DCIT 3(1), MUMBAI V. EXCELLENT EXPORTS P. LTD, MUMBAI

ITA 7780/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79161 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 17-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRJA PRADHAN
• Assessee Lawyers: VIMAL PUNMIYA
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEM BER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.7780/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR-2007-08 DCIT CIRCLE 3(1), R.NO. 607, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 VS M/S. EXCELLENT EXPORTS PVT. LTD. 142, MITTAL TOWER, B WING, 210, NARIMAN POINT, MUMBAI-400021 PAN: AAACE0897L ( $% / APPELLANT) ( &'$% / RESPONDENT) ( ) / REVENUE BY : MS. NIRJA PRADHAN '*+ '*+ '*+ '*+ ) ) ) ) / ASSESSEE BY : SHRI VIMAL PUNMIYA ' ' ' ' ( (( ( +, +, +, +, / DATE OF HEARING : 18-06-2014 -.# ( +, / DATE OF PRONOUNCEMENT : 18-06-2014 ' ' ' ' , 1961 ( (( ( 254 )1( +/+ +/+ +/+ +/+ 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DT.04.07.2011OF THE CIT(A)-7, MUMBAI, ASSESSING OFFICER (AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.41,53,983/- MADE ON ACC OUNT OF TREATING THE EXPENSES AS NON GENUINE PURCHASES WITHOUT APPRECIATING THE FACT THAT THE A .O HAS MADE DISALLOWANCE IN RESPECT OF THOSE PARTIES WHERE THERE WAS DIFFERENCE IN AMOUNT AND TO WHOM NOTICES U/S.133(6) WERE SENT AND RETURNED BACK UNSERVED OR NO REPLY OF THE PARTIES W AS RECEIVED. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF TRADING IN STEEL, FINANCING AND CONSTRUCTION,FILED ITS RETURN OF INCOME ON 30.10.2007,DECLARING TOTAL INCOME OF RS.36,33,806/-.AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON31/12/2009,DETER MINING THE TOTAL INCOME AT RS. 78,27,944/-. 2.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS,AO ASKE D THE ASSESSEE TO FURNISH PARTY-WISE DETAILS OF PURCHASES MADE DURING THE YEAR.ON THE BA SIS OF INFORMATION FURNISHED,HE ISSUED NOTICES U/S.133(6) TO NUMBER OF PARTIES TO VERIFY THE GENUI NENESS OF THE PURCHASES SHOWN BY THE ASSESSEE. AFTER PERUSAL OF THE REPLIES RECEIVED FROM THE PART IES,HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE MENTIONING THE DISCREPANCIES ABOUT THE MATERIAL PUR CHASED AND SERVICES OBTAINED.AS PER THE AO REPLY TO ABOVE SHOW CAUSE NOTICE WAS REQUIRED TO BE SUBMITTED ON 31/12/ 2009, HOWEVER, THE ASSESSEE DID NOT MAKE ANY SUBMISSION.ON THE BASIS O F MATERIAL AVAILABLE ON RECORD, HE HELD THAT THE IN RESPECT OF PURCHASES SHOWN NOTICES WERE ISSU ED U/S.133(6) OF THE ACT TO NUMBER OF PARTIES,THAT IN RESPECT OF SOME OF THE PARTIES THE AMOUNT OF PURCHASES SHOWN WERE FOUND TO BE MATCHING WITH THE SALES SHOWN BY SUCH PARTIES TO AS SESSEE-COMPANY,THAT AS THERE WAS NO DISCREPANCY THE NAME OF SUCH PARTIES WERE NOT INCLU DED IN THE SHOW CAUSE NOTICE ISSUED,THAT ONLY THOSE PARTIES;IN WHOSE RESPECT THERE WERE DIFFERENC ES OR NO REPLY HAD BEEN RECEIVED OR NOTICES RETURNED BACK UNSERVED;WERE INCLUDED IN THE SHOW CA USE NOTICE.HE FURTHER HELD THAT THE ASSESSEE 2 ITA NO. 7780/MUM/2011 M/S. EXCELLENT EXPORTS PVT. LTD . . HAD FAILED TO SUBMIT ANY REASON IN RESPECT OF THE D ISCREPANCIES POINTED OUT TO IT THAT THE NOTICES TO ALL THE PARTIES WERE SENT ONLY AT THE ADDRESSES GIV EN BY THE ASSESSEE,THAT THE ONUS WAS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES MADE,THAT THE ASSESSEE HAD FAILED TO DISCHARGE IT,THAT THE PURCHASES IN RESPECT OF ABOVE MENTIONED PARTIES WERE NOT GENUINE.HE DISALLOWED THE ABOVE PURCHASES AND MADE AN ADDITION OF RS.41,53,98 3/-TO TOTAL INCOME OF THE ASSESSEE. 2.2. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT THE ASSESSEE-COMPANY HAD FURNISHED COPY OF LEDGER ACCO UNT OF ALL THE PARTIES IN WHOSE NAME DISCREPANCIES WERE NOTICED BY THE AO,THAT ALL THE B ALANCES HAD BEEN CONFIRMED BY PARTIES,THAT PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES,THAT THE CONFIRMATION FILED B Y THE ASSESSEE CONTAINEDED PAN,THAT THE BALANCES WERE COMPLETELY T ALLYING WITH THE LEDGER ACCOUNT OF THE COMPANY,THAT THE ASSESSEE CONTINUEED BUSINESS WITH THOSE PARTIES IN SUBSEQUENT YEARS ALSO.HE REFERRED TO THE ORDER PASSED U/S 143(3) OF THE ACT BY THE SAME AO FOR LATER YEARS WHEREIN NO SUCH ADDITIONS WERE MADE BY THE AO,THAT NON SERVICE OF N OTICES AND ABSENCE OF REPLY COULD NOT BE HELD TO BE BASIS TO HOLD THAT THE TRANSACTION WERE UNACC OUNTED OR BOGUS. 2.3. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) ARGUED T HAT THERE WERE DISCREPANCIES IN THE NAMES OF THE PARTIES WHO WERE CLAIMED TO BE SUPPLIE R TO THE ASSESSEE,THAT IT DID NOT FILE ANY EXPLANATION BEFORE THE AO IN THIS REGARED,THAT THE AO HAD SPECIFICALLY MENTIONED THE SAID FACT IN THE ASSESSMENT ORDER,THAT FAA HAD NOT GIVEN ANY FIN DING ABOUT THE DISCREPANCY,THAT HE DID NOT CALL FOR ANY REMAND REPORT FROM THE AO ABOUT THE PA PERS FILED BEFORE HIM,THAT ASSESSMENT OF EARLIER OR SUBSEQUENT YEARS WERE OF NO USE TO DECID E THE ISSUE.AUTHORISED REPRESENTATIVE(AR) STATED THAT THE ASSESSEE HAS BUSINESS RELATION WITH THE PARTIES IN QUESTION AND THE AO HAD NOT DOUBTED THE GENUINENESS OF THE PARTIES,THAT AO DID NOT GIVEN SUFFICIENT TIME TO THE ASSESSEE FOR FURNISHING NECESSARY DETAILS. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEAL FAA HAD NOT DISCUSSED ANYTHING ABOUT THE DISCREPANCIES NOTED AND COMMUNI -CATED BY THE AO.IT IS A FACT THAT TIME ALLOWED BY THE AO TO THE ASSESSEE TO FILE DETAILS WAS INSUFFICIENT, BUT THE FAA HAD AMPLE TIME TO DECIDE THE ISSUE.WHEN THE AO HAD GIVEN A CATEGORICAL FINDING OF FACT ABOUT THE DISCREPANCIES IN HIS ORDE R,IT WAS THE DUTY OF THE FAA TO DEAL THE ISSUE ON MERITS BEFORE ALLOWING THE APPEAL FILED BY THE ASSE SSEE.IN OUR OPINION,IT WAS ESSENTIAL AS THE ASSESSEE HAD NOT FILED DETAILS BEFORE THE AO.CONSID ERING THE FACTS AND CIRCUMSTANCES OF THE MATTER,WE ARE OF THE OPINION THAT IN THE INTEREST O F JUSTICE MATTER SHOULD BE RESTORED BACK TO THE FIL E OF THE FAA FOR FRESH ADJUDICATION,WHO WILL DECIDE T HE ISSUE AFTER AFFORDING REASONABLE OPPORTUNITIES OF HEARING TO THE AO AND THE ASSESSEE -COMPANY.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE AO,IN PART. AS A RESULT,APPEAL FI LED BY THE AO STANDS PARTLY ALLOWED. 1+2 '*+ VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH ( VAKR% VAKR% VAKR% VAKR% 3 ( + 45. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE,2014 . 0 ( -.# 6 7' 18 TWU , 201 4 . ( / 8 SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7' /DATE: 18.06 . 2014. 3 ITA NO. 7780/MUM/2011 M/S. EXCELLENT EXPORTS PVT. LTD . . SK 0 0 0 0 ( (( ( &+9 &+9 &+9 &+9 : 9#+ : 9#+ : 9#+ : 9#+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR E BENCH, ITAT, MUMBAI / 9=/ &+' , . . . 6. GUARD FILE/ / 1 '9+ '9+ '9+ '9+ &+ &+&+ &+ //TRUE COPY// 0' / BY ORDER, > / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI