MAHAVIR SEAMLESS TUBE P. LTD, MUMBAI V. ITO WD 6(3)(3), MUMBAI

ITA 8046/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48784 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR
• Assessee Lawyers: KETAN L VAJANI
• Keywords: Unexplained expenditure; Opportunity of being heard
• Section: 69C; 143(3); 133(6); 69; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND T.R.SOOD(A.M ) ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) MAHAVIR SEAMLESS TUBE PVT LTD, 240, BRUSHWELL HOUSE, NAGDEVI STREET, MUMBAI- 400003 PAN: AADCM9639D INCOME TAX OFFICER WARD 6(3)(3), AAYAKAR BHAVAN M K ROAD, MUMBAI-400020. APPELLANT V/S RESPONDENT APPELLANT BY : SHRI KETAN L VAJANI RESPONDENT BY : MS.VANDANA SA GAR. O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06.09.2010 PASSED BY THE LEARNED CIT(A)-XII, MUMBAI FOR THE ASSESSMENT YEAR 2006- 07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF SEAMLESS TUB ES AND PIPES, FILED RETURN OF INCOME DECLARING TOTAL INCO ME OF RS.5,37,860/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO TO VERIFY THE PURCHASES AND FR EIGHT CHARGES ISSUED NOTICES U/S 133(6) TO THE FOLLOWING PARTIES: ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 2 NAME AND ADDRESS OF THE PARTY TO WHOM NOTICE U/S 133(6) SENT NOTICE U/S 133(6) DT. PURCHASE CLAIMED FREIGHT CHARGES CLAIMED 1 THE INDIAN SEAMLESS METAL TUBE, B-13, MIDC INDUSTRIAL AREA, BARAMATI-413133 10/09/2008 53,59,753 2 REMI METAL GUJARAT LTD, PLOT NO.1 GIDC JHAGADIA , SELOD, DISTRICT BHARUCH 10/11/2008 33,76,999 3 GYANCHAND SHARMA, B R CUTTERS, PLOT NO.1439, KALAMBOLI, DISTRICT RAIGADH 10/11/2008 37,642 4 M/S AARKAY CARRING CORPORATION, NEW JAL DARSHAN FLAT NO.202, PERRY CROSS ROAD, NEAR CHIMDHAI POLICE CHOWKIE, BANDRA (W), MUMBAI-400050 10/09/2008 1,18,633 5 M/S LODHA ROADWAYS, 1280, ACLATE BAZAR, AHMEDNAGAR-414001 27/10/2008 91,954 89,36,752 2,48,229 IN THE ABSENCE OF ANY CONFIRMATION FROM THE ABOVE P ARTIES, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY TH E ADDITION OF RS.89,36,752/- ON ACCOUNT OF UNPROVED PURCHASES U/S 69 AND RS.2,48,229/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE OF FREIGHT CHARGES U/S 69 C OF THE ACT SHOULD NOT BE MADE. IN THE ABSENCE OF ANY EXP LANATION BY THE ASSESSEE, THE AO ADDED UNPROVED PURCHASES OF RS.89,36,752/- U/S 69 AND UNEXPLAINED EXPENDITURE O F RS.2,48,229/- U/S 69C AGGREGATING TO RS.91,84,981 /- TO THE TOTAL INCOME OF THE ASSESSEE AND COMPLETED THE ASSE SSMENT AT AN INCOME OF RS.97,22,840/- VIDE ORDER DATED 2 5.11.2008 ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 3 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 3. ON APPEAL, THE LEARNED CIT(A) ON THE BASIS OF TH E DETAILS FILED BY THE ASSESSEE ASKED THE AO TO SUBMI T THE REMAND REPORT. THE LEARNED CIT(A) AFTER CONSIDERIN G THE ASSESSEES SUBMISSIONS AND THE REMAND REPORT OF THE AO WHILE UPHOLDING THE ADDITION OF PURCHASES OF RS.53 ,59,753/- OUT OF UNPROVED PURCHASES OF RS.89,36,752/- AND RS.7000/- OUT OF UNEXPLAINED EXPENDITURE OF RS.2,48,229/-, DELETED THE BALANCE ADDITION MADE BY THE AO AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. GROUND NO.I (A),(B),(C),(D), AND (E) ARE AGAINS T THE SUSTENANCE OF ADDITION OF RS.53,59,753/- ON ACCOUNT OF UNPROVED PURCHASES. 6. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR T HE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LEARNED CIT(A) FURTHER SUBMIT S THAT THE ASSESSEE HAS FILED A COPY OF LEDGER ACCOUNT OF TH E M/S THE INDIAN SEAMLESS METAL TUBES LIMITED (IN SHORT M/S ISMTL) IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE RE LEVANT ASSESSMENT YEAR 2006-07, COPY OF LEDGER ACCOUNT OF THE ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 4 ASESEEE IN THE BOOKS OF ACCOUNT OF M/S ISMTL DULY CONFIRMED BY THE SUPPLIER, COPY OF PURCHASE INVOICE S FROM M/S ISMTL IN RESPECT OF PURCHASES MADE BY THE ASS ESSEE DURING THE YEAR AGGREGATING TO RS.53,59,753 AND A COPY OF THE BANK STATEMENT OF THE ASSESSEE REFLECTING THE ENTRIES OF PAYMENTS MADE BY THE ASSESSEE TO THE M/S ISMTL THR OUGH CHEQUES APPEARING AT PAGES 1 TO 5 AND 8 TO 40 OF TH E ASSESSEES PAPER BOOK. HE FURTHER SUBMITS THAT DU RING THE REMAND PROCEEDINGS BEFORE THE AO, THE ASSESSEE HAS AGAIN FILED ALL THE COPIES OF ACCOUNT TO SHOW THE GENUIN ENESS OF THE PURCHASES. HOWEVER, THE AO WITHOUT VERIFYING T HE SAME FROM THE STATEMENT OF ACCOUNT SUBMITTED BY THE ASSE SSEE HAS NOT ACCEPTED THE SAME ON THE GROUND THAT THE PARTY M/S ISMTL HAS NOT CONFIRMED THE TRANSACTIONS. HE FUR THER SUBMITS THAT M/S ISMTL HAS NOT RESPONDED THE AOS LETTER AS THE AO HAS SENT THE LETTER TO THE WRONG ADDRE SS DESPITE THE FACT THAT THE ASSESSEE HAS GIVEN THE CORRECT ADDRESS OF THE COMPANY AS INDIAN SEAMLESS TUBES LTD, LUNKAD T OWER, VIMAN NAGAR, PUNE-411014. HE FURTHER SUBMITS THAT SINCE THE ASSESSEE HAS PRODUCED ALL THE RELEVANT DOCUMENT ARY EVIDENCE, THEREFORE, THE AO AND THE LEARNED CIT(A) ARE NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.53,59, 753/- MADE ON ACCOUNT OF UNPROVED PURCHASES. HE THEREFORE SU BMITS THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY T HE LEARNED CIT(A) BE DELETED. IN ALTERNATIVE, THE LEA RNED ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 5 COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION. 7. ON THE OTHER HAND, THE LEARNED DR WHILE RELYING ON THE ORDER OF THE AO AND THE LEARNED CIT(A) SUBMITS THA T SHE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION AFRESH. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE AO HAS I SSUED NOTICE U/S 133(6) OF THE ACT TO M/S ISMTL. IT IS ALSO NOT IN DISPUTE THAT NO COMPLIANCE WAS MADE BY THE SAID M/ S ISMTL. HOWEVER, DURING THE COURSE OF APPELLATE PRO CEEDINGS THE ASSESSEE HAS FILED COPIES OF THE ACCOUNT OF M/S ISMTL IN HIS BOOKS AND VICE-VERSA. THE LEARNED CIT(A) HAS CALLED FOR THE REMAND REPORT. DURING THE REMAND PROCEEDIN GS, THE AO IN ORDER TO VERIFY THE GENUINENESS HAS AGAIN ISS UED NOTICE U/S 133(6) TO THE PRINCIPAL OFFICER OF M/S I SMTL, B-13, MIDC INDUSTRIES AREA, BARAMATI AND THE SAID NOTIC E WAS RECEIVED BACK AS UNSERVED. THE ASSESSEE WAS AGAIN ASKED TO SHOW CAUSE AS TO WHY THE TRANSACTION MAY NOT BE TREATED AS BOGUS. IN REPLY, IT WAS INTER-ALIA STATED BY THE ASSESSEE THAT THE OFFICE OF THE ABOVE COMPANY IS SITUATED AT PUNE AT THE FOLLOWING ADDRESS: . ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 6 INDIAN SEAMLESS TUBES LTD, LUNKAD TOWER, VIMAN NAGAR, PUNE-411014 HOWEVER, THE AO WITHOUT ISSUING THE FRESH NOTICE ON THE ADDRESS PROVIDED BY THE ASSESSEE HAS SUBMITTED REM AND REPORT WHEREIN HE HAS INTERALIA STATED THAT . THUS IT MAY SEEN THAT THE ASSESSEE HAS FILED LEDGER OF THIRD P ARTY APPEARING IN THEIR BOOKS OF ACCOUNT. HOWEVER, THE THIRD PARTY HAVE NOT CONFIRMED THE TRANSACTIONS EXCEPT ONE PAR TY M/S REMI METAL GUJARAT LTD. THEREFORE, NECESSARY DECI SION MAY KINDLY BE TAKEN ON MERIT ON THE CASE. 9. SINCE DUE TO CHANGE OF ADDRESS, THE NOTICE ISSUE D BY THE AO HAS NOT BEEN RECEIVED BY THE SAID PARTY WHIC H RESULTED INTO NON-COMPLIANCE AND IN THE ABSENCE OF ANY CONFIRMATION FILED BY THE SAID PARTY IN COMPLIANCE TO THE AOS NOTICE ISSUED DURING REMAND PROCEEDING, WE AR E OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER SH OULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT A ND SEND BACK THE MATTER TO THE FILE OF THE AO WHO SHALL DE CIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREIA BOVE AND IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.I (A),(B),(C),(D) AND (E) TAKEN BY THE ASSESSEE ARE THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 7 10. IN GROUND NO.II (A),(B),(C) AND (D) THE ASSESSE E CHALLENGED THAT THE CIT(A) HAS ERRED IN NOT DIRECT ING THE ASSESSING OFFICER TO GIVE RELIEF OF RS.2,00,000/- ON ACCOUNT OF ARITHMETICAL ERROR. 11. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE SAID MISTAKE HAS BEEN RE CTIFIED BY THE AO VIDE ORDER DATED 19.1.2011 PASSED U/S 154. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER. HE THEREFORE, SUBMITS THAT THE GROUND TAKEN BY THE ASSESSEE MAY B E TREATED AS INFRUCTUOUS WHICH WAS NOT OBJECTED TO BY THE LEARNED DR. 12. THAT BEING SO AND KEEPING IN VIEW THAT SINCE T HE ABOVE MISTAKE HAS ALREADY BEEN RECTIFIED BY THE AO VI DE ORDER DATED 19.1.2011 PASSED U/S 154 OF THE ACT, WE ARE OF THE VIEW THAT THE GROUND TAKEN BY THE ASSESSEE BECOMES INFRUCTUOUS AND ACCORDINGLY THE SAME IS REJECTED. 13. IN THE RESULT, THE ASSESSEES APPEAL STANDS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. . ORDER PRONOUNCED IN THE OPEN COURT ON 4TH MAY,2 011. SD SD (T.R.SOOD) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 4TH MAY 2011 ITA NO. 8046/MUM/2010 (ASSESSMENT YEAR: 2006-07) 8 SRL:27411 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI