STONE SHIPPERS, V. ADDL CIT RG 12(3),

MA 344/MUM/2016

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6947 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM
• Assessee Lawyers: SR MURLIDHARAN; MOKSHA MEHTA MA TO MUM
• Keywords: Documents seized
• Section: 143(3); 133A; 147; 148

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JM AND SHRI RAJESH KUMAR, AM MISCELLANEOUS APPLICATION NO.344/MUM/2016 ARISING OUT OF I.T.A. NO. 3455/MUM/2011 ( / ASSESSMENT YEAR: 2005-06) M/S. STONE SHIPPERS 117 JOLLY MAKER CHAMBERS III, NARIMAN POINT, MUMBAI-400 021. / VS. ADDITIONAL COMMISSIONER OF INCOME TAX (ACIT), RANGE 12(3), MUMBAI. ( /APPLICANT ) : ( / RESPONDENT ) MISCELLANEOUS APPLICATION NOS.345 AND 346/MUM/2016 ARISING OUT OF I.T.A. NOS. 2372 AND 3456/MUM/2011 ( / ASSESSMENT YEARS: 2006-07 AND 2007-08) M/S. STONE SHIPPERS 117 JOLLY MAKER CHAMBERS III, NARIMAN POINT, MUMBAI-400 021.. / VS. ADDITIONAL COMMISSIONER OF INCOME TAX (ACIT), RANGE 12(3), MUMBAI. ( /APPLICANT ) : ( / RESPONDENT ) MISCELLANEOUS APPLICATION NO.347/MUM/2016 ARISING OUT OF I.T.A. NO . 3918/MUM/2012 ( / ASSESSMENT YEARS: 2008-09) M/S. STONE SHIPPERS 117 JOLLY MAKER CHAMBERS III, NARIMAN POINT, MUMBAI-400 021. / VS. ADDITIONAL COMMISSIONER OF INCOME TAX (ACIT), RANGE 12(3), MUMBAI. ( /APPLICANT ) : ( / RESPONDENT ) PAN: AAKFS 7395C / APPLICANT BY : S/R MURLIDHARAN AND MOKSHA MEHTA 2 MA 344 TO 347/MUM/2016 / RESPONDENT BY : SHRI PURSHOTTAM /DATE OF HEARING : 11.05.2018 / DATE OF PRONOUNCEMENT : 25.07.2018 / O R D E R PER RAJESH KUMAR, A. M: BY THESE FOUR MISCELLANEOUS APPLICATIONS THE ASSE SSEE SEEKS RECTIFICATION AND AMENDMENT OF THE TRIBUNAL ORDER DATED 26/04/2016 FOR THE ASSESSMENT YEARS 2005-06, 2006-0 7, 2007-08 AND 2008-09 PASSED IN ITA NOS.3455/MUM/2011 , 2372 & 3456/MUM/2011 AND ITA NO. 3918/MUM/2012. SINCE THESE MISCELLANEOUS APPLICATIONS RELATE TO TH E SAME ASSESSEE AND THESE MAS WERE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. MISCELLANEOUS APPLICATION NO.344/MUM/2016 2. THE LD.AR BY WAY OF THIS MA SUBMITTED THAT THE DOCUMENTS FOUND AND SEIZED DURING THE SURVEY PROCEE DINGS U/S 133A OF THE ACT ON 9.8.2007 REFERRED TO INFLATI ON OF EXPENDITURE BY THE ASSESSEE FOR THE PERIOD COMMENCI NG FROM JANUARY 2005 TO MARCH 2005 RELEVANT TO THE ASSESSME NT YEAR 2005-06 AMOUNTING TO RS.43.29 LAKHS AND FROM APRIL, 2005 TO SEPTEMBER, 2005 RELATING TO ASSESSMENT YEAR 2006 -07 AMOUNTING TO RS.45.85 LAKHS. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID DOCUMENTS REFERRED TO ALLEG ED 3 MA 344 TO 347/MUM/2016 INFLATION OF EXPENSES UNDER THREE HEADS I.E. CHOKIN G, STRAPPING AND UNLOADING IN TWO LOCATIONS NAMELY SHI LPATA AND PAWANE. THE LD. COUNSEL SUBMITTED THAT THERE WAS N OTHING IN THE DOCUMENTS FOUND IN THE SURVEY TO SHOW THAT T HESE INFLATION OF EXPENSES WERE ALSO RESORTED IN THE OT HER LOCATIONS WHERE THE ASSESSEE OPERATES NAMELY KOTA, MUNDRA AND CHENNAI. SIMILARLY THERE WAS NOTHING IN THE IM POUNDED PAPERS TO SHOW THAT THE INFLATION OF EXPENSES WERE MADE IN THE PERIOD OTHER THAN WHAT HAS BEEN MENTIONED THERE IN I.E ANNEXURE-1 PAGE 163. THE LD. AR WHILE TAKING US TH ROUGH THE ORDER OF THE TRIBUNAL SUBMITTED THAT THE CONTE NTIONS OF THE ASSESSEE THAT THE ADDITIONS CAN ONLY BE MADE ON LY IN RESPECT OF THE PERIOD AND LOCATIONS QUA WHICH THE M ATERIALS WAS FOUND DURING SURVEY WAS ACCEPTED BY THE TRIB UNAL IN BOTH THE ASSESSMENT YEAR 2007-08 AND 2004-05 IN TH E ORDER DATED 24.4.2016 IN PARA 12.1 AND PARA 7.2 RESPECTI VELY. ACCORDINGLY, THE TRIBUNAL DIRECTED THE AO TO CONFIN E THE ADDITIONS IN RESPECT OF INFLATED EXPENSES FROM TH E PERIOD BEGINNING FROM JANUARY 2005 TO DEC 2005. THE LD CO UNSEL SUBMITTED THAT WHILE DECIDING THIS ISSUE FOR OTHE R ASSESSMENT YEARS NAMELY 2006-07, 2005-06 AND 2008-0 9, THE TRIBUNAL LOST SIGHT OF THE AFORESAID PRINCIPLE AND UPHELD THE DISALLOWANCE FOR THE ENTIRE YEAR IN PARA 8.3 OF THE ORDER ON THE BASIS OF SAID SEIZED MATERIALS I.E. ANNEXURE -1 PAGE NO. 163. THE LD.AR SUBMITTED THAT THIS IS A MISTAKE AP PARENT IN THE IN AS MUCH AS THE TRIBUNAL HAS CONFIRMED THE 4 MA 344 TO 347/MUM/2016 DISALLOWANCE FOR THE ENTIRE ASSESSMENT YEAR 2005-06 INSTEAD OF CONFINING IT TO THE PERIOD COMMENCING FROM JANU ARY,2005 TO MARCH, 2005 AS THE ANNEXURE-1 PAGE 163 REFERRED ONLY TO THAT PERIOD SINCE THE AO HAS MADE THE DISALLOWANCE IN THE REMAINING PERIOD BY EXTRAPOLATING THE CONTENTS OF A NNEXURE- 1 PAGE 163 WHICH IS NOT PERMISSIBLE AS PER THE LAW LAID DOWN BY THE TRIBUNAL IN PARA 12.1 AND 7.2 OF THE IMPUGN ED ORDER. FINALLY THE LD COUNSEL PRAYED BEFORE THE BENCH THAT THE ORDER DATED 26 TH APRIL, 2016 MAY KINDLY BE AMENDED DIRECTING THAT (I) THE DISALLOWANCE IN RESPECT SHILPATA AND PAWANE BE CONFINED TO THE PERIOD FROM JANUARY, 2005 TO MARCH 2005 AND (II) THE DISALLOWANCE BE DELETED IN RESPECT OF OTHE R LOCATIONS NAMELY KOTA, MUNDRA AND CHENNAI REFERENCE TO WHICH DO NOT APPEAR IN THE SEIZED MATERIALS I.E ANNEXURE-1 PAGE 163. 3. THE LD. DR STRONGLY OBJECTED TO THE SUBMISSIONS OF THE LD.AR BY SUBMITTING THAT THE BENCH HAS DECIDED THE ISSUES INVOLVED AFTER CONSIDERING ALL FACTS, MATERIALS ON RECORDS AND SUBMISSIONS MADE DURING THE COURSE OF HEARING B EFORE THE BENCH. THEREFORE, THE CONTENTIONS OF THE LD. AR IS AFTER THOUGHT AND SHOULD NOT BE ACCEPTED AND MA FILED BY THE ASSESSEE HAS NO MERITS AS THERE IS NO MISTAKE APPAR ENT IN THE ORDER AND THUS DESERVED TO BE DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RELE VANT MATERIALS PLACED BEFORE US AS WELL AS THE TRIBUNAL ORDER DATED 26 TH APRIL, 2016. THE UNDISPUTED FACTS ARE THAT DURING 5 MA 344 TO 347/MUM/2016 THE COURSE OF SURVEY SOME DOCUMENTS WERE SEIZED ESP ECIALLY ANNEXURE-1 PAGE 163 WHICH MENTIONED THAT THE ASSESS EE HAS INFLATED ITS SHIPMENT EXPENSES IN RESPECT OF SHILPA TA AND PAWANE LOCATION UNDER THE HEADS CHOKING, STRAPPING AND UNLOADING EXPENSES FOR THE PERIOD BEGINNING WITH JA NUARY, 2005 TO DECEMBER,2005. THE AO EXTRAPOLATED AND ADD ITIONS ON THE BASIS OF SAID DOCUMENTS SEIZED MATERIAL ANNE XURE-1 PAGE 163 FOR THE PERIOD NOT MENTIONED IN ANNEXURE -1 PAGE 163 AND ALSO IN TO THOSE LOCATIONS NOT MENTIONED IN THE SAID DOCUMENT NAMELY KOTA, MUNDA AND CHENNAI. THE LD CI T (A) CONFIRMED THE ACTION OF THE AO. THE TRIBUNAL DECIDE D THE APPEALS FOR FOUR YEARS FROM 2004-05 TO 2007-08 BY A CONSOLIDATED ORDER DATED 26 TH APRIL, 2016. PERUSAL OF THE SAID ORDER REVEALS THAT THE TRIBUNAL HAS TAKEN A VIEW IN THE ASSESSMENT YEAR 2007-08 AND AY 2004-05 VIDE PARAS 1 2.1 AND 7.2 THAT ADDITIONS CAN ONLY BE SUSTAINED OR MAD E FOR THOSE LOCATIONS AND FOR THAT PERIODS AS MENTIONED I N THE ANNEXURE-1 PAGE 163. THE SAID PARAS ARE EXTRACTED B ELOW FOR THE SAKE OF CONVENIENCE:- ASSESSMENT YEAR 2007-08 PARA 12.1 12.1. WE HAVE CONSIDERED THE RIVALS SUBMISSION AND PERUSED THE RELEVANT MATERIALS ON RECORDS. WE FIND THAT THE ANNEXURE 1 P AGE 163 WHICH CONTAINED THE DETAILS OF EXPENSES BOOKED AND ACTUALLY INCURRED P ERTAINED TO THE PERIOD JANUARY, 2005 TO DECEMBER, 2005 AND THE AO BY EX TRAPOLATING THE SAME MADE THE ADDITIONS IN THE HAND OF THE ASSESSEE IN THE CU RRENT YEAR ON JUST SUSPICION WHICH NOT CORRECT. APART FROM THE ABOVE ANNEXURE-1 PAGE163 WHICH DO NOT RELATE TO THE CURRENT ASSESSMENT YEAR THE AO HAD NOT BROUG HT ANY MATERIALS ON RECORDS TO PROVE HIS ACTION OR ADDITIONS. SIMILARLY THE CIT (A) UPHELD THE ACTION OF AO BY JUST DIRECTING TO RECALCULATE THE DISALLOWANCE BASE D UPON THE ACTUAL QUANTITY/UNIT OF MATERIALS. IN OUR CONSIDERED OPINION THE ADDITIO NS CANNOT BE MADE ON THE BASIS 6 MA 344 TO 347/MUM/2016 OF A DOCUMENTS WHICH RELATED TO DIFFERENT YEAR AND BEAR NO MENTION OR REFERENCE OF THE CURRENT YEAR JUST ON THE BASIS OF SUSPICION THAT SAME METHODOLOGY AND MODUS OPERANDI MIGHT HAVE CONTINUED IN THE CURRENT YEAR ALSO. WE THEREFORE FIND THE ORDER OF CIT(A) IS WRONG TO THIS EXTENT AND THE REFORE THE ADDITIONS AS CONFIRMED BY THE CIT(A) IS ORDERED TO BE DELETED. T HE GROUND NO 1 IS ALLOWED AND THE AO IS DIRECTED ACCORDINGLY. ASSESSMENT YEAR 2004-05 PARA 7.2 7.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE RELEVANT MATERIALS ON RECORDS AND ORDERS OF AUTHORITIES BELOW FIND THA T THE DURING SURVEY ON THE ASSESSEE CONDUCTED ON 09.08.2007 AND SOME DOCUMENTS /PAPERS INCLUDING ANNEXURE-1 PAGE 163 WAS FOUND WHICH CONTAINS THE DE TAILS OF EXPENSES ACTUALLY INCURRED AND BOOKED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE DURING THE PERIOD COMMENCING FROM JAN 2005 TO DECEMBER, 2005. MOREOV ER WE FIND FROM THE STATEMENT OF ACCOUNT SHRI MITESH J MODY THAT THE SA ID EXPENSES WERE BOOKED AT THE DIRECTION OF MR. RAJ BAZAZ PARTNER IN ASSESSEE FIRM AS THE SAID ANNEXURE. NOW THE ISSUE BEFORE US IS WHETHER THE CASE OF THE ASSE SSEE COULD BE RE-OPENED ON THE BASIS OF MATERIALS/INFORMATION FOUND DURING THE SUR VEY OPERATION WHICH DO NOT TO THE INSTANT YEAR UNDER CONSIDERATION BY JUST EXTRAP OLATING AND GUESSING THAT SIMILAR TYPE OF PRACTICE OF INFLATING THE EXPENSES MIGHT HAVE BEEN FOLLOWED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2004-05. THE AO RE- OPENED THE CURRENT ASSESSMENT YEAR 2004-05 ON THE BASIS OF SAID DOCUME NTS A-1 PAGE 163 AND THE STATEMENT OF THE ACCOUNT WHEREAS AS A MATTER FACT W E SEE NO REFERENCE TO THE CURRENT ASSESSMENT YEAR AND ACCORDINGLY PROCEEDED T O RE-OPEN ALREADY CONCLUDED ASSESSMENT MADE U/S 143(3) OF THE ACT. WE FIND MERI T IN THE ARGUMENTS OF THE LD. AR THAT THE DOCUMENTS FOUND IN RESPECT OF SOME OTHE R PERIOD/YEAR CANNOT BE USED TO RE-OPEN ASSESSMENT RELATING SOME OTHER YEAR . IN OUR OPINION THE MATERIALS/INFORMATION ON THE BASIS OF WHICH THE PRE SENT ASSESSMENT WAS RE- OPENED IS NOT SUFFICIENT AS THE LAW DOES NOT ALLOW THE REOPENING IN THE ORDINARY COURSE AND IN THE ROUTINE MANNER. WHAT AO HAS TO PR OVE THAT SOME MATERIALS WHICH WAS NOT BEFORE THE AO AT THE TIME OF ORIGINAL ASSESSMENT HAS COME TO HIS POSSESSION AND ON THE BASIS OF THAT MATERIALS HE HA D REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT BUT C ANNOT BE ALLOWED TO RE- OPEN THE ASSESSMENT BY GUESSING THAT SAME METHODOLO GY MIGHT BE FOLLOWED BY THE ASSESSEE TO INFLATE THE EXPENSES. WE FIND FROM THE ANNUEXURE 1 PAGE 163 THAT IT RELATED TO ASSESSMENT YEAR 2005-06 AND 2006-07. THUS AO CANNOT BE ALLOWED TO DISTURB THE ASSESSMENT JUST ON THE BASIS OF SUSPICI ON THAT THE ASSESSEE HAD BOOKED OR INFLATED EXPENSES IN ONE YEAR AND MIGHT H AVE FOLLOWED THE SAME PRACTICE IN EARLIER YEAR WHICH IS SOUGHT TO BE RE- OPENED. IN OUR VIEW THE VERY BASIS OF RE-OPENING IS WRONG AND WITHOUT ANY TANGIB LE MATERIALS AND THEREFORE HAS TO BE ANNULLED AND QUASHED. ACCORDINGLY WE QUASH TH E RE-OPENING THE PROCEEDINGS U/S 147 R.W.S. 148 OF THE ACT AND ALSO THE CONSEQUENT ORDER OF ASSESSMENT. THE AO IS DIRECTED ACCORDINGLY. 7 MA 344 TO 347/MUM/2016 5. AS IS CLEAR FROM THE PERUSAL OF ABOVE PARAS THAT THE BENCH HAS TAKEN A VIEW THAT SINCE THE DOCUMENTS IMP OUNDED AND SEIZED I.E. ANNEXURE-1 PAGE 163 DURING THE COU RSE OF SURVEY PROCEEDINGS REFERRED ONLY TO TWO LOCATIONS SHILPHATA AND PAWANE FOR THE PERIOD FROM JANUARY 2005 TO DEC EMBER 2005 AS REGARDS THE INFLATION OF EXPENSES UNDER TH E HEADS CHOKING, STRAPPING AND UNLOADING, THE ADDITIONS WER E DIRECTED TO BE MADE ONLY FOR THE SAID PERIOD AND LO CATIONS AS MENTIONED IN THE ANNEXURE-1 PAGE 163 AND ADDITIONS BASED ON EXTRAPOLATION WAS ORDERED TO BE DELETED. HOWEVER , WHILE DECIDING THE APPEAL FOR 2005-06 THE TRIBUNAL LOST S IGHT OF THE SAID VIEW AND UPHELD THE ADDITION FOR THAT PERIOD A ND LOCATIONS NOT MENTIONED IN THE ANNEXURE-1 PAGE 163 WHICH IS A MISTAKE APPARENT IN THE ORDER AS THE SAME WAS CON TRARY TO THE VIEW TAKEN BY THE BENCH IN AY 2007-08 AND 2004- 05. IN OUR CONSIDERED VIEW THE ORDER DATED 26 TH APRIL, 2016 SUFFERS FROM APPARENT MISTAKES AND REQUIRED TO BE AMENDED T O THAT EXTENT MAKING RECTIFICATIONS. WE THEREFORE DIRECT THE AO TO RESTRICT THE ADDITIONS OF INFLATION OF EXPENSES UND ER THE HEADS CHOKING , STRAPPING AND UNLOADING EXPENSES ONLY FRO M JANUARY 2005 TO MARCH 2005 AND ONLY IN RESPECT OF S HILPATA AND PAWANE LOCATIONS. AS A RESULT THE ADDITION AS M ADE BY EXTRAPOLATING SHOWN IN ANNEXURE-1 PAGE 163 FOR THE PERIOD NOT MENTIONED THEREIN IS ORDERED TO BE DELETED AND SIMILARLY THE ADDITIONS IN RESPECT OF THOSE LOCATIONS NOT MEN TIONED IN 8 MA 344 TO 347/MUM/2016 THE ANNEXURE-1 PAGE 163 I.E KOTA, MUNDRA AND CHENN AI ARE ALSO DIRECTED TO BE DELETED. 6. IN THE RESULT, THE MA FILED BY THE ASSESSEE IS A LLOWED AND ORDER DATED 26 TH APRIL, 2016 FOR AY 2005-06 STANDS AMENDED TO THAT EXTANT AS INDICATED ABOVE. MISCELLANEOUS APPLICATION NO.345/MUM /2016 FOR A.Y. 2006-07 7. THE ASSESSEE HAS MADE PRAYERS BY WAY OF THIS MA QUA AMENDING THE ORDER DATED 26TH APRIL, 2016 DIRECTING TO CONFINE THE ADDITIONS IN RESPECT OF TWO UNITS NAME LY SHILPATA AND PAWANE FOR THE PERIOD COMMENCING FROM APRIL,200 5 TO DECEMBER, 2005 AS REFERRED TO IN ANNEXURE-1 PAGE 16 3 AND DIRECTING THE DELETION OF ADDITIONS IN RESPECT OF OTHER LOCATIONS NOT MENTIONED IN THE ANNEXURE-1 PAGE 163. WE FIND THAT THE ISSUES RAISED IN THE MA ARE IDENTICAL TO T HE ONES AS DECIDED BY US IN MA NO.344/MUM/2016 SUPRA DIRECTIN G THE AO TO MAKE THE ADDITIONS FOR THAT PERIOD AND FOR TH OSE LOCATIONS AS MENTIONED IN THE ANNEXURE-1 PAGE 163. SINCE, WE HAVE DECIDED THE MA IN FAVOUR OF THE ASSESSEE AN D ALSO AMENDED THE ORDER DATED 26TH APRIL, 2016 TO THAT EX TENT CORRECTING APPARENT MISTAKES IN THE ORDER DIRECTING THE AO TO CONFINE THE ADDITIONS ONLY TO THOSE UNITS AND FOR T HAT PERIOD AS APPEARED IN THE SEIZED MATERIALS ANNEXURE-1 PAGE 163. ACCORDINGLY, MA FILED BY THE ASSESSEE IN THIS YEAR IS ALLOWED 9 MA 344 TO 347/MUM/2016 AND THE ORDER DATED 26TH APRIL, 2016 IS AMENDED TO THAT EXTENT. MISCELLANEOUS APPLICATIONS NO.346 (A.Y. 2007-08) AND 347/MUM/2016 (A.Y. 2008-09) 8. IN ASSESSMENT YEARS 2007-08 AND 2008-09, THE ONL Y ISSUE RAISED BY THE ASSESSEE IS QUA AMENDING TH E ORDER DATED 26.04.2016 DIRECTING THE DELETION OF ADDITIO N IN RESPECT OF OTHER LOCATIONS QUA FOR WHICH THERE IS N O REFERENCE IN THE SEIZED MATERIALS FOUND DURING THE COURSE OF SURVEY . WE HAVE DECIDED THE SIMILAR ISSUE IN MA NO. 344/M/2 016 AY 2005-06 DIRECTING THE AO TO DELETE THE ADDITIONS IN RESPECT OF INFLATION OF EXPENSES IN THOSE UNITS FOR WHICH THER E IS NO REFERENCE IN THE SEIZED MATERIALS I.E. ANNEXURE -1 PAGE 163. ACCORDINGLY, THE DECISION TAKEN IN MA NO344/MUM/201 6 WOULD MUTATIS MUTANDIS APPLY TO THESE MAS. ACCORDIN GLY, THESE MAS ARE ALLOWED. 9. RESULTANTLY, ALL THE MISCELLANEOUS APPLICATIONS OF THE ASSESSEE ARE ALLOWED AND OUR ORDER DATED 26.04.2016 STANDS AMENDED TO THAT EXTENT. ORDER PRONOUNCED IN THE OPEN COURT ON 25.07.2018 SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 25 07.2018 KISHORE, SR.P.S. 10 MA 344 TO 347/MUM/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI