ITO 24(3)(4), MUMBAI V. RAJESH C MASRANI, MUMBAI

ITA 7827/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3310 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DWIVEDI
• Assessee Lawyers: MRS SANJUKTA CHOWDHURY
• Keywords: Bogus purchase; Principle of natural justice; Additional evidence
• Section: 43B; 143(3)

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENC H, MUMBAI . , . ! , # $%& $ BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, AM $ ./I.T.A. NO.7827/M/2011 (AY: 2007-2008) $ ./I.T.A. NO.7828/M/2011 (AY: 2007-2008) ITO-24(3)-4, C-11, R.NO.706, PRATYAKSH KAR BHAVAN, BKC, BANDRA(E), MUMBAI 400 051. / VS. SHRI RAJESH C. MASRANI, [PROP. M/S. HARSH PACKAGING] FLAT NO.1102, MAHENDRA GARDEN, LILEM BUILDING, S.V. ROAD, GOREGAON (W), MUMBAI 400 062. &' # $ ./PAN : AHLPM 5311N ( '( /APPELLANT) .. ( )*'( / RESPONDENT) '( + , $ / APPELLANT BY : SHRI RAJARSHI DWIVEDI, DR ) *'( + , $ / RESPONDENT BY : MRS. SANJUKTA CHOWDHURY $ + -# /DATE OF HEARING : 20.6.2013 ./ + -# /DATE OF PRONOUNCEMENT : 3.7.2013 %0 %0 %0 %0 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY RELATE TO QUANTUM ADDITIONS AND THE PENALTIES U/S 271(1)(C) OF THE AC T. BOTH THE APPEALS ARE FILED BY THE REVENUE AGAINST THE SEPARATE ORDERS OF THE CIT (A)-34, MUMBAI. THEY INVOLVE THE SAME ASSESSMENT YEAR 2007-2008. AS THE BOTH TH E APPEALS PERTAINS TO THE SAME ASSESSEE AND THE ISSUES RAISED ARE INTERRELATED, FO R THE SAKE OF CONVENIENCE, THESE TWO APPEALS ARE CLUBBED, HEARD TOGETHER AND BEING A DJUDICATED IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUNDS WISE ADJUDICATION I S GIVEN IN THE FOLLOWING PARAGRAPHS. 2 ITA NO.7828/M/2011 (QUANTUM APPEAL) 2. FIRSTLY, WE SHALL TAKE UP ITA NO.7828/M/2011, WH ICH IS FILED BY THE REVENUE ON 21.11.2011 AGAINST THE ORDER OF CIT (A)-34, MUMB AI DATED 19.8.2011 FOR AY 2007-08. IN THIS APPEAL, REVENUE RAISED THE FOLLOWI NG GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 31,11,683/- BY ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A OF THE IT RULES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW , THE LD CIT (A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF VAT U/S 43B AMOUNTING TO RS. 12,465/-, WITHOUT CONSIDERING THE SUBMISSIONS MADE BY THE ASS ESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH CLEARLY SHOWS THAT THE SAID PAYMENT WAS MADE ON 26.6.2008 IE FAR AFTER THE DUE DATE OF FILING OF THE RETURN. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE, AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING. ASSESSEE FILED THE RETURN DECLARING THE TOTAL INCOME OF RS. 6,82,677/-. ASSE SSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME OF THE ASSESSEE WAS DETERMINED AT RS.39,15,280/- WHICH INCLUDE ADDITIONS ON ACCOUNT O F SUNDRY CREDITORS OF RS. 31,11,683/- AND ON ACCOUNT OF VAT AMOUNTING TO RS. 12,465/- U/S 43B OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, AO UNDERTOOK THE VERIFICATION EXERCISE WITH REGARD TO THE SUNDRY CREDITORS AND FOUND VARIATIONS IN THE CLAIMS. ASSESSEE COULD NOT RECONCILE THESE VARIATIONS SUCCESSFULLY. THEREFORE , AO MADE ADDITION ON ACCOUNT OF BOGUS PURCHASES. OF COURSE, AO INVOKED THE PROVISIO NS OF SECTION 43B IN RESPECT OF THE UNPAID VAT COLLECTED BY THE ASSESSEE. MATTER TR AVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, ASSESSEE BROUGHT IN A NEW EXPLANATION AS DISCUSSED IN PARA 4.2 OF TH E IMPUGNED ORDER. THE CONTENTS OF PARAGRAPHS SUGGEST THAT THE FIGURES ARE RECONCIL ABLE IF BOTH M/S. ROHIT PAPER AND M/S ROHIT PAPER BOARD, WHO SOLD THE MATERIAL TO THE ASSESSEE, ARE CONSIDERED. AS PER THE ASSESSEE, THERE ARE NO VARIATIONS AND THE I MPUGNED ADDITION OF SUNDRY CREDITORS IS UNCALLED FOR. THUS, THE ASSESSEE BROUG HT IN OTHER CREDITOR FOR THE FIRST TIME BEFORE THE CIT(A) TO EXPLAIN THE DISCREPANCY. CIT (A) WITHOUT REMANDING THE 3 MATTER TO THE FILES OF THE AO, IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, ACCEPTED THE SAID EVIDENCES AND EXPLANATIONS AND GRANTED REL IEF TO THE ASSESSEE. AGGRIEVED, REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNA L. 5. DURING THE PROCEEDINGS BEFORE US, LD REPRESENTAT IVES OF BOTH THE PARTIES HAVE FAIRLY MENTIONED THAT, CONSIDERING THE PRINCIP LES OF NATURAL JUSTICE, THE ISSUE MUST BE SET ASIDE TO THE FILES OF THE AO FOR EXAMINING AND DECIDING THE ISSUE AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES. CONSIDERING THE AGREED POSITION OF LD REPRESENTATIVES OF BOTH THE PARTIES ON THE ISSUE OF REMANDING THE MATTER TO THE FILES OF THE AO FOR ADJUDICATING THE ISSUE AFRESH, WE FIND MERIT IN THE SAME AND ORD ER ACCORDINGLY. THUS, GROUND NO.1 RAISED BY THE REVENUE IS ALLOWED FOR STATISTIC AL PURPOSES. 7. GROUND NO.2 RELATES TO THE DISALLOWANCE OF RS. 12,4 65/- ON ACCOUNT OF VAT. IN THIS REGARD, IT IS THE CLAIM OF THE ASSESSEE T HAT THE SAID AMOUNT WAS PAID BEFORE THE DUE DATE 31.10.2007 FOR FILING OF RETURN OF INCOME. IN THIS REGARD, LD COUNSEL BROUGHT OUR ATTENTION TO PAGE 32 OF THE PAP ER BOOK TO DEMONSTRATE THAT THE AMOUNT WAS PAID ON 29.10.2007. 8. ON THE OTHER HAND, IN RESPONSE TO THE QUERY FROM THE BENCH, LD DR COULD NOT DEMONSTRATE THAT THE SAID AMOUNT WAS PAID ON 26.6.2 008 AND IT FALL OUTSIDE THE DUE DATE FOR FILING THE RETURN OF INCOME. THEREFORE, WE FIND NO REASON TO INTERFERE THE ORDER OF THE CIT (A) ON THIS ISSUE. THE CONTENTS O F PAGE 32 SUPPORT THE CONTENTION OF THE ASSESSEE IN HIS FAVOUR. THE SAID AMOUNT OF R S 12,465/- ON ACCOUNT OF VAT WAS PAID ON 29.10.2007 IE BEFORE THE DUE DATE (31.1 0.2007). LD DR COULD NOT DEMONSTRATE THE CORRECTNESS OF THE DATE OF 26.6.200 8 MENTIONED IN GROUND 2 ABOVE. THEREFORE, WE ALLOW THE CLAIM OF THE ASSESSEE AND H ENCE, GROUND 2 IS ALLOWED . 8.1. OF COURSE, THE LD DR TRIED TO RAISE A NEW ISSU E RELATING TO THE SUM OF RS. 1,33,992/-, WHICH WAS ACTUALLY PAID ON 29.3.2008, W HICH IS FACTUALLY FALLS OUTSIDE THE DUE DATE FOR FILING OF THE RETURN OF INCOME. AO HAS NOT MADE ANY DISALLOWANCE INTHIS REGARD. LD DR COULD NOT DEMONSTRATE THE REASONS FOR THE SAID EXCLUSION OF ADDITON 4 FROM THE ASSESSMENT. CONSIDERING THE FACT THAT THIS ISSUE DOES NOT ARISE EITHER THE ASSESSMENT ORDER OR IMPUGNED ORDER, WE DISMISS THIS PART OF THE ARGUMENT OF THE LD DR. ACCORDINGLY, THE SAID OBSERVATION OF LD DR IS NOT SUSTAINABLE IN LAW AND HENCE, THE SAME IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ITA NO.7827/M/2011 (PENALTY U/S 271(1)(C) OF THE AC T) 10. THIS APPEAL FILED BY THE REVENUE ON 21.11.2011 AGAINST THE ORDER OF CIT (A)- 34, MUMBAI DATED 23.8.2011 FOR AY 2007-08. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT (A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) AMOUNTING TO RS. 9,99,836/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAI LED TO RESPOND TO PENALTY SHOW CAUSE NOTICES AS TO WHY THE PENALTY SHOULD NOT BE L EVIED IN HIS CASE FOR FILING INACCURATE PARTICULARS AND CONCEALMENT OF INCOME DU RING THE COURSE OF PENALTY PROCEEDINGS. 11. IN THIS APPEAL, REVENUE RAISED THE ABOVE GROUND AGAINST THE RELIEF GRANTED BY THE CIT (A) ON THE ADDITION OF SUNDRY CREDITORS IE M/S. ROHIT PAPERS AND ROHIT PAPER BOARD. WHILE ADJUDICATING THE APPEAL ITA NO.7828/M/ 2011, ON MERITS, WE SET ASIDE THIS ISSUE TO THE FILES OF THE AO FOR EXAMINING AND DECIDING THE ISSUE AFRESH. THUS, QUANTUM ADDITIONS ARE SET ASIDE AND CONSEQUENTLY, I N OUR OPINION, THE PENALTY ORDER SHOULD ALSO BE SET ASIDE AND REMANDED TO THE FILES OF THE AO FOR EXAMINING THE ISSUES AFRESH IN TUNE WITH THE LAW AND THE OUTCOME ON THE PROCEEDINGS ON QUANTUM ADDITIONS. ACCORDINGLY, GROUND RAISED BY THE REVEN UE IS SET ASIDE . 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3.7.2013 . SD/- SD/- (D. MANMOHAN ) (D. KARUNAKARA RAO ) / VICE PRESIDENT # $%& / ACCOUNTANT MEMBER MUMBAI; 1% 3.7.2013 5 . 2 . $ ./ OKK , SR. PS %0 %0 %0 %0 + ++ + )2-34 )2-34 )2-34 )2-34 54/- 54/- 54/- 54/- / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 4 78 )2-2 , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. $*4- )2- //TRUE COPY// %0 $ %0 $ %0 $ %0 $ / BY ORDER, / $ $ $ $ ; ; ; ; (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI