DHANRAJ R PAREKH, MUMBAI V. INCOME TAX OFFICER 20(1)(4), MUMBAI

ITA 970/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1569 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A H ANSARI
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH , JM ITA NO. 970/MUM/2018 (ASSESSMENT YEAR: 2012-13) SHRI DHANRAJ R. PAREKH M/S. RAJSURI METAL INDUSTRIES 42/46, GURU RAJENDRA HOUSE, 5 TH KUMBHARWADA LANE, MUMBAI-400 004 VS. ITO-20(1)(4), PIRAMAL CHAMBER, LALBAUG, MUMBAI-400 012 PAN/GIR NO. AAPPP 8747 G ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI A. H. ANSARI DATE OF HEARING : 15.10.2020 DATE OF PRONOUNCEMENT : 14.12.2020 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-32, MUMBAI (L D.CIT(A) FOR SHORT) DATED 20.01.2016 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2012-13. 2. THE GROUNDS OF APPEAL ARE IN RESPECT OF VARIOUS ADDITIONS SUSTAINED BY THE LD. CIT(A) FOR WANT OF PROPER DETAILS. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFIC ER (A.O. FOR SHORT) IN THIS CASE MADE THE IMPUGNED ADDITIONS PRIMARILY ON THE GROUND THAT DETAILS WERE NOT PROVIDED BY THE ASSESSEES COUNSEL. IN THIS REGARD, WE MAY REFER TO THE ASSESSMENT ORDER DEALING WITH THE ADDITION AS UNDER: 3. THE ASSESSEE IS TRADING IN FERROUS AND NON FERRO US METAL UNDER THE NAME AND STYLE OF M/S. RAJSURI METAL INDUSTRIES. 3. AS PER THE SHOW CAUSE NOTICE DATED 11.03.2015, T HE ASSESSEE WAS REQUESTED TO SUBMIT DETAILS OF THE SUNDRY CREDITORS AS FOLLOWS: A) AKASH STEEL RS.35,41,168/- B) ATALAS INTERNATIONAL RS.16,96,228/- C) KESHAV INDUSTRIES RS.20,76,284/- 2 ITA NO. 970/MUM/2018 (A.Y. 2012-13) SHRI DHANRAJ R. PAREKH VS. ITO D) NISCHAL TRADING PVT. LTD. RS.10,45,395/- E) PREMIER ENTERPRISES RS.12,17,222/- F) ROMAN TRADING CO. RS.15,21,702/- G) UNICON ENTERPRISES RS.21,46,577/- RS.1,32,44,576/- 4. AS THE ASSESSEE HAS NOT PROVIDED ANY DETAILS, TH E SUNDRY CREDITORS AS ABOVE, OF RS.1,32,44,576/- IS ADDED BACK TO THE TOTAL INCOME. 5. AS PER THIS OFFICE QUESTIONNAIRE, THE ASSESSEE W AS REQUIRED TO SUBMIT THE DETAILS OF INTEREST PAID AMOUNTING TO RS.3,64,211/-. AS NO REPLY REGARD ING THE SAME IS SUBMITTED, THE INTEREST PAID OF RS.3,64,211/- IS ADDED BACK TO THE TOTAL INCOME. 6. ON PERUSAL OF THE BALANCE SHEET (SCHEDULE F) IT IS SEEN THAT THE ASSESSEE HAS SHOWN UNSECURED LOANS OF RS.55,76,029/-. THE ASSESSEE WAS REQUIRED TO SUBMIT CONFIRMATIONS OF THE LOAN PARTIES. ASSESSEE NO CONFIRMATIONS AND DETAILS REGA RDING THE UNSECURED LOANS HAVE BEEN SUBMITTED. I HAVE NO OTHER OPTION BUT TO ADD THE EN TIRE AMOUNT OF RS.55,76,029/- TO HIS TOTAL INCOME. 4. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) DISMI SSED THE ASSESSEES APPEAL ALSO ON THE GROUND THAT THE ASSESSEES COUNSEL HAS NOT PROP ERLY APPRECIATED AND CANVASSED THE ISSUE OF ADDITIONS. WE MAY REFER TO THE ORDER OF LD . CIT(A) AS UNDER: 5. DECISION: I HAVE CAREFULLY CONSIDERED THE MATTER AND PERUSED THE MATERIAL BEFORE ME. I FIND THAT ALL THE GROUNDS ARE AGAINST WHAT THE APPE LLANT CLAIMS TO BE DISALLOWANCE OF BOGUS PURCHASE BY THE A.O. I FIND FROM THE ASSESSMENT ORD ER THAT NO SUCH DISALLOWANCE HAS BEEN MADE. THE A.O. HAS MADE ADDITION TOWARDS UNPROVED SUNDRY CREDITORS, UNPROVED UNSECURED LOANS AND INTEREST DISALLOWANCE. I ALSO FIND FROM THE GROUNDS OF APPEAL THAT NO CHALLENGE IS MADE AGAINST THE DISALLOWANCE OF INTEREST AND ADDITION OF UNPROVED L OANS. 5.1 GROUND 1: THIS IS DIRECTED AGAINST THE ACTION O F THE A.O. IN ADDING BACK THE CLOSING BALANCE OF SUNDRY CREDITORS AS NO CONFIRMATION REGA RDING THE TRANSACTION WERE FILED BEFORE HIM. IN APPEAL, THE APPELLANT STATES THAT THESE CREDITORS A RE RELATING TO PARTIES FROM WHOM PURCHASES WERE MADE. HE STATES THAT THESE PARTIES WERE HELD AS BOG US SUPPLIERS BY THE SALES TAX DEPT. HE THEREFORE REQUESTS FOR ADDITION OF A REASONABLE PRO FIT % OF 12.5% OF THESE BOGUS PURCHASES. HOWEVER I FIND THAT THIS ISSUE DOES NOT EMERGE OUT OF THE ASSESSMENT ORDER. IN THE ASSESSMENT, THE A.O. HAS QUESTIONED THE APPELLANT ON THE GENUINENES S OF CREDITORS AND NOT THE PURCHASES. THE APPELLANT WAS SPECIFICALLY REQUIRED TO PRODUCE CONF IRMATIONS FROM THESE PARTIES, AND ADMITTEDLY THE APPELLANT COULD NOT DO SO. BEFORE ME ALSO INSTE AD OF ADDRESSING THE ADDITION MADE TOWARDS UNPROVED CREDITORS, THE APPELLANT WOULD HAVE ME BEL IEVE THAT THESE ARE BOGUS PURCHASES. THIS CLAIM IS MADE BEFORE ME WITHOUT ANY PROOF OR SUBSTA NTIATION. NO CONFIRMATIONS FROM TEHSE CREDITORS WERE FILED BEFORE ME ALSO. IN THE CIRCUMS TANCES, I AM CONSTRAINED TO HOLD THAT THE APPELLANT CANNOT PRODUCE PROOF THESE CREDITORS AS G ENUINE AND THEREFORE I UPHOLD THE ACTION OF THE A.O. IN MAKING AN ADDITION OF RS.1,32,44,576/- ON T HIS COUNT. GROUND 1 IS DISMISSED. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPE AL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT AS IT IS EVIDENT FROM THE O RDERS OF THE AUTHORITIES BELOW THAT THE EARLIER COUNSEL HAS NOT REPRESENTED THE ASSESSEE PR OPERLY AND HENCE THIS HAS LED TO THE ADDITIONS WHICH IS NOT WARRANTED AS ALL THE ASSESSE E DETAILS ARE AVAILABLE WITH THE ASSESSEE. 3 ITA NO. 970/MUM/2018 (A.Y. 2012-13) SHRI DHANRAJ R. PAREKH VS. ITO HE PRAYED THAT AN OPPORTUNITY MAY BE GRANTED TO THE ASSESSEE TO PRESENT THE CASE AFRESH WITH ALL THE DETAILS BEFORE THE ASSESSING OFFICER. 7. THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) DID NOT HAVE ANY OBJECTION TO THIS PROPOSITION. 8. UPON CAREFUL CONSIDERATION WE FIND CONSIDERABLE COGENCY IN THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. WE ALSO NOTE THAT THE A.O. HAS NOT PROPERLY ADJUDICATED THE ISSUES. HE HAS SIMPLY ADDED THE VARIOUS ITEMS F OR WHICH HE IS WRITING IN THE ASSESSMENT ORDER THAT HE HAS SOUGHT DETAILS AND THE SAME ARE NOT PROVIDED. WHAT IS THE IMPACT ON THE ASSESSMENT OF THE NON-PROVISION OF TH E DETAILS HAS BEEN SIMPLY STATED BY THE ASSESSING OFFICER BY MAKING THE ADDITIONS. THESE AD DITIONS INCLUDE SUNDRY CREDITOR AND LOANS. UNDER WHAT PROVISION OF LAW THE ASSESSING OF FICER IS MAKING THE ADDITIONS AS TO WHETHER HES INVOKING IS SECTION 41(1) OR SECTION 6 8 IS NOT AT ALL SPECIFIED. IT IS INCUMBENT UPON THE ASSESSING OFFICER TO MENTIONED AS TO WHETH ER THE INGREDIENTS MENTIONED IN THE PARTICULAR SECTION WARRANTING THE ADDITION IS SATIS FIED OR NOT. WHETHER THE ASSESSING OFFICER SHALL MAKE THE BEST JUDGMENT ASSESSMENT IN ABSENCE OF THE NECESSARY DETAILS IS ALSO NOT DISCUSSED IN THE ORDERS OF AUTHORITIES BELOW. IN TH IS VIEW OF THE MATTER, IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IS REMITTED TO THE FILE OF ASSESSING OFFICER. ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. LEARNED COUNSEL OF THE ASSESSEE HAS UNDERTAKEN TO PROVIDE FULL COOPERATION TO THE ASSESSING OFFICER I N THIS REGARD. 9. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STAND S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD ON 14.12.20 20. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 14.12.2020 ROSHANI , SR. PS 4 ITA NO. 970/MUM/2018 (A.Y. 2012-13) SHRI DHANRAJ R. PAREKH VS. ITO COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI