THE DY CIT CEN CIR-1, MUMBAI v. M/S. AMARSONS COLLECTIONS (BREACH CANDY), MUMBAI

ITA 4271/MUM/2007 | 2004-2005
Pronouncement Date: 14-05-2010 | Result: Dismissed

Appeal Details

RSA Number 427119914 RSA 2007
Assessee PAN AAFFA0311H
Bench Mumbai
Appeal Number ITA 4271/MUM/2007
Duration Of Justice 2 year(s) 11 month(s) 8 day(s)
Appellant THE DY CIT CEN CIR-1, MUMBAI
Respondent M/S. AMARSONS COLLECTIONS (BREACH CANDY), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 14-05-2010
Date Of Final Hearing 22-04-2010
Next Hearing Date 22-04-2010
Assessment Year 2004-2005
Appeal Filed On 05-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI N.V. VASUDEVAN (JM) & B. RAMAKOTAIAH (A M) I.T.A.NO. 4271/MUM/2007 (ASSESSMENT YEAR : 2004-0 5) I.T.A.NO. 3865/MUM/2008 (ASSESSMENT YEAR : 2005-0 6) I.T.A.NO. 3903/MUM/2009 (ASSESSMENT YEAR : 2006-0 7) DCIT CENTRAL CIRCLE-I 9 TH FLOOR OLD CGO BUILDING ANNEXE M.K.ROAD MUMBAI-400 020. VS. M/S. AMARSONS COLLECTIONS BREACH CANDY 63A BHULABHAI DESAI ROAD MUMBAI-400 026. APPELLANT RESPONDENT PAN/GIR NO. : AAFFA0311H ASSESSEE BY : SHRI F.V. IRANI DEPARTMENT BY : SHRI S.K. SINGH ORDER PER N.V. VASUDEVAN JM :- ITA NO. 4271/MUM/2007 : THIS IS AN APPEAL BY THE R EVENUE AGAINST THE ORDER DATED 4.4.2007 OF LEARNED CIT(A)- CENTRAL-I MUMBAI RELATING TO A.Y. 2004-05. ITAT NO. 3865/MUM/2008 : THIS IS APPEAL BY THE REVE NUE AGAINST THE ORDER DATED 7.3.2008 OF LEARNED CIT(A)-CENTRAL I MUMBAI RELATING TO A.Y. 2005-06. ITA NO. 3903/MUM/2009 : THIS IS AN APPEAL BY THE R EVENUE AGAINST THE ORDER DATED 20.3.2009 OF LEARNED CIT(A) -CENTRAL I MUMBAI RELATING TO A.Y. 2006-07. SINCE IN ALL THESE APPEALS OF THE REVENUE INVOLVE COMMON ISSUES AND RELATE TO THE SAME ASSESSEE THEY WERE HEARD TO GETHER. WE DEEM IT CONVENIENT TO PASS THIS COMMON ORDER. 2. ITA NO. 4271/MUM/2007 : GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FO LLOWS :- M/S. AMARSONS COLLECTIONS 2 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN HOLDING THE PURCHASE AS GEN UINE ON THE GROUND THAT SALES ARE GENUINE. THE LEARNED CIT( A) HAS FAILED TO APPRECIATE THE FACT THAT ASSESSEE HAS SHO WN PURCHASES FROM THE CONCERN OF SHRI MANIK LAL DAGA W HO HAS CATEGORICALLY ADMITTED BEFORE THE INVESTIGATION WING THAT HIS CONCERNS ARE INVOLVED IN ISSUING BOGUS BIL LS WITHOUT ANY ACTUAL SALES AND ASSESSEE HAS TAKEN BOG US BILLS FROM HIS CONCERNS. THE LEARNED CIT(A) HAS FURTHER E RRED IN HOLDING THAT THE ASSESSING OFFICER HAS MADE ADDITIO N OF RS. 3 LAKHS ON ACCOUNT OF REJECTION OF BOOKS OF ACCOUNT S AND NO FURTHER ADDITION IS JUSTIFIED WITHOUT APPRECIATING THE FACT THAT THIS ADDITION OF RS. 3 LAKHS IS ON DIFFERENT F OOTING AND IT HAS NO CONNECTION WITH BOGUS PURCHASES FROM THE CON CERN OF SHRI DAGA. 2) THE ORDER OF LEARNED CIT(A) BE SET ASIDE AND THAT O F THE ASSESSING OFFICER BE RESTORED. 3. THE REVENUE HAS FILED AMENDED GROUNDS OF APPEAL WHICH READS AS FOLLOWS :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 29 25 875/- MADE ON ACCOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE AND HOLDING THAT THE PURCHASES AS GENUINE ON THE GROUND THAT SA LES ARE GENUINE. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THE CONCERNS OF S HRI MANIK LAL DAGA WHO HAS CATEGORICALLY ADMITTED BEFORE THE INVESTIGATION WING OF THE DEPARTMENT THAT HIS CONCERNS ARE INVOLV ED IN ISSUING BOGUS BILLS WITHOUT ANY ACTUAL SALES AND ASSESSEE H AS TAKEN BOGUS BILLS FROM HIS CONCERNS. THE LEARNED CIT(A) HAS FURTHER ERRED IN HOLDING THA T THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 3 LAK HS ON ACCOUNT OF REJECTION OF BOOKS OF ACCOUNTS AND NO FURTHER AD DITION IS JUSTIFIED WITHOUT APPRECIATING THE FACTS THAT THIS ADDITION OF RS. 3 LAKHS WAS MADE ON THE BASIS OF SPECIFIC DISCREPANCI ES NOTED IN THE SALE FIGURES OF VARIOUS ITEMS AS PER THE BOOKS OF A CCOUNTS AND THAT AS PER THE SALE BILLS AND WHICH HAS NO CONNECTION W ITH BOGUS PURCHASES FROM THE CONCERNS OF SHRI DAGA. 4. THE ASSESSEE IS PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF RETAIL TRADE IN VARIOUS GOODS AND MERCHANDISE UNDER ONE RO OF AS DEPARTMENTAL STORES SINCE 1974. THE ASSESSEE FILED ITS RETURN FO R A.Y. 2004-05 DECLARING TOTAL INCOME OF RS. 1 92 88 540/-. IN COU RSE OF ASSESSMENT M/S. AMARSONS COLLECTIONS 3 PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT IN THE TAX AUDIT REPORT IT HAS BEEN MENTIONED THAT THE ASSESSEE DOES NOT MAINT AIN ITEM-WISE STOCK REGISTER TO RECORD DETAILS OF PURCHASES SALES AND STOCK OF ALL THE ITEMS DEALT IN. THE ASSESSING OFFICER THEREFORE CARRIED O UT AN EXERCISE TO FIND OUT STOCK POSITION OF THE VARIOUS ITEMS DEALT BY TH E ASSESSEE. THE ASSESSING OFFICER DID THE ABOVE EXERCISE IN RESPECT OF SOME OF THE MAJOR ITEMS IN WHICH THE ASSESSEE WAS DEALING VIZ. SAR EES SUIT LADIES SUIT AND SHIRT. ON THE BASIS OF THE EXERCISE CARRIED OUT BY THE ASSESSING OFFICER DISCREPANCIES IN THE STOCK POSITION WERE F OUND. THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE. THE ASSESSING O FFICER THEREFORE REJECTED THE BOOKS OF ACCOUNT AND MADE AN ADHOC ADD ITION OF RS. 3 LAKHS ON ACCOUNT OF GROSS PROFIT. 5. THE ASSESSEE HAD SHOWN PURCHASES OF RS. 29 25 8 75/- FROM ELEVEN PARTIES WHOSE NAMES ARE MENTIONED BELOW :- I) SEEMA SYNTHETIC FABRICS PVT. LTD. RS. 1 07 000/- II) SHREE GIRINAG TRADERS PVT. LTD. RS. 1 04 900/- III) C. KUMAR ENTERPRISES RS. 1 07 050/- IV) MAMTA CORPORATION RS. 2 10 510/- V) VISHAL UDYOG RS. 3 61 580/- VI) GAURAV UDYOG RS. 1 00 000/- VII) J.N. SILK INDUSTRIES RS. 4 51 455/- VIII) K.J.M. INTERNATIONAL RS. 4 37 525/- IX) KAMAL TEXTILES RS. 4 05 700/- X) S.R. FASHION FABRICS RS. 1 23 200/- XI) BRIJLAL & CO. RS. 5 16 955/- 6. THE DDIT(INV) UNIT IX(2) MUMBAI HAS DONE INVES TIGATION IN THE CASE OF SHRI MANICKLAL DAGA RESIDENT OF FLAT NO. 6 5 TH FLOOR VIMALAL MAHAL PEDDER ROAD MUMBAI 400 026 AND IT WAS FOUND THAT SHRI DAGA WAS RUNNING 14 CONCERNS WHICH INCLUDES THREE PRIVAT E LIMITED COMPANIES ONE REGISTERED FIRM AND 10 PROPORIETORSH IP CONCERNS WHICH WERE BOGUS CONCERNS INVOLVED IN ISSUING BOGUS BILLS AND GIVING CASH BACK AFTER DEPOSITING THE CHEQUE RECEIVED FROM THE PARTI ES TO WHOM IT HAS ISSUED BILL OF SALES. STATEMENT ON OATH WAS RECOVER ED BY THE DDIT(INV) UNIT IX(2) MUMBAI OF SHRI DAGA IN WHICH HE HAS CLE ARLY ACCEPTED THAT HE WAS ISSUING BOGUS BILLS FOR PURCHASES OF MATERIALS TO NUMBER OF CONCERNS M/S. AMARSONS COLLECTIONS 4 AND AFTER DEDUCTING HIS COMMISSION HE USED TO GIVE BACK THE CASH TO THE PARTIES FROM WHOM HE HAS RECEIVED CHEQUE. IN HIS ST ATEMENT SHRI MANICK LAL DAGA HAS SAID THAT HE WAS RUNNING 14 CONCERNS W HOSE NAMES ARE GIVEN BELOW :- I) SEEMA SYNTHETIC FABRICS PVT. LTD. II) SHREE GIRINAG TRADERS PVT. LTD. III) SEEMA FINANCE CONSULTANCY SERVICES (P) LTD. IV) C. KUMAR ENTERPRISES V) SEEMA ROAD LINES VI) MAMTA CORPORATION VII) VISHAL UDYOG VIII) GAURAV UDYOG IX) J.N. SILK INDUSTRIES X) K.J.M. INTERNATIONAL XI) KAMAL TEXTILES XII) S.R. FASHION FABRICS XIII) DHARMESH SALES XIV) BRIJLAL & CO. 7. OUT OF THE ABOVE 14 CONCERNS FIRST THREE CONCER NS ARE PRIVATE LIMITED COMPANIES WHOSE DIRECTORS ARE SHRI MANICK L AL DAGA SHRI ABISHEIKH DAGA AND HIS EMPLOYEES SHRI B.K. SHARMA A ND SHRI A.K. SINGH. CONCERN AT SERIAL NO. 4 IS A PARTNERSHIP FIR M IN WHICH SHRI MANICK LAL DAGA HUF AND SHRI SURESH KUMAR DAGA WERE PARTNE RS. CONCERNS AT SR. NO. 5 TO 14 ARE PROPORIETORSHIP CONCERNS OF SHR I MANICK LAL DAGA. IN THE STATEMENT RECORDED BY THE DDIT (INV.) SHRI DA GA ACCEPTED THAT ALL THE CONCERNS OPERATE FROM 19/23 VITHOBA LANE VITHA LWADI KALBADEVI MUMBAI-400 002. HE HAS FURTHER STATED THAT IN RESPE CT OF CONCERNS MENTIONED AT SR. NOS. 6 TO 14 NO BOOKS OF ACCOUNTS ARE MAINTAINED. HE HAS FURTHER STATED THAT IN RESPECT OF GIRINAG TRADE RS AND SEEMA FINANCE CONSULTANCY SERVICES ALSO HE AND HIS FAMILY MEMBERS ARE THE OWNERS. IN REPLY TO QUESTION NO. 10 OF HIS STATEMENT RECORDED ON 6.10.2005 HE HAS STATED THAT IN RESPECT OF CONCERNS FROM SR. NOS. 6 TO 14 HE IS DOING THE BUSINESS OF BILL FADNEKA. HENCE NO BOOKS OF ACCOU NTS ARE MAINTAINED. IN QUESTION NO. 11 HE WAS ASKED TO EXPLAIN WHAT IS THE MODUS OPERANDI OF BILL FADNEKA BUSINESS. IN RESPONSE TO THIS QUE STION HE REPLIED THAT ON REQUEST OF CLIENTS HE ISSUES BILLS AND RECEIVES CH EQUES. HE HAS ADMITTED M/S. AMARSONS COLLECTIONS 5 THAT THESE CHEQUES ARE DEPOSITED IN VARIOUS BANK AC COUNTS AND AFTER DEDUCTING COMMISSION RATING FROM 0.5% TO 1% THE BA LANCE MONIES ARE RETURNED TO THE PERSON FROM WHOM CHEQUE AMOUNT RECE IVED. HE HAS FURTHER STATED THAT SOMETIMES CROSSED CHEQUES ARE I SSUED WITHOUT MENTIONING THE NAME AND CASH IS RECEIVED BACK AND C OMMISSION IS SHARED. 8. SINCE DURING THE F.Y. 2003-04 PERTAINING TO A.Y . 2004-05 THE ASSESSEE MADE PURCHASES OF RS. 29 25 875/- FROM THE ABOVE MENTIONED CONCERNS THE ASSESSING OFFICER WAS OF THE VIEW THA T PURCHASES ARE BOGUS AS PER THE STATEMENT OF SHRI MANICK LAL DAGA. INFO RMATION U/S. 133(6) WAS SOUGHT FROM SHRI MANICK LAL DAGA FOR THE SALES MADE BY THE CONCERNS OF SHRI MANICK LAL DAGA TO THE ASSESSEE DU RING THE F.Y. 2003- 04. SHRI DAGA DID NOT REPLY AND SUBMIT DETAILS OF S ALES MADE BY HIS CONCERNS TO THE ASSESSEE EXCEPT IN THE CASE OF SHRI GIRINAG TRADERES M/S. SEEMA SYNTHETIC FABRIC P. LTD. AND C. KUMAR EN TERPRISES. THE BANK STATEMENTS OF SHRI DAGA WERE COLLECTED BY THE DDIT AND IT WAS FOUND THAT THE CONCERNS OF DAGA HAVE DEPOSITED THE CHEQUES IN THE BANK ACCOUNTS AND WITHIN 2 TO 3 DAYS CASH EITHER EQUIVAL ENT TO THE AMOUNT OF CHEQUES OR AFTER DEDUCTING THE COMMISSION IS WITHDR AWN FROM THE BANK ACCOUNT. IN THESE CIRCUMSTANCES THE ASSESSING OFFI CER CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE PURCHASES MADE BY THE ASSESSEE FROM THE ABOVE MENTIONED CONCERNS TOTALLING TO RS. 29 25 875/- SHOULD NOT BE TREATED AS BOGUS PURCHASES. 9. IN REPLY TO THE ABOVE THE ASSESSEE SUBMITTED CO PIES OF LEDGER ACCOUNT AND BILLS IN SUPPORT OF THE GOODS PURCHASED FROM THE AFORESAID PARTIES COPY OF THE LEDGER ACCOUNT OF SUPPLIER OF GOODS COPY OF PURCHASE BILLS COPY OF DELIVERY CHALLAN. THE ASSESSEE ALSO SUBMITTED THAT IT WAS IN THE BUSINESS RUNNING OF DEPARTMENTAL STORE DEALING IN MORE THAN 500 ITEMS. THE ASSESSEE SUBMITTED THAT PURCHASES ARE DE CENTRALIZED AND THE AUTHORITY/RESPONSIBILITY FOR MAKING PURCHASES IS DE LEGATED TO THE SALESMEN OF VARIOUS COUNTERS. THE SALESMEN MAKE PUR CHASES ON THE M/S. AMARSONS COLLECTIONS 6 BASIS OF THEIR PERCEPTION AS TO WHICH ARE FAST MOVI NG ITEMS AND WHETHER THEY WILL BE ABOVE TO SELL GOODS OF PARTICULAR QUAL ITY. THE ASSESSEE SUBMITTED THAT THE TERMS AND CONDITIONS OF SUPPLY A ND PAYMENTS ARE FINALIZED BY THE SALESMEN. ON RECEIPT OF THE GOODS ITEMS ARE CHECKED AND VERIFIED AND THE HILLS ARE APPROVED FOR MAKING PAYM ENTS AND BILLS ARE THEN FORWARDED TO ACCOUNTS DEPARTMENT WHICH MAKES PAYMENT ON SPECIFIED DATE AS AGREED. IT WAS SUBMITTED THAT PAR TNERS WERE NOT PERSONALLY INVOLVED IN THE ENTIRE PROCESS APART FRO M SIGNING THE CHEQUES AFTER VERIFYING THE FACT THAT THE BILLS ARE APPROVE D BY THE RESPECTIVE SALESMEN. WITH REGARD TO SHRI DAGA THE ASSESSEE SU BMITTED THAT IN THE STATEMENT OF SHRI DAGA THERE IS NO SPECIFIC MENTIO N ABOUT THE SALES MADE TO THE ASSESSEE OR BILLS ISSUED TO THE ASSESSE E BEING BOGUS. THE ASSESSEE POINTED OUT THAT SHRI DAGA IN HIS STATEMEN T HAS GIVEN SPECIFIC NAMES OF THE PARTIES TO WHOM HE HAS ISSUED BOGUS BI LLS AND NAME OF THE ASSESSEE DOES NOT FIGURES IN SUCH LIST. ASSESSEE AL SO SUBMITTED THAT STATEMENT OF SHRI DAGA NOT HAVING BEEN RECORDED IN THE PROCEEDINGS RELATING TO THE ASSESSEE THE SAME WILL NOT BE BIND ING. 10. THE ASSESSING OFFICER HOWEVER WAS OF THE VIEW THAT SINCE PERSON FROM WHOM THE ASSESSEE CLAIMED TO HAVE MADE PURCHAS ES HAS DENIED SUPPLYING ANY GOODS THOSE PURCHASES HAVE TO BE CON SIDERED AS BOGUS. IN THIS REGARD THE ASSESSING OFFICER RELIED ON THE ST ATEMENT OF SHRI DAGA. WITH REGARD TO THE OTHER DOCUMENTARY EVIDENCE REGAR DING PURCHASES VIZ. PURCHASE BILLS BANK STATEMENT ETC. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAME WILL NOT BE SUFFICIENT IN VIEW OF THE STATEMENT OF SHRI DAGA THAT MONEY WAS WITHDRAWN FROM BANK AFTER RECEI PT OF PAYMENT BY CHEQUE AND GIVEN BACK TO THE PERSON WHO GAVE CHEQUE AFTER DEDUCTING COMMISSION. THE ASSESSING OFFICER ALSO REFERRED TO THE FACT THAT SUMMONS WERE ISSUED TO SHRI DAGA TO PRODUCE COPY OF ACCOUNTS SALES BILLS BANK STATEMENT AND RETURN OF INCOME IN RESP ECT OF ALL THE ENTITIES REFERRED EARLIER OF WHICH SHRI DAGA WAS THE ULTIMAT E PERSON CONTROLLING THEIR AFFAIRS. SHRI DAGA DID NOT RESPOND TO THOSE S UMMON. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE DID NOT A VAIL OPPORTUNITY OF M/S. AMARSONS COLLECTIONS 7 CROSS EXAMINING SHRI DAGA. THE ASSESSING OFFICER WA S OF THE VIEW THAT STATEMENT OF SHRI DAGA HAD EVIDENTIARY VALUE AND BA SED ON THE ABOVE IT CAN BE PRESUMED THAT PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM SHRI DAGA WERE BOGUS. FOR ALL THE ABO VE REASONS THE ASSESSING OFFICER CONSIDERED ENTIRE PURCHASES EFFEC TED BY THE ASSESSEE FROM THE CONCERN OF SHRI DAGA HAVE TO BE TREATED AS BOGUS AND THE SUM OF RS. 29 25 875/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 11. ON APPEAL BY THE ASSESSEE LEARNED CIT(A) DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE FOLLOWING REA SONS :- A) THAT IN THE STATEMENT OF SHRI DAGA HE HAD NOT NAME D THE ASSESSEE AS A PERSON WITH WHOM BUSINESS TRANSACTION HE HAD WERE BOGUS; BUT HAD GIVEN ONLY A GENERAL STATEMENT THAT HE WAS MAINLY INVOLVED IN THE BUSINESS OF BILL FADNEK A. B) IT WAS NOT POSSIBLE FOR THE ASSESSEE TO HAVE ACHIEV ED TURNOVER DISCLOSED IN THE BOOKS OF ACCOUNT WITHOUT EFFECTING PURCHASES. C) THE ASSESSING OFFICER HAS NOT FOUND ANY FAULT IN TH E PLEA OF THE ASSESSEE THAT NORMALLY SUPPLIERS GOES TO THE SHOPS WITH SAMPLE GOODS AND ORDERS ARE PLACED ON THE BASIS OF SUCH SA MPLE AND THE GOODS ARE RECEIVED ALONG WITH DELIVERY CHALLA N. GOODS RECEIVED ARE DULY RECORDED IN THE BOOKS OF ACCOUNT. THIS SYSTEM OF ACCOUNTING MAINTAINED BY THE ASSESSEE HAS BEEN FOUND TO BE CORRECT. D) THERE WAS NO EVIDENCE ON RECORD TO COME TO THE CONC LUSION THAT AFTER MAKING PAYMENT TO SHRI DAGA THROUGH CHEQ UE MONIES WERE RECEIVED BY THE ASSESSEE IN CASH FROM S HRI DAGA. E) LEARNED CIT(A) RELIED ON THE DECISION OF ITAT MUMBA I IN THE CASE OF BALAJI TEXTILE PVT. LTD. VS. ITO 49 ITD 17 7 (BOM). IN THIS CASE THE ASSESSING OFFICER ISSUED SUMMONS TO THE PERSON FROM WHOM ASSESSEE PURCHASED GOODS. THE ASSESSEE HA D MADE PAYMENT THROUGH CROSS CHEQUES TO THE TRADERS AT BHI WANDI; BUT THOSE CHEQUES WERE ENCAHSED IN BOMBAY. SUMMONS WERE ISSUED TO THE PERSON FROM WHOM ASSESSEE PURCHASED GOODS BUT WERE RECEIVED BACK BECAUSE PURCHASERS WERE NOT AVAILABLE. IN THE ABOVE CIRCUMSTANCES HON'BLE ITAT DELETED TH E ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS P URCHASES FOR THE REASON THAT THE SALES MADE BY THE ASSESSEE WERE NOT DISBELIEVED AND THEREFORE PURCHASES HAVE TO BE ACCE PTED. ACCORDING TO THE LEARNED CIT(A) THE AFORESAID DECI SION CLEARLY APPLY TO THE CASE OF THE ASSESSEE. F) LEARNED CIT(A) WAS OF THE VIEW THAT THE ASSESSING O FFICER HAS ALREADY REJECTED THE BOOKS OF ACCOUNT OF THE ASSESS EE AND MADE THE ADDITION OF RS. 3 00 000/- AND IN THE CIRCUMSTA NCES THERE M/S. AMARSONS COLLECTIONS 8 WAS NO JUSTIFICATION FOR MAKING THE ADDITION OF RS. 29 25 875/- ON ACCOUNT OF BOGUS PURCHASES. FOR ALL THE ABOVE R EASONS LEARNED CIT(A) DELETED THE ADDITION MADE BY THE ASS ESSING OFFICER GIVING RISE TO THE ABOVE APPEAL BY THE REVE NUE BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE FILED BEFORE US COPY OF THE STATEMENT OF SHRI DAGA AND HI GHLIGHTED AS TO HOW SAID STATEMENT DOES NOT MAKE ANY REFERENCE TO THE P URCHASE MADE BY THE ASSESSEE BEING A BOGUS TRANSACTION. HE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ITO VS. LAKHMA NI MEWAL DAS 103 ITR 437. IN THE AFORESAID DECISION THE QUESTION WA S WITH REGARD TO THE EXISTENCE OF REASON TO BELIEVE WHETHER INCOME OF TH E ASSESSEE CHARGEABLE TO TAX AS ESCAPED ASSESSMENT. ASSESSMENT WAS SOUGH T TO BE REOPENED ON THE GROUND THAT ONE M.K. WHO WAS SHOWN TO BE ON E OF THE CREDITORS HAS CONFESSED THAT HE WAS DOING ONLY NAME-LENDING. THE ASSESSEE IN THE SAID CASE WAS A MONEY LENDER. IN THE STATEMENT OF S HRI N.M. DKN BS AND OTHERS WERE REFERRED TO AS THE MONEY-LENDERS WI TH WHOM NM WAS DOING NAME LENDING. THE ASSESSEES NAME DID NOT FI GURE IN THE STATEMENT OF M.K. THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON THE BASIS OF STATEMENT OF M.K. ON THE ABOVE FACTS HON 'BLE SUPREME COURT HELD THAT SINCE THERE WAS NOTHING TO SHOW THAT THE CONFESSION OF M.K. RELATED TO A LOAN TO THE ASSESSEE MUCH LEES TO THE LOAN WHICH WAS SHOWN TO HAVE BEEN ADVANCED BY M.K. TO THE ASSESSEE THER E CAN BE NO LIVE LINK OR CLOSE NEXUS BETWEEN THE MATERIAL BEFORE THE ITO AND THE BELIEF REGARDING ESCAPEMENT OF INCOME. THE COURT HELD THAT INITIATION OF REASSESSMENT PROCEEDING WAS INVALID. LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE FACTS OF THE ASSESSEES CASE WER E SIMILAR AND WOULD APPLY WITH GREATER FORCE TO A CASE WHERE ADDITION W AS MADE ON THE BASIS OF STATEMENT. RELIANE WAS ALSO PLACED ON THE FOLLOW ING TWO DECISIONS :- 95 ITR 401 (PATNA) 144 ITR 877 (MP) M/S. AMARSONS COLLECTIONS 9 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NECESSARY FOR US TO SEE THE STATEMENT OF SHRI DAGA WHICH HAS BEEN THE BASIS FOR MAKING IMPUGNED DISALLOWANCE. THERE WAS A SURVEY U/S. 133A OF ACT AT THE OFFICE OF SHRI DAGA ON 6.10.2005 AND HIS STATEMENT WAS REC ORDED. DDIT(INV) UNIT-IX(2) MUMBAI HAD CARRIED OUT INVESTIGATION IN THE CASE OF SHRI DAGA AND THEY WERE OF THE VIEW THAT HE WAS RUNNING SEVER AL CONCERNS WHICH WERE INVOLVED IN ISSUING BOGUS BILLS AND GIVING CAS H BACK AFTER DEPOSITING CHEQUE RECEIVED FROM THE PARTIES TO WHOM IT HAD ISS UED BILLS FOR SALES. IT IS PURSUANT TO THE ABOVE THAT STATEMENT OF SHRI DAG A WAS RECORD. IN ANSWER TO QUESTION NO. 3 HE HAD GIVEN LIST OF NAME S OF ENTITIES UNDER WHICH HE WAS DOING BUSINESS OF TRADING IN TEXTILE A ND FABRICS. LIST OF 14 NAMES WHICH WE HAVE ALREADY SET OUT WAS GIVEN. WI TH REGARD TO FIRM IN SERIAL NO. 1 TO 5 BOOKS OF ACCOUNTS WERE BEING MAI NTAINED AND IN RESPECT OF REMAINING FIRMS NO BOOKS OF ACCOUNTS WE RE MAINTAINED. QUESTION NO. 10&11 AND ANSWER THEREON IS VERY IMPOR TANT AND IT READS AS FOLLOWS :- QNO. 10 : IN ANSWER TO Q.NO. 5 YOU HAVE STATED TH AT AS REGARDS THE CONCERN FROM SL. NO. 6 TO 14 NO BOOKS OF ACCOU NTS ARE MAINTAINED. PLEASE EXPLAIN WHY NO BOOKS OF ACCOUNT S ARE MAINTAINED ? ANS : IN FACT IN THESE CONCERNS I AM DOING THE BU SINESS OF MAINLY BILL FADNEKA. HENCE NO BOOKS OF ACCOUNTS ARE MAIN TAINED. QNO. 11 : PLEASE EXPLAIN EXACTLY WHAT IS YOUR MODU S OPERANDI OF THE ABOVE BILL FADNEKA BUSINESS ? ANS : GENERALLY PEOPLE WHO PURCHASE CLOTH FROM BHIW ANDI DO NOT GET BILLS AS THE WEAVERS ARE NOT GIVING BILLS. THEY APPROACH PEOPLE LIKE US REQUESTING THAT THEY ARE GETTING MATERIAL W ITHOUT BILLS. SINCE THEY HAVE TO PAY CASH TO THESE WEAVERS AT BH IWANDI. WE ON THEIR REQUEST ACCOMMODATE THEIR BILLS. THEY GIVE US CHEQUE. WE DEPOSIT THESE CHEQUES IN OUR VARIOUS BANK ACCOUN TS. WE DEDUCT OUR COMMISSION RANGING FROM .. TO 1% AND RE TURN THE MONEY TO THE PERSON FROM WHOM WE RECEIVED THE CHEQU E. SOMETIME WE ISSUE THESE CHEQUES WITHOUT MENTIONING THE NAME AND RECEIVE THE CASH BACK. IN SUCH CASES WE MAY HA VE TO SHARE OUT OUR COMMISSION. M/S. AMARSONS COLLECTIONS 10 14. IT CAN BE SEEN FROM THE ABOVE THAT ONLY IN RESP ECT OF CONCERNS FROM SERIAL NO. 6 TO 14 THE ASSESSEE WAS DOING BUSINESS BILL FADNEKA. EVEN IN RESPECT OF THESE CONCERNS THERE ARE OTHER BUSIN ESS BUT THE MAIN BUSINESS WAS BILL FADNEKA. IN ANSWER TO QNO. 11 IT CAN BE SEEN THAT SHRI DAGA HAS REFERRED TO THE FACT THAT IT IS ONLY IN RESPECT OF PURCHASE OF CLOTH FROM BHIWANDI THAT HE WAS GIVING ACCOMMODATI ON OR BOGUS BILLS. EVEN IN HIS STATEMENT THERE WAS NOTHING TO SHOW TH AT REAL PURCHASES WERE BOGUS. IN ANSWER TO Q.NO. 15 REGARDING TOP CO NCERNS WITH WHOM HE HAS MADE BILL FADNEKA TRANSACTIONS THE ASSESSEE HA D PROMISED TO GIVEN DETAILS WITHIN TWO DAYS. IN ANSWER TO Q.NO. 18 THE ASSESSEE HAS EXPLAINED AS FOLLOWS :- Q.NO. 18 : YOU ARE HEREBY GIVING ANOTHER OPPORTUNIT Y TO STATE ANYTHING LEFT OUT IN REGARD TO THE TRANSACTIONS ENT ERED INTO AND THE EXPLANATION GIVEN BY YOU SO FAR. ANS : AS REGARDS TO MY BUSINESS ACTIVITY BECAUSE OF TENSION AND FEAR I COULD NOT GIVE THE CORRECT FACTS IN THE BEG INNING. I WOULD LIKE TO GIVE HONESTLY THE FACTS AS UNDER :- IN FACT THE VARIOUS TRANSACTIONS ENTERED THROUGH MY VARIOUS PROPRIETARY CONCERNS WAS A DEVICE FOR GIVING TURN O VER TO MAINLY TO THE FOLLOWING COMPANIES :- I) M/S. M. KUMAR UDYOG APPROXIMATELY 50 LAKHS II) M/S. EMPIRE INDUSTRIES RS. 6 CRORES. SHRI DAGA WAS AGAIN EXAMINED ON 11.10.2005. IN ANSW ER TO Q.NO. 1 THE ASSESSEE HAD GIVEN DETAILS OF THE PARTIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTIONS WHICH WERE NOT GENUINE. THE LIST IS GIVEN AS AN ANNEXURE TO THE STATEMENT. THE NAMES OF SIX PERSONS HAVE BEEN GIVEN NAMELY : I) EMPIRE INDUSTRIES LTD. II) M. KUMAR III) WELSPUN INDIA LTD. IV) GODOLO & GODOLO EXPORTS (P) LTD. V) SHRI KEN ENTERPRISES (P) LTD. VI) BALU TEX M/S. AMARSONS COLLECTIONS 11 15. AS CAN BE SEEN FROM THE ABOVE STATEMENT NAME O F THE ASSESSEE NO WHERE FIGURES IN THOSE STATEMENT. WE HAVE ALREADY S EEN THAT IN ANSWER TO Q.NO. 10 OF THE STATEMENT RECORDED ON 6.10.2005 SH RI DAGA HAD NOT STATED THAT ALL THE TRANSACTIONS ENTERED INTO BY HI M ARE FICTITIOUS. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THERE IS NOTHING INCRIMINATING AS FAR AS ASSESSEE IS CONCERNED AND A S RIGHTLY CONTENDED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THERE WAS NOT EVEN AN OBLIGATION ON HIM TO CROSS EXAMINE SHRI DAGA. CONSIDERING ALL THE ABOVE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT LEARNED CIT( A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER. WE ARE OF THE VIEW THAT THOUGH THERE IS NO MERIT IN THIS APPEAL BY THE REVENUE THE SAME IS DISMISSED. 16. IN THE RESULT THIS APPEAL BY THE REVENUE IS DI SMISSED. 17. ITA NO. 3865/MUM/2008 FOR A.Y. 2005-06: 18. GROUNDS OF APPEAL ARE IDENTICAL TO ONE RAISED I N A.Y. 2004-05. IN THIS YEAR ALSO BOOKS OF ACCOUNT WERE REJECTED AND AN ADDITION OF RS. 3.5 LAKHS WAS MADE TO THE TOTAL INCOME. OTHERWISE FACTS AND CIRCUMSTANCES PREVAILING IN THIS YEAR ARE IDENTICAL. QUANTUM OF P URCHASES WHICH WERE CONSIDERED AS BOGUS WAS SUM OF RS. 26 05 980/-. LE ARNED CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE REASONS GIVEN IN A.Y. 2004-05. WE HAVE ALREADY DEALT WITH THIS ISSUE IN A .Y 2004-05 AND FOR THE REASONS STATED THEREBY WE DISMISS THE APPEAL O F THE REVENUE. 19. ITA NO. 3903/MUM/2009 FOR A.Y. 2006-07 : 20. FACTS AND THE GROUNDS OF APPEAL IN THIS ASSESSM ENT YEAR ARE ALSO IDENTICAL TO THE GROUNDS RAISED IN THE OTHER TWO AP PEALS. THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING ADDITION AND THE REASONS GIVEN BY LEARNED CIT(A) FOR DELETING THE ADDITION ARE ALS O IDENTICAL. FOR THE REASONS STATED WHILE DECIDING THE APPEAL FOR A.Y. 2 004-05 WE UPHOLD THE ORDER OF LEARNED CIT(A) AND DISMISS THIS APPEAL BY THE REVENUE. M/S. AMARSONS COLLECTIONS 12 21. IN THE RESULT ALL THE APPEALS BY THE REVENUE A RE DISMISSED. ORDER HAS BEEN PRONOUNCED ON 14 TH DAY OF MAY 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 14 TH MAY 2010 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS