFICER ISSUED SHOW- CAUSE NOTICE FOR ESTABLISHING THE GENUINENESS OF PU RCHASES AND TO PRODUCE THE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSING OFFICE R NOT RECORDED, IF ANY REPLY OR EVIDENCE WAS FURNISHED BY ASSESSEE. THE AS SESSING OFFICER MADE THE DISALLOWANCE @ 25% OF THE BOGUS PURCHASES. WE H AVE NOTED THAT THE ASSESSING OFFICER SOLELY RELIED UPON THE INFORMATIO N OF THIRD PARTY. THE ASSESSING OFFICER NOWHERE RECORDED THAT THE STATEME NT OF THIRD PARTY RECORDED BY SALE TAX DEPARTMENT, WHICH WAS BASIS FO R MAKING DISALLOWANCE, WAS MADE AVAILABLE TO THE ASSESSEE. T HE ASSESSEE IS A TRADER, AS RECORDED IN PARA OF ASSESSMENT ORDER RELATED WIT H NATURE OF BUSINESS. THE ASSESSING OFFICER HAS NOT SHOWN THE NATURE AND NAME S OF GOODS TRADED BY ASSESSEE. THE ASSESSING OFFICER HAS LEFT SO MANY VA GUENESS IN THE ORDER. THE LD. CIT(A) AFFIRMED THE ORDER OF ASSESSING OFFI CER BY TAKING VIEW THAT NOTHING HAS BEEN PRODUCED BEFORE HIM. LD. CIT(A) PA SSED THE ORDER IN EX- PARTE PROCEEDING. BEFORE US, AGAIN NEITHER THE ASSE SSEE NOR HIS REPRESENTATIVE APPEARED NOR FILED ANY EVIDENCE OR W RITTEN SUBMISSION TO SUBSTANTIATE HIS CONTENTION. THERE IS NO MATERIAL O N RECORD TO DEVIATE FROM THE FINDING OF ASSESSING OFFICER. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/03/2020. SD/- SD/- R.C. SHARMA PAWAN SIN GH ACCOUNTANT MEMBER JUD ICIAL MEMBER ITA NO. 7 265 MUM 2018-AMIT ASHOK GOLWALA 6 MUMBAI, DATE: 02.03.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI