INCOME TAX OFFICER 14(3)(2), MUMBAI V. TV TELESHOP PRIVATE LIMITED, MUMBAI

ITA 830/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6480 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E BENC H MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 830/MUM/2018 FOR (ASSESSMENT YEAR 2009-10) ITO- 14(3)(2), R.NO. 458, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S T V TELESHOP PVT. LTD. SHOP NO. 10, BHAVESHWAR PLAZA, L. B.S. MARG, GHATKOPAR (WEST), MUMBAI-400086. PAN: AAECM1078M APPELLANT RESPONDENT APPELLANT BY : SHRI CHAUDHARY ARUN KUMAR SINGH (DR) RESPONDENT BY : NONE DATE OF HEARING : 14.02.2019 DATE OF PRONOUNCEMEN T : 14.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-22, MUMBAI (FO R SHORT THE LD. CIT(A) DATED 22.11.2017, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 O F THE ACT ON 27.03.2014. THE REVENUE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN REDUCING THE QUANTUM OF THE ADDITIO N TO 15% OF THE PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM THE HAWALA DEALERS FROM 25% OF SUCH PURCHASES. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF TRADING OF HEALTH AND FITNESS EQUIPMENT S, FILED ITS RETURN OF ITA NO. 830/MUM/2018-M/S T V TELESHOP PVT. LTD. 2 INCOME FOR ASSESSMENT YEAR 2009-10 ON 27.09.2009 DE CLARING TOTAL INCOME OF RS. 6,34,070/-. INITIALLY, THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 141(1) OF THE ACT. SUBSEQUENTLY, THE ASSESS MENT WAS RE-OPENED UNDER SECTION 147 ON 31.03.2013. NOTICE UNDER SECTI ON 148 WAS SERVED UPON THE ASSESSEE. NO RETURN OF INCOME WAS FILED BY ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESS MENT WAS RE-OPENED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATIO N WING OF INCOME-TAX DEPARTMENT THAT ASSESSEE IS ONE OF THE BENEFICIARY OF PURCHASES SHOWN FROM THE HAWALA TRADERS AS INFORMED BY SALES TAX DEPARTM ENT GOVERNMENT OF MAHARASHTRA. AS PER SAID INFORMATION, THE ASSESSEE HAS SHOWN THE PURCHASES FROM SEVEN SUCH HAWALA DEALERS AGGREGATIN G TO RS. 4,18,19,549/- AS RECORDED BY ASSESSING OFFICER IN PARA- 5.2 OF IT S ORDER. THE ASSESSEE WAS CONFRONTED WITH THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND ASKED TO SUBSTANTIATE THE GENUINENESS OF PURCHASES. THE ASSESSEE FURNISHED THE COPY OF LEDGER ACCOUNT OF THE PARTIES AND COPIE S OF SALE INVOICES RAISED BY THE PARTIES. ON THE BASIS OF ADDRESS AVAILABLE O N SALE INVOICE, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6 ) TO THE PARTIES. THE NOTICE WAS NOT BE SERVED ON THE PARTIES AS NONE OF THE PARTIES WERE ALLEGEDLY AVAILABLE ON THEIR GIVEN ADDRESSES. THE ASSESSING O FFICER AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND DISALLOWED 25% O F THE PURCHASES SHOWN FROM ALLEGED HAWALA DEALERS. ON APPEAL BEFORE THE L D. CIT(A), THE ITA NO. 830/MUM/2018-M/S T V TELESHOP PVT. LTD. 3 DISALLOWANCE WAS RESTRICTED TO 15%. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 3. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE SENDING NOTICE THROUGH REGISTERED AD. THE NOTICE SENT TO ASSESSEE IS RETUR NED BACK BY POSTAL AUTHORITY WITH THE REMARK LEFT. THEREFORE, WE LE FT NO OPTION EXCEPT TO HEAR THE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRES ENTATIVE (DR) FOR THE REVENUE AND TO DECIDE THE CASE ON THE BASIS OF MATE RIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDERS OF ASSESSING OFFICER. THE LD. DR FOR THE REVENUE ARGUED THAT THE INVESTIGATIO N WING OF THE INCOME- TAX DEPARTMENT MADE FULL-FLEDGED ENQUIRY. THE PARTI ES FROM WHOM THE ASSESSEE HAS SHOWN THE PURCHASES ARE BOGUS HAWALA D EALERS. THE HAWALA DEALERS ARE INDULGED IN ISSUING BOGUS BILLS WITHOUT DELIVERY OF ANY MATERIAL OR GOODS. THE ASSESSEE OBTAINED ACCOMMODATION BILLS ONLY IN ORDER TO INFLATE THE EXPENSES AND TO BRING DOWN THE PROFITAB ILITY IN ORDER TO AVOID THE TAX. THE ASSESSEE COULD NOT SUBSTANTIATE THE PURCHA SES DESPITE GIVING SUFFICIENT OPPORTUNITY. 4. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THA T DURING THE ASSESSMENT, THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT NOR DOUBTED THE GENUINENESS OF SALE OF THE ASSESSEE. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REJECTED BY THE ASSESSING OFFICER. THE ASS ESSING OFFICER DISALLOWED THE 25% OF THE PURCHASES. THE LD. CIT(A) BY FOLLOWING THE ITA NO. 830/MUM/2018-M/S T V TELESHOP PVT. LTD. 4 DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. S IMIT P. SHETH (365 ITR 451) HELD THAT THERE CAN BE NO SALE WITHOUT CORRESP ONDING PURCHASES, IN SUCH CASES, THE ONLY PROFIT ELEMENT EMBEDDED IN THE SE PURCHASE WAS TO BE DISALLOWED. THE LD. CIT(A) AFTER EXAMINING THE GROS S PROFIT RATIO OF ASSESSEE FROM ASSESSMENT YEAR 2008-09 TO 2010-11 WH ICH IS RANGING 7.13% TO 12.88% RESTRICTED THE DISALLOWANCE TO 15%. 5. WE ARE ALSO OF THE CONSIDERED VIEW THAT UNDER INCOM E TAX ACT ONLY REAL INCOME CAN BE TAXED BY THE REVENUE. WE MAY FURTHER CONCLUDE THAT EVEN IF THE TRANSACTION IS NOT VERIFIABLE, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRANSACTION. AND AFTER CONSIDERING THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS OF THE PARTIES, WE ARE OF THE OPINION THAT IN ORDER TO FULFIL THE GAP OF REVENUE LEAKAGE THE D ISALLOWANCE OF REASONABLE PERCENTAGE OF SUCH PURCHASES WOULD MEET THE END OF JUSTICE. CONSIDERING THE ABOVE FACTUAL DISCUSSION, WE DO NOT FIND ANY IL LEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED.. ORDER PRONOUNCED IN THE OPEN COURT ON 14/02/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATE: 14 .02.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT ITA NO. 830/MUM/2018-M/S T V TELESHOP PVT. LTD. 5 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI