Chokhani Ispat (P) Ltd., , Kolkata V. DCIT, CC - 3(3), Kolkata , Kolkata

ITSSA 57/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1370 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Additional evidence; Onus to prove
• Section: 133(6); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH KOLKATA BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI S. S. GODARA, JM ./I.T.A NO.57/KOL/2018 ( [ [ / ASSESSMENT YEAR: 2012-13) CHOKHANI ISPAT (P) LTD. 3, MANGOE LANE, KOLKATA-700 001. VS. DCIT, CC-3(3), KOLKATA ./ ./PAN/GIR NO.: AADCC2932K (APPELLANT) .. (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI A. K. NAYAK, CIT(DR) / DATE OF HEARING : 04/12/2019 /DATE OF PRONOUNCEMENT : 11/12/2019 / O R D E R PER SHRI S. S. GODARA: THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (A) - 21, KOLKATA DATED 30.05.2018 PASSED IN CASE NO.100/DCIT, CC-3(3)/CIT(A)-21/KOL/2015-16 INVOLVING PROCEEDINGS U/S 153/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. CASE CALLED TWICE. NONE APPEARS AT ASSESSEE'S BEHEST. THE REGISTRY HAS ALREADY SENT AN RPAD NOTICE DATED 13.11.19 TO THE ASSESSEE FOR TODAYS HEARING. WE THEREFORE PROCEED EX PARTE AGAINST THE ASSESSEE IN THE INSTANT CASE. ITS INSTANT APPEAL IS TAKEN UP FOR ADJUDICATION ON MERITS. 3. CASE FILE SUGGESTS THAT THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE CANVASSED IN ITS FOURTH SUBSTANTIVE GROUND CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION TREATING COMMODITY LOSS OF RS.4,03,670/- AS BOGUS UNEXPLAINED I.T.A NO.57/KOL/2018 CHOKHANI ISPAT (P) LTD. PAGE | 2 CASH CREDITS. MR. NAYAK INVITES OUR ATTENTION TO THE ASSESSMENT AS WELL AS THE CIT(A)S DETAILED DISCUSSION INDICATING THAT THE ASSESSEE HAD DERIVED ITS COMMODITY LOSSES THROUGH A BROKERAGE FIRM M/S MERIGOLD VINIJYA PVT. LTD. THE DEPARTMENT HAD CARRIED OUT A SEARCH IN THE SAID COMPANYS CASE. ITS DIRECTOR, SHRI SACHET SARAF MADE HIS STATEMENT DURING THE COURSE OF SEARCH TO HAVE PROVIDED BOGUS COMMODITY LOSSES ENTRIES TO THE ASSESSEE WHICH STOOD RECORDED AS SUNDRY CREDITORS IN ITS BOOKS OF ACCOUNTS. MR. NAYAK ALSO PLACES RELIANCE ON CIT(A)S DETAILED DISCUSSION AFFIRMING THE IMPUGNED ADDITION BASED ON CIRCUMSTANTIAL EVIDENCE. 4. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO ASSESSEES PLEADINGS AND THE REVENUES VEHEMENT CONTENTIONS IN SUPPORT OF THE IMPUGNED DISALLOWANCE/ADDITION OF BOGUS COMMODITY LOSSES, WE FIND NO REASON TO AFFIRM THE LEARNED LOWER AUTHORITIES ACTION. THIS TRIBUNALS COORDINATE BENCHS ORDER IN M/S. CHEMEX GOODS PVT. LTD . V. ITO ITA NO.2402/KOL/2017 DATED 18.05.2018 HAS DELETED THE SIMILAR ADDITION BASED ON SHRI SACHET SARAFS SEARCH STATEMENT AS UNDER: 2. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF GRANTING LOANS AND AS WELL AS SHARE TRADING. IT HAS CLAIMED LOSS IN FOREIGN EXCHANGE TRADING OF RS. 17,84,248/-. THE ASSESSING OFFICER DISALLOWED THIS LOSS BASED ON A STATEMENT FROM SHRI SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VANIJYAPVT. LTD. RECORDED ON 23.03.2013 BY THE INVESTIGATION WING WHICH HAD CARRIED ON A SEARCH & SEIZURE OPERATION UNDER SECTION 132 OF THE ACT. IT IS STATED THAT SHRI SACHET SARAF ADMITTED THAT HE WAS ENGAGED IN PROVIDING ENTRIES OF BOGUS LOSS OR PROFIT AS PER THE REQUIREMENT OF HIS CLIENTS. IT IS ALSO STATED THAT INFORMATION WAS GATHERED UNDER SECTION 133(6) FROM MCX AND IT WAS CONFIRMED THAT M/S. MARIGOLD VANIJYAPVT. LTD. WAS ENGAGED IN PROVIDING BOGUS ENTRIES AND THAT REGULATORY AUTHORITIES HAVE LEVIED PENALTIES ON THEM. THE ASSESSING OFFICER ALSO OBSERVED THAT M/S. MARIGOLD VANIJYAPVT. LTD. CHARGED BROKERAGE @ 0.4% AND WHEREAS THE BROKERAGE COST RANGED BETWEEN 0.01% TO 0.0015% AND THAT WAS PAID IS ABNORMALLY HIGH. HE HELD THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION AS TO WHY HE HAD CHOSEN AN UNKNOWN BROKER WITHOUT REPUTATION ON PAYMENT OF HIGH PERCENTAGE OF BROKERAGE. HE CONCLUDED THAT THE ASSESSEE HAD, INCOME FROM OTHER SOURCES, AND DID NOT WANT TO PAY TAX AT THE RATE OF 30% THEREON AND ACCORDINGLY OBTAIN ENTRIES OF BOGUS LOSS TO DEFRAUD THE REVENUE. HE DISALLOWED THE CLAIM OF THE ASSESSEE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER ON APPEAL WITHOUT SUCCESS. FURTHER AGGRIEVED THE ASSESSEE IS AN APPEAL BEFORE US. 3. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE SIMILAR ISSUE HAS COME UP BEFORE THE 'B' BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS M/S. TIRUPATI AWASPVT. LTD., ITA NO . 1560/KOL/2016 FOR THE A.Y. 2011-12 ORDER DATED 28.03.2013. THE TRIBUNAL BASED ON THE VERY SAME FACTS I.E. STATEMENT OF SHRI SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VANIJYAPVT. LTD. IN THE VERY SAME SEARCH HAD AT PARA 10 OBSERVED AS FOLLOWS: 'HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE A.O. ISSUED NOTICE U/S 133(6) OF THE ACT TO MCX STOCK EXCHANGE, MUMBAI. ADMITTEDLY, THE SAID STOCK EXCHANGE COMPLIED WITH THE NOTICE ISSUED BY THE A.O. ALONG WITH SUPPLYING VARIOUS DETAILS IN RESPECT OF SAID TRANSACTION. ACCORDING TO A.O., IT IS INCOMPLETE DETAILS. HOWEVER, THE CIT(A) NOTED IN HIS ORDER THAT THE A.O. FAILED TO VERIFY THE GENUINENESS OF TRANSACTION WITH THAT OF BROKER OF MCX STOCK EXCHANGE. IT IS ALSO OBSERVED THAT THE CIT(A) FOUND SATISFIED THAT THE ASSESSEE FILED ALL THE REQUIRED DETAILS AND DOCUMENTS IN SUPPORT OF THE TRANSACTIONS ENTERED INTO BY IT IN RESPECT OF FOREIGN EXCHANGE DERIVATIVES. WE FIND THAT THE A.O. MADE THE ADDITION ONLY ON THE BASIS OF STATEMENT I.T.A NO.57/KOL/2018 CHOKHANI ISPAT (P) LTD. PAGE | 3 RECORDED DURING THE SEARCH & SEIZURE OPERATION IN THE PREMISES OF THE SAID SACHET SARAF, DIRECTOR OF M/S. MARIGOLD VANIJYAPVT. LTD. THE SAID STATEMENT OF MR. SARAF WAS RETRACTED AT A LATER POINT OF TIME. THE CIT(A) FOUND SATISFIED THAT THERE WAS NO CORROBORATIVE EVIDENCE WHICH SUPPORTS THE VIEW OF THE A.O. THAT THE SAID TRANSACTION WAS UNEXPLAINED. THEREFORE, WE FIND NO ADDITIONAL EVIDENCE, WHICH WAS FILED BEFORE THE CIT(A), BUT NOT BEFORE THE A.O. THE CIT(A) DELETED THE SAID ADDITION ONLY ON THE BASIS OF MATERIAL/EVIDENCE AVAILABLE ON RECORD, WHICH WERE VERY MUCH BEFORE THE A.O. IN THE RE-ASSESSMENT PROCEEDINGS. THE CASE LAWS AS RELIED ON BY THE ASSESSEE BEFORE THE CIT(A) WERE RELEVANT AND APPLICABLE TO THE PRESENT FACTS OF THE CASE. THE CIT(A) HAS DISCUSSED THE EACH CASE LAW THOROUGHLY. THUS, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.O. ON THIS ISSUE. THE GROUNDS RAISED BY THE REVENUE IN THE APPEAL ARE DISMISSED.' 4. THE LEARNED DR RELIED ON THE ORDER OF THE ITAT IN THE CASE OF DCIT VS M/S. DRP TRADING & INVESTMENTS PVT. LTD., ITA NO . 83/KOL/2016 FOR THE A.Y. 2012-13 ORDER DATED 08.11.2017. 5. THIS ORDER IS NOT APPLICABLE TO THE FACTS OF THE CASE, AS IN THE CASH IN HAND, THE ASSESSEE HAD PAID A MARGIN MONEY OF RS. 5,00,000/- IN THE TRANSACTIONS AND WHEREAS IN THE CASE OF M/S. DRP TRADING & INVESTMENTS PVT. LTD., THERE WAS NO MARGIN MONEY PAID. THE ASSESSEE HAS FILED COPY OF THE LEDGER OF THE ASSESSEE, IN THE BOOKS OF M/S. MARIGOLD VANIJYAPVT. LTD., THE COPY OF ALL THE CONTRACT NOTES, COPY OF THE AFFIDAVIT GIVEN BY SHRI SACHET SARAF STATING THAT THE TRANSACTIONS WITH THE ASSESSEE ARE BONA FIDE TRADING TRANSACTIONS AND THAT ALL THE TRANSACTIONS WERE MADE BY ACCOUNT PAYEE CHEQUES ONLY, IN SUPPORT OF HIS CONTENTION. IN MY VIEW, THE ASSESSEE DISCHARGED THE BURDEN OF PROOF THAT LAY ON IT. AS THE FACTS OF THESE CASES ARE SIMILAR TO THE FACTS OF THE CASE OF M/S. TIRUPATI AWASPVT. LTD., I RESPECTFULLY FOLLOW THE SAME AND DELETE THE DISALLOWANCE AND ALLOW THIS GROUND OF THE ASSESSEE. 5. WE ADOPT THE ABOVE DETAILED DISCUSSION MUTATIS MUTANDIS IN ABSENCE OF ANY DISTINCTION ON FACTS AND LAW AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF BOGUS COMMODITY LOSSES. THE ASSESSEES FOURTH SUBSTANTIVE GROUND RELATING TO BOGUS COMMODITY LOSSES OF RS.4,03,670/- IS ACCEPTED. 6. THE ASSESSEES 1 ST TO 3 RD SUBSTANTIVE GROUNDS CHALLENGING VALIDITY OF SECTION 153A/143(3) PROCEEDINGS FAIL SINCE THERE IS NO EVIDENCE IN THE PAPER BOOK THAT THE IMPUGNED PROCEEDINGS SUFFER FROM ANY ILLEGALITY OR IRREGULARITY. 7. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.12.2019. SD/- ( J. SUDHAKAR REDDY ) SD/- (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER /KOLKATA; / DATE:11/12/2019 RS, SR. PS I.T.A NO.57/KOL/2018 CHOKHANI ISPAT (P) LTD. PAGE | 4 / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. THE APPELLANT - CHOKHANI ISPAT (P) LTD. 2. THE RESPONDENT- DCIT, CC-3(3), KOLKATA 3. ( ) / THE CIT(A), KOLKATA [SENT THROUGH EMAIL] 4. / CIT 5. , , / DR, ITAT, KOLKATA [SENT THROUGH EMAIL] 6. [ / GUARD FILE.