ACIT 25(3), MUMBAI v. VISHAL P. MEHTA, MUMBAI

ITA 5313/MUM/2013 | 2010-2011
Pronouncement Date: 05-10-2016 | Result: Dismissed

Appeal Details

RSA Number 531319914 RSA 2013
Assessee PAN AFGPM0875G
Bench Mumbai
Appeal Number ITA 5313/MUM/2013
Duration Of Justice 3 year(s) 2 month(s) 5 day(s)
Appellant ACIT 25(3), MUMBAI
Respondent VISHAL P. MEHTA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 05-10-2016
Date Of Final Hearing 30-03-2016
Next Hearing Date 30-03-2016
Assessment Year 2010-2011
Appeal Filed On 31-07-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN JUDICIAL MEMBER ITA NO. 5313/MUM/2013 (ASSESSMENT YEAR: 2010-11) A C I T 25(3) VS. SHRI VISHAL P. MEHTA 308 C 11 BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400051 A/305 SAIRAJ GARDEN IRANIWADI ROAD NO. 3 KANDIVALI (W) MUMBAI -067 PAN AFGPM0875G APPELLANT RESPONDENT APPELLANT BY: SHRI V.K. BORA RESPONDENT BY: SHRI NEELKANTH KHANDELWAL & MS. BHUMIKA VORA DATE OF HEARING: 28.09.2016 DATE OF PRONOUNCEMENT: 05.10.2016 O R D E R PER JASON P. BOAZ A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-35 MUMBAI DATED 09.05.2013 FOR A.Y. 2010-11. 2. THE FACTS OF THE CASE BRIEFLY ARE AS UNDER: - 2.1 THE ASSESSEE PROP. ISPAT STEEL SUPPLIES ENGAGE D IN THE BUSINESS OF TRADING IN IRON AND STEEL SHEETS FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 24.09.2010 DECLARING TOTAL INCOME OF ` 52 93 655/-. ON THE BASIS OF INFORMATION FROM THE SALES TAX DEPARTMENT GOVERNME NT OF MAHARASHTRA IT WAS FOUND BY THE ASSESSING OFFICER (AO) THAT CER TAIN DEALERS ARE PROVIDING ACCOMMODATION ENTRIES/BILLS WITHOUT DOING ANY ACTUAL BUSINESS FOR A COMMISSION. ON GOING THROUGH THE LIST OF BOGU S DEALERS LISTED IN THE WEBSITE OF THE SALES TAX DEPARTMENT IT WAS FOUND T HAT THE ASSESSEE HAD MADE PURCHASES FROM THE FOLLOWING DEALERS; THE DETA ILS OF WHICH ARE AS UNDER: - ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 2 S.NO. NAME OF ALLEGED SUPPLIER AMOUNT OF ALLEGED PURCHASE ( `) 1 M/S. HITEN ENTERPRISES ` 1 46 17 686/ - 2 M/S. RUSHABH ENTERPRISES ` 58 23 655/ - 3 M/S. SHREE TRADERS ` 44 69 575/ - 4 M/S. SIMANDHAR TRADING CORPORATION ` 1 09 53 073/ - 5 M/S. SWASTIK ENTERPRISES ` 17 23 304 / - TOTAL ` `` ` 3 75 87 293/ - 2.2 TO ASCERTAIN THE GENUINENESS OF SUCH PURCHASES (SUPRA) THE AO ISSUED NOTICE TO THE ASSESSEE TO SHOW CAUSE AS TO W HY THE AFORESAID PURCHASES AMOUNTING TO ` 3 75 87 293/- SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITURE. IN REPLY THERETO THE ASSE SSEE FURNISHED COPIES OF PURCHASE BILLS FROM THREE PARTIES COPIES OF BANK S TATEMENTS TO SHOW PAYMENTS WERE MADE BY CROSSED CHEQUE COPIES OF CON FIRMATION FROM THE ABOVE PARTIES ETC. THE AO THEN ISSUED NOTICES UNDE R SECTION 133(6) OF THE ACT TO THESE PARTIES WHICH WERE RETURNED UNSERVED. THE AO DID NOT ACCEPT THE EXPLANATIONS PUT FORTH BY THE ASSESSEE AND BRUS HED ASIDE THE EVIDENCE PLACED BEFORE HIM AS HE WAS OF THE VIEW THAT THE AS SESSEES DOCUMENTARY EVIDENCE WAS NOT SUPPORTED BY LORRY RECEIPTS OR DEL IVERY CHALLANS; THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE THE THREE PARTIES FROM WHOM ALLEGED PURCHASES WERE MADE BEFORE HIM FOR VERIFICATION AND PLACED RELIANCE ON THE STATEMENT ON OATH AND AFFIDAVIT OF ONE RAJENDRA DOD HIWALA (PROPRIETOR OF M/S. RUSHABH ENTERPRISES) GIVEN BEFORE SALES TAX AU THORITIES. IN THIS VIEW OF THE MATTER THE AO TREATED THE PURCHASES MADE FR OM THESE THREE PARTIES (SUPRA) AMOUNTING TO ` 3 75 87 293/- AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT AND THE ASSESSMENT WAS ACCOR DINGLY CONCLUDED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 28 .12.2012 WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 4 29 80 520/-. 3.1 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A.Y. 2 010-11 DATED 28.12.2012 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-35 MUMBAI. BEFORE THE LEARNED CIT(A) THE ASSESSEE REI TERATING THE STAND TAKEN BEFORE THE AO AND IN ORDER TO PROVE THE PURC HASES PLACED BEFORE THE LEARNED CIT(A) THE EVIDENCE EARLIER FILED BEFORE TH E AO; SUCH AS COPIES OF PURCHASE BILLS COPIES OF BANK STATEMENTS TO SHOW T HAT PAYMENTS TO THESE ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 3 PARTIES FOR THE SAID PURCHASES HAVE BEEN MADE BY AC COUNT PAYEE CHEQUES COPIES OF STOCK REGISTER TO SHOW THAT THE GOODS WER E RECEIVED FROM THESE PARTIES. IT WAS SUBMITTED THAT THE SALES EFFECTED I N RESPECT OF THESE PURCHASES HAVE NOT BEEN DOUBTED OR QUESTIONED BY TH E AO AND THEREFORE THE PURCHASES MADE BY THE ASSESSEE COULD NOT BE HEL D TO BE BOGUS AS WITHOUT PURCHASES THE ASSESSEE COULD NOT HAVE EFFEC TED SALES. MERELY BECAUSE THESE PARTIES WERE NOT FOUND AT THEIR GIVEN ADDRESSES NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE. 3.2 THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE VIS-A-VIS THE MATERIAL ON RECORD AND THE AOS VIEWS FOUND THAT THE AO WHILE TREATING THE PURCHASES AS BOGUS HAS MERELY RE LIED UPON THE INFORMATION OBTAINED FROM THE SALES TAX DEPARTMENT AND THE STATEMENT AND AFFIDAVIT OF A THIRD PARTY WHO NEITHER HAD ANY RELATION TO THE ASSESSEE NOR NAMED IT THEREIN AND IN RESPECT OF WHICH NO OPP ORTUNITY FOR CROSS EXAMINATION OF THAT PARTY WERE AFFORDED TO THE ASSE SSEE. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAD SUBMITTED THE ABOVE REFERRED DOCUMENTARY EVIDENCES BEFORE THE AO AND ALSO IN APPELLATE PROC EEDINGS BEFORE HIM TO PROVE THAT PURCHASES MADE FROM THE ABOVE REFERRED T HREE PARTIES WERE GENUINE. NO MATERIAL WAS BROUGHT ON RECORD BY THE A O TO ESTABLISH THAT THE PAYMENTS MADE FOR PURCHASES TO THE ABOVE THREE PARTIES WERE RECEIVED BACK IN CASH BY THE ASSESSEE. ACCORDING TO THE LEAR NED CIT(A) THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCE BEFORE THE AO AN D ALSO BEFORE HIM TO ESTABLISH THAT THE SAID PURCHASES WERE GENUINE AND THE AO WITHOUT RECORDING ANY FINDING THAT THE EVIDENCES PRODUCED A RE NOT GENUINE OR DOUBTFUL; COULD NOT HAVE MADE THE ADDITIONS IGNORIN G THE EVIDENCES PLACED BEFORE HIM. THE LEARNED CIT(A) INTER ALIA RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NI KUNJ EXIMP ENTERPRISES PVT. LTD. 372 ITR 619 (BOM) DELETED THE ADDITION OF ` 3 75 87 293/- MADE BY THE AO UNDER SECTION 69C OF T HE ACT VIDE THE IMPUGNED ORDER DATED 09.05.2013. ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 4 4.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-35 MUMBAI DATED 09.05.2013 FOR A.Y. 2010-11 REVENUE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS 3 75 87 293/- ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S 69C OF THE I .T. ACT BY TREATING THE PURCHASES AS GENUINE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) ERRED IN IGNORING THE FINDINGS OF ANOTHER GOVERNMENT AGENCY WITHOUT CONTROVERTING THE CONTENT IN THE DOC UMENTS WHICH HAVE EVIDENTIARY VALUE IN THE EYES OF LAW . (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) ERRED IN RELYING UPON JUDGMENTS IN THE CA SE OF CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD. WITHOUT APPRECIA TING THAT THE FACTS INVOLVED IN THE APPELLANT'S CASE ARE DIFFEREN T FROM THE FACTS OF THE ABOVE CASE LAW. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE NOTICES UNDER 133(6) 'ISSUED TO THE PARTIES FROM WH OM ALLEGED BILLS WERE RECEIVED WERE RETURNED UNDELIVERED BY THE POST AL AUTHORITIES. (V) THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE THAT OF THE AO BE RESTORED. (VI) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND. 4.2 THE LEARNED D.R. FOR REVENUE WAS HEARD IN SUPPO RT OF THE GROUNDS RAISED (SUPRA) SUBMITTING THAT SINCE THE PARTIES CO ULD NOT BE TRACED AT THE GIVEN ADDRESS FOR CONFIRMATION AND LORRY RECEIPTS I N RESPECT OF THE SAID PURCHASES WERE NOT PRODUCED THE GENUINENESS OF THE SAID PURCHASES FROM THE THREE PARTIES COULD NOT BE VERIFIED. THEREFORE THE AO WAS JUSTIFIED IN TREATING THE SAID PURCHASES AS BOGUS. 4.3 PER CONTRA THE LEARNED COUNSEL FOR THE ASSESSE E STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LEARNED CIT(A) DELETING THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES OF ` 3 75 87 293/- MADE BY THE AO UNDER SECTION 69C OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASE TRANSACTIONS HAD PRODUCED M ATERIAL EVIDENCE IN THE FORM OF PURCHASE BILLS ISSUED BY THESE PARTIES COPIES OF BANK STATEMENTS TO ESTABLISH THAT THE SAID PURCHASES WER E MADE THROUGH BANKING CHANNELS COPIES OF STOCK REGISTER TO SHOW RECEIPT OF THE SAID ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 5 MATERIAL PURCHASED FROM THESE PARTIES CONFIRMATION S FROM TWO OF THE THREE PARTIES IN RESPECT OF THE SAID PURCHASES. IT IS CON TENDED THAT ON THE CONTRARY THE AO HAS NOT BROUGHT ON RECORD EVEN A S HRED OF EVIDENCE TO PROVE THE SAID PURCHASES WERE BOGUS AND IN COMING T O AN ADVERSE FINDING IN THE MATTER MERELY RELIED ON THE INFORMATION OF P URCHASE PARTIES LISTED BY THE SALES TAX DEPARTMENT AND STATEMENT OF A THIRD P ARTY UNRELATED TO THE ASSESSEE WHEREIN THE ASSESSEES NAME WAS NOT MENTI ONED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON IDENTICA L FACTS AND CIRCUMSTANCES THE HON'BLE BOMBAY HIGH COURT AND TH E COORDINATE BENCHES OF THIS TRIBUNAL HAD DELETED SUCH ADDITIONS MADE UNDER SECTION 69C OF THE ACT IN INTER ALIA THE FOLLOWING CASES: - (I) CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD. (372 ITR 619) (BOM); (II) HIRALAL CHUNILAL JAIN VS. ITO (ITA NO. 4547/MU M.2014 DATED 01.01.2016; (III) IMPERIAL IMP & EXP (ITA NO. 5427/MUM/2015 DAT ED 18.03.2016); (IV) SANJAY V. DHRUV (ITA NO. 5089/MUM/2014 DATED 29.02.2016. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. ON AN APPRECIATION OF THE MATERIAL ON RECORD IT IS EVIDENT FROM THE ORDER OF ASSESSMENT THAT IT IS ON THE BASIS OF INFO RMATION OBTAINED FROM THE SALES TAX DEPARTMENT THAT THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE SAID PURCHASES AS WELL AS NOTICES UNDER SECTION 133(6) OF THE ACT TO THE SAID THREE PARTIES FROM WH OM PURCHASES WERE MADE WHICH WERE RETURNED UNSERVED. AS THE ASSESSEE FAILED TO PRODUCE THE SAID PARTIES THE AO PRIMARILY RELYING ON THE INFOR MATION OBTAINED FROM THE SALES TAX DEPARTMENT AND THE STATEMENT OF AN UNCONN ECTED THIRD PARTY SHRI RAJENDRA DODHIWALA (PROF. RUSHABH ENTERPRISES ) HELD THE SAID PURCHASES TO BE BOGUS. WHILE IT MAY BE TRUE THAT TH E SAID THREE PARTIES DID NOT APPEAR BEFORE THE AO FOR WHATEVER REASON THE FACT REMAINS THAT THE ASSESSEE ITSELF HAD FILED CONFORMATIONS FOR PURCHAS ES FROM TWO OF THE THREE PARTIES COPIES OF PURCHASE BILLS COPIES OF BANK A CCOUNT STATEMENTS TO SHOW PAYMENT FOR THE SAME WERE THROUGH BANKING CHAN NELS COPIES OF STOCK REGISTER TO SHOW THAT THE MATERIAL FROM THESE PARTIES HAD BEEN ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 6 RECEIVED ETC. TO ESTABLISH THE GENUINENESS OF THES E PURCHASES. IT IS A FACT ON RECORD THAT THE AO HAS NOT DOUBTED THE SALES EFF ECTED BY THE ASSESSEE AND THEREFORE IT IS IN ORDER TO CONCLUDE THAT WITH OUT CORRESPONDING PURCHASES BEING EFFECTED THE ASSESSEE WOULD NOT HA VE MADE SALES. 4.4.2 IN OUR VIEW THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE TO CONCLUSIVELY PROVE THAT THE PURCHASES ARE BOGUS. MERE RELIANCE BY THE AO ON INFORMATION OBTAINED FROM THE SALES TAX DEPAR TMENT OR THE STATEMENT OF A THIRD PARTY BEFORE THE SALES TAX DEP ARTMENT WITHOUT AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY TO CROS S EXAMINE THAT PERSON OR THE FACT THAT THESE PARTIES DID NOT RESPOND TO N OTICE UNDER SECTION 133(6) OF THE ACT WOULD NOT SUFFICE TO TREAT THE PU RCHASES AS BOGUS AND MAKE THE ADDITION. IF THE AO DOUBTED THE GENUINENES S OF THIS SAID PURCHASES IT WAS INCUMBENT UPON HIM TO CAUSE FURTH ER INQUIRIES IN THE MATTER TO ASCERTAIN THE GENUINENESS OR OTHERWISE OF THE TRANSACTIONS. WITHOUT CAUSING ANY FURTHER ENQUIRES IN RESPECT OF THE SAID PURCHASES THE AO CANNOT MAKE THE ADDITION UNDER SECTION 69C OF TH E ACT BY MERELY RELYING ON INFORMATION OBTAINED FROM THE SALES TAX DEPARTMENT THE STATEMENT/AFFIDAVIT OF A THIRD PARTY SHRI RAJENDRA DODHIWALA WHEREIN THE ASSESSEE WAS NOT NAMED OR AFFORDED OPPORTUNITY OF C ROSS EXAMINATION OF THAT PERSON AND ISSUE OF NOTICES UNDER SECTION 133( 6) OF THE ACT. 4.4.3 IN THE FACTUAL MATRIX OF THE CASE WHERE THE AO FAILED TO CAUSE ANY ENQUIRY TO BE MADE TO ESTABLISH HIS SUSPICION THAT THE SAID PURCHASES ARE BOGUS THE ASSESSEE HAS BROUGHT ON RECORD DOCUMENTA RY EVIDENCES TO ESTABLISH THE GENUINENESS OF THE PURCHASE TRANSACTI ONS THE ACTION OF THE AO IN IGNORING THESE EVIDENCES CANNOT BE ACCEPTED. MOREOVER AS CORRECTLY OBSERVED BY THE LEARNED CIT(A) WHEN THE PAYMENT FO R THE SAID PURCHASES TO THE CONCERNED THREE PARTIES IS THROUGH PROPER BA NKING CHANNELS AND THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE SAID PAYMENTS WERE ROUTED BACK TO THE ASSESSEE THE ADDI TION MADE BY THE AO UNDER SECTION 69C OF THE ACT IS UNSUSTAINABLE. WE A RE FORTIFIED IN THIS VIEW OF OURS BY THE DECISIONS OF INTER ALIA THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUP RA) AND THE DECISION OF ITA NO. 5313/MUM/2013 SHRI VISHAL P. MEHTA 7 THE COORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF HIRALAL CHUNILAL JAIN (SUPRA). SHRI SANJAY V. DHRUV (SUPRA) AND IMPE RIAL IMP & EXP (SUPRA). IN THIS FACTUAL MATRIX OF THE CASE AS DIS CUSSED ABOVE WE FIND NO REQUIREMENT FOR INTERFERENCE IN THE ORDER OF THE LE ARNED CIT(A) AND CONSEQUENTLY UPHOLD THE SAME. THEREFORE REVENUES GROUNDS (I) TO (VI) ARE DISMISSED. 5. IN THE RESULT REVENUES APPEAL FOR A.Y. 2010-11 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 5 TH OCTOBER 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -35 MUMBAI 4. THE CIT - 25 MUMBAI 5. THE DR F BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.