VISION ADVERTISING P. LTD, MUMBAI V. CIT (A), MUMBAI

ITA 890/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3741 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Peak credit
• Section: 69C; 143(3); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 890 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 11 - 11 ) MY VISION ADVERTISING PVT LTD, 315/2514, MOTILAL NAGAR, GOREGAON (W), MUMBAI - 400090 / VS. COMMISSIONER OF INCOME TAX, 20 , AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AAGCM3691Q / APPELLANT BY: NONE / RESPONDENT BY SHRI KAILASH KANOJIYA / DATE OF HEARING : 20.7 .201 6 / DATE OF PRONOUNCEMENT : 12. 08 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 20 , MUMBAI D A T ED 5.11.2014 PERTAINING TO A.Y. 20 10 - 11 . DESPITE OF SERVICE OF NOT ICE, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX - PARTE WITHOUT PRESENCE OF ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE BEFORE US AND AFTER HEARING THE LD.DR. 2. ONLY ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL IS QUA UPHOLDING THE ADDITION OF RS. 2,48,344 / - BY THE LD.CIT(A) AS MADE BY THE AO UNDER SECTION ITA NO 890 /M/ 201 5 2 69C OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF PEAK CASH CREDIT IN RESPECT OF ALLEGED BOGUS PURCHASE FROM PARAS SALES COR PORATION AND RASHMI ENTERPRISES. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2010 DECLARING A LOSS OF RS. 2,74,139 / - , WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRU TINY AND STATUTORY NOTICE U/S 143(2) DATED 2 .9.201 1 AND 142 (1) ALONG WITH QUESTIONNAIRE DATED 7.6.2012 WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING ASSESSMENT PROCEEDINGS, T HE AO MADE ADDITION OF RS . 2,48,344 / - UNDER SECTION 69C OF THE ACT AS IT IS UNEXPLAINED EXPENDITURE TOWARDS PURCHASES FROM PARAS SALES CORPORATION AND RASHMI ENTERPRISES AND FRAMED ASSESSMENT UNDE R SECTION 143(3) VIDE ORDER DATED 8.3.2013 BY ASSESSING THE INCOME AT A LOSS RS. 25,795/ - UNDER THE NORMAL PROVISIONS OF ACT. AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) . BEFORE THE LD.CIT(A) IT WAS SUBMITTED THAT THE ADDITION U/S 69C OF RS. 2,48,344 / - WAS NOT JUSTIFIED AS THE AMOUNT PERTAIN ED TO PURCHASE S FROM PARAS SALES CORPORATION AND RASHMI ENT ERPRISES. THE AO ISSUED NOTICE S U/S 133(6) TO THESE PARTIES WHICH WERE NOT RESPONDED. IT WAS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE ABOVE TWO NAMES OF SUPPLIERS WERE DECLARED SUSPICIOUS DEALERS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND THE INFORMATION WAS SENT TO THE INCOME TAX DEPARTMENT TO THIS EFFECT ITA NO 890 /M/ 201 5 3 BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE LD. CIT(A) FINALLY DISMISSED THE APPEAL OF THE APPEAL BY HOLDING AS UNDER : 3.3 I HAVE CONSIDERED THE ISSUE UNDER AP PEAL, CAREFULLY. I FIND THAT APPELLANT IS NOT ABLE TO ESTABLISH THE PURCHASES SHOWN FROM RASHMI ENTERPRISES AND PARAS SALES CORPORATION. IT IS VERY EVIDENT FROM THE FINDING OF THE ASSESSING OFFICER THAT PROPRIETORS OF THESE CONCERN HAVE GIVEN AN AFFIDAVIT BEFORE THE SALE TAX DEPARTMENT THAT THEY HAVE NOT SOLD OUT ANY GOODS, ONLY SALES BILLS HAVE BEEN ISSUED. IT IS IMPORTANT TO NOTE THAT DURING THE ASSESSMENT PROCEEDINGS, APPELLANT HAS NOT ESTABLISHED THE FACT THAT ACTUAL PURCHASE WERE MADE FROM THESE TWO PA RTIES. ASSESSING OFFICER HAS ISSUED NOTICES TO THESE PARTIES NEVERTHELESS NO RESPONSE WAS RECEIVED. THEREFORE, IT WAS THE RESPONSIBILITY OF THE APPELLANT TO PRODUCE SOME OTHER RELIABLE AND VERIFIABLE EVIDENCES, BUT IT IS SEEN FROM THE REPRESENTATION DATED 19.6.2014, OR FROM ABOVE SUBMISSION THAT APPELLANT IS NOT ABLE TO ESTABLISH THE PURCHASES SHOWN FROM THESE PARTIES. SINCE, APPELLANT / A.R. HAS ADMITTED THE INGENUINENESS OF THE PURCHASES AND HAS WORKED OUT THE PEAK CREDIT OF RS. 2 , 48 , 344/ - , THERE IS NO OPT ION LEFT OUT BUT TO APPROVE THE FINDING OF THE ASSESSING OFFICER. CONSIDERING THE INABILITY OF THE APPELLANT TO ESTABLISH THE PURCHASES, THE FINDING OF THE ASSESSING OFFICER IS APPROVED AND DISALLOWANCE OF PURCHASE EXPENDITURE OF RS. 2,48,344/ - IS SUSTAINE D. 4 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW . WE FIND THAT IN THE CASE BEFORE US, THE DISALLOWANCE OF RS. 2,48,344/ - WAS MADE BY THE AO WHICH RELATES TO TWO SUPPLIERS OF GOODS VIZ. PARAS SALES CORPORATION AND RASHMI ENTERPRISES. THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE SAID SUPPLIERS WHICH WERE NOT REPLIED AND WHEN THE ASSESSEE WAS CONFRONTED WITH THE SAID FACT, IT WAS SUBMITTED THAT THEY HAD SHIFTED THEIR BUSINESS LOCATIONS. WE FURTHER FIND THAT THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT QUA THE ABOVE SUPPLIERS BEING SUSPICIOUS DEALERS. WE FIND MERIT IN THE ARGUMENTS OF THE LD. AR THAT SOURCES OF PURCHASES OF ITA NO 890 /M/ 201 5 4 MATERIAL WE R E NOT IN DISPUTE. THE ASSESSEE HAS MADE PURCHASE S FROM THESE SUPPLIERS AND DULY MADE PAYMENT S TO THE SAID SUPPLIERS AND THEREFORE THE PAYMENTS WERE DULY REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THEREFORE THE PROVISIONS OF SECTION 69C OF THE ACT CA NNOT BE INVOKED. FOR THE SAKE OF CONVENIENCE AND BETTER UNDERSTANDING, THE PROVISIONS OF SECTION 69C ARE REPRODUCED BELOW: 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPE NDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FO R SUCH FINANCIAL YEAR : A PLAIN PERUSAL OF THE PROVISIONS OF SECTION 69C REVEALS THAT WHERE THE ASSESSEE HAS INCURRED ANY EXPENDITURE AND THE SOURCES WHEREOF COULD NOT BE EXPLAINED BEFORE THE AO OR AO IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESS EE ONLY THEN PROVISIONS OF SECT ION 69C COULD BE INVOKED AND NOT OTHERWISE. IN OUR VIEW THE ORDER OF LD.CIT(A) UPHOLDING THE APPLICATION OF PROVISION OF SECTION 69C OF THE ACT WAS WRONG AS THE SOURCE OF PAYMENT WAS NOT DOUBTED OR DISPUTED. IN THE BACKGRO UND OF THE ABOVE FACTS , WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS. 2,48,344/ - 5. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12TH AUG , 2016 . 12TH AUG, 2016 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI: 12TH AUG , 2016 . . . ./ SRL , SR. PS ITA NO 890 /M/ 201 5 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, (ASSTT. REGISTRAR) , /ITAT, MUMBAI