LACIER INDUSTRIES, MUMBAI V. ITO WD 21(2)2, MUMBAI

ITA 7411/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6716 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE LD
• Keywords: Bogus purchase; Deemed to accrue or arise in india; Additional evidence; Reassessment proceedings
• Section: 143(3); 133(6); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , # BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7411/MUM/2016 ( $ $ $ $ %$ %$ %$ %$ / ASSESSMENT YEAR: 2009-10) M/S. LACIER INDUSTRIES 48A, MADHUBAN APARTMENT, WORLI HILL ROAD, WORLI, MUMBAI-400018 / VS. I NCOME TAX OFFICER WARD-21(2), MUMBAI & ./ ./PAN/GIR NO. AABFL-7102-M ( &( /APPELLANT ) : ( )&( / RESPONDENT ) ASSESSEE BY : MISS AARTI SATHE-LD. AR REVENUE BY : SHRI SATISH CHANDRA RAJORE - LD.DR * +, / DATE OF HEARING : 01/05/2019 % * +, / DATE OF PRONOUNCEMENT : 07/05/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI [CIT(A)], APPEAL NO. CIT(A)-33/RG.-21/190/2015-16 D ATED 06/09/2016 ON FOLLOWING GROUNDS OF APPEAL: - 1. THE PROCEEDING INITIATED U/S 148 ON THE BASIS OF THE INFORMATION RECEIVED BY THE INCOME TAX OFFICER 21(2)(2), FROM DGIT (INV.) M UMBAI REGARDING THE BOGUS PURCHASES MADE BY M/S LACIER INDUSTRIES FROM M/S ASIA STEEL OF RS.5400/-, M/S SHIV INDUSTRIES OF RS.48,48,974/- AN D M/S MARUTI STEEL 2 TRADERS OF RS.50,93,660/- TOTALING TO RS.99,48,034/ - ARE BAD IN LAW AS THESE PURCHASES WERE NOT DONE BY M/S LACIER INDUSTRIES HA VING PAN AABLF7102M BUT WERE ACTUALLY MADE BY MR. CHIRAG AGARWAL HAVING PAN AERPA5913A AND VAT NO. 27480019084V. HENCE THE PROCEEDINGS-INI TIATED U/S 148 ARE BAD IN LAW AND SHOULD BE CANCELLED. 2. THE HONORABLE CIT(A) HAS ERRED NOT CONSIDERING T HE FACT THAT M/S LACIER INDUSTRIES, A PARTNERSHIP FIRM HAS NOT DONE ANY BUS INESS SINCE INCEPTION, AND FROM REMAND REPORT OBTAINED FROM THE ITO 21(1)(3) D ATED 16 JUNE. 2016 IT WAS EVIDENT THAT THE PURCHASES OF RS.99,48,034/- WE RE ACTUALLY MADE BY MR. CHIRAG AGARWAL, PROP OF M/S LACIER INDUSTRIES. IN S PITE OF THESE FACTS THE LEARNED ASSESSING OFFICER HAS CONFIRM THE ADDITION OF RS.9,95,000/- ON THE BASIS OF THE VOLUNTARY DECLARATION MADE VIDE LETTER DATED 13TH MARCH, 2015 WITHOUT CONSIDERING THE SUBSEQUENT SUBMISSION MADE ON 27TH MARCH, 2015 AND THE STATEMENT RECORDED OF PARTNER OF THE FIRM M R. SURENDER KUMAR AGARWAL ON 26 TH MARCH, 2015 WHEREIN IT WAS CLEARLY MENTIONED THAT THE PURCHASES WERE ACTUALLY MADE BY MR. CHIRAG AGARWAL WHO IS HAVING THE VAT NO. 27480019084V. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT FIRM WAS ASSESSED U/S 143(3) R.W.S 147 ON 30/03/2015 WHEREIN THE INCO ME OF THE ASSESSEE WAS DETERMINED AS RS.216.20 LACS. THE REASSESSMENT PROCEEDINGS WERE TRIGGERED PURSUANT TO RECEIPT OF CERTAIN INFOR MATION FROM SALES TAX DEPARTMENT THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHASES AGGREGATING TO RS.99.48 LACS STATED TO BE MADE FROM THREE PARTIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXT RACTED IN THE QUANTUM ASSESSMENT ORDER. THEREFORE, THE CASE WAS REOPENED VIDE NOTICE U/S 148 DATED 17/01/2014. INITIALLY, THE ASSESSEE DID N OT FILE ANY RETURN IN RESPONSE THERETO. HOWEVER, THE ASSESSEE, VIDE LETTE R DATED 29/12/2014 SUBMITTED THAT THE FIRM HAS NOT DONE ANY BUSINESS T ILL DATE AND DO NOT HOLD ANY BANK ACCOUNT. SUBSEQUENTLY, ON 19/03/2015, THE ASSESSEE PRODUCED A COPY OF RETURN OF INCOME REFLECTING NIL INCOME WHICH WAS SIGNED BY ONE OF THE PARTNERS SHRI SURENDRA KUMAR AGARWAL. 2.2 DURING REASSESSMENT PROCEEDINGS, NOTICES SENT U /S 133(6) TO THE SUPPLIERS TO CONFIRM THE TRANSACTIONS ELICITED NO S ATISFACTORY RESPONSE AND THE SAME WERE RETURNED BACK UNSERVED BY THE POS TAL AUTHORITIES. 3 THE SAID FACT WAS CONFRONTED TO THE ASSESSEE WHO, V IDE REPLY DATED 13/03/2015, REITERATED THAT NO BUSINESS HAS BEEN CA RRIED OUT BY THE FIRM SINCE ITS INCEPTION. IT WAS ALSO SUBMITTED THAT NO PARTNERSHIP DEED WAS PREPARED. AT THE SAME TIME, THE PARTNER OF THE ASSE SSEE NAMELY SHRI S.K.AGARWAL, OWING TO ILL-HEALTH AND TO BUY PEACE OF MIND, OWNED UP THE TRANSACTIONS AND AGREED TO PAY THE TAX ON THE DEEME D INCOME OF THE FIRM COMPUTED @10% OF ALLEGED BOGUS PURCHASES. ACCORDINGLY, THE FIRM AGREED TO OFFER RS.9.95 LACS AS DEEMED INCOME OSTEN SIBLY TO AVOID FURTHER LITIGATION. 2.3 HOWEVER, THE SUBMISSIONS COULD NOT FIND FAVOR W ITH LD. AO WHO OPINED THAT THE FACTUAL MATRIX CALL FOR FULL DISALL OWANCE AND ACCORDINGLY, THE PURCHASES OF RS.99.48 LACS WAS DISALLOWED AND A DDED TO THE INCOME OF THE ASSESSEE. 2.4 PROCEEDING FURTHER, THE INFORMATION AS OBTAINED FROM SALES TAX DEPARTMENT U/S 133(6) REVEALED THAT THE ASSESSEE REFLECTED GRO SS TURNOVER OF RS.445.28 LACS AND IN THE ABSENCE OF AN Y INFORMATION FORTHCOMING FROM THE ASSESSEE, THE INCOME WAS ESTIM ATED AGAINST THE SAME @25% WHICH LED TO AN ADDITION OF RS.111.32 LAC S IN THE HANDS OF THE ASSESSEE. THE THIRD ADDITION OF RS.5.40 LACS WA S MADE BEING RECEIPTS FROM OIL INDIA LIMITED IN THE ABSENCE OF ANY INFORMATION / EXPLANATION FORTHCOMING FROM THE ASSESSEE. 2.5 THE INCOME OF THE FIRM SO COMPUTED, WORKED OUT TO RS.216.20 LACS. 3.1 AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 06/09/2 016. DURING APPELLATE PROCEEDINGS, ASSESSEE FILED ADDITIONAL EV IDENCES TO SUPPORT 4 THE FACT THAT THE STATED TRANSACTIONS WERE CARRIED OUT BY SIMILARLY NAMED PROPRIETARY CONCERN OF SHRI CHIRAG S. AGARWAL. CONSEQUENTLY, DURING REMAND PROCEEDINGS, TO VERIFY THE STATED FACTS, INF ORMATION WAS PASSED ON TO CONCERNED ASSESSING OFFICER OF SHRI CHIRAG S. AGARWAL HAVING PAN AERPA-5913-R. THE CASE OF SHRI CHIRAG S. AGARWAL WAS REOPENED FOR AY 2009-10 & 2010-11. IN THE ABOVE BACKGROUND, LD. AO, IN THE REMAND REPORT, SUBMITTED THAT NO ADDITIONAL EVIDENCE WAS F URNISHED BY THE ASSESSEE. 3.2 THE ASSESSEE REITERATED THAT NO BUSINESS WAS CA RRIED OUT BY THE FIRM AND THE STATED TRANSACTIONS WERE CARRIED OUT B Y PROPRIETARY CONCERN OF SHRI CHIRAG S. AGARWAL. IN SUPPORT, FINANCIAL DOCUMENTS AS WELL AS INCOME TAX RETURN OF SHRI CHIRAG S. AGARWAL WAS ALSO FURNISHED. THEREFORE, PLEADINGS WERE MADE TO DELETE THE IMPUGN ED ADDITIONS IN THE HANDS OF THE ASSESSEE. 3.3 THE LD. FIRST APPELLATE AUTHORITY, UPON PERUSAL OF SUBMISSIONS AND REMAND REPORT, CONCURRING WITH ASSESSEES STAND DEL ETED ALL THE ADDITIONS. HOWEVER, AN OBSERVATION WAS MADE THAT SI NCE THE ASSESSEE HAD VOLUNTARILY OFFERED UNDISCLOSED INCOME OF RS.9. 95 LACS IN THE HANDS OF THE FIRM, THE ESTIMATED UNDISCLOSED PROFIT OF RS .9.95 LACS WERE TO BE SUSTAINED. AGGRIEVED THE ASSESSEE IS IN FURTHER APP EAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], MS. AARTI SATHE, REITERATING THE STAND, SUBMITTED THAT THE FIRM HAS NOT DONE ANY BUSINESS AND ALL THE TRANSACTIONS WERE CARRIED OUT BY THE PROPRIETARY CONCERN OF SHRI CHIRAG S. AGARWAL, AND THEREFORE, ANY ADDITION IN ASSESSEES HAND WAS NOT JUSTIFIED. THE LD. DR, SUBM ITTED THAT THE 5 ASSESSEE OWNED UP THE TRANSACTION AND OFFERED UNDIS CLOSED INCOME AND THEREFORE, THE ADDITIONS TO THE EXTENT OF RS.9.95 L ACS WERE JUSTIFIED. 5.1 UPON CAREFUL CONSIDERATION, THE UNDISPUTED POSI TION THAT EMERGES IS THE FACT THAT THE ALLEGED BOGUS PURCHASES, WHICH FORMED THE VERY BASIS FOR REOPENING THE ASSESSMENT, ARE FOUND TO HAVE BEE N CARRIED OUT BY OTHER ENTITY. ANOTHER UNCONTROVERTED FACT IS THAT C ERTAIN ADDITIONS, AGAINST THE SAME, HAS ALREADY BEEN MADE IN THE HANDS OF THE OTHER ENTITY. THIS BEING THE CASE, THE PRIMARY CONDITION TO INVOKE REA SSESSMENT PROCEEDINGS AGAINST THE ASSESSEE VIZ. THERE WAS AN ESCAPEMENT OF INCOME REMAINED UNFULFILLED. THE SAID FACT IS ALSO EVIDENT FROM THE REMAND REPORT AND THE OBSERVATION OF LD. CIT(A) AT PARA 15.1 OF THE IMPUGNED ORDER. 5.2 PROCEEDING FURTHER, THE ONLY REASON TO SUSTAIN THE ADDITION IN THE HANDS OF THE ASSESSEE IS THAT FACT THAT THE ASSESSE E OWING TO ILL-HEALTH AND WITH A VIEW TO BUY PEACE OF MIND, OFFERED DEEME D INCOME AGAINST THOSE PURCHASES. HOWEVER, NOTHING HAS BEEN BROUGHT ON RECORD TO CONTROVERT THE FACT THAT NO BUSINESS WAS EVER CARRI ED OUT BY THE ASSESSEE SINCE ITS INCEPTION. THEREFORE, THE FACTUA L MATRIX DOES NOT INSPIRE US TO CONFIRM THE STATED ADDITION MERELY BE CAUSE THE ASSESSEE OFFERED THE SAME DURING ASSESSMENT PROCEEDINGS. 5.3 VIEWING FROM ANY ANGLE, THE ADDITIONS COULD NOT BE SUSTAINED. BY DELETING THE SAME, WE ALLOW THE APPEAL. 6. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH MAY, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 6 MUMBAI; DATED : 07/05/2019 SR.PS, JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. ! , ! , / DR, ITAT, MUMBAI 6. #$% / GUARD FILE / BY ORDER, / / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.