INCOME TAX OFFICER 3(2)(1), MUMBAI V. INDIGO EDUTAINMENT PRIVATE LIMITED, MUMBAI

ITA 7442/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4836 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO. 7442 , 7443 & 7444 / MUM . /201 7 ( ASSESSMENT YEAR : 2008 09, 2007 08 & 2008 09 ) INCOME TAX OFFICER WARD 3(2)(1), MUMBAI . APPELLANT V/S INDIGO EDUTAINMENT PVT. LTD. 1010, MAKER CHAMBER V NARIMAN POINT, MUMBAI 400 021 PAN AABCI2949E . RESPONDENT REVENUE BY : SHRI AWUNGSHI GIMSON A/W SHRI NEIL PHILIP ASSESSEE BY : SHRI VINOD KUMAR BINDAL DATE OF HEARING 13.05.2019 DATE OF ORDER 09.08.2019 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEALS BY THE REVENUE ARE AGAINST THREE SEPARATE ORDERS , ALL DATED 4 TH OCTOBER 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 8, MUMBAI, FOR THE ASSESSMENT YEAR S 2007 08 AND 2008 09. 2 INDIGO EDUTAINMENT PVT. LTD. 2 . SINCE ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE , INVOLVING COMMON ISSUES AND ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. HOWEVER, SINCE THE SUBSTANTIVE ORDER OF LEARNED COMMISSIONER (AP PEALS) IS THE SUBJECT MATTER OF APPEAL IN ITA NO.7444/ MUM./2017, AT THE REQUEST OF BOTH THE PARTIES IT WAS TAKEN UP AS THE LEAD APPEAL . ACCORDINGLY , WE PROCEED TO NARRATE THE FACTS AS THEY APPEAR IN ITA NO. 7444 /MUM./201 7 , FOR ASSESSMENT YEAR 200 8 09 . 3 . BR IEF FACTS ARE, THE ASSESSEE, A COMPANY , IS STATED TO BE CARRYING ON BUSINESS OF TRADING IN COMPUTER SOFTWARE. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER 2008, DECLARING LOSS OF ` 2,45,295. AS IT TRANSPIRES FROM THE FACTS ON RECORD, IN COURSE OF INVESTIGATION CONDUCTED BY THE CENTRAL BUREAU OF INVESTIGATION (CBI) AND ANTI - CORRUPTION BUREAU (ACB) IN CASE OF SHRI ARUN DALMIA AND SHRI HARSH DALMIA, DIRECTOR S OF M/S WATER MARKET FINANCIAL CONSULTANTS L TD., HAVING OFFICE AT MAKER CHAMBERS, NARIMAN POINT, MUMBAI, IT WAS FOUND THAT THEY WERE OPERATING TWENTY COMPANIES FROM THE SAME ADDRESS AND IN MOST OF THE COMPANIES, THE EMPLOYEES THEMSELVES ARE THE DIRECTOR. HE OBSERVED THAT THESE COMPANIES ARE FALSELY SHO WING BUSINESS OF PURCHASE, SALE AND DEVELOPMENT OF COMPUTER SOFTWARE , THOUGH , NONE OF THEM ARE 3 INDIGO EDUTAINMENT PVT. LTD. ENGAGED IN ANY SUCH ACTIVITIES NOR THEY HAVE ANY INFRASTRUCTURE OR TECHNICAL MANPOWER TO DO SO. HE OBSERVED , THE TRANSACTIONS OF PURCHASE AND SALES RUNNING INTO CRORE S ARE NOT H ING BUT BOOK ENTRIES ENABLING THESE COMPANIES TO TRANSFER FUNDS TO OTHERS. HE OBSERVED , WHILE COMPLETING ASSESSMENT IN CASE OF DATABASE SOFTWARE TECHNOLOGY PVT. LTD.( DSTPL ), FROM WHOM ASSE SSEE HAS SHOWN PURCHASES, FOR THE ASSESSMENT YEAR S 2006 07 TO 2008 09 , THE SALES MADE TO THE PRESENT ASSESSEE WERE HELD AS BOGUS. THE ASSESSING OFFICER OBSERVED , IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAS MADE THE PURCHASE COMPUTER SOFTWARE WORTH ` 5,28,44,480, FROM THE DSTPL AND SOLD IT TO HIMACHAL FUTURISTIC COMMUNICATION LTD. (HFCL), BILL CARE LTD. HE OBSERVED , AS PER THE INFORMATION RECEIVED FROM CBI , LARGE NUMBER OF TRANSACTIONS IN PURCHASE AND SALE OF COMPUTER SOFTWARE BY BASANT MARKETING PVT. LTD., D STPL AND THE PRESENT ASSESSEE WITH HFCL, RADIO VANI HOLDING PVT. LTD. AND PREMIER SUPPLIES AND SERVICES PVT. LTD. HAD TAKEN PLACE. FURTHER , HE OBSERVED , THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SHOW VALUE ADDED TAX (VAT) PAYMENT BY DSTPL. THUS , ON THE BASIS OF THE AFORESAID FACTS AND INFORMATION AVAILABLE WITH HIM, THE ASSESSING OFFICER ULTIMATELY CONCLUDED THAT THE TRANSACTION RELATING TO PURCHASE OF COMPUTER SOFTWARE FROM DSTPL AMOUNTING TO ` 5,28,44,480, IS BOGUS, HENCE, ADDED BACK TO THE IN COME OF THE 4 INDIGO EDUTAINMENT PVT. LTD. ASSESSEE AS UNEXPLAINED PURCHASES. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 4 . A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) FOUND THAT WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2006 07, HE HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, RELYING UPON THE SAID DECISION, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFI CER. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER. HE SUBMITTED , AS PER THE INFORMATION RECEIVED FROM CBI, IT WAS FOUND THAT THE DIRECTORS OF THE ASSESSEE COMPANY HAVE CREATED OTHER DUMMY COMPANIES THROUGH WHICH BOGUS TRANSACTIONS IN PURCHASE AND SALE OF COMPUTER SOFTWARE WAS BEING CARRIED ON. THUS, HE SUBMITTED , ON THE BASIS OF SUCH INFORMATION THE ASSESSING OFFICER HAS VALIDLY MADE THE ADDITION. THEREFORE, LEARNED COMMISSIONER (APPEALS) WAS NOT JU STIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 6 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INDEPENDENTLY WHILE COMING TO THE CONCLUSION THAT THE TRANSACTIONS BETWEEN THE ASSESSEE AN D DSTPL ARE BOGUS. HE SUBMITTED , SIMPLY RELYING UPON CERTAIN INFORMATION 5 INDIGO EDUTAINMENT PVT. LTD. RECEIVED FROM THE CBI, THE ASSESSING OFFICER HAS PROCEEDED TO MAKE THE ADDITION. HE SUBMITTED , IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HA D ISSUED NOTICE UNDER S ECTION 133(6) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) TO THE TRANSACTING PARTIES CALLING FOR CERTAIN INFORMATION. HE SUBMITTED , IN RESPONSE TO SUCH NOTICE, THE CONCERNED PARTIES HAVE ALSO FURNISHED THEIR REPLY CONFIRMING THE TRANSACTIONS WITH THE ASSESSEE. HE SUBMITTED , THOUGH , IN THE ASSESSMENTS COMPLETED IN CASE OF DSTPL THE ASSESSING OFFICER HAD TR EATED THE SALES MADE TO DIFFERENT PARTIES AS BOGUS, HOWEVER, LEARNED COMMISSIONER (APPEALS) WHILE DECIDING THE APPEAL OF DSTPL HAS ACCEPTED THE SALES MADE BY IT TO DIFFERENT PARTIES AS GENUINE. HE SUBMITTED , THE AFORESAID DECISION OF LEARNED COMMISSIONER (APPEALS) WAS UPHELD BY THE TRIBUNAL WHILE DISMISSING THE APPEAL FILED BY THE DEPARTMENT. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDER PASSED B Y THE TRIBUNAL IN DSTPL FROM THE ASSESSMENT YEAR 2005 06 TO 2009 10 PLACED IN THE PAPER BOOK. FURTHER, HE SUBMITTED , WHILE DECIDING THE APPEAL S IN CASE OF OTHER COMPANIES INCLUDING BASANT MARKETING PVT. LTD., THE FIRST APPELLATE AUTHORITY HAS ACCEPTED THE TRANSACTIONS AS GENUINE. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ORDER S PASSED BY THE FIRST APPELLATE AUTHORITY IN CASE OF BASANT MARKETING PVT. LTD. FROM THE ASSESSMENT YEAR S 2008 09 TO 2010 11. HE SUBMITTED , THE AFORESAID DECISIONS OF THE FIRST APPELLATE AUTHORITY W ERE ACCEPTED BY 6 INDIGO EDUTAINMENT PVT. LTD. THE DEPARTMENT. HE SUBMITTED , THE ALLEGATION OF THE ASSESSING OFFICER THAT ASSESSEE HAS NOT PAID VAT IS WITHOUT ANY BASIS. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE CHALLAN EVID ENCING PAYMENT OF VAT, A COPY OF WHICH IS PLACED AT PAGE 73 OF THE PAPER BOOK. HE SUBMITTED , WHEN IN CASE OF SELLER VIZ. DSTPL, THE SALES HAVE BEEN ACCEPTED AS GENUINE, IT CANNOT BE TREATED AS BOGUS IN CASE OF THE PURCHASE R, THE PRESENT ASSESSEE. THE LEARN ED AUTHORISED REPRESENTATIVE SUBMITTED , SIMILAR ADDITION MADE BY THE ASSESSING OFFICER IN CASE OF VARIOUS OTHER GROUP COMPANIES PURELY ON THE BASIS OF INFORMATION RECEIVED FROM THE CBI HAS BEEN DELETED BY THE TRIBUNAL. IN THIS CONTEXT, HE DREW OUR ATTENTIO N TO THE FOLLOWING ORDERS OF THE TRIBUNAL. I ) ITO V/S SHRI HARSH DALMIA, ITA NO.7459/MUM./2016, DATED 17.10.2017; II ) ITO V/S ARTLINK VINTRADE PVT. LTD., ITA NO.1121/KOL./2016, ETC., DATED 14.09.2018; III ) MAHAN INDUSTRIES LTD. V/S DCIT, ITA NO.146/MUM./2016, DATED 28.02.2018; IV ) DCIT V/S UDIPUR PROPERTIES & FINANCE LTD., ITA NO.6449/MUM./2017, DATED 09.11.2018; AND V ) VENKTESH SECURITIES LTD. V/S ITO, ITA NO.1498 TO 1501/MUM./2017, DATED 21.12.2018. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON REC ORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE LEARNED AUTHORISED REPRESENTATIVE. UNDISPUTEDLY, ON THE BASIS 7 INDIGO EDUTAINMENT PVT. LTD. OF INFORMATION RECEIVED FROM CBI/ACB, THE ASSESSING OFFICER HAS CONCLUDED THAT THE TRANSACTION RELATING TO PURCHASE OF SOFT WARE FROM DSTPL IS BOGUS. L EARNED COMMISSIONER (APPEALS), WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER, HAS RELIED UPON HIS OWN ORDER PASSED FOR THE ASSESSMENT YEAR 2006 07. ON A CAREFUL PERUSAL OF THE ORDER DATED 4 TH OCTOBER 2017, PASSED BY LEARNED COMMISSIONER (APPEALS) IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 07, IT APPEARS THAT IN THE SAID ASSESSMENT YEAR ALSO THE ASSESSING OFFICER HAS TREATED THE PURCHASES MADE FROM DSTPL AS BOGUS AND ADDED IT BACK TO T HE INCOME OF THE ASSESSEE. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED VARIOUS ADDITIONAL EVIDENCES ON THE BASIS OF WHICH A REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE EVIDENCES AND REMAND REPO RT, LEARNED COMMISSIONER (APPEALS) TREATED THE PURCHASES MADE FROM DSTPL AS GENUINE AND ACCORDINGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE REASONS ON THE BASIS OF WHICH LEARNED COMMISSIONER (APPEALS) CAME TO SUCH CONCLUSION ARE AS UNDER: I ) THE ASSESSEE HAS SUBMITTED LEDGER EXTRACTS, COPIES OF SALES AND PURCHASE BILLS, DETAILS OF BANK ACCOUNT, COPY OF BANK STATEMENT WITH BANK SUMMARY, DETAILS OF CURRENT LIABILITIES, DETAILS OF SUNDRY CREDITORS, COPY OF CHALLAN OF VAT PAYMENT MADE, VAT AUDIT REPORT TO PROVE THE TRANSACTION; 8 INDIGO EDUTAINMENT PVT. LTD. II ) DSTPL IS ALSO ASSESSED TO TAX; AND III ) WHILE DECIDING THE APPEALS OF DSTPL FROM THE ASSESSMENT YEAR 2005 06 TO 2009 10, THE FIRST APPELLATE AUTHORITY HAS CONCLUDED THAT THE SALES AND PURCHASE EFFECTED BY IT ARE GENUINE AND THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) WAS UPHELD BY THE TRIBUNAL WHILE DISMISSING REVENUES APPEAL. 8 . IF WE JUXTAPOSE THE FACTS OF THE PRESENT APPEAL WITH THAT OF THE ASSESSMENT YEAR 2006 07, IT WILL BE EVIDENT , IN THE IMPUGNED YEAR ALSO, THE A SSESSEE HAS FURNISHED ALL THE EVIDENCES LIKE ASSESSMENT YEAR 2006 07 TO PROVE THE GENUINENESS OF THE PURCHASES. EVEN , LEARNED COMMISSIONER (APPEALS) HAS ALSO CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND AFTER VERIFYING THE SAME HAS DELETED THE ADDITION. UNDISPUTEDLY, WHILE FRAMING THE ASSESSMENT S IN CASE OF DSTPL FROM THE ASSESSMENT YEAR 2005 06 TO 2009 10, THE ASSESSING OFFICER HAS HELD THE SALES MADE TO DIFFERENT PARTIES , INCLUDING THE ASSESSE E , AS NON GENUINE . HOWEVER, WHILE DECIDING THE APP EALS FILED BY DSTPL, LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED THE SALES TO BE GENUINE. THE TRIBUNAL ALSO HAS UPHELD THE AFORESAID DECISION OF LEARNED COMMISSIONER (APPEALS) WHILE DECIDING REVENUES APPEAL S IN ITA NO.4399 TO 4403/MUM./2014, DATED 7 TH JUL Y 2017. ON A PERUSAL OF 9 INDIGO EDUTAINMENT PVT. LTD. THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND THAT RELYING UPON IDENTICAL INFORMATION RECEIVED FROM THE CBI AND ACB, THE ASSESSING OFFICER HAD CONCLUDED THAT THE SALES EFFECTED BY DSTPL TO DIFFERENT ENTITIES INCLUDING THE PRESENT ASS ESSEE ARE NOT GENUINE. HOWEVER, THE TRIBUNAL ULTIMATELY AGREED WITH LEARNED COMMISSIONER (APPEALS) THAT THE SALES EFFECTED BY THE DSTPL ARE GENUINE. THUS, BY VIRTUE OF THE AFORESAID DECISION OF THE TRIBUNAL, IT IS FACTUALLY ESTABLISHED THAT THE SALES EFFEC TED BY THE DSTPL TO DIFFERENT PARTIES ARE GENUINE. IF IN CASE OF DSTPL, THE SALES EFFECTED ARE ACCEPTED AS GENUINE, THE SAME CANNOT BE TREATED AS BOGUS I N CASE OF ASSESSEE AS THE Y LIKE TWO SIDES OF THE SAME COIN. THAT BEING THE CASE, THE PURCHASES EFFECTED FROM DSTPL BY THE ASSESSEE CANNOT BE HELD AS BOGUS. FURTHER, THE ALLEGATION MADE BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT FURNISHED VARIOUS EVIDENCES INCLUDING VAT PAYMENT DOES NOT APPEARS TO BE CORRECT AS THE MATERIAL PLACED BEFORE US PROVES OT HERWISE. IN FACT, LEARNED AUTHORISED REPRESENTATIVE HAS DEMONSTRATED THAT THE ASSESSEE HAS PAID VAT ON THE SAID TRANSACTION. THEREFORE, THE ALLEGATION OF THE ASSESSING OFFICER THAT VAT HAS NOT BEEN PAID ON THE SAID TRANSACTION IS FACTUALLY INCORRECT. IT IS FURTHER RELEVANT TO OBSERVE , IN RESPECT OF VARIOUS OTHER ASSESSEES , THE ASSESSING OFFICER RELYING UPON VERY SAME INFORMATION RECEIVED FROM CBI TREATED SIMILAR TRANSACTIONS AS NON GENUINE AND MADE ADDITIONS . HOWEVER, THE APPELLATE AUTHORITIES AFTER 10 INDIGO EDUTAINMENT PVT. LTD. CONSIDERING VARIOUS EVIDENCES AND MATERIAL BROUGHT BEFORE THEM HAVE HELD THAT THE TRANSACTIONS RELATING TO PURCHASE AND SALES OF COMPUTER SOFTWARE A RE GENUINE. IN THIS CONTEXT, WE MAY REFER TO A NUMBER OF DECISIONS OF THE TRIBUNAL CITED BEFORE US BY THE LE ARNED AUTHORISED REPRESENTATIVE. IT IS ALSO A FACT, NO COGENT MATERIAL/EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO ENABLE US TO DISTURB THE FACTUAL FINDING OF LEARNED COMMISSIONER (APPEALS) AND TAKE A VIEW DIFFERENT FROM THE VIEW TAKEN BY THE TRI BUNAL IN THE DECISIONS CITED BEFORE US. THEREFORE, ON OVERALL CONSIDERATION OF FACTS AND MATERIAL ON RECORD AS WELL AS THE DECISIONS CITED BY LEARNED AUTHORISED REPRESENTATIVE , WE ARE OF THE VIEW THAT THE REVENUE HA VING FAILED TO CONTROVERT THE FACTUAL FIN DING OF LEARNED COMMISSIONER (APPEALS) ESTABLISHING THE SALES TO BE GENUINE , THE ADDITION MADE BY THE ASSESSING OFFICER DESERVES TO BE DELETED. THEREFORE, WE ARE INCLINED TO UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). GROUNDS RAISED ARE DISM ISSED. 9 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ITA NO.7443 /MUM./2017 ITA NO. 7444/MUM./2017 10 . T HE FACTS AND ISSUES IN THESE APPEALS ARE IDENTICAL TO THE FACTS AND ISSUES INVOLVED IN REVENUES APPEAL BEING ITA NO.7442/MUM./2017 DECIDED IN THE EARLIE R PART OF THIS ORDER. 11 INDIGO EDUTAINMENT PVT. LTD. T HEREFORE, OUR DECISION , THEREIN, WILL APPLY MUTATIS MUTANDIS TO THESE APPEALS AS WELL. 11 . IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 09.08.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.08.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI