SANGEETA GHANSHYAM PATEL, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-32(3), MUMBAI

MA 179/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0339 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Rectification of order; Search and seizure; Opportunity of being heard; Principle of natural justice; Accommodation entries
• Section: 6; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM M .A. NO S . 179 TO 181/MUM/2018 (ARISING OUT OF ITA NOS. 4583 TO 4585/MUM/2017) ( ASSESSMENT YEAR S : 2009 - 10 TO 2011 - 12 ) SANGEETA GHANSYAM PATEL 1211 C, NATIONAL PARK V IEW, RAHEJA ESTATE, BORIVALI, MUMBAI VS. THE ASST. CIT 32(3), MUMBAI PAN/GIR NO. AGTPP 4539 J ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI RAM TIWARI DATE OF HEARING : 20.03.2017 DATE OF PRONOUNCEMENT : 07.09 .2018 ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 PER S HAMIM YAHYA, A. M.: BY WAY OF THE S E MISCELLANEOUS APPLICAT ION S THE ASSESSEE HAS FILED APPEAL U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT' FOR SHORT) AGAINST THE T RIBUNAL S ORD ER IN ITA NO S . 4583 TO 4585/MUM/2017 FOR ASSESSMENT YEAR S 2009 - 10 TO 2011 - 12 VIDE ORDER DATED 01.01.2018. 2. IN THE MISCELLANEOUS APPLICATIONS (MA FOR SHORT) THE ASSESSEE HAS QUOTED THE FOLLOWING FROM THE ITAT ORDER: 9 . AS REGARDS MERITS OF ADDITION, I FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS, ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATI ON ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELATING TO REOPENING HAS BEEN CONFIRMED BY THE LEARNED CIT(A) AND BY ITAT AS ABO VE. FURTHERMORE IT IS NOTED THAT IN SUCH FACTUAL SCENARIO 2 ITA NO S . 179 TO 181/MUM/2018 SANGEETA GHANSYAM PATEL ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESS EE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. THE NECESSARY EVIDENCE FOR TRANSPORTATION OF GOODS HAVE NOT BEEN PROVIDED BY THE ASSESSEE. IN THIS FACTUAL SCENARIO IT IS AMPLY THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DO CUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS ARE BOGUS AND NON - EXISTENT AND THERE IS NO COGENT EVIDENCE OF TRANSPORTATION OF GOODS. THE SALES TAX DEPARTMENT IN ITS ENQUIRY HAVE FOUND THE PARTIES TO BE PROVI DING BOGUS ACCOMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. THE ASSESSING OFFICE R HAS NOTED THAT THERE IS NO COGENT EVIDENCE OF THE PROVISION OF GOODS. NEITHER THE ASSESSEE HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES. IN SUCH CIRCUMSTANCES, THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. 10 . HENCE PURCHASE BILL S FROM THESE NON - EXISTENT/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES, IN LIGHT OF THE OVERWHELMING EVIDENCE THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS DULY SUPPORTED BY HON BLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL 214 ITR 801 AND DURGA PRASAD MORE 82 ITR 540. IN THE PRESENT CASE THE ASSESSEE WANTS THAT THE UNASSAILABLE FACT THAT THE SUPPLIERS ARE NON - EXISTENT AND THUS BOGUS SHOULD BE IGNORED AND ONLY THE DOCUMENT S BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF ABOVE APEX COURT DECISIONS. 1 1 . IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF APEX APPEAL NO. 240 OF 2003 IN THE CASE OF N K INDUSTRIES VS DY CIT , ORDER DATED 20.06.2016, WHEREIN HUNDRED PERCENT OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHAS ES WAS SET ASIDE. IT WAS EXPOUNDED THAT WHEN PURCHASE BILLS HAVE BEEN FOUND TO BE BOGUS 100% DISALLOWANCE WAS REQUIRED. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 1 2. I NOTE THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) HAS EXPOUNDED THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCES FOR BOGUS PURCHASE IS NOT PERMISSIBLE. HOWEVER, FACTS OF THAT CASE WERE A LITTLE DIFFERENT INASMUCH AS SALES WERE TO GOVERNMENT DEPARTMENT. 3 ITA NO S . 179 TO 181/MUM/2018 SANGEETA GHANSYAM PATEL 13. I FURTHER FIND THAT IN SIMILAR CIRCUMSTANCES HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH [2013] 356 ITR 451 (GUJ.) HAS HELD THAT 12.5% DI SALLOWANCE OF THE BOGUS PURCHASE IN SUCH SITUATION MEETS THE END OF JUSTICE. FOLLOWING THE ABOVE CATENA OF ORDERS HAVE BEEN PASSED BY THE ITAT, MUMBAI. ACCORDINGLY, I MODIFY THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DIRECT THAT THE DISA LLOWANCE IN THIS CASE BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THE ABOVE PROPOSITION. 14. IN THE RESULT, THESE APPEALS BY THE ASSESSEE STAND PARTLY ALLOWED. 3. THEREFORE, THE ASSESSEE HAS MADE THE FOL LOWING SUBMISSIONS: 3. EVEN THOUGH THE ORDER PASSED BY THE HONBLE BENCH WAS SPEAKING ORDER, THE SAME BAD IN LAW AS ALSO ON FACTS FOR THE FOLLOWING AMONGST THE ORDER REASONS: A. THERE IS VAT RATE IS 4% AND WHEREAS ADDITION CONFIRMED 12.0%. B. ASSESSEE S UBMITTED SALES TAXES ASSESSMENT ORDER AND CHALLAN OF VAT PAYMENT WHICH PAID TO SALES TAXES DEPARTMENT WHICH IS NOT CONSIDERED BY HONOURABLE IT AT. C. WHOLE SALES TAX SURVEY AND RAID CONDUCTED ON THE BASIS OF NON PAYMENT OF VAT TO SALES TAX DEPARTMENT AN D WHEREAS SUCH TAXES PAID BY ASSESSEE THAN THERE IS NO QUESTION OF SALES TAX EVASION. D. THE LEVY DEFINED UNDER CONSTITUTION EITHER COLLECTED BY STATE GOVERNMENT OR CENTRAL GOVERNMENT. BOTH GOVERNMENTS CANNOT LEAVED TAXES ON SAME INCOME, E. ESTIMATION OF 12.50% DERIVED FOR EVASION OF SALES TAXES WHERE SALES TAXES PAID BY ASSESSEE TO STATE GOVERNMENT THAN WHOLE IDEAS OF ESTIMATION COME TO END. F. THE VAT RATE OF ASSESSEE BUSINESS IS ONLY 4% AND CONFIRMING 12.50% IS AGAINST THE FACTUAL POSITION OF ASSE SSEE. RELIANCE PLACE ON ITAT MA ORDER NO. 847/MUM/2017 WHERE TRIBUNAL ADMITTED MISCELLANEOUS APPLICATION IS ALLOWED WHERE WRONG VAT HAS TAKEN INTO ACCOUNT. (ATTACHED WITH M.A. APPLICATION) G. DECISION RELY BY HONORABLE BENCH IS AT DIFFERENT FACTS AND IN GUJRAT THERE WAS VAT RATE OF 12 % SO THEY CONFIRMED 12.50%. IN THOSE CASE BOOKS OF ACCOUNTED REJECTED AND IN OUR CASE NO BOOKS OF ACCOUNT REJECTED AND HENCE IS FACTUAL DIFFERENCE IN BOTH CASES. H. ASSESSEE SUBMITTED DETAILS PAPER BOOK WHICH IS NOT CONSID ERED BY HONOURABLE ITAT HENCE IT IS VIOLATION OF PRINCIPAL OF NATURAL JUSTICE, I. ASSESSEE SHOWN EXITING GP IS 9.88% WHICH WAS ALSO NOT REDUCED BY HONOURABLE ITAT WHERE AS COORDINATE BENCHES GIVING CREDIT OF EXITING GP. RELIANCE PLACE ON I.T.A. NO.3182 - 3183/MUM/2016 IN CASE OF SUNIL B.DOSHI 4. BEFORE PROCEEDING FURTHER, I MAY GAINFULLY REFER TO THE PROVISIONS OF SECTION 254(2) OF THE ACT : 4 ITA NO S . 179 TO 181/MUM/2018 SANGEETA GHANSYAM PATEL 61 254. (2) THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN 63 [SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER WAS PASSED], WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD 64 , AMEND ANY ORDER PASSED BY IT UNDER SUB - SECTION (1), AND 64 SHALL MAKE SUCH AMENDMENT 64 IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE 65 [ASSESSING] OFFICER : PROVIDED THAT AN AMENDMENT WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE, SHALL NOT BE MADE UNDER THIS SUB - SECTION UNLESS THE APPELLATE TRIBUNAL HAS GIVEN NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO AND HAS ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD : 66 [ PROVIDED FURTHER THAT ANY APPLICATION FILED BY THE ASSESSEE IN THIS SUB - SECTION ON OR AFTER THE 1ST DAY OF OCTOBER, 1998, SHALL BE ACCOMPANIED BY A FEE OF FIFTY R UPEES.] 5. FURTHER I FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT HAS OCCASION TO CONSIDER SECTION 254(2) OF THE ACT IN THE CASE OF CIT VS. RAMESH ELECTRIC AND TRADING CO. [1993] 203 ITR 497 (BOM). IN THE SAID ORDER, THE HON'BLE JURISDICTIONAL HIGH COU RT HAS REFERRED TO AND DRAWN STRENGTH FROM THE HONBLE APEX COURT DECISION IN THE CASE OF T.S. BALARAM, ITO V. VOLKART BROS. [1971] 82 ITR 50 (SC). THE HON'BLE JURISDIC TIONAL HIGH COURT HAS REFERRED TO THE FOLLOWING FROM THE HONBLE APEX COURT DECISION: 'A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHIC H THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD.' 6. THEREAFTER AFTER CONSIDERING THE VARIOUS FACTS AND DECISIONS, THE HON'BLE JURISDICTIONAL HIGH COURT HAS EXPOUNDED AS UNDER: IN OUR VIEW, THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME - TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO B E ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS, AS HAS BEEN SHOWN IN THE PRESENT CASE. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUMENT 5 ITA NO S . 179 TO 181/MUM/2018 SANGEETA GHANSYAM PATEL ADVANCED BY EITHER PARTY FOR ARRIVING AT A CON CLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. 7. FROM THE ABOVE, IT TRANSPIRES THAT IT IS NOT PERMISSIBLE TO REVIEW THE ORDER OF THE TRIBUNAL U/S. 254(2) OF THE ACT IN THE GARB OF THE RECTIFICATION OF MISTAKE. 8. NOW I EXAMINE THE PRESENT MISCELLANEOUS APPLICATIONS ON THE TOUCH STONE OF THE ABOVE SAID PROVISION OF LAW AND CASE LAW FROM THE HONBLE APEX COURT AND HON'BLE JURISDICTIONAL HIGH COURT DECISION. I FIND THAT THE ITAT HAS AFTER ELABORATELY DEALING WITH THE MATTER AND TAKING INTO ACCOUNT SEVERAL CASE LAWS FROM VARIOUS HONBLE HIGH COURTS HAD MODIFIED THE ORDER OF THE LD. CIT(A) AND DIRECTED THAT THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. 9. NOW THE ASSES SEE HIMSELF HAS CON CEDED IN THE MA S THAT THE ITAT HAS PASSED A SPEAKING ORDER. NEVERTHELESS, THE ASSESSEE WHILE REFERRING TO SEVERAL GROUNDS AS REFERRED HEREINABOVE HAS URGED THAT THE ITATS ORDER IS BAD IN LAW AND FACT. FROM THE ABOVE, IT IS APPARENT THA T THE CONSIDERATIONS OF THE REASON GIVEN BY THE ASSESSEE IN THE BACKGROUND OF THE AFORE - SAID PROVISION OF LAW AND CASE LAW WOULD AMOUNT TO REVIEW OF THE ORDER OF THE TRIBUNAL WHICH IS NOT PERMISSIBLE U/S. 254(2) OF THE ACT. HENCE, THESE MAS ARE LIABLE TO BE DISMISSED AND THE SAME ARE DISMISSED AS SUCH. 10 . IN THE RESULT, THE SE MISCELLANEOUS APPLICATIONS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT MEMBER MUMBAI ; DATED : 07.09.2018 ROSHANI , SR. PS 6 ITA NO S . 179 TO 181/MUM/2018 SANGEETA GHANSYAM PATEL C OPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI