HARESH K. SANGHVI, MUMBAI V. INCOME TAX OFFICER-17(1)(5), MUMBAI

MA 409/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2905 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase; Rectification of order; Search and seizure; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM M A NO. 409/MUM/2018 (ARISING OUT OF ITA NO. 4975/MUM/2017) ( ASSESSMENT YEAR: 2011 - 12 ) HARESH K. SANGHVI PROP. M/S. MAHAVIR METAL SYNDICATE 35/37, BAPU KHOTE LANE, GULAL WADI, MUMBAI - 400 004 VS. ITO - 17(1)(5) ROOM NO. 117, AAYKAR BHAVAN, M. K. ROAD, MUMBAI - 400 001 PAN/GIR NO. AJVPS 5483 K ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH DATE OF HEARING : 02.11.2018 DATE OF PRONOUNCEMENT : 02.11 .2018 ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 PER SHAMIM YAHYA, A. M.: BY WAY OF THIS MISCELLANEOUS APPLICATION THE ASSESSEE SEEKS RECTIFICATION OF MISTAKE U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT' FOR SHORT) AGAINST THE TRIBUNALS ORDER IN ITA NO. 4975/MUM/2017 FOR ASSESSMENT YEAR (A.Y. FOR SHORT) 2011 - 12 VIDE ORDER DATED 02.01.2018. 2. IN THE AFORESAID APPEAL, THE ITAT HAS DECIDED THE ISSUE RELATING TO THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHAS E. WHILE CONFIRMING THE VALIDITY OF THE REOPENING, THE TRIBUNAL HAS REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RAJESH J H AVERI STOCK BROKERS P. LTD. (291 ITR 500). 2 MA NO. 409/MUM/2018 HARESH K. SANGHVI 3. AS REGARDS THE MERITS OF THE CASE, THE TRIBUNAL HAS REFERR ED TO THE HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC). IT HAD CONCLUDED AS UNDER: 14. 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 TRIBUN ALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES 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 DISM ISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 15. HOWEVER I NOTE THAT THIS IS NOT AN APPEAL BY THE REVENUE. HENCE IT WILL NOT BE APPROPRIATE TO TAKE AWAY THE RELIEF ALREADY GRANTED BY THE REVENUE TO THE ASSESSEE, HENCE I CONFIRM THE ORDER OF LEARNED CIT(A). 4. AGAINST THE ABOVE ORDER, THE ASSESSEE HAS FILED MISCELLANEOUS APPLICATION, IN WHICH FOLLOWING HAS BEEN SUBMITTED: A. THE HONOURABLE ITAT MERELY RELIED ON LD A.OS OPINION REGARDING INFORMATION RECEIVED FROM DGIT MUMBAI AND SALES TAX DEPARTMENT, WITHOUT MAKING ANY INQUIRY IN THAT RESPECT. B. THUS, REOPENING ON THE GROUND OF BORROWED INFORMATION AND OPINION OF OTHER AUTHORITIES IS NOT ALLOWED FOR REOPENING OF COMPLETED ASSESSMENT PROCEEDINGS, IS NOT CONSIDERED BY HONOURABLE ITAT. C. THE VAT RATE IS 4 % , WHEREAS ADDITION CONFIRMED IS 12.5% D. ASSESSEE SUBMITTED SALES TAX ASSESSMENT ORDER AND CHALLAN OF VAT PAYMENT WHICH PAID TO SALES TAXES DEPARTMENT WHICH IS NOT CONSIDERED BY HONOURABLE ITAT. E. WHOLE SALES TAX SURVEY AND RAID CONDUCTED ON THE BASIS OF NON PAYMENT OF VAT TO SALES TAX DEPARTMENT AND WHEREAS SUCH TAXES PAID BY ASSESSEE THAN THERE IS NO QUESTION OF SALES TAX EVASION, F. THE LEVY DEFINED UNDER CONSTITUTION EITHER COLLECTED BY STATE GOVERNMENT OR CENTRAL GOVE RNMENT. BOTH GOVERNMENTS CANNOT LEVY TAXES ON SAME INCOME. G. ESTIMATION OF 12.5% DERIVED FOR EVASION OF SALES TAXES WHERE SALES TAXES PAID BY ASSESSEE TO STATE GOVERNMENT THAN WHOLE IDEAS OF ESTIMATION COME TO END. 3 MA NO. 409/MUM/2018 HARESH K. SANGHVI H. THE VAT RATE OF ASSESSEE BUSINESS IS ONLY 4% AND CONFIRMING 12.5% IS AGAINST THE FACTUAL POSITION OF ASSESSEE. 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. APPLICATI ON) I. DECISION RELY BY HONORABLE BENCH IS AT DIFFERENT FACTS AND IN GUJRAT THERE WAS VAT RATE OF 12 % SO THEY CONFIRMED 12.5%. IN THIS CASE BOOKS OF ACCOUNT REJECTED AND IN OUR CASE NO BOOKS OF ACCOUNT REJECTED AND HENCE IS FACTUAL DIFFERENCE IN BOTH C ASES. J. ASSESSEE SUBMITTED DETAILS PAPER BOOK WHICH IS NOT CONSIDERED BY HONOURABLE ITAT HENCE IT IS VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. K. ASSESSEE SHOWN EXISTING GP IS 3.61% WHICH WAS ALSO NOT REDUCED BY HONOURABLE ITAT WHERE AS COORDINATE BEN CHES GIVING CREDIT OF EXITING GP. RELIANCE PLACE ON I.T.A. NO.3182 - 3183/MUM/2016 IN CASE OF SUNIL B.DOSHI . 5. UPON CAREFUL CONSIDERATION I FIND THAT BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE SEEKING REVIEW OF THE ORDER OF THE TRIBUNAL IN SECT ION 254(2) OF THE ACT. SECTION 254(2) OF THE ACT ONLY PERMITS RECTIFICATION OF THE MISTAKE APPARENT FROM THE RECORD. 6. 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. RA MESH ELECTRIC AND TRADING CO. [1993] 203 ITR 497 (BOM). IN THE SAID ORDER, THE HON'BLE JURISDICTIONAL HIGH COURT 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 JURISDICTIONAL HIGH COURT HAS REFERRED TO THE FOLLOWING FROM THE HONBLE APEX COURT DECISION: 'A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PA TENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD.' 7. THEREAFTER AFTER C ONSIDERING THE VARIOUS FACTS AND DECISIONS, THE HON'BLE JURISDICTIONAL HIGH COURT HAS EXPOUNDED AS UNDER: 4 MA NO. 409/MUM/2018 HARESH K. SANGHVI 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 RECTI FIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE 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 TH E PRESENT CASE. FAILURE BY THE TRIBUNAL TO CONSIDER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. 8. FROM THE SUBMISSION IN MA IT IS NOW CLEAR THAT THE A SSESSEE IS SEEKING A REVIEW OF THE ORDER OF THE ITAT WHICH IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE ACT IN THE GARB OF THE RECTIFICATION OF MISTAKE . HENCE, THE MA IS LIABLE TO BE DISMISSED AND THE SAME IS DISMISSED ACCORDINGLY. 9 . IN THE RESULT, TH E MISCELLANEOUS APPLICATION BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.11.2018 SD/ - (S HAMIM YAHYA) A CCOUNTANT MEMBER MUMBAI ; DATED : 02.11.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE R ESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. R EGISTRAR) ITAT, MUMBAI