ASST CIT 25(2), MUMBAI v. VIJAY M VAGHANI, MUMBAI

ITA 3434/MUM/2014 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 343419914 RSA 2014
Assessee PAN ADEPV8809P
Bench Mumbai
Appeal Number ITA 3434/MUM/2014
Duration Of Justice 2 year(s) 4 month(s) 17 day(s)
Appellant ASST CIT 25(2), MUMBAI
Respondent VIJAY M VAGHANI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 30-09-2016
Date Of Final Hearing 20-04-2016
Next Hearing Date 20-04-2016
Assessment Year 2010-2011
Appeal Filed On 13-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUM BAI BEFORE SHRI JASON P. BOAZ AM AND SHRI SANDEEP GOSA IN JM ./ I.T.A. NO. 3434/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOME TAX- 25(2) ROOM NO.108 1 ST FLOOR BLDG. NO. C-11 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (EAST) MUMBAI-400 051. / VS. SHRI VIJAY M VAGHANI PROP. M/S V-TECH ENGINEERS 202 NARMADA CHHAYA APARTMENT CARTER ROAD NO.05 RADONGRI BORIVALI (E) MUMBAI-400 066. ./ ./PAN/GIR NO. ADEPV 8809P ( /APPELLANT ) : ( / RESPONDENT ) C.O. NO.13/MUM/2016 (ASSESSMENT YEAR: 2010-11) SHRI VIJAY M VAGHANI PROP. M/S V-TECH ENGINEERS 202 NARMADA CHHAYA APARTMENT CARTER ROAD NO.05 RADONGRI BORIVALI (E) MUMBAI-400 066. / VS. ASSTT. COMMISSIONER OF INCOME TAX-25(2) ROOM NO.108 1 ST FLOOR BLDG. NO. C-11 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (EAST) MUMBAI-400 051. ./ ./PAN/GIR NO. ADEPV 8809P ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ANU KRISHNA AGARWAL / RESPONDENT BY : SHRI VIPUL JOSHI / DATE OF HEARING : 08/08/2016 !'# / DATE OF PRONOUNCEMENT : 30/09/2016 2 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI $% / O R D E R PER SANDEEP GOSAIN JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 35 DATED 17 .02.2014 ON THE GROUNDS OF APPEAL MENTIONED HEREIN BELOW. 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) ERRED IN RESTRICTING OF ADDITION OF RS.46 50 981/- TO RS.6 9 7 647/- U/S 69C OF THE ACT AS PROFIT ON THE BOGUS PURCHASES.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) ERRED IN APPLYING THE RATIO OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. AND RESTRICTING THE ADDITION TO 15% ON SUCH PURCHASES ON THE GROUND THAT WHEN THE S ALES HAS BEEN ACCEPTED BY THE DEPARTMENT THE GENUINENESS OF THE PURCHASE CANNOT BE DOUBTED.' 3. 'ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) ERRED IN RELYING UPON JUDGMENTS IN THE CASE OF CIT VS. NIKUN J EXIMP ENTERPRISES PVT. LTD AND CIT VS. LEADERS VALVES(P) LTD. WITHOUT APPRECIATING THA T THE FACTS INVOLVED IN THE APPELLANT'S CASE ARE DIFFERENT FROM THE FACTS OF THE ABOVE CASE LAW.' 4. 'ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT(A) HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE NOTICES UNDER SECTION 133(6) ISSUED TO PARTIES FROM WHOM ALLEGED BILLS WERE RECEIVED WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES AND THE WAND INSPECTOR AND THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE PARTIES BEFORE THE AO:' 5. 'ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT ASSESSEE FA ILED TO AVAIL THE OPPORTUNITY TO PRODUCE THE PARTIES FOR DISPROVING THE STATEMENT GIVEN BY T HEM TO SALES TAX AUTHORITY. 6. 'ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) ERRED IN RESTRICTING THE ADDITION MADE BY THE AO OVERLOOKING THE EXPLICIT FINDING OF THE INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTME NT AND CORROBORATED BY THE ENQUIRIES OF THE AO.' 7. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A. A BE RESTORED.' 8. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND. 3 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI THE ASSESSEE HAS ALSO PREPARED A C.O. WHICH GROUNDS RAISED ARE AS UNDER:- 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE HON. CIT(A) ERRED IN TREATING RS.6 97 647/- BEING 15% OF PURCHASE AMOUNT OF RS.46 50 981/- AS PROFIT OF THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE HON.CIT(A) FAILED TO APPRECIATE THAT THE TOTAL PURCHASES WERE EXPLAINED AND NO ADDITION WAS REQUIRED. 3. WITHOUT PREJUDICE THE ESTIMATION OF INCOME AT 15 % OF THE SAID PURCHASES IS ON THE HIGHER SIDE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF REGISTERED FIRM M/S. V-TECH ENGINEERS ENGAGED IN T HE BUSINESS OF CIVIL CONSTRUCTIONS. THE RETURN OF INCOME DECLARING TOTA L INCOME OF RS.24 70 400/- WAS E-FILED ON 26.09.2010 THEREAFTER THE CASE WAS SELEC TED FOR SCRUTINY THROUGH CASS AND AFTER SERVING STATUTORY NOTICES AND SEEKING REP LY OF THE ASSESSEE THE AO PASSED THE ORDER OF ASSESSMENT THEREBY MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C AND U/S 40(A)(IA) OF THE I.T. A CT 1961 VIDE ORDER DATED 26.02.2013. 3. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE FILED APPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE ASSESS EE RESTRICTED THE DISALLOWANCE U/S 69C OF THE ACT AND UPHOLD THE DISALLOWANCE U/S 40(A )(IA) VIDE ORDER DATED 26.02.2013. 4 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI 4. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE AN D THE ASSESSEE FILED THE PRESENT APPEAL AND CROSS OBJECTIONS BEFORE US ON TH E GROUNDS MENTIONED HEREIN ABOVE. 5. SINCE ALL THE GROUNDS RAISED BY THE REVENUE AND THE ASSESSEE ARE INTER- CONNECTED AND INTER-RELATED THEREFORE WE THOUGHT IT FIT TO DISPOSE OFF THE SAME THROUGH THE PRESENT COMMON ORDER. BEFORE WE DECIDE THE MERITS OF THE CASE IT IS NECESSARY TO ANALYSE THE ORDER OF CIT(A) WHEREBY TH E CIT(A) HAS DEALT WITH THE ISSUE OF UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT AND THE OPERATIVE PARA IS REPRODUCED BELOW FOR THE SAKE OF REFERENCE: 5. 'DECISION: 5A. UNEXPLAINED EXPENDITURE U/S 69C RS.46 50 981/ - I HAVE GONE THROUGH THE AO'S CONTENTION AND THE SUB MISSION OF THE APPELLANT IN THIS REGARD THE MAIN CONTENTION OF THE A O IS THA T: (I) THERE IS INFORMATION AVAILABLE FROM THE SALES TAX DEPARTMENT GOVT. OF MAHARASHTRA (II) THE SAID PERSONS HAVE GIVEN DEPOSITION BEFORE THE SALES TAX DEPARTMENT THAT THEY HAVE ONLY PROVIDED ENTRIES AND HAVE NOT A CTUALLY SUPPLIED ANY MATERIAL; (III) THE SAID PARTIES COULD NOT BE PRODUCED BY THE APPE LLANT;' (IV) THE NOTICES SENT WERE EITHER RETURNED BACK WIT H THE COMMENT 'LEFT' 'CLOSED' OR 'NONE APPEARED.' AND ' -- (IV) A FIELD VISIT BY THE' INSPECTOR ALSO CONFIRMED THAT NO SUCH CONCERN EXISTED AT THE GIVEN ADDRESS. THE APPELLANT ON THE OTHER HAND HAS SUBMITTED THAT THEY HAVE THE AUDITED ACCOUNTS DULY MAINTAINED BILLS FROM THE SAID PARTI ES AND THE BANK STATEMENT EVIDENCING THE PAYMENTS. THE APPELLANT HAS ALSO SUB MITTED THAT IT IS INVOLVED IN CIVIL CONSTRUCTION ACTIVITY AND THE SAID MATERIAL H AS BEEN UTILIZED AT THE CONSTRUCTION SITE: IN ITS SUPPORT THE APPELLANT HA S REFERRED TO THE DECISION OF M/S. NIKUNJ ENTERPRISES WHEREIN THE HON'BLE BOMBAY' HIGH COURT HAS HELD THAT MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A) ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT-ASSESSEE TO THIS EXTENT I AM IN AGREEME NT' WITH THE 'APPELLANT THAT SINCE THE APPELLANT' HAS FILLED ITS ONUS OF MAKING THE .PAYMENTS BY CHEQUE AND HAS 5 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI SUPPLIED THE ADDRESS OF THE SELLERS THEN IT CANNOT BE PRESUMED THAT THE SUPPLIERS WERE BOGUS SIMPLY BECAUSE THE SELLERS WERE NOT FOUN D AT THE GIVEN ADDRESSES. HOWEVER IT ALSO AT THE SAME TIME CANNOT BE SAID TH AT THE INFORMATION PROVIDED BY THE MAHAVAT AND THE DEPOSITIONS OF THE SELLERS BEFO RE THE SALES TAX DEPARTMENT OF MAHARASHTRA SHOULD NOT BE TAKEN COGNIZANCE OF BY TH E A.O. THEREFORE FOLLOWING THE RATIO OF NIKUNJ EXIMP ENTERPRISES CITED SUPRA A ND ALSO THE DECISION IN THE CASE OF CIT VS. LEADERS VALVES (P) LTD (ALSO REFERRED SU PRA) THE PROFIT ELEMENT ON THE TOTAL COMPONENT IN DISPUTE IS WHAT NEEDS TO BE ADDE D TO THE INCOME OF THE APPELLANT. THE TOTAL AMOUNT WHICH IS BEING TREATED AS BOGUS BY THE A.O. IS RS.46 50 981/-. 15% OF THIS AMOUNT WHICH IS RS.6 97 647/- IS TAKEN AS PROFIT OF THE APPELLANT ON PURCHASES THAT ARE NOT FULLY AND PROPE RLY EXPLAINED. 5B. DISALLOWANCE UNDER SECTION 40(A)(I)(A) - RS.27 068/- I HAVE GONE THROUGH THE FACTS OF THE DISALLOWANCE M ADE U/S 40(A)(IA) AND I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE APPELLANT. TH E PAYMENT IS SQUARELY COVERED AND THEREFORE LIABLE FOR DEDUCTION U/S 194A AND TH EREFORE THE DISALLOWANCE IS UPHELD. 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES ON THIS GROUND AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. AFTER CO-JOINT READING OF THE ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS HEARING OF COUNSELS FOR BOTH THE PARTIES WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS TAKEN INTO CONS IDERATION THE FACTS OF THE ENTIRE CASE AND THE BASIS OF AO FOR MAKING ADDITION U/S 69 C. THE CIT(A) HAD DULY CONSIDERED THE AUDITED ACCOUNTS MAINTAINED BY THE A SSESSEE BILLS FROM THE SAID PARTIES AND BANK STATEMENT EVIDENCING THE PAYMENTS. THE LD. CIT(A) HAS ALSO TAKEN INTO CONSIDERATION THAT THE ASSESSEE IS INVOL VED IN CIVIL CONSTRUCTION ACTIVITY AND HAD PURCHASED THE MATERIAL WHICH HAS BEEN UTILI ZED AT THE CONSTRUCTION SITE. EVEN DURING THE COURSE OF ARGUMENTS LD. AR APPEARIN G ON BEHALF OF ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO PAGE NO. 24 &25 OF PAPE R BOOK WHICH IS AN ORDER DATED 6 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI 08.04.2001PASSED BY DEPUTY COMMISSIONER OF SALES TA X (APPEAL) U/S.23(5) M- VAT ACT 2002 AND IN THE SAID ORDER DEPUTY COMMISSIO NER OF SALES TAX (APPEAL) HAS ALSO TAKEN INTO CONSIDERATION THE PURCHASES EFF ECTED BY THE ASSESSEE ARE FOR HIS CONSTRUCTION ACTIVITIES AND IN THIS REGARD DEDUCTIO NS OF SALES TAX HAVE BEEN MADE BY MODIFYING THE ASSESSMENT ORDER PASSED UNDER SALES T AX. THIS ORDER ALSO GOES TO SHOW THAT THE ASSESSEE HAD MADE PURCHASES WHICH HAD ALREADY BEEN ACKNOWLEDGE BY THE SALES TAX DEPARTMENT AS BEING FOR THEIR OWN CONSTRUCTION AND IN ADDITION THE PAYMENTS HAVE ALSO BEEN MADE BY CHEQUES. LD. CIT(A) IN THE PRESENT CASE HAS ALSO GIVEN A CATEGORICAL FINDING THAT SINCE THE ASSESSEE HAD ALREADY SUPPLIED THE ADDRESSES OF THE SELLERS AND IF THEY ARE NOT COMING FORWARD OR NOT FOUND AT THE GIVEN ADDRESSES THEN IT CANNOT BE PRESUMED THAT THE SUPPLIERS WERE BOGUS. IN OUR VIEW ONCE THE PURCHASES AND SALES ARE ACCEP TED AS GENUINE THE AUTHORITIES BELOW CANNOT REJECT THE PURCHASES AND MAKE ADDITION S THEREON MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTME NT WITHOUT MAKING ANY CORROBORATIVE INDEPENDENT ENQUIRY THEREON AND WITHO UT ALLOWING CROSS EXAMINATION TO THE ASSESSEE OF THE PARTY WHOSE STATEMENT HAS BE EN RELIED ON. THIS PROPOSITION HAS BEEN UPHELD BY THE CO-ORDINATE BENCHES IN THE C ASES OF RAJEEV KALATHIL (67 SOT 52) AND IN THE CASE OF HIRALAL CHUNILAL JAIN IT A NO.4547/MUM/2014 AND OTHERS DATED 01.01.2016. THE LD. CIT(A) HAS REDUCED THE ADDITION TO 15% OF THE TOTAL AMOUNT OF PURCHASES AS PROFITS RESULTANT THE REFROM BUT HAS NOT JUSTIFIED SUCH 7 ITA NO. 3434/MUM/2014(A.Y. 2010-11) ACIT VS. SHRI. VIJAY M. VAGHANI EXPLANATION WITH ANY MATERIAL EVIDENCE TO ESTABLISH THAT SUCH PROFITS WERE ACTUALLY EARNED THEREON. IN THESE PECULIAR FACTS AND CIRCUMS TANCES OF THIS CASE WE REVERSE THE IMPUGNED ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.6 49 647/- SUSTAINED BY THE LD. CIT(A) AND ALLOW GROUNDS OF CROSS OBJECTION FILED BY THE ASSESSEE. CONSEQUENTLY THE GROUNDS RAI SED BY THE REVENUE IN THIS APPEAL ARE DISMISSED. 8. IN THE RESULT THE REVENUES APPEAL IS DISMISSE D AND ASSESSEES C.O. IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016 SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED : 30.09.2016 PS. ASHWINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 12# ( ) / DR ITAT MUMBAI 6. 045 6 / GUARD FILE / BY ORDER / !'# (DY./ASSTT. REGISTRAR) #$ % ( ) / ITAT MUMBAI