Upendra Maheshwari, CHENNAI V. DCIT, CHENNAI

ITA 974/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4093 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAGADEVAN
• Assessee Lawyers: G BASKAR
• Keywords: Bogus purchase

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.974 & 975/MDS/2017 ( / ASSESSMENT YEAR: 2009-10 & 2010-11) MS. UPENDRA RAVINDRA MAHESHWARI, C/O. M/S. G. BASKAR, S. SRINIRANJANI, SUSHMA HARINI, A.S. SREE LAKSHMI VALLI, ADVOCATES, NO.7, 1 ST FLOOR, ROSY TOWER, NUNGAMBAKKAM HIGH ROAD, CHENNAI 34. VS THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE -2, CHENNAI 34. PAN: AADPV3404E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI SAGADEVAN, JCIT /DATE OF HEARING : 03.07.2017 !' /DATE OF PRONOUNCEMENT : 05.07.2017 / O R D E R THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, CHENNAI DATED 12.01.2017 AND 30.01.201 7 IN ITA NO.18/CIT(A)-2/2015-16 AND ITA NO.183/CIT(A)-2/2015 -16 FOR THE ASSESSMENT YEAR 2010-11 & 2009-10 RESPECTIVELY PASSED U/S.250(6) R.W.S.143(3) R.W.S.147 OF THE ACT. 2 ITA NO.974& 9 75/MDS/2017 2. THE ASSESSEE HAS RAISED SEVERAL SIMILAR GROUNDS IN HIS APPEALS; HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOW S: (I) THE LD.CIT(A) HAS ERRED IN UPHOLDING THE VALIDI TY OF REOPENING U/S.147 OF THE ACT, FOR BOTH THE ASSESSME NT YEARS BECAUSE THE ASSESSING OFFICER HAS NO MATERIALS TO B ELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. (II) THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ADDIT ION MADE BY THE LD.AO BY ESTIMATING 25% OF BOGUS / UNVERIFIABLE PURCHASES AS UNDISCLOSED INCOME. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN IR ON BARS USED FOR CONSTRUCTION PURPOSES, FILED HIS RETURN OF INCOME O N 29.09.2009 AND 25.09.2010 FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 RESPECTIVELY. THE ASSESSMENT FOR BOTH THE YEARS WE RE REOPENED BECAUSE THE REVENUE HAD INFORMATION FROM THE SALES TAX DEPARTMENT, MUMBAI THAT THE ASSESSEE HAD AVAILED BO GUS BILLS FROM CERTAIN ENTITIES FOR PURCHASE OF STEEL. THERE FORE THE LD.AO REOPENED THE ASSESSMENT FOR BOTH THE ASSESSMENT YEA RS. 3 ITA NO.974& 9 75/MDS/2017 4. GROUND NO.(I) : REOPENING U/S.147 OF THE ACT:- THE LD.AR SUBMITTED BEFORE US THAT THE LD.AO HAD ERRED IN REOPENING THE ASSESSMENT WHICH IS BEYOND 4 YEARS BE CAUSE THERE WERE NO MATERIALS AVAILABLE BEFORE THE REVENU E TO HOLD THAT THE INCOME HAS ESCAPED TO BE TAXED IN THE HAND S OF THE ASSESSEE. HE FURTHER ARGUED STATING THAT THE LD.AO HAS NOT PASSED A SPEAKING ORDER AS HELD IN THE CASE GKN DRI VESHAFT. AT THE OUTSET WE DO NOT FIND ANY MERITS IN THESE ARGUM ENTS ADVANCED BY THE LD.AR. FROM THE FACTS OF THE CASE, IT IS APPARENT THAT THE REVENUE HAD INFORMATION FROM THE SALES TAX DEPARTMENT, MUMBAI THAT THE ASSESSEE HAD AVAILED BO GUS BILLS FROM CERTAIN ENTITIES. IN ORDER TO VERIFY THE VELOC ITY OF SUCH INFORMATION RECEIVED BY THE REVENUE, THE LD.AO DID NOT HAVE ANY OTHER OPTION BUT TO REOPEN THE CASE OF THE ASSE SSEE. THE REASON FOR REOPENING WAS ALSO FURNISHED TO THE ASSE SSEE. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ACTIO N OF THE LD.AO WITH RESPECT TO REOPENING OF THE ASSESSMENT. HENCE THIS ISSUE IS HELD AGAINST THE ASSESSEE FOR BOTH THE ASSESSMENT Y EARS. 5. GROUND NO.(II) : ESTIMATING OF INCOME AT 25% OF BOGUS BILLS:- 4 ITA NO.974& 9 75/MDS/2017 AT THE OUTSET THE LD.AR SUBMITTED THAT THE ASSESS EE HAD FURNISHED ALL THE BILLS AND INVOICES BEFORE THE LD. AO, EVEN WITH RESPECT TO THE ENTITIES CITED BY THE SALES TAX DEPA RTMENT, MUMBAI TO BE BOGUS. HOWEVER, NEITHER THE LD.AO NOR THE LD.CIT(A) HAD VERIFIED THE INVOICES BEFORE COMING I NTO A CONCLUSION THAT THE BILLS ARE BOGUS. FURTHER IT WA S SUBMITTED THAT THE REVENUE HAS NOT SUMMONED THE VENDORS OR OBTAINE D ANY INFORMATION FROM ANY DEPARTMENT WITH RESPECT TO THE INVOICES PRODUCED BY THE ASSESSEE EVIDENCING HER PURCHASES. THE LD.AR THEREFORE PLEADED THAT THE MATTER MAY BE REMITTED B ACK TO THE FILE OF LD.AO FOR EXAMINING THE INVOICES PRODUCED BY THE ASSESSEE AND ALSO FOR VERIFYING THE FACTS THEREIN. THE LD.DR DID NOT EXPRESS ANY SERIOUS OBJECTIONS FOR THE SAME. CONSI DERING THE PRAYER OF THE LD.AR AND THE FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE TOWARDS BOGUS PURCHASES ONLY BASED ON INFO RMATION RECEIVED FROM SALES TAX DEPARTMENT THAT THE PERSONS WITH WHOM THE ASSESSEE HAS DEALT WITH WERE ISSUING BOGUS BILL S. THE INVOICES PRODUCED BY THE ASSESSEE HAVE TO BE PROPER LY VERIFIED AND THERE SHOULD BE A CLEAR CUT FINDING WITH RESPEC T TO THE GENUINENESS OF SUCH INVOICE. THEREFORE IN THE INTE REST OF JUSTICE, 5 ITA NO.974& 9 75/MDS/2017 I REMIT BACK THE MATTER TO THE FILE OF LD.AO FOR DE -NOVA CONSIDERATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THE 05 TH JULY, 2017. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 05 TH JULY, 2017 JR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF