CHIRAG RAJENDRA SHAH, MUMBAI V. INCOME TAX OFFICER 24(1)(4), MUMBAI

MA 446/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6071 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-06-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: A K SHARMA MS TANEKSHA SHARMA
• Keywords: Bogus purchase; Unexplained expenditure; Rectification of order; Accommodation entries
• Section: 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM M .A. NO S . 446 , 447 & 448 /MUM/2018 (ARISING OUT OF ITA NO S . 4086 , 4087 & 4088 /MUM/2016) ( ASSESSMENT YEAR S : 2009 - 10 , 2010 - 11 & 2011 - 12 ) SHRI CHIRAG RAJENDRA SHAH D - 305, SIDDHI VINAYAK TOWER, OFF TANK ROAD, ORLEM, MALAD (W), MUMBAI - 400 064 VS. INCOME TAX OFFICER WARD 24(1)(4) C - 13, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBA I PAN/GIR NO. AFXPS 7904 P ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI A. K. SHARMA MS. TANEKSHA SHARMA RESPONDENT BY : SHRI CHAITANYA ANJARIA DATE OF HEARING : 30.11.2018 DATE OF PRONOUNCEMENT : 23.01 .2019 ORDER U/S. 254(2) OF THE INCOME TAX ACT, 1961 PER SHAMIM YAHYA, A. M.: BY WA Y OF THE S E MISCELLANEOUS APPLICATION S THE ASSESSEE SEEKS RECTIFICATION OF MISTAKE APPARENT FROM THE RECORD IN THE COMMON ORDER OF THIS TRIBUNAL IN ITA NO S . 4086 , 4 087 & 4088 /MUM/2016 FOR ASSESSMENT YEAR S 20 09 - 10 , 2010 - 11 AND 2011 - 12 VIDE ORDER DATED 0 3.04.2 018 . 2. IN THE SE APPEALS BY THE ASSESSEE, THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE FOR BOGUS PURCHASES FROM 25% DONE BY THE LD. CIT(A) TO 12.5%. 2 MA NOS.446 , 447 & 448 /M / 18 3. THE FIRST SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE IS THAT THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES: A) ISSUANCE OF NOTICE U/S. 143(2) PREMATURE/ INVALID AS NO RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 WAS FILED. 4. IT IS THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE THAT THE ABOVE GROUND HAS NOT BEEN ADJUDICATED BY THE TRIBUNAL. 5. P ER CONTRA, THE LD. DR SUBMITTED THAT THERE WAS NO SUCH GROUND RAISED BY THE ASSESSEE. HENCE, IT IS SUBMITTED THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORD. WE HAVE GONE THROUGH TH E CHALLENGE TO THE REOPENING BY THE ASSESSEE IN THE GROUNDS OF APPEAL IN THE ABOVE ITAT APPEALS. IN FACT, THE TRIBUNAL HAS ALSO REPRODUCED THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD IN PARA 10 OF THE ORDER . IT IS NO WHERE MENTIONED THAT THE ISSUE OF NOTICE U/S. 143( 2 ) WAS PREMATURE OR INVALID. HENCE, AS THERE WAS NO SUCH GROUND, IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF THE TRIBUNAL. 7. FURTHERMORE, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE TRIBUNAL WIT H REGARD TO THE PROVISION OF SECTION 151 OF THE ACT. IN THIS REGARD, WE NOTE THAT WITH REGARD TO THE ASSESSEES CHALLENGE FOR THE PROVISION OF SECTION 151, THE TRIBUNAL HAD HELD IN PARA 16 OF THE ABOVE ORDER WHICH MAY BE READ AS UNDER: 16. WE FIND THAT TH E VALIDITY OF THE REOPENING HAS ALREADY BEEN FOUND TO BE JUSTIFIED BY US. THE OTHER POINTS RAISED BY THE LD. COUNSEL OF THE ASSESSEE ARE THAT FOR THE REOPENING, THE ASSESSING OFFICER WAS NOT REQUIRED TO TAKE ANY PERMISSION 3 MA NOS.446 , 447 & 448 /M / 18 BUT STILL HE HAS TAKEN SOME PERMI SSION. IN OUR CONSIDERED OPINION, HOW THE SAME WILL BE FATAL TO THE REASSESSMENT HAS NOT BEEN EXPLAINED TO US AS THAT ACT OF ASSESSING OFFICER IS A NULLITY. THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED TO REOPEN ON HIS OWN ON THE FACTS AND CIRCUMSTANCES O F THE CASE. THIS THE LD. COUNSEL OF THE ASSESSEE ALSO ADMITS. HENCE, IN OUR CONSIDERED OPINION, THE SAME DOES NOT INVALIDATE THE REOPENING. FURTHERMORE, THE LD. COUNSEL OF THE ASSESSEE HAS ALLEGED THAT THE REOPENING WAS DONE ON BOGUS PURCHASE WHILE IN COMP LETING THE ASSESSMENT, PURCHASES WERE TREATED AS GENUINE. THIS IN OUR OPINION HAS NO MERITS. THE ASSESSING OFFICER HAS CONFIRMED 100% OF THE PURCHASE AS UNEXPLAINED EXPENDITURE. 8. THE LD. COUNSEL OF THE ASSESSEE HAS QUOTED CASE LAWS FOR THE PROPOSITION THAT THE ABOVE DECISION OF THE TRIBUNAL WAS ERRONEOUS. IN OUR CONSIDERED OPINION, IF THE ASSESSEE IS NOT SATISFIED BY THE ORDER OF THE TRIBUNAL, IT CANNOT LEAD TO AN INFERENCE THAT THERE IS A MISTAKE APPARENT FROM THE RECORD. 9. FURTHER, THE LD. COUNSEL OF THE ASSESSEE HAS CHALLENGED THE TRIBUNALS FINDING THAT THE ASSESSEE WAS DEALING IN THE GREY MARKET BY A SUBMISSION THAT ALL THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. IN THIS REGARD, WE NOTE THAT ON CONSIDERATION OF THE OVERALL FACTS AND CIRCUMST ANCES OF THE CASE, THE TRIBUNAL HAD COME TO THE DECISION THAT THE ASSESSEE WAS ENGAGED INTO DEALING INTO THE GREY MARKET . FURTHER, THE ASSESSEE HAS CHALLENGED THE ITAT S REFER ENCE TO THE MATTER THAT THE A.O. HAS RECEIVED INFORMATION FROM THE SALES TAX DEPA RTMENT REGARDING THE BOGUS PURCHASE BEING FROM HAWALA TRADERS. WE FIND THAT THERE IS NO INFIRMITY IN THE TRIBUNALS REFERENCE IN THIS REGARD , AS PARA 7 OF THE ASSESSMENT ORDER DULY MENTIONS THE REFERENCE TO THE LIST OF THE HAWALA PARTIES PUBLISHED BY THE S ALES TAX DEPARTMENT. IN OUR CONSIDERED OPINION, THERE IS NO MISTAKE APPARENT FROM THE RECORD IN THIS REGARD. 4 MA NOS.446 , 447 & 448 /M / 18 10. THE LD. COUNSEL OF THE ASSESSEE HAS FURTHER REITERATED TO THE FACT THAT THE LD. CIT(A) HAS OBSERVED THAT THERE WAS NO IN - DEPTH ENQUIRY BY THE A.O. FOR HIS CONCLUSION. 11. WE FIND THAT THE ITAT HAVE GONE THROUGH THE ORDER OF THE A.O. AND THE LD. CIT(A) AND ALL THE FACTS ON RECORD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, DESPITE NOTING THE DECISION OF THE HONBLE APEX COURT WHEREIN 100% BOGU S PURCHASE WAS CONFIRMED, THE TRIBUNAL HAS PROCEEDED TO GRANT RELIEF OF 12.5% AS AGAINST 25% ADDITION SUSTAINED BY THE LD. CIT(A). IN THIS REGARD, WE MAY GAINFULLY REFER TO THE ORDER OF THE TRIBUNAL ON THE MERITS OF THE CASE WHICH READS AS UNDER: 17. AS R EGARDS MERITS OF ADDITION, WE 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 FO UND TO HAVE TAKEN ACCOMMODATION 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 LEA RNED CIT(A) AND BY ITAT AS ABOVE. FURTHERMORE IT IS NOTED THAT IN SUCH FACTUAL SCENARIO 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. ASSESSEE 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 DOCUMENTS 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 PROVIDING 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 OFFICER 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 - EXI STENT. 18. HENCE PURCHASE BILLS FROM THESE NON - EXISTENT THE/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 PR OPOSITION IS DULY SUPPORTED BY HONBLE 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 SHOUL D 5 MA NOS.446 , 447 & 448 /M / 18 BE IGNORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF ABOVE APEX COURT DECISIONS. 19. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH C OURT DECISION IN THE CASE OF 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 ADDITIO N 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 DISMISSED BY THE HONBLE APEX COUR T VIDE ORDER DATED 16.1.2017. 20. WE FURTHER NOTE THAT HONBLE RAJASTHAN HIGH COURT HAS SIMILARLY TAKEN NOTE OF DECISIONS OF THE APEX COURT ON THE ISSUE OF BOGUS PURCHASES IN THE CASE OF CIT JAIPUR VS SHRUTI GEMS IN ITA NO. 658 OF 2009. THE HONBLE HIGH CO URT HAS REFERRED TO THE DECISION OF CIT JAIPUR VS. ADITYA GEMS, D. B. IN ITA NO. 234 OF 2008 DATED 02.11.2016, WHEREIN THE HONBLE COURT HAD INTER ALIA HELD AS UNDER: 'CONSIDERING THE LAW DECLARED BY THE SUPREME COURT IN THE CASE OF VIJAY PROTEINS LTD. V S. COMMISSIONER OF INCOME TAX, SPECIAL LEAVE TO APPEAL (C) NO.8956/2015 DECIDED ON 06.04.2015 WHEREBY THE SUPREME COURT HAS DISMISSED THE SLP CONFIRMED THE ORDER DATED 09.12.2014 PASSED BY THE GUJARAT HIGH COURT AND OTHER DECISIONS OF THE HIGH COURT OF GUJ ARAT IN THE CASE OF SANJAY OILCAKE INDUSTRIES VS. COMMISSIONER OF INCOME TAX (2009) 316 ITR 274 (GUJ) AND N.K. INDUSTRIES LTD. VS. DY. C.I.T., TAX APPEAL NO.240/2003 DECIDED ON 20.06.2016, THE PARTIES ARE BOUND BY THE PRINCIPLE OF LAW PRONOUNCED IN THE AFO RESAID THREE JUDGMENTS. 21. HOWEVER, WE NOTE THAT THIS IS NOT AN APPEAL BY THE REVENUE. UPON CAREFUL CONSIDERATION WE FIND THAT SALES IN THESE CASES ARE NOT DOUBTED. WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE IS NOT SUSTAINABLE AS P ER THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014). HOWEVER, THE FACTS OF THAT CASE WERE DIFFERENT INASMUCH AS SALES WERE TO THE GOVERNMENT DEPARTMENT. HOWEVER TH E FACTS AND CIRCUMSTANCES OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS ENGAGED INTO DEALINGS IN THE GREY MARKET. DEALINGS IN THE GREY MARKET GIVE THE ASSESSEE VARIOUS SAVINGS AT THE EXPENSE OF THE EXCHEQUER. HENCE, ON THE OVERALL CONSIDERATION OF FACTS A ND CIRCUMSTANCES AND FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH [2013] 356 ITR 451 (GUJ.) WE HOLD THAT A DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASE WOULD MEET THE END OF JUSTICE. ACCORDINGLY, WE MODIFY THE OR DER'S OF AUTHORITIES BELOW AND DIRECT THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. WE ALSO NOTE HERE THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS ITSELF RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (SUPRA) WHERE 12.5% OF DISALLOWANCE WAS UPHELD. 22. AS REGARDS THE REFERENCE TO THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. ASHISH INTERNATIONAL (SUPRA), WE FIND THAT THE SAME WAS DELIVERED ON THE FACTS OF THAT CASE. IN THAT CASE, THE HON'BLE JURISDICTIONAL HIGH COURT HAS NOTED THAT THE APPELLATE AUTHORITY HAS SOUGHT A REMAND REPORT AND EVEN AT THAT STAGE THE GENUINENESS OF THE STATEMENT HAS NOT BEEN ESTABLISHED BY ALLOWING THE CROSS EXAMINATION OF THE PERSON WH OSE STATEMENT WAS RELIED UPON BY THE REVENUE. WE FIND THAT IN THE PRESENT CASE, WE HAVE NOT RAISED ANY SUCH ISSUE. RATHER, WE HAVE FOUND THAT THE ASSESSEE WANTS TO CROSS 6 MA NOS.446 , 447 & 448 /M / 18 EXAMINE HIS OWN SUPPLIERS WHOM HE HAS NOT BEEN ABLE TO PRODUCE. FURTHERMORE, THE ADDIT ION HAS NOT BEEN MADE SOLELY ON THE BASIS OF THE STATEMENT. COMPREHENSIVE ENQUIRY HAS BEEN DONE AND THE ASSESSEE HAS TOTALLY FAILED IN DISCHARGING THE ONUS OF PROVING THAT THE PURCHASE BILLS PRODUCED WERE GENUINE AND NOT BOGUS. FURTHERMORE, THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. GOLANI BROTHERS (SUPRA) WAS ALSO RENDERED ON THE FACTS OF THE PARTICULAR CASE, WHEREIN THE HONBLE HIGH COURT HAS FOUND THAT THERE WAS NO SERIOUS INFIRMITY OR PERVERSITY IN THE ORDER OF THE TRIBUNAL. H ENCE, IN OUR CONSIDERED OPINION, THE CASE LAWS RELIED UPON BY THE LD. COUNSEL OF THE ASSESSEE DO NOT SUPPORT THE CASE OF THE ASSESSEE. FURTHERMORE, SINCE WE HAVE CONSIDERED THE ISSUE ON THE BASIS OF THE HONBLE APEX COURT DECISION AND THE DECISION OF THE H ONBLE HIGH COURTS REFERRED HEREINABOVE, THE DECISIONS OF THE TRIBUNAL REFERRED BY THE LD. COUNSEL OF THE ASSESSEE ARE NOT RELEVANT. FURTHERMORE, THOSE DECISIONS WERE RENDERED ON THE FACTS OF THOSE CASES. 12. FROM THE ABOVE, WE NOTE THAT THE ITAT HAD GIV EN A FINDING WHICH WAS OVERWHELMINGLY IN SUPPORT OF THE REVENUE DEPARTMENTS ACTION. FURTHER, AS A MATTER OF FACT, AFTER NOTING THE FACTS OF THE CASE AND THE CASE LAWS IN PARA 20, THE ITAT HAS NOTED THAT IT WAS NOT THE APPEAL BY THE REVENUE AND THEREAFTER IT HAD GIV EN RELIEF TO THE ASSESSEE. IN OUR CONSIDERED OPINION, THERE IS NO MISTAKE APPARENT FROM THE RECOR D IN THE ORDER OF THE TRIBUNAL AS RAISED BY THE ASSESSEE. 13. WE ARE OF THE OPINION THAT WHAT THE LD. COUNSEL OF THE ASSESSEE IS SEEKING IS A REVIEW OF THE ORDER WHICH IS NOT PERMISSIBLE IN THE LAW. NONE OF THE ISSUES RAISED BY THE LD. COUNSEL OF THE ASSESSEE IN THE MISCELLANEOUS APPLICATION S CAN BE TERMED AS MISTAKE APPARENT FROM RECORD. ISSUES WHICH CAN BE TAKEN UP U/S.254(2) OF THE ITAT HAVE TO BE OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A PROCESS OF ARGUMENTS AND REASONING. FURTHER ON THE SAME BASIS, AN ERROR IN JUDGMENT ALSO CANNOT BE TAKEN UP AS MISTAKE APPARENT FROM RECORD LIABLE FOR RECTIFICATION U/S. 254(2). 7 MA NOS.446 , 447 & 448 /M / 18 ACCORDINGLY, IN THE BACKGROUND OF AFORESAID DISCUSSION, WE FIND THAT THE ISSUE RAISED IN THE MISCELLANEOUS APPLICATION CAN NOT BE A SUBJECT MATTER OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD. 14. IN THE RESULT, TH E S E MISCELLANEOUS APPLICATION S FILED B Y THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.01.2019 SD/ - SD/ - ( AMARJIT SINGH ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 23.01.2019 ROSHANI , SR. PS 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 F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI