HAJARAM P. PUROHIT, MUMBAI V. DCIT CEN CIR 5(3), MUMBAI

ITA 760/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6794 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries; Set aside
• Section: 142(1); 143(1); 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO S . 760 & 761 /MUM/201 8 ( / ASSESSMENT YEAR S : 2011 - 12 & 20 12 - 13 ) SHRI HAJARAM P. PUROHIT PROP: RINKU S TEEL CORPORATION GROUND FLOOR, ZARIWALA BUILDING, 1 ST KHETWADI LANE, NEAR, ALANKAR CINEMA, MUMBAI - 400004 . / VS. DCIT CENTRAL CIRCLE - 5(3) AIR INDIA BUILDING, 19 TH FLOOR, NARIMAN POINT, MUMBAI - 400021. ./ ./ PAN/GIR NO. : AGUPP68 13E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 02 . 0 4 .201 9 / DATE OF PRONOUNCEMENT : 24/ 04 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEAL S AGAINST THE ORDER DATED 1 .1 1 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 53 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] REL EVANT TO THE A.Y S . 2011 - 12 & 20 12 - 1 3 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - BEING AGGRIEVED BY THE ORDER OF LEARNED CIT (APPEALS) - 53. MUMBAI. THE APPELLANT SUBMITS HEREWITH THE FOLLOWING GROUNDS OF APPEAL: REVENUE BY : SHRI MANOJ KUMAR SINGH (DR) ASSESSEE BY: NONE ITA NO. 760 & 761 / M/201 8 A.Y S . 2011 - 12 & 20 12 - 13 2 1. ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING 100% DISALLOWANCE OF RS.11,86,69,553/ - IN RESPECT OF PURCHASES FROM SIX PARTIES TREATED BY AO AS ACCOMMODATION ENTRIES MERELY ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT, MAHARASH TRA (A) WITHOUT ALLOWING THE APPELLANT PROPER OPPORTUNITY OF BEING HEARD IN THE APPELLATE PROCEEDINGS, (B) WITHOUT APPRECIATING THAT THE AO HAS NOT BROUGHT ON RECORDS ANY INDEPENDENT AND RELIABLE EVIDENCES IN SUPPORT OF THOSE ALLEGED PURCHASES DURING ASSES SMENT PROCEEDINGS AND (C) WITHOUT APPRECIATING THAT THE APPELLANT IS A TRADER AND RESELLER IN FERROUS AND NON - FERROUS METALS WHERE MARGIN OF PROFIT IS VERY LOW AND INSIGNIFICANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A ) HAS ERRED IN CONFIRMING 100% DISALLOWANCE OF RS. 11,86,69,553/ - IN RESPECT OF PURCHASES FROM SIX PARTIES WITHOUT APPRECIATING THE FACT THAT (A) THE APPELLANT BEING A TRADER IF THE CORRESPONDING SALES ARE ACCEPTED BY AO THEN NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF PURCHASES IN LIGHT OF BOMBAY HIGH COURT AND MUMBAI [TAT DECISIONS CLEARLY HOLDING THAT THERE CAN BE NO SALES WITHOUT PURCHASES AND (B) THE AO HAS NOT BROUGHT ON RECORDS ANY EVIDENCE TO SUGGEST THAT THE AMOUNTS PAID BY ACCOUNT PAYEE CHEQUES TO T HOSE PARTIES HAVE FLOWN BACK TO THE APPELLANT IN CASH. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS IN THE ALTERNATIVE, THE APPELLANT HUMBLY PRAYS THAT IN THE INTEREST OF SUBSTANTIAL JUSTICE AND EQUITY, ALL THE ISSUES CONCERNING THE PRESENT APPEAL MAY KINDLY BE RESTORED BACK TO THE FILE OF AO AND THE APPELLANT BE GIVEN OPPORTUNITY OF HEARING AS PER LAW IN VIEW OF THE FACT THAT (A) THE APPELLANT IS PREVENTED FROM PUTTING FORTH HIS CASE PROPERLY BEFORE THE AO AS THE OFFICE OF THE APPELLANT WAS SEARCHED AND IMPO RTANT RECORDS PERTAINING TO THE YEAR UNDER APPEAL REMAINED SEIZED WITH SALES TAX DEPARTMENT. (B) THE FIRST NOTICE OF HEARING WAS NOT SERVED ON THE APPELLANT BY THE OFFICE OF CIT (A) AND (C) THE REQUEST OF THE APPELLANT FOR ADJOURNMENT PURSUANT TO SECOND NO TICE WAS OUT RIGHTLY REJECTED BY CIT (A) AND CIT(A) PASSED THE APPELLATE ORDER EX - PARTE WITHOUT HEARING THE APPELLANT. 4. THE APPELLANT CRAVES LEAVE TO AMEND, ADD, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. ITA NO. 760 & 761 / M/201 8 A.Y S . 2011 - 12 & 20 12 - 13 3 3 . THE BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 . 09 .20 1 0 DECLARING TO TAL INCOME TO THE TUNE OF RS. 11,68,560/ - . T HE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE ASSESSEE IS A PROPRIETARY INDIVIDUAL AND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN THE INCOME FROM BUSINESS. THE ASSESSEE IS A TRADER AND STOCKIEST OF FERROUS AND NON - FERROUS METALS AND WORKS UNDER THE NAME OF M/S. RINKU STEEL CORPORATION. THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 OF THE ACT ON ACCOUNT OF INFORMATI ON RECEIVED SHOWED BY OFFICIAL WEBSITE OF SALES TAX DEPARTMENT OF MAHARASHTRA IN WHICH THE ASSESSEE HAS TAKEN THE ENTRY OF BOGUS PURCHASE FROM SIX PARTIES IN SUM OF RS.11,86,69,553/ - . THE ASSESSEE HAS TAKEN THE BOGUS PURCHASE ENTRIES FROM THE FOLLOWING PAR TIES AS UNDER.: - S. NO. NAME OF THE HAWALA PARTY PURCHASE AMOUNT IN RS. 1 SHRADHA TRADING CO. 64,802/ - 2 APEX FERROMATE P. LTD. 3,26,30,998/ - 3 AKSHAY METALS 3,44,67,724/ - 4 JINDAL METAL CORPORATION 8,17,037/ - 5 KONICA STEEL INDIA 1,25,49,784/ - 6 V EER CORPORATION 3,81,39,208/ - TOTAL 11,86,69,553/ - THEREAFTER, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSES SEE AND ASSESSEE NOWHERE JUSTIFY HIS CLAIM, THEREFORE, THE AO RAISED THE ADDITION IN SUM OF RS.11,86,69,553/ - AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.11,98,38,113/ - . FEELING AGGRIEVED, T HE ASSESSEE FILE D AN APPEAL BEFORE THE CIT(A) 53 , MUMBAI WHO DISMISSED THE APPEAL OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFO RE US. ITA NO. 760 & 761 / M/201 8 A.Y S . 2011 - 12 & 20 12 - 13 4 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE REVENUE AND PERUSED THE RECORD. THE ASSESSEE DID NOT APPEAR BEFORE US. WE FIND THAT LD. CIT(A) HAS DISMISSED THE APPEAL FOR NON - PROSECUTION. WE FIND THAT IT IS INCUMBENT UPON TH E LD. CIT(A) TO PASS AN ORDER ON THE MERITS OF THE CASE AND NOT DISMISS THE APPEAL FOR NON - PROSECUTION. 5. FOR THIS PROPOSITION WE PLACE RELIANCE UPON THE FOLLOWING CASE LAWS. ( 1 ) CIT VS. PREMKUMAR ARJUNDAS LUTHRA (HUF) (2017) 154 DTR (BOM) 302 ( 2 ) CIT VS. S CHEN NIAPPA MUDALIAR (1969) 74 ITR 1 (SC) 6. ACCORDINGLY IN THE INTEREST OF JUSTICE WE REMIT THE ISSUE RAISED IN THE APPEAL THE FILE OF THE LD. CIT(A). LD. CIT(A) IS DIRECTED TO CONSIDER THE ISSUE AFRESH AND PASS AN ORDER ON THE MERITS OF THE CASE AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON ALL THE ISSUES AN D RESTORED THE MATTER BEFORE THE CIT(A) TO DECIDE THE MATTER AFRESH BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. 7. SINCE THE APPEAL OF THE ASSESSEE BEARING ITA. NO.761/M/2018 FOR THE A.Y.2012 - 13 IS HAVING SIMILAR CONTROV ERSY, THEREFORE, THE FINDING ABOVE IS QUITE APPLICABLE TO THE FACTS OF THE PRESENT CASE ALSO AS MUTATIS MUTANDIS, THEREFORE, THE PRESENT APPEAL IS HEREBY ALSO ALLOWED ACCORDINGLY. ITA NO. 760 & 761 / M/201 8 A.Y S . 2011 - 12 & 20 12 - 13 5 8 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE S . ORDER PRONOUNCED IN THE OPEN COURT ON 24/ 04 / 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 24 / 04 / 2019 . VIJAY / 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// (SR. PRIVATE SECRETARY) , / ITAT, MUMBAI