A VARSHIT & COMPANY, MUMBAI V. INCOME TAX OFFICER 25(2)(1), MUMBAI

MA 340/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4619 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Bogus purchase; Principle of natural justice; Non passing of speaking order; Retraction
• Section: 69C

Judgement Text

1 MA 340/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) M.A. NO.340/MUM/2019 (ARISING OUT OF ITA NO.990/MUM/2018) (ASSESSMENT YEAR : 2008-09) A. VARSHIT & COMPANY 802, MILLENNIUM APARTMENT PLOT NO.661, LALLUBHAI PARK ROAD EXT.VILE PARLE (WEST) MUMBAI-400 056 PAN : AAKFA6008L VS ITO - 25(2)(1) C-10,ROOM NO.505, 5 TH FLOOR PRATYAKSHKAR BHAWAN BANDRA KURLA COMPLEX BANDRA MUMBAI-400 051 APPLICANT RESPONDENT APPLICANT BY BHARAT KUMAR RESPONDENT BY AKHILENDRA YADAV DATE OF HEARING 0 2.08.2019 DATE OF PRONOUNCEMENT 28 .08.2019 O R D ER PER G MANJUNATHA: AM THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON U/S 254(2) OF THE I.T.ACT, 1961 AND REQUESTED TO RECALL ORDER OF THE TRIBUNAL DATED 27/02/2019 IN ITA.NO. 990/MUM/2018 FOR AY 2008-09. 2 MA 340/MUM/2019 2. THE ASSESSEE HAS NARRATED FACTS AND MISTAKES STA TED TO BE APPARENT ON RECORD FROM THE ORDER OF THE TRIBUNAL D ATED 27/02/2019. THE RELEVANT CONTENTS OF MISCELLANEOUS APPLICATION FILE D BY THE ASSESSEE ARE REPRODUCED AS UNDER: 2. EVEN THOUGH THE ORDER PASSED BY THE HON'BLE BEN CH IS A SPEAKING ORDER, YET CONTAINS CERTAIN FACTUAL MISTAKES THAT NEEDS TO BE CORRECTED AS PER THE PROVISIONS OF SECTION 254(2)OF THE ACT: WE WOULD LIKE TO SUBMIT A. THAT DURING THE COURSE OF HEARING THE HON'BLE SE NIOR MEMBER HAD GIVEN CLEAR CUT INDICATION IN THE OPEN COURT THAT I N DIAMOND INDUSTRY EMBEDDED PROFIT IS AROUND 3%-5%, SO THE HONBLE BEA CH WOULD RESTRICT IT TO ADDITION TO 3% - 5% OF ALLEGED BOGUS PURCHASE S,( OUR AR SH.BHARAT KUMAR HAD INFORMED US ABOUT IT AFTER HEAR ING WAS OVER),BUT IN THE FINAL ORDER OF HON'BLE BENCH HAS ADDED 12.50 % OF THE ALLEGED BOGUS PURCHASES TO OUR INCOME. THE ADDITION IS AGAI NST THE PRINCIPLE OF NATURAL JUSTICE. IT IS SUBMITTED WHEN THE TRIBUNAL HAVE GIVEN CLEAR CUT INDICATION, OF PROPOSED ADDITION; OUR AR DID NOT FA RTHER ARGUE THE CASE. B. WE HAVE SUBMITTED TWO ORDER OF HON'BLE ITAT AND WHEREIN APPLICABILITY OF SECTION 69C WAS DISCUSSED AND BOTH THE CASES HAD DIRECT LINK WITH THE FACTS OF THE MATTER. BUT, THE CASES DO NOT FIND PLACE IN ORDER OF HON'BLE ITAT. NOR IT HAS BEEN DISCUSSED AS TO HOW SAME ARE NOT APPLICABLE TO OUR CASE. C. 3.WE HAD SUBMITTED ORDER OF THE HON'BLE ITAT DEL IVERED IN CASE OF PAREKH CORPORATION UI BUILDING (32 CCH 129) AND IT HAD DECIDED THE SIMILAR ISSUE- POINTS NUMBER)4 AND 15 OF SUBMISSION OF THE ASSESSEE DEAL WITH THE ABOVE ISSUE ONLY. FOR THE KIND PERUSA L OF THE BENCH WE ARE REPRODUCING THE PARAGRAPHS AND SAME READ AS UND ER. 14. FURTHER IT IS ALSO STATED THAT I,D. A,O. MADE A DDITION U/S 69C WHEREAS AS SECTION 69C PROVIDES THAT WHERE IN ANY F INANCIAL YEAR AN ASSESSES HAS INCURRED ANY EXPENDITURE AND H E OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THERE OF , OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. IN THIS REGARD, IT IS SUBMITTED THA T WHEN THE ASSESSES HAS PROVIDED ALL THE EVIDENCES OF THE PAYM ENT AND THE PAYMENTS ARC RECORDED IN THE HOOKS OF ACCOUNT, THEY ARE NOT LIABLE TO BE ADDED N/S. 69C OF THE ACT. RELIANCE PL ACE ON IN CASE OF M/A. R. R. OOMERBHOY PVT. LTD. VIDE ITA NO. 4223/MUM/2017 3 MA 340/MUM/2019 15. IN THE CASE OF PAREKH CORPORATION UI BUILDING ( 32 CCH 129) THE TRIBUNAL HAS DISCUSSED THE APPLICABILITY OF PRO VISIONS OF SECTION G9C OF THE ACT AND HAS HELD AS UNDER: ' .. . . IN SO FAR AS THE APPLICATION OF 69C IS CONCERNED, WE FIND THAT THE SAME CANNOT BE ATTRACTED BECAUSE SECTION 69C APPLIES HERE IN ANY FINANCIAL YEAR FIND ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PAN THEREOF, OR THE EXPLANATION, IF ANY OF BY THE ASSES SEE IS NOT SATISFACTORY. IT IS THEN THAT THE AMOUNT COVERE D BY SUCH EXPENDITURE NR PART THEREOF IS DEEMED AS INCOM E OF THE ASSESSES FOR SUCH FINANCIAL YEAR. THE BEDROCK F OR MAKING AN ADDITION UNDER SECTION 69C IS THAT THERE MUST HAVE BEEN SOME EXPENDITURE INCURRED BY THE , THE SO URCE OF WHICH IS NOT DISCLOSED. IF OUR SUCH EXPENDITURE IS RECORDED IN THE BOOKS OF ACCOUNTS, THERE CANNOT HE ANY REASON TO INVOKE THE PROVISIONS OF SECTION 69C OF THE ACT. IN THAT VIEW OF THE MATTER IS IT IS HELD SHUT PROVI SIONS OF SECTION 69C WERE STRONGLY RESTORE BY THE AO FOR MAK ING THIS ADDITION. D. IT IS ALSO SUBMITTED IN OUR WRITTEN SUBMISSION, WE HAVE EMPHASIZED THAT RAJENDRA JAIN, THE ALLEGED HAWALA TRADER HAD RETRACTED HIS STATEMENTS. RETRACTION OF THE STATEMENT BY RAJENDRA JAIN IS A VITAL AND IMPORTANT FACT TO DECIDE OUR APPEAL POINTS NUMBER 1 1, 12 AND 13 OF OUR SUBMISSION DEAL WITH IT AND SAME DID NOT CONSIDERED BY HONBLE ITAT WHILE DECIDING OUR APPEAL. FOR THE KIND PERUSAL OF THE BENCH, WE ARE SUBMITTING THE RELEVANT PORTION OF SUBMISSION AND S AME READS AS UNDER: '11. IN THE CASE OF M/S M.B. JEWELLERS & SONS V IDE LT.A NO. 1/KOL/2017 LEGALITY OF RETRACTION OF STATEMENT BY R AJENDRA JAIN HAS BEEN DELIBERATED UPON. AS PER THAT ORDER RAJENDRA J AIN HAD RETRACTED HIS STATEMENT BY WAY OF AN AFFIDAVIT ON 9,1.2014.HC HAD ALSO EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE ORIGINAL STATEME NTS HAD BEEN RECORDED. HENCE, RELIANCE CANNOT BE PLACED ON HIS S TATEMENT LO MAKE ADDITIONS TO THE PROFITS SHOWN BY THE ASSESSES IT I S FURTHER STATED THAT RAJENDRA JAIN HAD ALSO FILED A LETTER TO DCIT. CENTRAL CIRCLE -4 ; SURAT ON 31.10.2014 EXPLAINING THE ENTIRE FACTS OF THE CASE AND THE CIRCUMSTANCES WARRANTING HIM TO FILE TWO AFFIDAVITS . 12. IN THE CASE OF M/S M.B. JEWELLERS & SONS (I.T.A NO. L/K.OL/2017) ONE OF THE SUPPLIER WAS M/S AVI EXPORT AND ADDITION IN THAT CASE HAS BEEN DELETED BY HONORABLE TRIBUNAL AS STALED EARLIER. 13. IN THE CASE OF MANOJ BEGANI (L.TA, NO. 932/KOI/ 20L7)ADDITION MADE ON THE BASIS OF RAJENDRA JAIN STANDS DELETED.' 4 MA 340/MUM/2019 E. HONBLE ITAT HAS PLACED RELIANCE ON EARLIER YEAR 'S CASE. BUT WE WOULD LIKE TO SUBMIT THAT FACTS FOR THE YEAR UNDER CONSIDERATI ON ARE DIFFERENT AND DISTINGUISHABLE FROM THE FACTS OF THE EARLIER YEAR. RELEVANT PARAGRAPHS OF THE ORDER PASSED FOR THE EARLIER YEAR ARE REPRODUCED AS UNDER, 7. NOW, COINING LO THE MERIT OF THE ADDITION, WE FO UND THAT ALLEGATION OF THE AO WAS AS PER INFORMATION FROM THE SALES TAX DEPARTMEN T ASSESSEE HAS TAKEN ACCOMMODATION PURCHASES- HOWEVER , THE CORRESPONDING SALES HAVE NOT BEEN DENIED BY THE AO. WITHOUT PURCHASES THERE CANNOT BE SALE. THEREFORE, ADDING E NTIRE AMOUNT OF PURCHASES IN ASSESSEE'S INCOME IS NOT JUSTIFIED. 8. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUM STANCES OF THE CASE, VISA-VIS NATURE OF ASSESSEE'S BUSINESS, I RESTRICT ADDITION TO THE EXTENT OF 12,5% OF SUCH BOGUS PURCHASES. F. IN THE ORDER OF HON'BLE ITAT IT IS MENTIONED T HAT THE DR HAD REFERRED TO THE ORDER OF HON'BLE IT AT .BUT THE FACT IT THAT OUR AR HAD BROUGHT TO THE NOTICE OF THE HON'BLE BENCH THAT IN THE EARLIER YEAR THE HON' BLE TRIBUNAL HAD DECIDED THE ISSUE CONSIDERING THE PECULIAR FACTS OF THE THA T YEAR. HE NOT ONLY SUBMITTED THE COPY OF THE ORDER BUT ALSO HIGHLIGHTED THE FACT THAT ISSUE TO BE DECIDED FOR THE YEAR UNDER APPEAL WAS CLEARLY DISTINGUISHABLE A ND THAT THE ORDER FOR THE EARLIER COULD NOT BE USED AS A PRECEDENT. IN THIS R ESPECT, WE WOULD REFER TO OUR SUBMISSION AT POINT 1 6, WHEREIN WE HAD MENTIONED A S UNDER: '16, FURTHER LD. A.O, RELIANCE PLACE ON EARLIER YEA R ORDER IN ASSESSES CASE WHEREAS IS 12.50% IS ESTIMATED BY HON'BLE ITAT BUT IT IS FACTS THAT EARLIER ORDER WAS EX PARTE ORDER OF CIT (A) AND IT IS DECID ED BY SINGLE BENCH OF ITAT AND EARLIER YEAR ORDER IS NON SPEAKING ORDER AND WH ICH DISCUSS ABOUT INFORMATION FROM SALES TAX DEPARTMENT BUT IN THIS C ASES FACTS AND CIRCUMSTANCES ARE DIFFERENT.' FURTHER, IT WAS SPECIFICALLY STATED THAT THERE WERE FOUR PARTIES IN THE ORDER FOR THE EARLIER YEAR WHEREAS FOR THE YEAR UNDER APPEAL THERE WAS ONLY ONE PARTY THAT FIGURED IN LAST YEAR'S LIST. IT IS ALSO A FACT THAT LAST YEAR THE LD, CIT (A) HAD PASSED EX PARTY ORDER. G. WE HAD ALSO SUBMITTED THAT ASSESSEE GP IS 4.85% AND FURTHER MAKING ADDITION 12.50% WHICH LEAD GP 17.35% WHICH IS AGAINST THE NATURE OF TRADE IN DIAMOND AND THIS VERY IMPORTANT ASPECT REMAINED TO BE CONSIDERED BY HON'BLE BENCH. H. IT WAS ALSO BROUGHT TO THE NOTICE OF THE HON'BLE BENCH THAT THE SALES TAX DEPARTMENT HAD ACCEPTED THESE TRANSACTIONS AS GENUI NE TRANSACTIONS, AS WE HAD SUBMITTED VAT RETURNS BEFORE THE SALES TAX AUTH ORITIES. POINT 10 OF OUR SUBMISSION DEALS WITH THIS VERY CRUCIAL ASPECT BUT IT REMAINED TO BE CONSIDERED BY HON'BLE ITAT. 5 MA 340/MUM/2019 I. NON CONSIDERATION OF THE FACT GOING TO THE ROOT OF THE ISSUE IS A MISTAKE APPARENT FROM RECORD, AS ENVISAGED BY THE PROVISION S OF SECTION 254(2)OF THE ACT . 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MISCE LLANEOUS APPLICATION FILED BY THE ASSESSEE, ALONG WITH ORDER OF THE TRIBUNAL DATED 27/02/2019 IN ITA NO. 990/MUM/2018. WE FIND THAT TH E TRIBUNAL HAD RECORDED ITS FINDING, IN RESPECT OF ISSUE INVOLVED IN APPEAL REGARDING PROFIT ESTIMATION ON ALLEGED BOGUS PURCHASE FROM HA WALA/SUSPICIOUS DEALERS AND AFTER CONSIDERING RELEVANT FACTS AND AL SO BY FOLLOWING THE DECISION OF ITAT, MUMBAI BENCH IN ASSESSEES OWN CA SE FOR EARLIER ASSESSMENT YEAR HAS DIRECTED THE AO TO ESTIMATE 12. 5% NET PROFIT ON ALLEGED BOGUS PURCHASES. WE, FURTHER NOTED THAT IF, YOU GO THROUGH CONTENTS OF MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IN LIGHT OF FINDINGS RECORDED BY THE TRIBUNAL IN ITS ORDER DATE D 27/02/2019, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FAILED TO MAKE OUT A CASE OF PRIMA-FACIE MISTAKE APPARENT ON RECORD, WHICH CO ULD BE RECTIFIED U/S 254(2) OF THE I.T.ACT, 1961. FURTHER, WHAT THE LD.A R FOR THE ASSESSE SEEKING IS TO REVIEW THE DECISION RENDERED BY THE T RIBUNAL IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BY FO LLOWING THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR EAR LIER ASSESSMENT YEARS, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE I.T.ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN 6 MA 340/MUM/2019 MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE A ND ACCORDINGLY, THE SAME IS DISMISSED. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS F ILED BY THE ASSESSE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 .08.2019 . SD/- SD/- MAHAVIR SINGH G MANJUNATHA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28.08.2019 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//