CENZER INDUSTRIES LTD, V. ADDL CIT 5(1),

MA 263/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1314 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PARESH M SHAH
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI P.M.JAGTAP, AM & SHRI AMIT SHUKLA,JM MA NO.263/MUM/2013 (ARISING OUT OF ITA NO.1811/M/2012) (ASSESSMENT YEAR : 2006-07) M/S CENZER INDUSTRIES LTD., 2 ND FLOOR, OVAL HOUSE, 63, BRITISH HOTEL LANE, OFF NAGINDAS MASTER ROAD, FORT, MUMBAI-400 001 VS. ADCIT 5(1), MUMBAI PAN NO. : AABCC 4342 F (APPLICANT ) .. ( RESPONDENT ) ASSESSEE BY : MR PARESH M. SHAH REVENUE BY : MS NEERAJA PRADHAN DATE OF HEARING : 6 TH DECEMBER, 2013 DATE OF PRONOUNCEMENT : 11 TH DECEMBER, 2013 O R D E R PER AMIT SHUKLA, JM : THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E ASSESSEE, WHICH IS ARISING OUT OF THE ORDER DATED 12-6-2013, PASSED IN ITA NO.1811/M/2012. 2 . IN THE REVISED MISCELLANEOUS APPLICATION FILED ON 3-12-2013, THE ASSESSEE HAS SOUGHT TO RAISE THE FOLLOWING POINTS, WHICH ACCORDING TO THE ASSESSEE IS A MISTAKE APPARENT FROM RECORD, WHI CH NEEDS TO BE RECTIFIED UNDER SECTION 254 (2) :- THE ABOVE APPEAL WAS DISPOSED OF BY THE TRIBUNAL B Y ITS ORDER DATED 12/06/2013. THE APPELLANT ABOVE NAMED BEG TO PRESENT THIS APPLICATION FOR CONSIDERING THE STAND TAKEN BY THE APPELLANT DURING THE SAID TRIBUNAL HEARING AND THERE BY RECTIFICATIO N OF CERTAIN POINTS IGNORED AND WHICH ARE APPARENT FROM RECORD IN THE S AID ORDER. 1. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT 'THE APPELLANT HAS SUBMITTED THAT OPAL INDUSTRIES IS A WELL KNOWN WATCH MARKETING CO'.- PAGE 7 POINT NO 7. WHAT HAS BEEN SUBMITTED IS THAT - INTERALIA, SAID COMPANY IS ALSO DEALER IN JEWELLERY, PRECIOUS METAL. (PRECIOUS METAL INCLUDES GOLD AND SILVER) - PAGE 23 LAST PARA AND PAGE 94 OF SUBMISSION DATED 18/07/2012. M.ANO.263/2013 2 2. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT 'SCHEME OF GOLD COIN' AS STARTING FROM 15/06/2005, DISPATCH T HEREOF ON SAME DATE, RELATION WITH REIMBURSEMENT OF PAYMENTS AND ALSO OBSERVED THAT SCHEME IS INCONSISTENT AND UNEXPLAINED - PAGE NO 20, POINT NO 'F' .. WHAT IS SUBMITTED IS THAT GOLD COINS HAS STA RTED IN JUNE 2005, FIRST CONSIGNMENT RECEIVED ON 14/06/2005, FIRST OUT GO IS ON 17/06/2005. SCHEME IS EXPLAINED ON PAGES 226 AND 22 7, SUBMISSION DT 18/04/2013. IN RELATION TO REIMBURSEM ENT, SAME HAS BEEN CLARIFIED VIDE PAGE 59 OF SUBMISSION D! 18/07 /2012. 3. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT COIN OF 20 GM PLACED IN A HANDSET PACKET OF 100 GM CAN BE DETECTE D BY SHEER HUMAN PROBABILITY. - PAGE NO 22 POINT NO 'H'. THE H ON'BLE COURT WAS UNABLE TO SO DETECT WHEN THE DEMONSTRATION WAS CARR IED OUT IN THE COURT ROOM. IT CAN BE REASONABLY EXPECTED THAT WHAT WAS TRUE IN THE COURT ROOM, HOLDS TRUE ELSEWHERE. 4. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT THERE IS NO EVIDENCE OF INSERTION OF GOLD COINS INTO HANDSETS.- PG 21 POINT 'G'. THE APPELLANT HAS FURNISHED AN AFFIDAVIT OF ITS EMP LOYEE WHO ACTUALLY PHYSICALLY INSERTED COINS INTO HANDSETS, P AGE NO 101/102 OF SUBMISSION DT 18/07/2012 5. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT 10 HANDSETS COMING IN ONE PACKET AND THESE PACKETS ARE DISTRIBU TED - PG 21 POINT 'G'. INVOICE SHOWS PIECES/HANDSETS UNIT. FOOT NOTE SHOWS CARTOON PACKAGE (BOX/PACKET). THAT IS FOR 150 PES, THERE ARE 15 CARTOONS TRANSFERRED.- PG 54 OF SUBMISSION DT 18/04 /2013. 6. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT REIMBURSEMENTS ARE ACTUALLY DISCOUNT. - POINT NO.14 ON PAGE NO. 13. THE APPELLANT HAS ACTUALLY PAID ON PURCHASE OF GOODS. SUBSEQUENTLY, ON SATISFACTION OF CONDITIONS WITH PR INCIPAL, IT ACTUALLY RECEIVED AMOUNTS. THERE WAS NEVER A JOURNAL ENTRY N OR A BOOK ENTRY NOR A UNDERSTANDING TO REDUCE COST OF (GOODS. - PAGE 59 AND PAGE 34 OF SUBMISSION DT 18/07/2012 7. IN ITS ORDER, HON'BLE ITAT COURT HAS OBSERVED TH AT GOLD COINS HAS BEEN SUPPLIED AND HAD BEEN INSERTED IN HANDSET - PO INT NO.16 ON PAGE NO 23. (A). THE SUPPLIER HAS, IN HIS STATEMENT OF OATH, AD MINISTERED BY INCOME TAX OFFICER THAT HE HAS SOLD. - (A.12 DT 01/ 11/2010 ) PAGE 84 SUBMISSION DT 18/07/2012. (B) BY AFFIDAVIT, SUPPLIER HAS DECLARED OF HAVING S UPPLIED TO APPELLANT GOLD COINS - POINT NO 5 AFFIDAVIT DT 02/0 1/2013 FILED ON 14/01/2013. (C) THE APPELLANT HAS FURNISHED PURCHASE BILL- PAGE NO 34- 36 VIDE SUBMISSION DT 18/04/2013. (D) THE APPELLANT HAS DECLARED UNDER STATEMENT OF O ATH ADMINISTERED BY INCOME TAX OFFICER THAT HE HAS PURC HASED - (A3 AND A 11 DT 06/01/2011) PAGE NO 22 SUBMISSION D T 18/04/2013. M.ANO.263/2013 3 THEREFORE THE TRIBUNAL OUGHT TO HAVE CONSIDERED AND REFERRED THE ISSUE AS RAISED BY THE APPELLANTS DURI NG THE HEARING AND PRESENTATION OF THE SAID CASE. IT IS RE SPECTFULLY SUBMITTED THAT THE OMISSION ON THE PART OF THE TRIB UNAL TO CONSIDER THESE DETAILS CONSTITUTE A MISTAKE APPAREN T FROM THE RECORD. IT IS RESPECTFULLY SUBMITTED THAT THE T RIBUNAL MAY BE PLEASED TO SUITABLY AMEND ITS ORDER TO RECTIFY T HE AFORESAID MISTAKE, WHICH IS APPARENT FROM THE RECOR D. THE APPELLANT THEREFORE PRAYS THAT THERE IS A MISTAKE A PPARENT FROM THE RECORD AND THE SAME MAY BE RECTIFIED. 3. THE MAIN ISSUE INVOLVED IN THE ASSESSEES APPEAL W AS DISALLOWANCE OF CLAIM OF EXPENSES OF RS.4,77,58,412 /- MADE IN RESPECT OF FREE DISTRIBUTION OF GOLD COINS ON THE MOBILE SE TS. ONE OF THE MAIN BUSINESS ACTIVITIES OF THE ASSESSEE WAS TO IMPORT M OBILE HANDSETS AND TO DISTRIBUTE THE SAME IN THE INDIAN MARKET. THE AS SESSEES CASE HAS BEEN THAT UNDER SALES PROMOTION SCHEME, THE ASSESSE E HAS DISTRIBUTED 3,400 NUMBERS OF GOLD COINS OF 20 GMS. EACH, WHICH WERE INSERTED IN THE HANDSET OF THE MOBILE PHONES. FOR THIS PURPOSE, GOLD BARS OF 68 KGS. WERE PURCHASED FROM MUMBAI AND WERE SENT TO OP AL INDUSTRIES, PUNE FOR CONVERTING THE SAME INTO GOLD COINS OF 20 GMS EACH. THE AO AFTER A DETAIL ENQUIRY AND EXAMINATION OF THE RECOR DS AS DISCUSSED IN THE ASSESSMENT ORDER, CAME TO THE CONCLUSION THAT S UCH A CLAIM OF EXPENDITURE OF THE ASSESSEE, IS BOGUS. IN THE COURS E OF THE FIRST APPELLATE PROCEEDINGS, AGAIN ENQUIRIES WERE CONDUCT ED BY THE CIT(A), THROUGH ASSESSING OFFICER AND IN PURSUANCE THEREOF, TWO REMAND REPORTS WERE SUBMITTED, WHEREIN DETAIL EXAMINATION OF THE EVIDENCES WERE CARRIED OUT AND ENQUIRIES WERE CONDUCTED TO RE BUT THE EXPLANATION AND THE CLAIM OF ASSESSEE. IN SUM AND SUBSTANCE, TH E RESULT OF SUCH ENQUIRIES WERE THAT CLAIM OF PURCHASING OF GOLD OF 68 KILOGRAMS FOR M.ANO.263/2013 4 MAKING 3400 PIECES OF GOLD COINS, WAS NOT SUPPORTED BY ANY CONCRETE EVIDENCE AND THAT M/S OPAL INDUSTRIES, PUNE, WHICH HAVE BEEN STATED TO HAVE MINTED THE GOLD COINS, HAD NO EXPERTISE, LI CENCE OR EXPERIENCE TO CONVERT THE GOLD BAR INTO COINS IN SUCH A SHORT SPAN, WHICH WAS ALSO CORROBORATED BY THE FACT THAT NO PROPER EVIDENCE OF TRANSPORTATION OF SUCH A HUGE QUANTITY AND VALUE OF GOLD WAS MADE AVA ILABLE IN THE FORM OF BUILTY, OCTROI, TRANSPORTATION CHALLAN ETC.. IN THE STATEMENT RECORDED ON OATH OF SHRI SUBHASH GUJAR, ONE OF THE MANAGING PARTNER OF M/S OPAL INDUSTRIES, HAS FIRSTLY DEPOSED THAT NO SUCH T RANSACTION WAS CARRIED OUT. LATER ON HE HAS FILED AN AFFIDAVIT CHA NGING HIS VERSION AND ACCEPTING SUCH TRANSACTION. HOWEVER, BASED ON ALL T HE EVIDENCES AND MATERIAL BROUGHT ON RECORD, THE LD. CIT(A) HAS GIVE N A VERY CATEGORICAL CONCLUSION AND FINDING, WHICH HAS BEEN INCORPORATED IN THE ORDER OF THE TRIBUNAL FROM PAGES 4 TO 6. THEREAFTER, THE ASSESSE E HAS PLACED VARIOUS DOCUMENTS, PARTLY WHICH WAS THERE BEFORE TH E AUTHORITIES BELOW AND PARTLY IN THE FORM OF ADDITIONAL EVIDENCES. BAS ED ON SUCH EVIDENCES AND AFTER CONSIDERING THE ENTIRE GAMUT OF ARGUMENTS, THE TRIBUNAL HAS GIVEN A VERY DETAIL FINDING NOT ONLY O N EACH AND EVERY PIECE OF EVIDENCE BUT ALSO ON THE VARIOUS CONTENTIO N RAISED BY THE PARTIES. THIS HAS BEEN ANALYZED FROM PARA 11 ONWARD S FROM PAGES 10 TO 24. IN PARA 16, POINTWISE FINDING AND CONCLUSION HAVE BEEN GIVEN ON EVERY ASPECT OF THE MATERIAL PLACED ON RECORD AND T HEREAFTER A DEFINITE CONCLUSION HAS BEEN ARRIVED AT. M.ANO.263/2013 5 4. IN POINT NO.1, THE ASSESSEE HAD CONTENDED THAT M/S OPAL INDUSTRIES WAS ALSO A DEALER IN JEWELLERY AND PRECI OUS METALS, BESIDES BEING WELL KNOWN WATCH MANUFACTURING COMPANY. IN TH IS REGARD, THE TRIBUNAL AFTER APPRAISING THE FACTS AND MATERIAL ON RECORD, HAS HELD THAT, FIRSTLY, THE OWNER OF M/S OPAL INDUSTRIES, PU NE, HAS DENIED SUCH TRANSACTION AT THE FIRST INSTANCE AND THEN HE HAS B ACKTRACKED IN THE FORM OF AFFIDAVIT, WHEREIN VARIOUS DISCREPANCIES IN SUCH AN AFFIDAVIT HAS BEEN HIGHLIGHTED BY THE TRIBUNAL IN THE ORDER; SECO NDLY, THERE IS NOTHING IN THE RECORD THAT OPAL INDUSTRIES WAS CARRYING OUT THE BUSINESS OF MINTING OF GOLD COINS PRIOR TO THIS TRANSACTION AND /OR SUBSEQUENT TO THAT, AS NO LICENCE FOR MINTING OF GOLD COINS OR DOCUMENT S WERE SHOWN THAT THE OPAL HAD SUCH A MINT;, THIRDLY, THE POSSIBILITY OF GOLD BARS BEING PURCHASED FROM MUMBAI AND THEN SENT TO THE PUNE FOR MINTING 3400 GOLD COINS AND AGAIN SENDING SAME BACK TO MUMBAI, A PPEARS TO BE NOT ONLY MAKE BELIEF ARRANGEMENT BUT ALSO THERE IS NO C ONCRETE PROOF FOR SUCH TRANSACTION IN THE FORM OF OCTROI, BUILTY, CHA LLAN ETC.THE DETAIL FINDING TO THIS EFFECT HAS BEEN GIVEN IN POINT NO.A ,B,C & D OF PARA 16 OF THE ORDER. IT WAS BASED ON THESE FINDING OF FACT TH AT THE TRIBUNAL HAS DRAWN ADVERSE INFERENCE. MERELY, BECAUSE THE ASSESS EE IN ITS LETTER HAS SUBMITTED THAT M/S OPAL INDUSTRIES WAS ALSO ENG AGED IN DEALING OF PRECIOUS METALS, WILL NOT CHANGE THE COLOUR OF THE FACTS OR THE CONCLUSION. THUS, POINT NO1 RAISED BY THE ASSESSEE IS DEVOID OF ANY MERIT. M.ANO.263/2013 6 5. IN POINT NO.2, THE ASSESSEE HAS TRIED TO HIGHLIGHT THAT THE FIRST CONSIGNMENT WAS RECEIVED ON 14-6-2005 AND THE FIRST OUTGOING WAS ON 17-6-2005 AND THIS HAS BEEN GIVEN IN THE STATEMENT DATED 18-4-2012 AND 18-7-2012, WHICH HAS NOT BEEN CONSIDERED PROPER LY. THIS ASPECT OF THE MATTER, WHETHER THERE WAS ANY GENUINE MOVEMENT OF GOLD BARS AND RECEIVING OF GOLD COINS FROM MUMBAI TO PUNE AND PUN E TO MUMBAI WITHIN A SHORT SPAN, HAS BEEN DEALT BY THE TRIBUNAL IN POINTS NO.C,D & F OF PARA 16. SUCH A CONCLUSION OF THE TRIBUNAL IS BA SED ON THE ENQUIRY CONDUCTED BY THE AO AND THE MATERIAL PLACED ON RECO RD BY THE ASSESSEE ITSELF. IT HAS NOT BEEN POINTED BY THE LEA RNED COUNSEL AS TO HOW IT WILL MAKE ANY DIFFERENCE ON THE CONCLUSION A RRIVED AT BY THE TRIBUNAL. THE TRIBUNAL HAS RECORDED A CONCURRENT FI NDING OF FACT. BESIDE THAT THE TRIBUNAL HAS NOTED THE SEQUENCE OF EVENTS, FOR INSTANCE, FIRST CONSIGNMENT OF GOLD COINS, WHICH WERE FOR 950 PIECE S, TOTALING 19 KGS., HOW IT WAS CARRIED ON 14-6-2005, WHEN THE SALE INVO ICE ITSELF SHOWS THE PURCHASE OF BARS ON 16-6-2005; AND SECONDLY HOW SUC H A HUGE QUANTITY HAS BEEN CONVERTED IN SHORT SPAN AND TRANS PORTED AND SENT BACK TO MUMBAI, WITHOUT ANY INVOICE PASSING THROUGH OCTROI. THUS, WE DO NOT FIND ANY MERIT IN POINT NO.2 AS RAISED BY TH E ASSESSEE, SO AS TO FALL WITHIN THE REALM OF SECTION 254(2). 6. IN POINT NO.3, THE ASSESSEE HAS STATED THAT DURING THE COURSE OF HEARING, IT HAS TRIED TO DEMONSTRATE, AS TO HOW A 2 0 GM GOLD COIN IF PLACED IN THE HANDSET PACKET OF 100 GRAMS, WILL NOT BE DETECTED FROM THE NORMAL HUMAN EYE. THIS ASPECT HAS BEEN DISCUSSE D IN DETAIL IN M.ANO.263/2013 7 PARA 10 AND ALSO IN POINTS NO.G & H IN PARA 16, WHE REIN THE TRIBUNAL HAS DISCUSSED THE IMPROBABILITY OF SUCH AN EXPLANAT ION GIVEN BY THE ASSESSEE. THIS CONCLUSION OF THE TRIBUNAL IS ALSO C ORROBORATED BY VARIOUS OTHER FACTORS AND THE ENQUIRY CONDUCTED BY THE AO. HENCE, THE POINT NO.3 IS ALSO DEVOID OF ANY MERIT. 7. IN POINT NO.4, THE ASSESSEE STATED THAT THERE IS A N EVIDENCE FOR INSERTION OF GOLD AND SUCH AN EVIDENCE IS BY WAY OF AN AFFIDAVIT OF ASSESSEES EMPLOYEE. SUCH AN AFFIDAVIT OF AN EMPLOY EE WILL NOT CHANGE THE COLOUR OF THE DETAIL FINDING RECORDED BY THE TR IBUNAL WITHOUT ANY CORROBORATIVE EVIDENCE, AS THE TRIBUNAL HAS REJECTE D THE ASSESSEES ENTIRE THEORY OF INSERTION OF GOLD COIN FROM MANY A NGLES. THUS, THIS POINT IS ALSO HEREBY REJECTED. 8. IN POINT NO.5, THE ASSESSEE HAS STATED THAT THERE IS SOME DISCREPANCIES IN THE OBSERVATION WITH REGARD TO THE NUMBER OF HANDSETS IN ONE PACKET. THIS AGAIN DOES NOT HAVE ANY BEARING ON THE OUTCOME OF THE CONCLUSION DRAWN BY THE TRIBUNAL. HENCE, THIS P OINT IS ALSO DISMISSED. 9. IN POINT NO.6, THE ASSESSEE HAS STATED THAT IT HAS ACTUALLY PAID THE SUM ON THE PURCHASE OF GOODS AND IT WAS UNDER S ATISFACTION OF THE CONDITIONS WITH ITS PRINCIPALS, THAT IT HAS RECEIVE D THE AMOUNT. THE TRIBUNAL HAS DEMONSTRATED THAT WHATEVER THE AMOUNT HAS BEEN RECEIVED BY THE PRINCIPAL WAS IN THE FORM OF MARKET ING BUDGET OF US$ 5 PER HANDSET, WHICH WAS NOTHING BUT FIXED ADVERTISEM ENT BUDGET AND THERE IS NO CORRELATION WITH REFERENCE TO THE PARTI CULAR SCHEME OF THE M.ANO.263/2013 8 ASSESSEE OF BEING REIMBURSEMENT OF THE COST OF THE GOLD COINS, AGGREGATING RS.4,77,58,412/-. 10. IN POINT NO.7, THE ASSESSEE HAS STATED VARIOUS POI NTS WHICH WAS BASED ON THE AFFIDAVIT/STATEMENT OF THE SUPPLIER M/ S OPAL INDUSTRIES. THIS ASPECT OF THE MATTER HAS BEEN DEALT IN MUCH DE TAIL, WHEREIN EACH AND EVERY POINT OF THE AFFIDAVIT HAS BEEN DEALT BY THE TRIBUNAL AND NOT ONLY THAT, A DETAIL ANALYSIS HAS ALSO BEEN GIVEN, B ASED ON WHICH THE CONCLUSION HAS BEEN DRAWN BY THE TRIBUNAL. 11. IN ANY CASE, WHATEVER POINTS WHICH HAS BEEN RAISED BY THE LD. COUNSEL, ULTIMATELY DOES NOT HAVE ANY EFFECT ON THE FINDING OF FACT AND THE CONCLUSION DRAWN BY THE TRIBUNAL IN THE ORDER. IN FACT, ALL THE POINTS RAISED BY THE ASSESSEE IN ITS MISCELLANEOUS APPLICA TION IS BASICALLY A REVIEW OF THE DETAIL FINDING AND CONCLUSION GIVEN B Y THE TRIBUNAL AND THERE IS NO MISTAKE APPARENT FROM RECORD WHICH C AN BE RECTIFIED WITHIN THE SCOPE OF SECTION 254(2) AND ACCORDINGLY, ALL TH E CONTENTIONS RAISED BY THE ASSESSEE IN THE MISCELLANEOUS APPLICATION AR E DEVOID OF ANY MERITS, 12 . RESULTANTLY, MISCELLANEOUS APPLICATION FILED BY TH E ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF DEC.,2013. SD/- SD/- (P.M. JAGTAP) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 11/12/2013. M.ANO.263/2013 9 . . /PKM , . / PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)-X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI