DCIT 1(2 ) (2), MUMBAI V. MANGALAM DRUGS & ORGANICS LTD, MUMBAI

MA 605/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7407 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ITA NO; MUM; MUM ASSESSMENT YEAR S; ORGANICS LTD MA NOS
• Keywords: Bogus purchase; Depreciation; Corroborative evidences; Accommodation entries; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RA MLAL NEGI , JUDICIAL MEMBER M A NO S . 603, 604 & 605 /M UM /20 19 (A/O ITA NO.5275 & 5276/MUM /2018 & 3627/MUM/2017) ASSESSMENT YEAR S : 2008 - 09 , 2009 - 10 & 2010 - 11 DCIT - 1( 2)(2 ), MUMBAI VS. MANGALAM D U R GS & ORGANICS LTD. RUPAM BUILDING, 3 RD FLOOR, P.D. MELLO ROAD, NEAR GPO, MUMBAI, PIN - 400001 . PAN: AAACM7880P ( REVENUE ) ( ASSESSEE ) & ITA NO.5275 & 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEAR S : 2008 - 09, 2009 - 10 & 2010 - 11 DCIT - 1(2)(2), MUMBAI VS. MANGALAM D U R GS & ORGANICS LTD. RUPAM BUILDING, 3 RD FLOOR, P.D. MELLO ROAD, NEAR GPO, MUMBAI, PIN - 400001. PAN: AAACM7880P ( REVENUE ) ( ASSESSEE ) PRESENT FOR: APPELLANT BY : SHRI AJIT PRATAP SINGH, DR RE SPONDENT BY : SHRI V.K. TULSIYAN, AR DATE OF HEARING : 1 7.01 .20 20 DATE OF PRONOUNCEMENT : 31 .01 . 20 20 MANGALAM DRUGS & ORGANICS LTD MA NOS.603, 6 04 & 605/MUM/2019 & ITA NO.5275& 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEARS: 2008 - 09, 2009 - 10 & 2010 - 11 2 O R D E R PER RAJESH KUMAR , ACCOUNTANT MEMBER : BY VIRTUE OF THESE THREE MISCELLANEOUS APPLICATIONS, THE REVENUE SEEKS FOR RECTIFICATION OF THIS ORDER PASSED IN ITA NO.5275 &5276/MUM/2018, ITA NO.3267/MUM/2017 FOR ASSESSMENT YEAR 2008 - 09, 2009 - 10 & 2010 - 11 RESPECTIVELY DATED 16.05.2019 WHICH WAS A C ONSOLIDATED ORDER FOR FOUR YEARS FROM ASSESSMENT YEARS 2007 - 08 TO 2010 - 11. 2. THE LD. DR SUBMITTED FOR THE BENCH THAT WHILE DECIDING THE APPEAL, THE HONBLE TRIBUNAL HAS FIRST DECIDED THE APPEAL IN ITA NO.5273/MUM/2016 FOR ASSESSMENT YEAR 2007 - 08 WHEREIN THE ASSESSEE HAS TAKEN FOUR GROUNDS AND ALL THE REMAINING APPEALS WERE DECIDED MUTATIS MUTANDIS BASED UPON THE FINDING OF THE BENCH IN ASSESSMENT YEAR 2007 - 08. T HE LD. AR SUBMITTED THAT IN ASSESSMENT YEAR 2007 - 08, THE REVENUE HAS ONLY CHALLENGED THE BOGUS PURCHAS ES OF MATERIALS WHICH WAS DECIDED DULY BY THE COORDINATE BENCH IN THE ABOVE SAID ORDER. HOWEVER IN THE SUBSEQUENT THREE YEARS, THE REVENUE HAS RAISED GROUND CHALLENGING THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF EXCESS DE PRECIATION IN RESPECT OF BOGUS CAPITAL EXPENDITURE ON THE GROUND THAT ADDITION WAS BASED ON STATEMENT RECORDED. THE LD. D R SUBMITTED THAT THE SIMILAR GROUND WAS ALSO THERE IN THE OTHER TWO ASSESSMENT YEARS 2009 - 10 & 2010 - 11, THEREFORE, THE LD. DR SUBMITTED THAT GROUND NO.3 IN ASSESSMENT YEAR 2008 - 09, GROUND NO.5 IN ASSESSMENT YEAR 2009 - 10 AND GROUND NO.4 IN ASSESSMENT YEAR 2010 - 11 WERE NOT MANGALAM DRUGS & ORGANICS LTD MA NOS.603, 6 04 & 605/MUM/2019 & ITA NO.5275& 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEARS: 2008 - 09, 2009 - 10 & 2010 - 11 3 ADJUDICATED AT ALL. THE LD. D R THEREFORE SUBMITTED THAT ORDER OF THE TRIBUNAL PRIMA FACIE CONTAINS APPARENT AND PATENT MISTAKE THEREBY RENDERING THE SAID ORDER LIABLE FOR RECTIFICATION. THE LD. D R THEREFORE PRAYED THAT MISCELLANEOUS APPLICATION FILED BY THE REVENUE FOR ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 PRAYING BEFORE THE BENCH FOR CORRECTION OF ORDER DATED 16.05.2019 QUA THE DELETION OF EXCESS DEPRECIATION BY THE CIT(A) MAY BE ALLOWED BY RECTIF YING OR RECALL ING THE ORDER TO THAT EXTENT . 3. THE LD. AR ON THE OTHER HAND SUBMITTED THAT THE PRINCIPLE INVOLVED IN BOTH THE ISSUES NAMELY, BOGUS PURCHASES AND EXCESS DEPRECIA TION ON BOGUS CAPITAL EXPENDITURE IS THE SAME AND IN BOTH THE CASES, THE ADDITION S W ERE MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES AND EXCESS DEPRECIATION ON BOGUS CAPITAL EXPENDITURE ON THE GROUND THAT THEY WERE NOT GENUINE . T HE LD. AR SUBMITTED THAT T RIBUNAL HAS ADJUDICATED AND DELETED THE ADDITION ON ACCOUNT OF BOGUS PURCHASES ON THE GROUND THAT THEY WERE MERELY BASED UPON THE STATEMENT WITHOUT ANY CORROBORATIVE MATERIAL. THE LD. AR SUBMITTED THAT WHILE DISCUSSING THE ISSUE ON ACCOUNT OF BOGUS PURCH ASES OF MATERIALS , THE TRIBUNAL HAS ALSO DISCUSSED IN P ARA 3 THAT ASSESSEE HAS TAKEN SOME ACCOMMODATION ENTRIES OF BOGUS CAPITAL EXPENDITURE AND THUS ISSUE HAS BEEN DULY CONSIDERED BY THE TRIBUNAL AND ADJUDICATED ACCORDINGLY . IN VIEW OF THESE FACTS, THE M ISCELLANEOUS APPLICATION S MAY KINDLY BE DISMISSED. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORD, WE OBSERVE THAT THE ISSUE OF DELETION OF DISALLOWANCE MANGALAM DRUGS & ORGANICS LTD MA NOS.603, 6 04 & 605/MUM/2019 & ITA NO.5275& 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEARS: 2008 - 09, 2009 - 10 & 2010 - 11 4 OF THE DEPRECIATION ON BOGUS CAPITAL EXPENDITURE , RAISED AND CHALLENGED BY T HE REVENUE IN GROUND NO.3 IN ASSESSMENT YEAR 2008 - 09, GROUND NO.5 IN ASSESSMENT YEAR 2009 - 10 AND GROUND NO.4 IN ASSESSMENT YEAR 2010 - 11 RESPECTIVELY , HA S NOT BEEN ADJUDICATED BY THE TRIBUNAL AND THEREFORE THE ORDER OF THE TRIBUNAL IS SUFFERING FROM PATENT AND APPARENT MISTAKE WHICH HAS TO BE RECTIFIED. IN OUR OPINION, THIS ISSUE IS IDENTICAL TO ONE WHICH HAS DECIDED BY US IN RESPECT OF OTHER GROUNDS RAISED BY THE REVENUE ON ACCOUNT OF BOGUS PURCHASES OF MATERIALS WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSE SSEE ON THE GROUND THAT THE ABOVE ADDITION WAS BASED UPON ONLY ON STATEMENT RECORDED WITHOUT ANY CORROBORATIVE EVIDENCES. ACCORDINGLY WE HEREBY RECALL AND RECTIFY THE ORDER DATED 16.05.2019 IN THE FOLLOWING PARAS . WE ONLY REPRODUCE THE GROUND RAISED IN ASS ESSMENT YEAR 2008 - 09 FOR THE SAKE OF BETTER UNDERSTANDING AS UNDER: 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF RS.2,19,36,781/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESSIVE DEPRECIATION IN RESPECT OF THE BOGUS CAPITAL EXPENDITURE, STATING THAT THE ADDITION BASED ONLY ON THE STATEMENT RECORDED WITHOUT FINDING ANY OTHER TANGIBLE EVIDENCE DURING SURVEY IS NOT JUSTIFIABLE, WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD DURING A SSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER.' 3.1 WE FIND THAT THE AFORESAID GROUND HAS NOT BEEN ADJUDICATED BY THE TRIBUNAL SPECIFICALLY IN THE ABOVE CONSOLIDATED ORDER WHEREAS THE ISSUE ON BOGUS PURCHASES OF MATERIALS WAS DECIDED IN FAVOUR OF THE AS SESSEE ON THE GROUND THAT THE ADDITION WAS BASED UPON THE STATEMENT WITHOU T ANY CORROBORATIVE MATERIAL IN VIEW OF THE DECISION IN THE CASE OF CIT V/S KHADAR KHAN & SONS MANGALAM DRUGS & ORGANICS LTD MA NOS.603, 6 04 & 605/MUM/2019 & ITA NO.5275& 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEARS: 2008 - 09, 2009 - 10 & 2010 - 11 5 (2012) 210 TAXMAN 248 (SC). SINCE THE ISSUE INVOLVED IS IDENTICAL TO ONE HAS DECIDED BY US IN ITA NO.5273/MUM/2018 ASSESSMENT YEAR 2007 - 08 WITH ONLY DIFFERENT THAT THE ISSUE ADJUDICATED WAS BOGUS PURCHASES ON ACCOUNT OF REVENUE EXPENDITURE WHEREAS THE ABOVE GROUNDS RAISED IN THREE YEARS, RELATE TO THE ISSUE OF BOGUS PURCHASES ON CAPITAL ACC OUNT ON WHICH THE ASSESSEE CLAIMED DEPRECIATION. SINCE WE HAVE ALREADY ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT AS STATED HEREINABOVE, WE ARE INCLINED TO DISMISS THE GROUNDS RAISED BY THE REVENUE IN ALL THREE YEARS ON THE GROUND THAT THE ADDITION WAS MERELY BASED ON THE STATEMENT AND THERE IS NO CORROBORATIVE MATERIAL ON RECORD. THUS THE ORDER OF LD. CIT(A) IS UPHELD AND GROUNDS RAISED BY THE REVENUE ARE DISMISSED. THE ORDER DATE 16.5.2019 STANDS MODIFIED TO THAT EXTENT. WE WOULD LIKE TO STATE THAT BY ALLOWING THE MISCELLANEOUS APPLICATION S , OUR CONCLUSION IN THE MAIN ORDER REMAINS SAME. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FI LED BY THE REVENUE ARE DISPOSED OFF AS INDICATED ABOVE. ORDER P RONOUNCED IN THE OPEN COURT ON 31.01 . 20 20 . SD/ - SD/ - ( RAMALAL NEGI ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 31 .01 . 2020 . RS , SR. P.S. MANGALAM DRUGS & ORGANICS LTD MA NOS.603, 6 04 & 605/MUM/2019 & ITA NO.5275& 5276/MUM /2018 & 3627/MUM/2017 ASSESSMENT YEARS: 2008 - 09, 2009 - 10 & 2010 - 11 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.