DCIT 9(1), MUMBAI v. GAJANAN PAPER MILLS P. LTD, MUMBAI

ITA 4799/MUM/2010 | 2004-2005
Pronouncement Date: 28-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 479919914 RSA 2010
Assessee PAN AAACG4019Q
Bench Mumbai
Appeal Number ITA 4799/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 17 day(s)
Appellant DCIT 9(1), MUMBAI
Respondent GAJANAN PAPER MILLS P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 28-09-2011
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year 2004-2005
Appeal Filed On 10-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.4799/MUM/2010 (ASSESSMENT YEAR: 2004-05) DCIT -RANGE 9(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ....... APPELLANT VS M/S. GAJANAN PAPER MILLS PVT. LTD. LEVA GURJAR SNEHWARDHAN MANDAL KETAN APARTMENT 25 DR. AMBEDKAR MARG WADALA MUMBAI -400 031 ..... RESPONDENT PAN: AAACG 4019 Q APPELLANT BY: SHRI A.K. NAYAK RESPONDENT BY: SHRI V.C. SHAH DATE OF HEARING: DATE OF PRONOUNCEMENT: 21.09.2011 ..09.2011 O R D E R PER R.S. PADVEKAR JM: IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUG NED ORDER OF THE LD. CIT (A)-19 MUMBAI DATED 29.03.2010 FOR THE A.Y. 2004-05. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN D:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A) ERRED IN ALLOWING ADDITION MAD E BY THE ASSESSING OFFICER AMOUNTING TO ` 20 82 914/- BEING BOGUS NON GENUINE OVERSTATED OR UNREASONABLE PURCHASES WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS OR PROVIDING THE EXPENDITURE OF ITA 4799 /MUM/2010 M/S. GAJANAN PAPER MILLS PVT. LTD. 2 PURCHASES BY SUBSTANTIATING THE SAME WITH EVIDENCES EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE REMAND PROCEEDINGS. 2. BRIEFLY STATED THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS IN THE MANUFACTURING OF THE KRAFT PAPER. THE RETURN FILED BY THE ASSESSEE WAS COMPLETED U/S.143( 3) OF THE ACT. SO FAR AS THE ISSUE IN CONTROVERSY IN RESPECT OF ALLEG ED BOGUS PURCHASES THE A.O. ISSUED NOTICES U/S.133(6) TO THE FOUR PART IES TO VERIFY THE GENUINENESS OF THE PURCHASE TRANSACTION SHOWN BY TH E ASSESSEE. THE DETAILS OF THE PARTIES ARE GIVEN ON PAGE NO.6 OF TH E ASSESSMENT ORDER WHICH ARE AS UNDER:- NAME OF ASSESSEE TRANSACTION COMPLIANCE REMARKS 1 SHALIMAR WIRE INDUSTRIES LTD. PURCHASE 990 308 UNSERVED WRONG ADDRESS GIVEN BY ASSESSEE 2 M/S. CREATORS PURCHASE 499 965 UNSERVED A/C. PAYEE CHEQUES ISSUED TO PARTY 3 ELECON ENGG.CO. LTD. PURCHASE 3 60 515 NO COMPLIANCE ASSESSEES RECORD PRODUCED 4 SUMMET MARKETING PURCHASE 232 126 NO COMPLIANCE ASSESSEE RECORD PRODUCED 3. THE NOTICE U/S.133(6) WAS UN-SERVED ON THE TWO P ARTIES AND THOUGH NOTICES WERE SERVED ON THE ANOTHER TWO PARTI ES I.E. ELECON ENGG. CO. LTD. AND SUMMET MARKETING BUT BOTH THE PA RTIES DID NOT RESPOND. THE A.O. ASKED THE ASSESSEE TO PRODUCE TH E PARTIES FOR CROSS VERIFICATION. IN THE OPINION OF THE A.O. THE ASSESS EE FAILED TO PRODUCE AN AUTHENTIC EVIDENCE TO PROVE GENUINENESS OF TRANS ACTIONS. MOREOVER IN RESPECT OF TWO PARTIES THE NOTICES COULD NOT BE SERVED DUE TO WRONG ADDRESSES GIVEN BY THE ASSESSEE AND IN RESPECT OF T HE REMAINING TWO PARTIES THOUGH THE NOTICES WERE SERVED BUT THERE WA S NO RESPONSE. THE A.O. THEREFORE MADE THE ADDITION IN RESPECT O F THE PURCHASE TRANSACTION SHOWN BY THE ASSESSEE FROM THOSE FOUR P ARTIES TOTALING TO ` ITA 4799 /MUM/2010 M/S. GAJANAN PAPER MILLS PVT. LTD. 3 20 82 914/-. AS PER THE ASSESSMENT ORDER THERE IS NO OTHER BASE FOR MAKING THE ADDITION NOR THERE WAS ANY EVIDENCE IN P OSSESSION OF THE A.O. TO PROVE IT OTHERWISE. THE ASSESSEE CHALLENGE D THE ADDITION BEFORE THE LD. CIT (A) AND LD. CIT (A) DELETED THE ADDITION. OPERATIVE PART OF THE FINDING OF THE LD. CIT (A) IS AS UNDER: - 7.8 FROM AN EXAMINATION OF THE ABOVE DETAILS IT C AN BE SEEN THAT WHATEVER MATERIAL AVAILABLE IN THE POSSESSION OF THE APPELLANT WAS PRODUCED BEFORE THE AO. IT IS TO BE CONSIDERED THAT WITH RESPECT TO TWO PARTIES VIZ. M/ S. ELICON ENGG. CO. LTD. AND SUMMET MARKETING THE OBJECTION TAKEN BY THE AO IS THAT THERE WAS NO COMPLIANCE TO THE SU MMONS ISSUED UNDER S.133(6). THUS THE IMPLIED FACT THAT THE NOTICE HAS BEEN SERVED INDICATES THAT THE PARTIES DO EXIST THOUGH THERE WAS NO COMPLIANCE TO THE REQUIREMENTS AS MENT IONED IN THE SUMMONS UNDER S. 133(6). HOWEVER RELEVANT DOCUMENTS WHICH WERE IN THE POSSESSION OF THE APPEL LANT AS PER ITS RECORDS WERE FURNISHED. AS REGARDS M/S . SHALIMAR WIRE INDUSTRIES AND M/S. CREATORS IT IS A FACT THAT THE SUMMONS WERE RETURNED UNSERVED. HOWEVER ALL THE DOCUMENTS IN THE POSSESSION OF THE APPELLANT TO SUPPORT ITS CONTENTION THAT THE PARTIES DO EXIST WERE FURNI SHED INCLUDING EVIDENCE OF PAYMENT THROUGH CHEQUES. THO UGH THE AO HAD MENTIONED IN THE ASSESSMENT ORDER THAT PAYMENT THROUGH BANKING CHANNELS ALONE ARE NOT ENOU GH TO MAKE A TRANSACTION GENUINE ON THE FACTS OF THIS CA SE THE FACT THAT THE PAYMENTS HAVE BEEN MADE THOUGH CHEQUE S HAS TO BE CONSIDERED ALONG WITH OTHER DETAILS FURNI SHED SUCH AS COPIES OF PURCHASE BILLS RELEVANT COPIES O F DOCUMENTS EVIDENCING SALES TAX REGISTRATION AND OTH ER RELEVANT MATERIAL. IT IS ALSO A FACT THAT FROM THE ACCOUNTS AS FURNISHED IT CAN BE SEEN THAT THESE ARE RUNNING AC COUNTS ITA 4799 /MUM/2010 M/S. GAJANAN PAPER MILLS PVT. LTD. 4 INDICATING THAT THERE ARE PERIODIC TRANSACTIONS WIT H THE SAID PARTIES. MOREOVER THE DETAILS / DOCUMENTS AS FURN ISHED BY THE APPELLANT BEFORE THE AO HAVE NOT BEEN FOUND TO BE NON- GENUINE OR FABRICATED. THERE IS NO FINDING THAT TH E SAID DETAILS / DOCUMENTS ARE SHAM. ON THE OTHER HAND B OOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO; THE BOOKS HAVE NOT BEEN REJECTED. NO DEFECTS IN THE BOOKS OF ACCO UNTS AS MAINTAINED HAVE BEEN POINTED OUT OR BROUGHT ON RECO RD. ON THE OTHER HAND THE AO HAS HIMSELF MENTIONED IN PAR A 3 OF THE ASSESSMENT ORDER THAT THE GP AND NET PROFIT RAT IOS COMPARE BETTER WHEN COMPARED TO THE PREVIOUS YEAR. CONSIDERING THE FACT THAT DOCUMENTS SUCH AS PURCHAS E BILLS WHICH INDICATE THE ITEMS PURCHASES CST S.T. NOS. AND OTHER RELEVANT DETAILS HAVE BEEN FURNISHED IT CANN OT BE STATED THAT THE APPELLANT HAS NOT DISCHARGED THE ON US OF PROVING THE GENUINENESS OF THE PURCHASES. IN THE A BSENCE OF ANY POSITIVE MATERIAL ON RECORD TO HOLD THAT THE PURCHASES ARE BOGUS APART FROM THE FACT THAT THE S UMMONS WERE RETURNED UNSERVED OR THERE HAS BEEN NO COMPLIA NCE IT CANNOT BE HELD THAT THE PURCHASES BY THE APPELLANT IT IS HELD THAT THE APPELLANT HAD DISCHARGED ITS ONUS OF EXPLAINING THE PURCHASES. IN THE ABSENCE OF ANY FI NDINGS TO THE CONTRARY WITH REGARD TO THE DOCUMENT / MATERIA L AS PRODUCED BY THE APPELLANT THE AO THE ADDITION MADE BY THE AO OF ` 20 82 914/- IS HEREBY DELETED. GROUND 3 IS HELD IN FAVOUR OF THE APPELLANT. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. ADMITTEDLY SAVE ISSUING NOTICES TO A BOVE FOUR PARTIES U/S.133(6) TO CROSS VERIFY THE GENUINENESS OF THE P URCHASE TRANSACTIONS SHOWN BY THE ASSESSEE NO OTHER MATERI AL WAS IN THE ITA 4799 /MUM/2010 M/S. GAJANAN PAPER MILLS PVT. LTD. 5 POSSESSION OF THE A.O. TO DISBELIEVE THE GENUINENES S. ASSESSE PRODUCED THE COPIES OF THE RELEVANT DOCUMENT SHOWIN G THE SALES-TAX REGISTRATION OF THOSE PARTIES BEFORE THE LD. CIT (A ). THE LD. CIT (A) WAS OF THE OPINION THAT THE A.O. HAS NOT OTHERWISE ALSO POINTED OUT THE DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND A.O. ADMITS THAT THE G.P. ON THE NET PROFIT RATIO AFTER COMPARING TH E PRECEDING YEAR AS THE SAME WERE REASONABLE. SO FAR NOTICES ISSUED TO M/S. ELECON ENGG. CO. LTD. AND SUMMET MARKETING THOUGH THE NOTICES W ERE SERVED BUT THERE WAS NO COMPLIANCE FROM THE SAID PARTIES. IN OUR OPINION THE A.O. COULD HAVE ENFORCED THEIR ATTENDANCES BY ISSUI NG THE REQUISITE SUMMONS U/S.131 OF THE ACT. IF THE PARTIES HAVE NO T RESPONDED THE ASSESSEE CANNOT BE MADE RESPONSIBLE FOR THAT. IN R ESPECT OF OTHER TWO PARTIES WE FIND THAT THE ASSESSEE FILED THE DETAILS I.E. IN RESPECT OF M/S. SHALIMAR WIRE INDUSTRIES LTD AND M/S. CREATORS INCL UDING THE ABSTRACT OF THE LEDGER ACCOUNT. IN RESPECT OF REMA INING TWO PARTIES THE NOTICES ISSUED BY THE A.O. WERE RETURNED UNSERV ED ON THE I.E. SHALIMAR WIRE INDUSTRIES LTD. AND M/S. CREATORS. W E THEREFORE CONSIDER IT FIT TO RESTORE THE ISSUE TO THE EXTENT OF TWO PARTIES I.E. M/S. SHALIMAR WIRE INDUSTRIES LTD. AND M/S. CREATORS TO THE FILE OF THE A.O. FOR CROSS VERIFICATION AS THE ASSESSEE COULD PRODUC E THE XEROX COPIES OF SALES-TAX RETURN AND THE ACCOUNT EXTRACT AS ASSESSE COULD HAVE GIVEN CORRECT ADDRESSES TO THE A.O. THE ASSESSEE IS DIREC TED TO GIVE THE CORRECT ADDRESSES TO THE A.O. AND THE A.O. SHOULD I SSUE SUMMONSES TO BOTH THE PARTIES FOR PRODUCING THE RELEVANT RECORD FOR LIMITED PURPOSE OF THE VERIFICATION. BEFORE US ALSO ASSESSEE HAS NOT FILED ANY OF THE DOCUMENTS WHICH WERE FILED BEFORE THE A.O. OR THE C IT (A) TO SUBSTANTIATE THE ARGUMENT ADVANCED BEFORE US. SO F AR AS OTHER TWO PARTIES ARE CONCERNED I.E. M/S. ELECON ENGG. CO. L TD. AND M/S. SUMMET MARKETING CO. LTD. WE CONFIRM THE ORDER OF THE LD. CIT (A) DELETING ADDITIONS. 6. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWE D FOR THE STATISTICAL PURPOSES. ITA 4799 /MUM/2010 M/S. GAJANAN PAPER MILLS PVT. LTD. 6 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF SEPTEMBER 2011. ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATED: .. SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -19 MUMBAI. 4) THE CIT-9 MUMBAI. 5) THE D.R. G BENCH MUMBAI. BY ORDER ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 15.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 19.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER