Shri Vipul Hasmukhlal Mehta, Surat V. The ACIT, Cent.Circle-2, Ahmedabad

ITSSA 138/AHD/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8453 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-04-2011
• Assessment Year: misc
• Appeal Filed On: 05-09-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Assessee Lawyers: MODI
• Keywords: Corroborative evidences
• Section: 142(1); 131; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) IT (SS) A NO.138/AHD/2008 BLOCK PERIOD: 1989-90 TO 1998-99 (UP TO 10-07-1998) VIPUL HASMUKHLAL MEHTA, PROP. OF M/S. PRAGATI CHEMI-QUIP, 205, JALARAM PARK, B/H DENA BANK, SURAT VS THE A. C. I. T., CENTRAL CIRCLE-2, AAYAKAR BHAVAN, MAJURA GATE, SURAT PA NO. AAYPM 2004 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. S. MODI, AR RESPONDENT BY SHRI R.K. DHANISTA, DR O R D E R PER B. SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II, AHMEDABAD DATED 22-06-2007 FOR THE ABOVE BLOCK PERIOD ON THE FOLLOWING GROUNDS: (1) THE LEARNED CIT(AS)-II, AHMEDABAD HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ORDER OF THE ACIT, CENTRAL CIRCLE-2, SURAT MAKING ADDITION ON ESTIMATION TO THE EXTENT OF RS.37,79,368/- ON ACCOUNT OF ALLEGED UNDISCLOSED GROSS PROFIT @ 8.36% ON ALLEGED TRADING BUSINESS ACTIVITY INSTEAD OF COMMISSION INCOME @ 1% OF TOTAL TURNOVER EARNED BY THE APPELLANT. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, BOTH THE LOWER AUTHORITIES HAVE ERRED IN MIS- INTERPRETING AND MIS-CONSTRUCTING OF THE DIRECTION GIVEN BY THE HONBLE ITAT IN PARA 9 OF ITS ORDER IN IT(SS) NO.31/AHD/2002 VIDE ORDER DTD. 28/6/05 IN SPITE OF ONUS FULFILLED BY THE APPELLANT BY PLACING IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 2 AUTHENTIC AND BELIEVABLE EVIDENCES BEING CONFIRMATION LETTER, DULY NOTARIZED BEFORE THE NOTA RY, OF MR. ARUN K. SHAH, THE OWNER OF THE GOODS AND SOLD THE SAME THROUGH HIS COMMISSION AGENT (I.E. THE APPELLANT.) 2. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 158 BD READ WITH SECTION 158BC ( C ) OF THE IT ACT BY THE AO AND THE ADDITION MADE BY THE AO WAS CONFIRME D BY THE CIT(A). ITAT AHMEDABAD VIDE ORDER NO. IT(SS)A NO.31 /AHD/2002 GRANTED RELIEF OF RS.43,609/- AND SET-ASIDE THE MAT TER ON ADDITION OF RS.40,42,978/- MADE ON ACCOUNT OF UNDISCLOSED NET P ROFIT AT THE RATE OF 8.36% ON TRADING BUSINESS ACTIVITY. ACCORDINGLY, THE AO ISSUED NOTICE U/S. 142(1) OF THE IT ACT. THE ASSESSEE WAS REQUESTED TO PRODUCE THE ALLEGED BOMBAY BASED PARTY FOR NECESSAR Y EXAMINATION OF THE CONTENTION ADDUCED BEFORE THE CIT(A) AND THE ITAT ALONG WITH SUPPORTING EVIDENCES FOR THE ASSESSEES CLAIM. A SU MMON U/S 131 OF THE IT ACT WAS ALSO ISSUED TO THE BOMBAY BASED PART Y SHRI A. K. SHAH. THE SUMMON ISSUED TO SHRI A. K. SHAH RETURNED UN-SERVED WITH A NOTE LEFT BY THE POSTAL AUTHORITIES. THE A O OBSERVED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE STATED THAT THE BOMBAY BASED PARTY HAS GONE TO USA AND FURNISHED A PHOTOCOPY OF FAX DATED 13-11-2005. AS THE ASSESSEE COULD NOT PRODUCE THE B OMBAY BASED PARTY, THE AO OBSERVED THAT THE FAX ALLEGEDLY SIGNE D BY THE PARTY IS NOT RELIABLE AS NO IDENTITY AND AUTHENTICITY IS EST ABLISHED AND NO GENUINENESS OF THE NATURE OF TRANSACTION COULD BE I NQUIRED FROM THE PARTY. THE ASSESSEE COULD NOT PRODUCE EVIDENCE FROM THE SAID PARTY AS WELL AS PURCHASE PARTY THAT PURCHASERS HAVE PURC HASED GOODS OF SHRI A. K. SHAH, C/O. VIKAS COLOUR AGENCIES PVT. LT D., MUMBAI AND IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 3 CHEQUES/DRAFTS WERE GIVEN AGAINST THOSE PURCHASES W HICH ARE REFLECTED IN THEIR BOOKS OF ACCOUNTS AND SIMILARLY, SELLER OF GOODS I.E. SHRI A. K. SHAH, C/O. VIKAS COLOUR AGENCY PVT. LTD. , MUMBAI HAS SOLD THESE GOODS TO ABOVE MENTIONED PARTIES AND THE CASH RECEIVED FROM THE ASSESSEE THROUGH CHEQUE DISCOUNTING IS REFLECTE D IN ITS BOOKS OF ACCOUNT AND THE ASSESSEE HAS ALSO RECEIVED COMMISSI ON. THE ASSESSEE COULD NOT PROVE THESE DETAILS, THEREFORE, THE AO TREATED IT AS TURNOVER OF THE ASSESSEE AND COMPUTED ITS UNDISC LOSED INCOME AT RS.40,42,978/-. 3. THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A) THAT HE IS ENGAGED IN THE BUSINESS OF TRADING OF COLOUR AND CH EMICALS USED IN TEXTILE INDUSTRY. MOREOVER, DURING THE PERIOD 23-03 -1996 TO 29-06-1998 HE HAS DONE BUSINESS AS COMMISSION AGENT IN SUPPLY OF COLOUR AND CHEMICALS FROM INTERESTED SELLERS TO INT ERESTED PURCHASERS. HOWEVER, THE ASSESSEE HAD ADMITTED THAT THE INCOME EARNED BY WAY OF COMMISSION FOR THE PERIOD 23-03-1996 TO 29-06-19 98 HAD NOT BEEN DISCLOSED IN THE REGULAR RETURN AND HENCE INCOME EA RNED ON SUCH TRANSACTIONS HAVING TOTAL TURNOVER OF RS.5,27,21,92 5/- HAS BEEN DISCLOSED FOR THE BLOCK PERIOD CONCERNED, BUT UNFOR TUNATELY, ON ASSUMPTION AND GUESS WORK, THE AO TREATED THE SAID COMMISSION INCOME AS INCOME FROM TRADING BUSINESS IN COLOUR AN D CHEMICALS. THE ASSESSEE STATED THAT AS THE CONCERNED PARTY SHR I A. K. SHAH FOR WHOM THE ASSESSEE HAD WORKED AS THE COMMISSION AGEN T DURING THE YEAR 1996 TO 1998 HAS SETTLED AT USA AND THEREFORE, HE COULD NOT BE PRODUCED FOR VERIFICATION. THEREFORE, NON-PRODUCTIO N OF SHRI A. K. SHAH WAS REASONABLE AND BEYOND THE CONTROL OF THE A SSESSEE. SHRI IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 4 A. K. SHAH HAS FAXED CONFIRMATION LETTER DIRECTLY T O THE AO STATING CATEGORICALLY THE TRANSACTIONS ON COMMISSION BASIS MADE IN THE YEAR 1996 TO 1998. THEREFORE, THE ONUS HAS BEEN FULLY DI SCHARGED BY SUPPLYING COMPLETE NAME AND ADDRESSES AND CONFIRMAT ION LETTER FULLY NOTARIZED TO PROVE THE EXISTENCE OF THAT PERSON. TH EREFORE, THE ASSESSEE REQUESTED TO DELETE THE ADDITION MADE BY T HE AO. 4. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN THE IMPUGNED ORDER IN PARA 4.2 AND 5 ARE REPRODUCED AS UNDER: 4.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION MADE BY THE APPELLANT BEFORE ME. ON PERUSAL OF THE REASSESSMENT ORDER, IT IS NOTICED TH AT THE ASSESSING OFFICER HAD GIVEN THE OPPORTUNITY TO THE APPELLANT TO PROVE THAT THE TRANSACTION RELATED TO COMMISSION BUSINESS AND NOT TRADING ACTIVITY. SHRI A. K. SHAH OF MUMBAI IS NOT AVAILABLE AND A COPY OF HIS F AX IS SUBMITTED BY THE APPELLANT. THIS FAX IS SIMPLY REIT ERATING THE ASSESSEES PLEA THAT THERE IS NO TRADING TRANSA CTION WITH SHRI A. K. SHAH. THIS FAX MESSAGE IS DATED 28/04/2006, WHEREAS IT WAS SIGNED BEFORE NOTARY ON 05/09/2006. THIS TIME GAP IS SUGGESTING THAT THIS F AX IS NOT GENUINE. APART FROM THIS, NO OTHER EVIDENCE IS FURNISHED TO PROVE THAT THERE WAS NO TRADING ACTIVI TY. REFERENCE IS ALSO MADE TO PARA 7 & 8 OF THE ORDER O F HON. ITAT. HON. ITAT HAS ALSO OBSERVED THAT THE ONUS WAS UPON THE APPELLANT TO EXPLAIN WITH COGENT MATERIAL AS TO THE NATURE OF TRANSACTION WHICH RESULTED INTO THE I SSUE OF DRAFTS BY THE PARTIES. CONSIDERING THIS OBSERVATION OF ITAT DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO THE APPELLANT WAS EXPECTED TO GIVE EVIDENCE TO PROVE HI S CLAIM. NO SUCH EVIDENCE IS PRODUCED BY THE APPELLAN T. IN THE CIRCUMSTANCES, I CONFIRM THE ADDITION MADE BY T HE ASSESSING OFFICER WHICH IS BASED ON THE EARLIER IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 5 ASSESSMENT ORDER AND WHICH WAS CONFIRMED BY THE THE N COMMISSIONER OF INCOME TAX (APPEALS). THEREFORE THE GROUND RAISED BEFORE ME BY THE APPELLANT IS DISMISS ED. 5. IN THE RESULT, THE APPEAL IS DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F ILED COPY OF THE FAX MENTIONED ABOVE AND SUBMITTED THAT THE ASSESSEE HAS MADE VARIOUS EFFORTS TO PRODUCE SHRI A. K. SHAH BUT THE ASSESSEE WAS NOT ABLE TO PRODUCE THE SAID PARTY BEFORE THE AO FOR EX AMINATION. HE HAS SUBMITTED THAT ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO COMPLY WITH THE DIRECTION OF THE TRIBUNAL. ON THE O THER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIE S BELOW AND SUBMITTED THAT THE ASSESSEE FAILED TO COMPLY WITH T HE DIRECTIONS OF THE TRIBUNAL WHILE RESTORING THE MATTER TO THE FILE OF THE AO. HE HAS SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE SHRI A. K. SHAH BEFORE THE AO. IN THE ABSENCE OF ANY DETAILS AND EVIDENCES , THE AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. THE LEARNED DR SUBMITTED THAT THOUGH THE FAX IS DATED 2 8-04-2006 BUT IT WAS SIGNED BY THE NOTARY PUBLIC LATER ON AND THE CO MMISSION OF THE NOTARY PUBLIC EXPIRED PRIOR TO THE DATE OF ATTESTAT ION. THEREFORE, IT CREATES DOUBT EVEN IN THE FAX MESSAGE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. ON THE SAME MATTER IN ISSUE, M ATTER EARLIER TRAVELED TO THE TRIBUNAL AND THE MATTER WAS RESTORE D TO THE FILE OF THE AO WITH DIRECTION THAT THE SAME MAY BE DECIDED AFRE SH AFTER MAKING NECESSARY INQUIRIES INCLUDING FROM THE BOMBAY PARTY . THE ASSESSEE IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 6 WAS DIRECTED TO FURNISH DETAILS OF ANY OTHER PARTY IF INVOLVED, OWNERS OF THE GOODS AND ALSO THE PURCHASERS SO THAT THE AO CA N MAKE NECESSARY INQUIRIES. THE ASSESSEE HAS HOWEVER, FAIL ED TO FURNISH THE DETAILS. THE TRIBUNAL FURTHER DIRECTED THAT IN CASE THE ASSESSEE FAILS TO FURNISH THE DETAILS AS TO THE OWNERS OF THE GOODS A ND THE PURCHASERS, THE AO WILL BE FREE TO CONSIDER THE TRANSACTIONS AS ASSESSEES OWN TRANSACTION OF SALE AND COMPUTE THE NECESSARY UNDIS CLOSED INCOME. THE ASSESSEE WAS THEREFORE, REQUESTED AT THE ASSESS MENT STAGE TO PRODUCE THE BOMBAY PARTY FOR NECESSARY EXAMINATION AND SHALL ALSO DIRECT TO PRODUCE SUFFICIENT EVIDENCES IN SUPPORT O F THE CLAIM THAT THE ASSESSEE EARNED COMMISSION INCOME ONLY. SUMMONS WAS ALSO ISSUED TO SHRI A. K. SHAH U/S 131 OF THE IT ACT WHI CH RETURNED UN- SERVED. THUS, THE ASSESSEE FAILED TO PRODUCE THE SA ID PARTY BEFORE THE AO FOR EXAMINATION AS WELL AS FAILED TO FURNISH ADEQUATE EVIDENCE IN SUPPORT OF THE CONTENTION. IT WAS MERELY STATED THAT THE PARTY HAS GONE FOR USA. ONLY THE FAX FROM SHRI A. K. SHAH WAS FILED WHICH WAS NOT FOUND TO BE RELIABLE BECAUSE NO IDENTITY AND AU THENTICITY WAS ESTABLISHED. THE AO ALSO NOTED THAT THE SAID FAX WA S NOTARIZED ON 17-11-2005 BUT UNDER THE SIGNATURE OF THE NOTARY PU BLIC IT WAS MENTIONED THAT HIS COMMISSION EXPIRED ON 30-7-2005. THESE FACTS WERE SUFFICIENT TO HOLD THAT THERE REMAINS DOUBT IN THE GENUINENESS OF THE FAX MESSAGE ITSELF. THE ASSESSEE ALSO FAILED TO PRODUCE ANY BOOKS OF ACCOUNTS TO SHOW THAT SALES HAVE BEEN COND UCTED BY SOMEBODY ELSE. NO EVIDENCE WAS PRODUCED TO SHOW THA T THE ASSESSEE EARNED ONLY COMMISSION INCOME. SINCE NO MA TERIAL EVIDENCE WAS PRODUCED BEFORE THE AO IN RESPONSE TO THE DIRECTION OF THE TRIBUNAL, THE AO WAS BOUND TO FOLLOW THE ORDER OF THE TRIBUNAL IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 7 AND HAS RIGHTLY TREATED THE TRANSACTION OF THE ASSE SSEE AS HIS OWN TRANSACTION OF SALE AND RIGHTLY COMPUTED THE UNDISC LOSED INCOME. SAME IS THE POSITION BEFORE THE LEARNED CIT(A) BECA USE NO EVIDENCE WAS FURNISHED IN SUPPORT OF THE CONTENTION EVEN NO EVIDENCE IS PRODUCED BEFORE US IN SUPPORT OF THE CONTENTION THA T THE ASSESSEE EARNED ONLY COMMISSION INCOME. IN THE ABSENCE OF AN Y EVIDENCE AND MATERIAL ON RECORD, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS BEEN UNABLE TO POINT OUT ANY INFIRMITY IN THE ORDERS OF THE AUTHOR ITIES BELOW. WE ACCORDINGLY, CONFIRM THE ORDERS OF THE AUTHORITIES BELOW BECAUSE THE SAME WERE PASSED AS PER DIRECTION OF THE TRIBUNAL I SSUED EARLIER. THE APPEAL OF THE ASSESSEE HAS NO MERIT AND IS LIABLE T O BE DISMISSED. SINCE THE ASSESSEE HAS ALREADY BEEN GIVEN OPPORTUNI TY BY THE TRIBUNAL EARLIER, THERE IS NO NEED TO GIVE FURTHER OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE AS PER THE DIRECTION OF THE TRIBUNAL ISSUED EARLIER BECAUSE THE ASSESSEE FAILED TO AVAIL OF THE SAID OPPORTUNITY. THE ASSESSEE CANNOT BE ALLOWED ANY BEN EFIT FOR HIS OWN MISTAKES AND WRONGS COMMITTED BY NOT PRODUCING ANY EVIDENCE BEFORE THE AUTHORITIES BELOW IN THE SET ASIDE PROCE EDINGS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-04-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-04-2011 LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/- -- - IT(SS)A NO.138/AHD/2007 VIPUL HASMUKHLAL MEHTA VS ACIT CENTRAL CIRCLE-2, SU RAT 8 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD