THE ITO -5(1)(4), MUMBAI v. M/S/. HATIM ALUMINIUM & GLASS TRADERS PVT. LTD, MUMBAI

ITA 3537/MUM/2007 | 2003-2004
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 353719914 RSA 2007
Assessee PAN AAACH3574M
Bench Mumbai
Appeal Number ITA 3537/MUM/2007
Duration Of Justice 3 year(s) 10 month(s) 17 day(s)
Appellant THE ITO -5(1)(4), MUMBAI
Respondent M/S/. HATIM ALUMINIUM & GLASS TRADERS PVT. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 25-03-2011
Date Of Final Hearing 22-03-2011
Next Hearing Date 22-03-2011
Assessment Year 2003-2004
Appeal Filed On 08-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI S V MEHROTRA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO.2548/MUM/2007 (ASSESSMENT YEAR 2003-04) M/S HATIM ALUMINUM AND GLASS TRADERS P LTD SHED NO.60 HUSEINI LAKDA BAZAAR 242 BELLASIS ROAD MUMBAI-400008. PAN:AAACH3574M APPELLANT VS INCOME TAX OFFICER WARD 5 (1)(4) MUMBAI. RESPONDENT ITA NO.3537/MUM/2007 (ASSESSMENT YEAR 2003-04) INCOME TAX OFFICER WARD 5 (1)(4) MUMBAI. .APPELLANT V/S M/S HATIM ALUMINUM AND GLASS TRADERS P LTD RESP ONDENT ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) M/S HATIM ALUMINUM AND GLASS TRADERS P LTD APPELLANT V/S INCOME TAX OFFICER WARD 5 (1)(4) MUMBAI. .RESPONDENT APPELLANT BY : SHRI PRAKASH K JOTWANI RESPONDENT BY : SHRI HEMANT LAL ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 2 O R D E R PER VIJAY PAL RAO JM THE APPEAL BEARING ITA NO.2548/MUM/2007 AND ITA NO.3537/MUM/2007 ARE CROSS-APPEALS DIRECTED AGAINST THE ORDER DATED 22.02.2007 OF CIT(A) FOR THE ASSESSMEN T YEAR 2003-04. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS.6 47 84 987/- AND SUNDRY CREDITORS OF RS.3 16 97 794/- WHICH IS 49 % OF THE TOTAL PURCHASES. THE AO ASKED THE ASSESSEE TO FURNISH THE LIST OF PURCHASES ABOVE RS. 5 000/- ALONG WITH THE ADDRESSES. THE ASSESSEE FILED THE LIST OF PURCHASE OF ABOVE RS.5 000/- WHICH INCLUDES 57 PAR TIES. SINCE THE ASSESSEE DID NOT FILE THE ADDRESSES OF T HE PARTIES. THE AO AGAIN ASKED THE ASSESSEE TO PRODUCE THE ADDR ESSES OF THE PARTIES IN CASES OF PURCHASES OF ABOVE RS.5 LA KHS AND COPY OF BILLS OF EACH PARTY. THE AO NOTICED TH AT THE BILLS OF SOME OF THE 30 PARTIES IN CASES OF ABOVE RS.5 LAKHS OF PURCHASES DID NOT CONTAIN THE BASIC D ETAILS ABOUT THE TELEPHONE NO. LORRY NO. ETC. ACCORDINGLY TO VERIF Y THE GENUINENESS OF PURCHASES OF THE PARTIES THE NOTICE U/S 133(6) WAS ISSUED TO 21 PARTIES. IN SOME OF THE CASES NOTICES WERE RECEIVED BACK UN-SE RVED. ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 3 WHEREAS IN OTHER CASES THE SERVICE WAS EFFECTED BUT NO REPLY WAS FILED. THE AO EXAMINED EACH AND EVERY CASE OF THESE 21 PARTIES AND HAS DISCUSSED IN DETAIL INQUIRY UNDERT AKEN IN THE ASSESSMENT PROCEEDINGS. THE AO WAS OF THE VIEW TH AT THE PURCHASE AFFECTED BY THE ASSESSEE ARE NOT FULLY VER IFIABLE AND DESPITE VARIOUS OPPORTUNITIES TO THE ASSESSEE THE ASSESSEE DID NOT ESTABLISH GENUINENESS OF THE TRANSACTIONS BY PRODUCING THE CONFIRMATION ALONG WITH THE DOCUMENTA RY EVIDENCE. THE AO ALSO TAKEN INTO CONSIDERATION THE AUDITORS COMMENTS THAT THE ASSESSEE IS NOT MAINTAINING ANY D AY TO DAY STOCK RECORD AND ACCORDINGLY HELD THAT 21 TRANSACT IONS AMOUNTING TO RS.1 29 46 987/- OF THE TOTAL PURCHASE S ARE EITHER BOGUS OR ARE NOT PROPERLY CONFIRMED/VERIFIED BY THE ALLEGED SELLER. ACCORDINGLY THE AO HAS DISALLOWE D 20% OF THE TOTAL PURCHASES AND ADDED THE SAME TO THE TOTAL INC OME OF THE ASSESSEE. 3. ON APPEAL THE CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF 5% OF TOTAL PURCHASES AMOUNTING TO RS.7 2 91 574/-. ACCORDINGLY THE CIT(A) HAS PARTLY ALLOWED THE CLAI M OF THE ASSESSEE. BOTH THE ASSESSEE AS WELL AS THE REVENUE HAVE CHALLENGED THE ORDER OF THE CIT(A) BEFORE US. ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 4 ITA NO.2548/MUM/2007 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. (A) THE LD. CIT(A) HAS ERRED IN MAKING AN ADDITION TO THE INCOME OF THE APPELLANT OF THE SUM OF RS.55 77 169/- ON ACCOUNT OF PURCHASE MADE BY THE APPELLANT; (B) THE LD. CIT(A) FAILED TO APPRECIATE THE FACT TH AT THE ADDITIONS ARE UNCALLED FOR AN HAVING DELETED TH E ESTIMATED ADDITO9N OF 20% OF THE PURCHASE TO THE INCOME OF THE APPELLANT SEPARATE ADDITIONS ARE UNCALLED FOR AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE; C) THE APPELLANT PRAYS THAT THE ADDITION MADE TO THE INCOME OF THE APPELLANT WITHOUT ANY JUSTIFICATI ON BE DELETED.. 2. (A) WITHOUT PREJUDICE TO THE ABOVE GROUND THE LD. CIT(A) HAS ERRED IN STATING THE AMOUNT RELATING TO THE PURCHASE MADE FROM ONE PARTY M/S M D CORPORATION ; (B) THE LD. CIT(A) HAS STATED THE AMOUNT OF PURCHASE FROM M/S M D CORPORATION AT RS.24 61 243 INSTEAD OF ACTUAL PURCHASES FROM M/S M D CORPORATIO N AT RS.7 46 838/- C) THE APPELLANT PRAYS THAT THE AMOUNT OF PURCHASES AT ACTUAL PURCHASE BE SUBSTITUTED IN THE ORDER OF THE LEARNED CIT(A) AS AGAINST THE EROGENOUS AMOUNT STATED BY HIM. ITA NO.3537/MUM/2007 5. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE TRANSACTIONS WITH THE FIVE PARTIES . VIZ ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 5 (I) AKSHAR METAL (II) ARIHANT METAL (III) CHETAL TRADERS (IV) SPECTRUM ENTERPRISES (V) IMPEX SALES CORPORATION WHO FILED MERE CONFIRMATION WERE PROVED; 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW THE LD. CIT(A) HAS ERRED IN RELYING ONLY ON THE CONFIRMATIONS FILED WITHOUT HA VING REGARD TO THE FACT WHETHER PARTIES ARE GENUINE AND HAVE PROPER IDENTITY AND ALSO THERE IS ANY CORROBORATIVE EVIDENCES IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS 5.1 THUS BOTH THE ASSESSEE AND REVENUE HAVE RAISED COMMON GROUNDS AGAINST THE DISALLOWANCE OF CLAIM OF PURCHASES BY THE AO WHICH WAS PARTLY ALLOWED BY THE CIT(A) AND PARTLY CONFIRMED. 5.2 BEFORE US THE LEARNED AR OF THE ASSESSEE VEHEM ENTLY CONTENDED THAT NO DISCREPANCY WAS FOUND BY THE AO IN THE BOOKS OF ACCOUNT AND PHYSICAL STOCK OF THE ASSESSE E THEN THE PURCHASES CANNOT BE HELD AS NON-GENUINE AS THE CORRESPONDING SALES AND STOCK HAS BEEN ACCEPTED BY THE AO. HE HAS FURTHER CONTENDED THAT THE DISALLOWANC E OF THE PURCHASES AMOUNTS TO REJECTION OF BOOKS OF ACCOUNT OF THE ASSESSEE WHICH IS NOT JUSTIFIED BECAUSE THE ASSESSE E IS A COMPANY AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE-C OMPANY ARE MAINTAINED AS PER THE PROVISIONS OF COMPANIES ACT 1956. HE HAS FURTHER CONTENDED THAT THE AO HAS MADE ADHO C DISALLOWANCE ON ESTIMATED BASIS WITHOUT HAVING ANY EVIDENCE ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 6 TO SHOW THAT THE PURCHASES CLAIMED BY THE ASSESSEE ARE BOGUS. THE LEARNED AR OF THE ASSESSEE HAS FURTHER POINTED OUT THAT IN THE SUBSEQUENT YEAR THERE WAS A SURVEY U/S 133A AND DURING THE SURVEY THE SURVEY PARTY HAS RECORD ED THE DISCREPANCY IN THE OPENING AND CLOSING STOCK WHICH WAS NOT FOUND CORRECT DURING THE ASSESSMENT PROCEEDINGS AND THE ADDITION MADE ON ACCOUNT OF DISCREPANCY OF THE STOC K HAS BEEN DELETED BY THE CIT(A) WHILE DECIDING THE APPEA L FOR THE ASSESSMENT YEAR 2007-08. THUS THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE STOCK OF THE ASSE SSEE WAS FOUND CORRECT AND NO ADDITION CAN BE MADE ON ACCOU NT OF BOGUS PURCHASES. 5.3 ON THE OTHER HAND THE LEARNED DR HAS SUBMITT ED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CAST UPON IT TO PROVE THE PURCHASES BY PRODUCING THE DOCUMENTARY SU PPORTING EVIDENCE. THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE CONCERNED PARTIES FOR VERIFICATION TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTIONS. THUS THE ASSESSEE H AS FAILED TO DISCHARGE ITS ONUS TO PROVE THE CLAIM OF PURCHASE W HICH WERE POINTED OUT BY THE AO. HE HAS RELIED UPON THE O RDER OF THE AO. ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 7 5.4 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE C OULD NOT PRODUCE ALL THE PARTIES AS PER THE DIRECTIONS OF TH E AO FOR VERIFICATION OF THE GENUINENESS OF THE PURCHASES. IT IS WELL SETTLED PRINCIPLE OF LAW THAT IF THE ASSESSEE CLAIM S THE DEDUCTION OR EXPENDITURE THEN THE ONUS IS ON THE AS SESSEE TO ESTABLISH THE SAME BY PRODUCING THE SUPPORTING DOC UMENTS AND MATERIAL. HOWEVER WHEN THE AO HAS NOT POINTE D OUT ANY DISCREPANCY IN THE PHYSICAL STOCK OF THE ASSESSEE THEREFORE THE DISALLOWANCE MADE BY HE AO ON ESTIMATED BASIS IN OUR VIEW IS EXCESSIVE. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE CLAIM BUT AT THE SA ME TIME WHEN THE AO DID NOT FIND ANY DISCREPANCY IN THE ST OCK RECORDED BY THE ASSESSEE THEN IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE OF THE VIEW THAT THE INCOME OF T HE ASSESSEE MAY BE TAKEN ON THE BASIS OF AVERAGE GP OF THE PR EVIOUS YEARS AS WELL AS FUTURE YEARS WHICH WERE ACCEPTED B Y THE REVENUE. FOR THE YEAR UNDER CONSIDERATION THE ASSE SSEE HAS ADMITTED THE GP AT 4.14% WHEREAS IN THE OTHER ASSES SMENT YEARS THE GP IS RANGING FROM 6.82 TO 4.17 %. THER EFORE WE ESTIMATE THE AVERAGE GP AT 5% FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION AND THE DIRECT THE AO TO MAKE THE AD DITION BY TAKING INTO CONSIDERATION THE GP AT 5%. WE MAY CL ARIFY THAT ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 8 THIS ESTIMATE OF GP WILL NOT BE CONSIDERED AS PREC EDENT FOR ANY FUTURE YEARS OF ASSESSMENT AND IT IS ONLY FOR T HE ASSESSMENT YEARS UNDER CONSIDERATION. ACCORDINGLY THE APPEALS OF THE REVENUE AS WELL AS THE ASSESSEE ARE DISPOSED OFF AS INDICATED ABOVE. ITA NO.97/MUM/2008 6. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4.12.2007 OF THE CIT(A) FOR THE ASSESS MENT YEAR 2004-05. 6.1 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N THIS APPEAL: 1. (A) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO IN RESPECT OF PURCHASES MADE BY THE APPELLANT FROM TWO PARTIES; (B) THE LD. CIT(A) FAILED TO APPRECIATE THE FACT T HAT THE PURCHASES MADE FROM THE TWO PARTIES M/S FACHRI HARD AND MILLS GIN STORES AND M/S YAM TRADING COMPANY ARE GENUINE PURCHASES; C) THE APPELLANT PRAYS THAT THE AFORESAID ADDITIONS MADE TO THE INCOME OF THE APPELLANT WITHOUT ANY JUSTIFICATION BE DELETED 6.2 SINCE THE ISSUES ARE COMMON AS INVOLVED IN THE APPEAL FOR THE ASSESSMENT YEAR 2003-04 THEREFORE WE D ISPOSE OFF ITA NO.2548/MUM/2007 ITA NO.3537/MUM/2007 ITA NO.97/MUM/2008 (ASSESSMENT YEAR 2004-05) 9 THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 IN TERMS OF THE ORDER FOR THE ASSESSMENT YEAR 2003- 04. 11. IN THE RESULT ALL THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH MAR 20 11 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 25 TH MAR 2011 SRL:23311 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI