KAYSONS AGENCIES P.LTD, MUMBAI V. ITO CIR 4(2)(4), MUMBAI

ITA 816/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5422 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 816 /M/ 20 1 5 ASSESSMENT YEAR : 2008 - 09 KAYSONS AGENCIES PRIVATE LIMITED, 27, CHOTTALAL BHAVAN, KALBADEVI ROAD, MUMBAI - 400020. VS. ITO CIRCLE 4(2)(4), MUMBAI AAYAKAR BHAVAN, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACK 4485 C ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 09 . 07 .2018 DATE OF PRONOUNCEMENT : 25. 07 .201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 08 . 12 .201 4 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 9 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 08 - 09 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - I) . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN UPHOLDING THE REOPENING OF THE ASSESSMENT U/S 14S OF THE INCOME - TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF 10% OF THE ALLEGED DISPUTED PURCHASES BASING HIS DECISION ON ASSUMPTIONS SUSPICIONS ASSESSEE BY: SHRI HARI S. RAHEJA (AR ) DEPARTMENT BY: MS. N. HEMLATHA (DR) ITA. NO. 816 /M/201 5 A.Y. 2008 - 09 2 AND SURMISES THAT THE APPELLANT MIGHT HAVE PURCHASED F ROM THE LOCAL MARKET TOTALLY DISREGARDING THE LETTER FROM THE GUPTA'S THAT ALL THE TRANSACTIONS MADE BY THEIR THREE CONCERNS WITH THE APPELLANT WERE GENUINE AND THAT THEY HAD DURING THE ASSESSMENT STAGE CONFIRMED THE SAME. 3. THE APPELLANT SUBMITS T HAT THE C[T(A) HAS GROSSLY ERRED IN INFERRING AND IN CONCLUDING THAT THE PURCHASES / DELIVERY COULD HAVE BEEN FROM SOME OTHER PART} AND THAT THE APPELLANT WOULD THUS BE LIABLE TO AN ADDITION / DISALLOWANCE AND AN ESTIMATION TO COVER THE GP DIFFERENCE IN RE SPECT OF THESE PURCHASE AT 10% OF THE PURCHASES. ' 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED C1T{A) HAS FAILED TO APPRECIATE THAT THERE WAS NO MATERIAL FOUND OR SEIZED BY THE INCOME TAX DEPARTMENT SHOWING ANY ACCOMMODATION FOR THE UNDER APPEAL AND THE RELIANCE BY THE DEPARTMENT ON THE INITIAL STATEMENT OF MR. GUPTA WHICH STOOD RETRACTED DURING ASSESSMENT CANNOT BE A GROUND OF MAKING ANY DISALLOWANCE / ADDITIONS IN THE HANDS OF THE APPELLANT, 5. THE CIT( A) ERRED IN MERELY FOLLOWING HIS DECISION FOR THE A.Y 2006 - 07 AND IN MAKING AN ESTIMATE OF DISALLOWANCE OF 10% OF THE DISPUTED PURCHASES IGNORING THE VARIOUS APPELLATE DECISIONS CITED BEFORE HIM. 6. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, MODI FY, DELETE AND/OR CHANGE ALL OR ANY ABOVE GROUNDS OR BEFORE THE HEARING OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2008 DECLARING TOTAL INCOME TO THE TUNE OF RS.20,36,980/ - FOR THE A.Y. 2008 - 09. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY. THEREAFTER, THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 10.12.2010 ASSESSING THE TOTAL INCOME TO THE TUNE OF RS.20,82,500/ - . THEREAFTER, NOTICE U/S 1 48 OF THE ACT DATED 26.03.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. NOTICE U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. IN PURSUANCE OF NOTICE THE ITA. NO. 816 /M/201 5 A.Y. 2008 - 09 3 ASSESSEE FILED THE RETURN OF INCOME WHICH HE HAD FILED EARLIER. THE CASE OF THE ASSESSEE REOPENED ON THE BASIS OF THE FOLLOWING REASONS .: - THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME OF RS.20,36,980/ - ON 27.09.2008. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961, ORDER U/S 143(3) OF THE I.T. ACT, 1961 WAS PASSED ON 10.12.2010 DETERMINING THE TOTAL INCOME OF RS.20,82,500/ - DURING THE COURSE OF SURVEY PROCEDINGS U/S 133A CONDUCTED ON SHRI RAKESH KUMAR GUPTA & ORS ON 13.02.2009, IT HAS BEEN FOUND THAT ASSESSEE COMPANY HAS TAKEN BOGUS BILLS FOR PURCHASES FROM THE FOLL OWING PARTIES: M/S. DEV VANI INDUSTRIES - PROPRIETOR - NILES R GUPTA RS.10,86,893/ - M/S. SAINATH TEXTILE - PROPRIETOR RAKESH KUMAR GUPTA RS.11,69,446/ - MOREOVER, THE ABOVE PARTIES HAD CONFIRMED THE ISSUANCE OF ACCOMMODATION BI LLS TO THE ASSESSEE COMPANY DURING THE COURSE OF SURVEY U/S 133 CONDCTED ON SHRI RAKESH KUMAR GUPTA & ORS ON 13.02.2009. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 4. THEREAFTER, THE TOTAL PURCHASE TO THE T UNE OF RS.22,56,342/ - FROM THE ABOVE SAID TWO PARTIES WAS DECLINED AND WAS ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.43,61,410/ - . THEREFORE, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 10% OF THE BOGUS PURCHASE BUT THE ASSESSEE WAS NOT SATISFIED , THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO . 1 : - 5 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLEN GED THE REOPENING U/S 148 OF THE ACT. WE NOTICED THAT THIS ISSUE HAS BEEN COVERED AGAINST THE ITA. NO. 816 /M/201 5 A.Y. 2008 - 09 4 ASSESSEE BY THE ORDER OF THE HONBLE ITAT IN THE ASSESSES OWN CASE FOR THE A.Y. 2005 - 06 IN ITA. NO. 3812/M/2014 DATED 17.03.2017 , THEREFORE, IN THE SAID CIRCUMSTANCES, BY HONORING THE DECISION (SUPRA) IN THE ASSESSEES OWN CASE , WE DECIDE THIS ISSUE IN FAVOUR OF THE REVENUE. I SSUE N OS. 2, TO 5 : - 6 . UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE ADDITION OF BOGUS PURCHASE TO THE EXTENT OF 10%. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASS ESSEE HAS ARGUED THAT THE CASE HAS DULY BEEN COVERED BY ASSESSEES OWN CASE FOR THE A.Y.2005 - 06 IN ITA. NO. 3812/M/2014 DATED 17.03.2017, THEREFORE, I N THE SAID CIRCUMSTANCES, NO ADDITION IS LIABLE TO BE MADE IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE COPY OF ORDER DATED 17.03.2017 IS ON THE FILE. THE FACTS OF THE PRE SENT CASE ARE QUITE SIMILAR TO THE SAID CASE. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE HONBLE ITAT AS UNDER .: - 4.1.AS FAR AS THE ADDITION WITH REGARD TO NON - GENUINE PURCHASE IS CONCERNED, WE WANT TO MENTION THAT THE FAA HAS HELD THAT THERE WAS NO DOUBT ABOUT THE SALES MADE BY THE ASSESSEE, THAT THE ASSESSEE WAS NOT GIVEN A CHANCE TO CROSS - EXAMINE RKG, THAT THE QUAN TITY DETAILS OF THE SALES AND CLOSING STOCK OF NOT CHALLENGED, THAT NO MEANINGFUL INVESTIGATION WAS DONE AFTER THE SURVEY PROCEEDINGS AT THE BUSINESS PREMISES OF RKG, THAT 10% OF THE TOTAL PURCHASES SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE.IN OUR OPIN ION,THERE WAS NO JUSTIFICATION FOR UPHOLDING THE ADDITION OF 10% OF THE PURCHASES ALSO.ONCE THE SALES AND ITA. NO. 816 /M/201 5 A.Y. 2008 - 09 5 CLOSING STOCK DETAILS WERE FOUND TO BE GENUINE,THEN WITHOUT BRINGING SOME POSITIVE MATERIAL ON RECORD TO PROVE THE UNACCOUNTED PURCHASES,NO ADDITION S HOULD HAVE BEEN MADE.IN THE CASE BEFORE US,THE SUPPLIER I.E. RKG HAS RETRACTED HIS STATEMENTS.CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA CANNOT BE ENDORSED. SO, REVERSING THE SAME,WE DECIDED SECOND GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE . 7 . SINCE THE FACTS OF THE PRESENT CASE IS QUITE SIMIL AR TO THE FACTS OF THE CASE OF THE ASSESSEES OWN CASE FOR THE A.Y.2005 - 6 IN ITA. NO. 3812/M/2014 DATED 17.03.2017 , THEREFORE, IN THE SAID CIRCUMSTANCE S, BY FOLLOWING THE SAID DECISION, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DELETE THE ADDITION . ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 8 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 25. 07 . 2018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 25. 07 . 2018 . V.P. SINGH ITA. NO. 816 /M/201 5 A.Y. 2008 - 09 6 / 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// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI