Asst Cit Cen Cir 45 Mumbai v. R Keshavlal Traders P Ltd Mumbai

P A G E 1 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd In The Income Tax Appellate Tribunal D Bench M Umbai Before Shri P K Bansal Vice President And Shri Ravish Sood Jm Ita No 3425 Mum 2013 Assessment Year 2004 05 Acit Central Circle 45 Mumbai 400 020 Vs M S R Keshavlal Traders Pvt Ltd A 504 Silver Bell Laxman Mahatre Road Dahisar West Mumbai 400 068 Pan No Aaccr 2251 F Appellant Respondent Appellant By Shri Rahul Hakani A R Respondent By Shri Awungshi Gimson D R Date Of Hearing 2 8 11 2017 Date Of Pronouncement 20 1 2 2017 O R D E R Per Ravish Sood Judicial Member The Present Appeal Filed By The Assessee Is Directed A Gainst The Order Passed By The Commissioner Of Income Tax Appeals 38 Mumbai Dated 31 0 1 2013 Which In Itself Arises From The Order Passed By The A O Under Sec 143 3 R W S 147 Of The Income Tax A Ct 1961 For Short Act Dated 24 11 2011 The Assessee Assailing The P A G E 2 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd Order Of The Cit A Had Raised Before Us The Following Grounds Of Appeal 1 On The Facts And In The Circumstances Of The Case And In Law The Cit A Was Not Justified In Deleted The Addition Of Rs 5 16 49 105 On Account Of Unexplained Purchases From M S Avani Enterprises Ignoring The Fact That The Capacity Of The Party And Th E Genuineness Of The Transaction Had Not Been Proved And Also During Search And Post Search Enquiries It Was Proved Admitted That The Transactions Were Only Accommodation Entries 2 On The Facts And In The Circumstances Of The Case And In Law The Cit A Was Not Justified In Ignoring Conclusive Evidence By Way Of Statement Of Shri Pravin Ghaghda Proprietor Of M S Avani Enterprises Admitting That The Alleged Trading Transactions Were In Nature Of Accommodation Entries Only And Also Ignoring The Fact Th At There Were Substantial Deposits In Crores Of Rupees In The Bank Account Of His Concern Which Were Immediately Withdrawn 3 The Appellant Prays That The Order Of The Ld Cit A On The Above Ground Be Set Aside And That Of The Assessing Officer Be Rest Ored 4 The Appellant Craves Leave To Amend Or Alter Any Ground And Or Add New Grounds Which May Be Necessary 2 Briefly Stated The Facts Of The Case Are That The Assessee Company Which Is Engaged In The Business Of Trading Of Iron Steel Had Filed Its Return Of Income On 30 10 20 04 Declaring Total Income At Rs 4 52 879 The Case Of The Assessee Was Thereafter Selected For Scrutiny Assessment Under Sec 143 2 And Its Income Was Assessed Vat Rs 5 43 320 Vide Order Dated 23 10 2006 T He Case Of The Assessee Was Reopened Under Sec 147 Of The Act The A O Passed The Reassessment Order Under Sec 143 3 R W S 147 Of The Act On 15 12 2009 And The Income Of The Assessee Was Assessed At Rs 32 60 93 194 Aggrieved The Assessee Assailed The Order Of The A O Before The Cit A Who Vide His Order Dated 11 03 2010 Partly Allowed The Ground Of Appeal Pertaining To The Addition Of Rs 32 39 79 137 Made On Account Of Outstanding Creditor For Supply Of Goods By Observing That Th E Outstanding Liability Payable To The Supplier Was Already Paid And Squared Up In Subsequent Assessment Years P A G E 3 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd However The Cit A Being Of The View That The Gross Profit Shown By The Assessee Was On The Lower Side Thus Estimated The Same 6 And The Difference In G P Of 5 5 Of The Turnover Worked Out To Rs 2 54 64 409 The Addition To Which Extent Was Sustained By The Cit A Thereafter While Giving Effect To The Order Of The Cit A It Was Noticed By The A O That Th E Unproved Purchases From M S Av Ani Enterprise Of Rs 5 16 49 105 Which Was Required To Be Added While Reassessing The Income Of The Assessee Vide Order Passed Under Sec 143 3 R W S 147 Dated 15 12 2009 Had Escaped Assessment The A O To Undo The Afo Resaid Failure On His Part And To Assess The Aforesaid Amount Of Rs 5 16 49 105 Initially Issued Notice Under Sec 154 Of The Act Which Was Challenged By The Assessee The A O Thereafter Issued A Notice Under Sec 148 And Called Upon The Assessee To Fi Le Its Return Of Income In Compliance To The Same The Assessment Under Sec 143 3 R W S 147 Was Framed On 24 11 2011 And The Income Of The Assessee After Making An Addition Of Rs 5 16 49 105 To The Total Income Determined After Giving Effect To The Or Der Of The Cit A Was Assessed At Rs 7 92 27 580 3 Aggrieved The Assessee Assailed The Order Of Reassessment Before The Cit A The Assessee Submitted Before The Cit A That The A O While Making An Addition Of Rs 5 16 49 105 As Regards The Alleged Unproved Purchases Of The Ass Essee From M S Avani Enterprise Had However Lost Sight Of The Order Passed By The Cit A 36 Mumbai Dated 11 03 2010 It Was Submitted By The Assessee That The A O While Reopening The Assessment Which Was Concluded Vide Orde R Passed Under Sec 143 3 R W S 147 Dated 15 12 2009 Had Though Observed That The Income Of The Assessee Was Earlier Reassessed At Rs 37 56 28 242 After Making An Addition Of Rs 32 39 79 137 Towards Bogus Outstanding Credits But However Had Fai Led To Take P A G E 4 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd Cognizance Of The Fact That The Said Reassessment Order Already Stood Merged In The Order Passed By The Cit A 36 Mumbai Dated 11 03 2010 It Was Submitted By The Assessee That The Cit A Vide His Order Dated 11 03 2010 Had Though Partly Allo Wed The Appeal And Had Deleted The Addition Of Rs 32 39 79 137 But Finding That The Gross Profit Shown By The Assessee Was On The Lower Side Had Therein Estimated The G P 6 As A Result Whereof An Addition Of Rs 2 54 64 409 Was Sustained It Was Thus The Contention Of The Assessee Before The Cit A That The A O Loosing Sight Of The Order Passed By The Cit A 36 Dated 11 03 2010 Had Once Again Dealt With The Matter And Wrongly Made An Addition Of Rs 5 16 49 105 4 The Cit A After Deliberating On The Aforesaid Contentions Of The Assessee In The Backdrop Of The Facts Of The Case Therein Held That The Issue Of M S Avani Enterprises Was Covered By The Order Of His Predecessor Viz Cit A 36 Dated 11 03 2010 Who Aft Er Rejecting The Books Of Account Of The Assessee Had Estimated The Gross Profit Of The Assessee 6 On The Total Turnover Of The Assessee Which Therein Had Led To Upholding Of An Addition Of Rs 2 54 64 409 In The Hands Of The Assessee The Cit A Obs Erved That The Order Of The A O Passed Under Sec 143 3 R W S 147 Dated 15 12 2009 Stood Merged In The Order Of The Cit A 36 Dated 11 03 2010 The Cit A Observed That Now When His Predecessor Viz Cit A 36 Had Vide His Order Dated 11 03 2010 Estima Ted The Gross Profit Of The Assessee By Adopting A G P Rate Of 6 On The Turnover Disclosed By The Assessee Therefore The Issue Of Alleged Bogus Purchases Which As Per The A O The Assessee Had Made From M S Avani Enterprises Was Subsumed Thus In The Ba Ckdrop Of His Aforesaid Observations The Cit A Concluded That As His Predecesso R Had Already Decided The Issue Therefore It Was Not Open For The A O To Dislodge The Said Order Of The Cit A By P A G E 5 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd Either Taking Recourse To Sec 154 Or Reopening Of The Earli Er Re Assessment Order Passed By The A O Under Sec 143 3 R W S 147 As The Same Already Stood Merged In The Order Of The Cit A 5 The Ld Authorised Representative For Short A R At The Very Outset Of The Hearing Of The Appeal Submitted That Both Th E Assessee And The Revenue Had Further Assailed The Order Passed By The Cit A 36 Mumbai Dated 11 03 2010 Before The Tribunal It Was Submitted By The Ld A R That The Tribunal Viz Itat D Bench Mumbai Vide Its Order Dated 14 06 2017 While Disposi Ng Of The Cross Appeals Of The Assessee And Revenue For The Year Under Consideration Viz A Y 2004 05 Amongst Other Years Taking Cognizance Of The Submissions Of The Revenue That The Cit A While Disposing Of The Appeal Had Failed To Afford An Opportun Ity Of Being Heard To The Assessee Therefore The Mater Be Restored To The File Of The Cit A F Or Fresh Adjudication Observed That The Assessee Had No Objec Tion If The Aforesaid Request Of The Revenue Was Accepted Had Thus Restored The Matter To The Fil E Of The Cit A That On An Enquiry By The Bench The Ld A R Submitted That The Aforesaid Appeal Before The Cit A Was Pending Adjudication As On Date Per Contra The Ld D R Relied On The Order Of The A O And Submitted That As The Addition Of The Bogus Purchases Of Rs 5 16 49 105 From M S Avani Enterprise Had Remained Omitted To Be Added By The A O While Framing The Reassessment Therefore The Addition To The Said Extent Was Rightly Made By The A O 6 We Have Heard The Authorized Representative S Fo R Both The Parties Perused The Orders Of The Lower Authorities And The Material Available On Record We Find That The Reassessment Order Passed By The A O Under Sec 143 3 R W S 147 Dated 15 12 2009 Wherein An Addition Of Unproved Outstanding Credits Of Rs 32 39 79 137 Was Made And The Income Of The Assessee Was Assessed At Rs P A G E 6 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd 37 56 28 242 Was Carried In Appeal Before The Cit A 36 Mumbai We Find That The Cit A 36 Vide His Order Dated 11 03 2010 Had Though Deleted The Addition Of Rs 32 39 79 137 But At The Same Time Observing That The Disclosed Gross Profit Of The Assessee Was On The Lower Side Had Estimated The G P Rate 6 As A Result Whereof An Addition Of Rs 2 54 64 409 Was Sustained We Find That Both The Assessee And The Revenue Being Aggrieved With The Aforesaid Order Of The Cit A Had Therein Carried The Same By Way Of Cross Appeals Before The Tribunal We Find That The Tribunal Whil E Disposing Of The Cross Appeal S Of The Assessee And The Revenue Had Restored The Matter To The File Of The Cit A With A Direction To Adjudicate The Same Afresh 7 We Have Deliberated On The Facts Of The Case And Are Persuaded To Be In Agreement With The View Taken By The Cit A We Find That The Cit A Had Rightly Concluded That Now When His Predecessor Viz Cit A 36 Mumbai Had Estimated The Gp Rate 6 On The Disclosed Turnover Of The Assessee Therefore The Issue As Regards The Alleged Bogus Purchases Of Rs 5 16 49 105 From M S Avani Enterpr Ises Was Subsumed And It Was Not Permissible For The A O To Have Thereafter Made A Separate Addition Of The Same To The Income Of The Assessee Rather We Find It Beyond Comprehension That Now When The Order Of Reassessment Dated 15 12 2009 Passed By The A O Under Sec 143 3 R W S 147 Had Merged In The Order Of The Cit A 36 Mumbai Dated 11 03 2010 And Had No More Of An Independent Existence Of Its Own How The A O Could Have Made A Separate Addition Of Rs 5 16 49 105 Loosing Sight Of The Aforesai D Order Of The Ci T A In Which The Same Stood Merged We Thus Are Of The Considered View That Now When The Matter Had Been Restored By The Tribunal Viz Itat D Bench Mumbai Vide Its Order Dated 14 06 2017 While Disposing Of The Cross Appeals Of The Assessee And Revenue For The Year Under P A G E 7 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd Consideration Viz A Y 2004 05 Therefore The Whole Matter Is Subjudice Before The Cit A Be That As It May We Are Of The Considered View That In The Backdrop Of Our Aforesaid Observations And The Totality Of Th E Facts Involved The Order Of The Cit A Which Had Been As Sailed Before Us By The Revenue On The Ground That He Had Erred In Setting Aside The Addition Of The Alleged Bogus Purchases Of Rs 5 16 49 105 Which Were Claimed By The Assessee To Have Been Mad E From M S Avani E Nterprise Is Not Found To Be Suffering From Any Infirmity Therefore Uphold The Order Of The Cit A Before Parting We May Observe That Our Observations Recorded Hereinabove Would Not Come In The Way Of The Fresh Adjudicat Ion Of The Case Of The Assessee By The Cit A Which As Observed By Us Hereinabove Had Been Restored To His File By The Tribunal Vide Its Order Dated 14 06 2017 8 The Appeal Of The Revenue Is Dismissed In Terms Of Our Aforesaid Observations Order Pro Nounced In The Open Court On 20 12 2017 Sd Sd P K Bansal Ravish Sood Vice President Judicial Member Mumbai 20 1 2 2017 Ps Rohit Kumar P A G E 8 Ita No 3425 Mum 2013 Ay 2004 05 Acit Vs R Keshavlal Traders Pvt Ltd Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File True Copy By Order Dy Asstt Registrar Itat Mumbai