DINESH MAHESHWARI, V. ITO 20(2)(1),

MA 502/MUM/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6464 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 10-08-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: VIJAY KOTHARI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAGH AVAN (JM) M.A. NO. 502/MUM/2010 (ARISING OUT OF ITA NO. 2660/MUM/2005) ASSESSMENT YEAR- 2001-02 SHRI DINESH MAHESHWARI 504, 4 TH WING, ANMOL, NEAR HOTEL LEELA, MAROL PIPE LINE, OPP. MUKUND NAGAR, ANDHERI (E),MUMBAI-400 059 PAN-AAFPM 0414M VS. THE ITO, 20(2)(1), MUMBAI (APP LICANT ) (RESPONDENT) APP LICANT BY: SHRI VIJAY KOTHARI RESPONDENT BY: SHRI JITENDRA YADAV O R D E R PER ASHA VIJAYARAGHAVAN (JM) BY THIS MISCELLANEOUS APPLICATION THE APPLICANT SUB MITS CERTAIN MISTAKE APPARENT ON RECORDS WHICH REQUIRED TO BE RE CTIFIED AS PER PROVISIONS OF SEC.254(2) OF THE I.T. ACT, 1961. 2. THE APPLICANT STATES AS FOLLOWS: A) THE APPLICANT HAD DEBITED AN AMOUNT OF RS. 11,12,097/- ON ACCOUNT OF PURCHASES MADE. DUE TO A N INADVERTENT ERROR, THE PURCHASES WERE WRONGLY POSTE D IN THE ACCOUNT OF DEVANSHI TEXTILES, INSTEAD OF ACTUAL PURCHASES MADE FROM DEV SYNTHETICS. B) THE AO DID NOT ACCEPT THE CLAIM OF THE APPELLANT THAT THE PURCHASE WAS MADE FROM M/S. DEV SYNTHETICS FOR THE ONLY REASON THAT THE PAYMENTS MADE BY CHEQUE TO DEV SYNTHETICS WERE ENCASHED BY SOME OTHER PARTY. THE AO HELD THAT THE APPELLANT HAD DEBITED THESE EXPENSES TO SHOW LOW PROFIT AND PAY LESS TAX. M.A. NO. 502/M/2010. 2 C) BEFORE THE CIT(A), THE DETAILS OF MONTH-WISE PUR CHASES & SALES OF YARN WERE FURNISHED. A COPY OF THE LETT ER BEFORE THE CIT(A) IS ENCLOSED HEREWITH MARKED AS ANNEXURE B. ON THE BASIS OF THE QUANTITATIVE DET AILS FURNISHED, IT WAS SUBMITTED THAT THE APPELLANT HAD ACTUALLY PURCHASED YARN FOR MANUFACTURING GREY CLOT H. THE DETAILS OF WEAVING CHARGES PAID TO WEAVERS AND THE QUANTITATIVE DETAILS OF GREY CLOTH SOLD WERE ALSO FURNISHED TO THE AO. THE AO HAD VERIFIED THE QUANTITATIVE DETAILS OF THE SALE OF GREY CLOTH ETC. ALL THESE DETAILS WERE RECORDED IN COLUMN 28(A) AND 28( B) OF THE TAX AUDIT REPORT IN FORM NO. 3CD FILED ALONG WI TH THE RETURN OF INCOME. D) IT WAS ALSO SUBMITTED THAT BUT FOR THE PURCHASE OF YARD, THE APPELLANT COULD NOT HAVE EFFECTED SALES OF GREY CLOTH TO VARIOUS PARTIES. HAVING REGARD TO THE FACTS OF THE APPELLANTS CASE, THE CIT(A) IN PARA 2.5 HAS HELD AS UNDER: 2.5 .. IN APPELLATE PROCEEDINGS THE APPELLANT PRODUCED DE TAILS OF MONTHWISE PURCHASE AND SALES BOTH IN TERMS OF QUANTITY AS WELL AS IN TERMS OF NUMBER OF BAGS. IT IS OBSERVED THAT THE AO HAS NOT DOUBTED EVEN THE JOB W ORK WEAVING CHARGES PAID BY THE ASSESSEE FOR PROCESSING WORK CARRIED OUT. THE PROCESSING OF CLOTH AND SALE OF CLOTH CAN ONLY BE MADE IF THE ASSESSEE HAD PURCHASE D THE CLOTH IN THE FIRST PLACE. IN THESE CIRCUMSTANC ES, I AM OF THE VIEW THAT THE PURCHASE PRICE PAID BY THE ASS ESSEE CANNOT BE DISALLOWED UNLESS IT IS PROVED THAT THE ASSESSEE HAS RECEIVED THE SAME AMOUNT WHICH WOULD THEN PROVE THAT THE PURCHASES IS BOGUS AND THAT THE PURCHASE PRICE IS INFLATED. SINCE THAT IS NOT THE OPTION IN THIS CASE, I AGREE WITH THE APPELLANT THAT THE PURC HASE PRICE CANNOT BE DISALLOWED. THE ADDITION IS THEREF ORE DELETED. E) IN THE ORDER PASSED BY THE HONBLE ITAT IN PARA 8, IT HAS BEEN HELD AS UNDER: A) BUT IN THE FIRST APPEAL, THE CIT(A) STATES AN ENTIRELY DIFFERENT STAND. HE HAS NOT REBUTTED THE FINDINGS OF THE ASSESSING AUTHORITY WITH THE HELP OF ANY EVIDENCE PRODUCED BY THE ASSESSEE M.A. NO. 502/M/2010. 3 B) NOW REGARDING THE OBSERVATION OF THE CIT(A) THAT IF THAT MUCH PURCHASE WERE NOT THERE, THE ASSESSEE COULD NOT HAVE BEEN PROCESSED THE QUANTUM HE HAD IN THE PREVIOUS YEAR, IS ALSO WITHOUT ANY BASIS. IN HIS ORDER, THE CIT(A) HAS NOT EXAMINED THE QUANTITATIVE DETAILS AT ALL. HE HAS NOT EXAMINED ESPECIALLY WITH THE HELP OF QUANTITATIVE STATEMEHNT THAT THE PROCESSING CARRIED OUT BY THE ASSESSEE WOULD NOT HAVE BEEN POSSIBLE BUT FOR THE PURCHASE DISPUTED BY THE ASSESSING AUTHORITY. THAT WAS A CASUAL STATEMENT MADE BY THE CIT(A). F) IT IS SUBMITTED THAT THE AFORESAID FINDINGS RECO RDED BY THE HONBLE ITAT IN PARA 8 OF THE ORDER ARE WITHOUT TAKING COGNIZANCE OF THE FOLLOWING: A) TAX AUDIT REPORT IN FORM NO. 3CD AND THE QUANTITATIVE DETAILS OF PURCHASES OF YARN AND SALES OF GREY CLOTH ETC. AS PER COLUMN NO. 28(A) AND 28(B ) OF THE AUDIT REPORT. B) QUANTITATIVE DETAILS OF PURCHASES OF YARN AND SALES OF GREY CLOTH DURING FINANCIAL YEAR 2000-01. C) DETAILS OF WEAVING CHARGES PAID TO WEAVERS D) THE FINDINGS RECORDED IN PARA 2.5 OF THE ORDER OF T HE CIT(A) E) THE PURCHASES AND SALES REGISTER PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENTS PROCEEDINGS. 3. THE LD. DEPARTMENTAL REPRESENTATIVE SHRI JITENDR A YADAV OBJECTED TO THE SUBMISSION OF THE APPLICANT STATING THAT ALL OWING THE M.A. WOULD IN EFFECT BE REVIEW OF THE ORDER OF THE TRIBUNAL PA SSED ON 17 TH MARCH, 2008 AT PARA-8 OF THE ORDER OF THE TRIBUNAL, IT HAS BEEN HELD AS FOLLOWS: BUT IN THE FIRST APPEAL, THE CIT(A) STATES AN ENTI RELY DIFFERENT STAND. HE HAS NOT REBUTTED THE FINDINGS OF THE ASS ESSING AUTHORITY WITH THE HELP OF ANY EVIDENCE PRODUCED BY THE ASSES SEE. BUT HE PROCEEDS ON A DIFFERENT TANGENT. HE HAS STATED THA T THE PURCHASE M.A. NO. 502/M/2010. 4 PRICE PAID BY THE ASSESSEE THROUGH CROSSED CHEQUES COULD NOT BE DISALLOWED UNLESS IT WAS PROVED THAT THE ASSESSEE H AD RECEIVED THE AMOUNT FROM THE PARTIES SUBSEQUENTLY. HE FURTHER H AS STATED THAT THE ASSESSEE COULD NOT HAVE CARRIED OUT THE PROCESS ING WORK IF THAT MUCH PURCHASES WERE MADE BY HIM. WE FIND THAT ALL THE OBSERVATIONS MADE BY THE CIT(A) ARE LOGICAL IN NATU RE. IT IS THE DUTY OF THE ASSESSEE TO PROVE THE PURCHASES DEBITED IN T HE BOOKS OF ACCOUNT, TO THE SATISFACTION OF THE ASSESSING OFFICER. THAT HAS NOT BEEN DONE IN THE PRESENT CASE. NEITHER THE CIT(A) HAS ANY SUCH CASE. ONCE THE ASSESSEE FAILS TO PROVE THE GENUINE NESS OF THE PURCHASE, ONE SHOULD PROCEED TO ITS LOGICAL END RAT HER DIVERTING THE DISCUSSION ON DIFFERENT TANGENT. WHY THE ASSESSING OFFICER SHOULD PROVE THAT THE CHEQUE PAYMENTS MADE BY THE ASSESSEE HAD ULTIMATELY COME BACK TO HIM. THE CIT(A) IS IGNORI NG A SPEAKING FACT AVAILABLE BEFORE HIM AND PROCEEDING ON THE BASIS OF A PROPOSITION OR PRESUMPTION THAT THE PAYMENTS WOULD HAVE BEEN RRECE IVED BACK BY THE ASSESSEE AND ONLY THEN THE PURCHASES COULD BE D ISBELIEVED. WHILE MAKING OUT SUCH A PROPOSITION, THE CIT(A) HAS IGNORED THE FACT THAT THE ASSESSEE HAS NOT PROVED THE PURCHASE AT AL L. NOW REGARDING THE OBSERVATION OF THE CIT(A) THAT IF THA T MUCH PURCHASES WERE NOT THERE, THE ASSESSEE COULD NOT HAVE BEEN PR OCESSED THE QUANTUM HE HAD IN THE PREVIOUS YEAR, IS ALSO WITHOU T ANY BASIS. IN HIS ORDER, THE CIT(A) HAS NOT EXAMINED THE QUANTITA TIVE DETAILS AT ALL. HE HAS NOT EXAMINED ESPECIALLY WITH THE HELP OF QUA NTITATIVE STATEMENT THAT THE PROCESSING CARRIED OUT BY THE AS SESSEE WOULD NOT HAVE BEEN POSSIBLE BUT FOR THE PURCHASE DISPUTED BY THE ASSESSING AUTHORITY. THAT WAS A CASUAL STATEMENT MADE BY THE CIT(A). HENCE WE ARE OF THE OPINION THAT THE MATTER HAS BE EN THOROUGHLY EXAMINED BY THE TRIBUNAL BEFORE ALLOWING THE APPEAL OF THE REVENUE. THERE IS NO ERROR APPARENT ON RECORD TO COME WITHIN THE PURVIEW OF SEC. 254(2)) OF THE I.T. ACT. WE THEREFORE DISMISSED TH IS M.A. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 13 TH DAY OF APRIL, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER M.A. NO. 502/M/2010. 5 MUMBAI, DATED 13 TH APRIL, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI M.A. NO. 502/M/2010. 6 DATE INITIALS 1 DRAFT DICTATED ON: 1 . 0 4 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 1 .0 4 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______