THE ITO 16(3)(4), MUMBAI v. SHRI GUVINDER SINGH KOCHER, MUMBAI

ITA 5602/MUM/2005 | 2001-2002
Pronouncement Date: 29-09-2011 | Result: Dismissed

Appeal Details

RSA Number 560219914 RSA 2005
Assessee PAN AAHPK1643C
Bench Mumbai
Appeal Number ITA 5602/MUM/2005
Duration Of Justice 6 year(s) 29 day(s)
Appellant THE ITO 16(3)(4), MUMBAI
Respondent SHRI GUVINDER SINGH KOCHER, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 24-04-2009
Date Of Final Hearing 26-09-2011
Next Hearing Date 26-09-2011
Assessment Year 2001-2002
Appeal Filed On 31-08-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI R.V. EASWAR (PRESIDENT) & SHRI J SUDHAK AR REDDY (AM) I.T.A.NO. 5602/MUM/2005 (ASSESSMENT YEAR : 2001-02) ITO 16(3)(4) MATRU MANDIR MUMBAI. VS. SHRI GURVINDER SINGH KOCHER PROP. AMARJEET ENTERPRISES 355 VITHALBHAI PATEL ROAD MUMBAI-400 004. PAN/GIR NO. : AAHPK1643C ASSESSEE BY : SHRI DINESH JOOTHWAT DEPARTMENT BY : SHRI JITENDRA YADAV DATE OF HEARING : 26.9.2011 DATE OF PRONOUNCEMENT : 29.9.2011 ORDER PER J. SUDHAKAR REDDY (AM) :- THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XVI MUMBAI DATED 17.6.2005 FOR A.Y. 2001-02. 2. FACTS IN BRIEF. THE ASSESSEE IS IN INDIVIDUAL AN D PROPRIETOR OF M/S. AMARJEET ENTERPRISES. HE IS IN THE BUSINESS OF TRAD ING AND EXPORTING OF AUTO PARTS. THE ASSESSEE FILED A RETURN OF INCOME O N 30.10.2001 FOR A.Y. 2001-02. THE ASSESSEE CLAIMED THAT HE HAS RECEIVED EXPORT SALE PROCEEDS TO THE TUNE OF ` 31 79 922/-. GROSS TOTAL INCOME WAS SHOWN AT ` 25 31 441/- AND DEDUCTION U/S. 80HHC WAS CLAIMED A T ` 19 50 846/-. THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS NOTED THAT THE OPENING STOCK OF THE ASSESSEE WAS ` 1 80 175/- AND THAT THE PURCHASES MADE DURING THE YEAR WAS ONLY 6 41 968/- TOTALING T O ` 8 22 143/- AND THAT THE ASSESSEE HAS CLAIMED TO HAVE SOLD THESE GO ODS ABROAD FOR ` 31 79 922/- EARNING PROFIT OF ` 23 57 779/-. HE OBSERVED THAT THE ASSESSEE HAS EARNED ABNORMAL PROFIT ON EXPORT OF AU TO PARTS OF 286.78%. HE DOUBTED THE PURCHASES AND INQUIRED THAT M/S. SHR EE SHIVAM CORPORATION VILE PARLE EAST MUMBAI-57 FROM WHOM THE ASSESSEE HAS DECLARED TO HAVE PURCHASED 86.53% OF GOODS. SHRI RA JENDRA GOKULDAS PAREKH PROPRIETOR OF M/S. SHREE SHIVAM CORPORATION STATED THAT HE DID NOT SELL ANY GOODS TO THE ASSESSEE AND THAT HE HAD SIMPLY ISSUED BLANK SHRI GURVINDER SINGH KOCHER 2 SALE BILLS. SHRI PAREKH FURTHER STATED THAT THE PAY MENTS MADE AGAINST THE ABOVE PURCHASES IN CHEQUE WERE TAKEN BACK IN CASH B Y THE ASSESSEE AND THAT A SMALL AMOUNT OF ` 2000/- WAS GIVEN HIM AS COMMISSION FOR ISSUING THE BILLS. ON BEING CONFRONTED THE ASSESSE E STOOD BY HIS CLAIM THAT GOODS WERE PURCHASED FROM M/S. SHREE SHIVAM CO RPORATION. THE ASSESSING OFFICER INQUIRED WITH THE BANKS IN WHICH M/S. SHREE SHIVAM CORPORATION HAD ACCOUNTS AND IT REVEALED THAT ON TH E SAME DATE ON WHICH MONEY WAS TRANSFERRED BY THE ASSESSEE TO M/S. SHREE SHIVAM CORPORATION CASH WAS WITHDRAWN. THE DETAILS ARE GI VEN IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER CONCLUDED T HAT THE PURCHASES FROM SHREE SHIVAM CORPORATION WERE NOT GENUINE. 3. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HA D IN FACT EXPORTED CERTAIN GOODS AS PER THE EVIDENCE PRODUCED BEFORE HIM AND CAME TO A CONCLUSION THAT THERE WOULD HAVE BEEN SOME PURCHASE S. AS THE ASSESSEE HAS NOT SUBSTANTIATED HIS PURCHASES THE ASSESSING OFFICER DETERMINED THE GROSS PROFIT OF 25% ON SALE AS REASONABLE AND TREATED BALANCE OF THE EXPORT PROCEEDS AS COST OF PURCHASE AND MADE AN ADD ITION OF ` 15 62 799/- AS UNEXPLAINED PURCHASES. CALCULATION W AS ARRIVED AT AS FOLLOWS :- EXPORT SALE : ` 31 79 922 25% PROFIT THEREON IS = ` 7 94 980/- COST OF PURCHASE ` 31 79 922 MINUS ` 7 94 980 = ` 23 84 942/- COST OF PURCHASE DECLARED WAS ` 8 22 143/- SO THE ADDITION WAS ` 23 84 942/- MINUS ` 8 22 143/- = ` 15 62 799/-. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN AP PEAL. THE FIRST APPELLATE AUTHORITY GRANTED RELIEF BY OBSERVING AS FOLLOWS :- GROUND NO. 1 : WHICH IS CHALLENGING ADDITION OF ` 15 62 799/- ON ACCOUNT OF UNACCOUNTED INCOME SUPPRESSED FOR PURCHA SES. THE APPELLANT SUBMITTED THE RELEVANT EVIDENCES BEFORE A SSESSING OFFICER REGARDING EXPORT DURING THE YEAR. THEREFORE THERE HAS TO BE PURCHASES AGAINST THE EXPORTS. I HAVE GONE THROUGH THE FACTS OF THE CASE AS WELL AS THE ASSESSING OFFICER ASSESSMEN T ORDER. THE ASSESSING OFFICER FAILED TO BRING ANY CONTRARY EVID ENCES TO ESTABLISH THAT THE APPELLANT HAS EMPLOYED HIS UNACC OUNTED MONEY OF ` 15 62 799/- TO MAKE THE PURCHASES IN ADDITION TO T HE TOTAL PURCHASES OF ` 6 41 968/-. I THEREFORE REJECT THE CLAIM OF THE ASSESSING OFFICER. SHRI GURVINDER SINGH KOCHER 3 AGGRIEVED THE REVENUE IS IN APPEAL ON THE FOLLOWIN G GROUNDS :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO DELETE THE ADDITION OF ` 15 62 799/- REPRESENTING THE PURCHASES MADE OUT OF UNACCOUNTED INCOME WITHOUT APPRECIATING THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO CONSIDER THE PURCHASES OF ` 15 62 799/- WHICH WERE MADE OUT OF THE UNACCOUNTED INCOME FOR COMPUTATION OF DEDUCTION U/S. 80HHC. 3) THE APPELLANT PRAYS THAT THE ORDER OF LEARNED CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER RESTORED. 5. LEARNED DEPARTMENTAL REPRESENTATIVE SHRI JITENDR A YADAV DREW THE ATTENTION OF THE BENCH TO PAGE NO. 6&7 OF THE A SSESSEES PAPER BOOK AND POINTED OUT THAT AS PER THE STOCK REGISTER IT CAN BE SEEN THAT THE GOODS EXPORTED WERE NOTHING BUT BOLT BRASS WASHER NUTS STEEL ROD WIRES AND CABLES ETC. HE SUBMITTED THAT THESE GENERAL ITE MS ARE AVAILABLE IN THE MARKET AND THE CLAIM OF THE ASSESSEE THAT IT HAS EA RNED A PROFIT OF 286.78% ON EXPORT IS HIGHLY ABNORMAL. HE TOOK THIS BENCH THROUGH THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT ONCE THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS PURCHASE THE ASS ESSING OFFICER CAN REASONABLY COME TO A CONCLUSION THAT THERE WERE UNA CCOUNTED AND SUPPRESSED PURCHASES. HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT LEARNED CIT(A) HAS PASSED A CRYP TIC ORDER BEREFT OF REASONS AND THAT LEARNED CIT(A) HAS NOT DEALT WITH THE ISSUES AT ALL. HE SUBMITTED THAT BOTH THE GROUNDS ARE INTERLINKED AND HAVE TO BE ALLOWED. 6. LEARNED COUNSEL FOR THE ASSESSEE SHRI DINESH JOO THWAT ON THE OTHER HAND FILED A PAPER BOOK RUNNING INTO 46 PAGES AND SUBMITTED THAT IT IS WRONG TO SAY THAT THE ASSESSEE HAS EARNED 286 % AND THE PROFITS WORKS OUT TO 76% OF THE SALES. HE SUBMITTED THAT TH E ASSESSING OFFICER HAS NOT GIVEN ANY SHOW-CAUSE NOTICE NOR HAS GRANTED THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINATION THE PROPRIETOR OF M/S. SHREE SHIVAM CORPORATION. HE RELIED ON THE ORDER OF LEARNED CIT( A). ON QUERY FROM THE SHRI GURVINDER SINGH KOCHER 4 BENCH LEARNED COUNSEL FOR THE ASSESSEE STATED THAT NO SPECIFIC REQUEST WAS MADE FOR CROSS EXAMINATION. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED THAT TH E GP WAS 286% OF PURCHASE AND 76% OF SALE VALUE. 7. RIVAL CONTENTIONS WERE HEARD. ON CAREFULLY CONSI DERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE A PERUSAL OF T HE PAPERS ON RECORD AND ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED WE HOLD AS FOLLOWS. THE ORDER OF LEARNED CIT(A) IS CRYPTIC. F IRST APPELLATE AUTHORITY HAS NOT DEALT WITH THE ISSUES AT ALL. THIS IS THE C ASE WHERE THE ASSESSEE HAS EXPORTED BOLTS BRASS WASHERS WIRES AND CABLES NUT ETC. WORTH ` 8 22 143/- FOR ` 31 79 922/-. PROFIT EARNED AS PERCENTAGE OF COST OF PURCHASE 286.78% THIS IS ABNORMAL. THE SALE PRICE W AS 386% MORE THAN THE COST PRICE. ON THESE FACTS THE FINDINGS OF THE ASSESSING OFFICER IN OUR OPINION ARE CORRECT. LEARNED CIT(A) HAS NOT DEALT W ITH THIS ISSUE. THE ASSESSING OFFICER HAS PROVED THAT THE CLAIM OF THE ASSESSEE THAT IT PURCHASED GOODS FROM M/S. SHREE SHIVAM CORPORATION VILE PARLE EAST MUMBAI-57 IS WRONG. THE PURCHASE WAS PROVED AS INGE NUINE. THE ASSESSEE HAS NOT ASKED FOR AN OPPORTUNITY TO CROSS EXAMINE SHRI RAJENDRA G. PAREKH PROPRIETOR OF M/S. SHREE SHIVAM CORPORATION AT ANY STAGE OF ASSESSMENT PROCEEDINGS OR THEREAFTER. THUS THIS IS NOT A CASE WHERE THERE IS VIOLATION OF PRINCIPLE OF NATURAL JU STICE. THE ASSESSEE HAS NOT BROUGHT OUT ANY EVIDENCE TO CONTRADICT THE FIND INGS OF THE ASSESSING OFFICER THAT THE PURCHASE PURPORTED TO HAVE BEEN MA DE FROM SHRI RAJENDRA G. PAREKH OF M/S. SHREE SHIVAM CORPORATION ARE NOT GENUINE. THIS ASPECT IS NOT DEALT WITH BY LEARNED CIT(A). ON THIS FACTUAL MATRIX IN THE ABSENCE OF ASSESSEE LEADING ANY EVIDENCE TO CO NTRADICT THE EVIDENCE COLLECTED BY THE ASSESSING OFFICER REGARDING THE P URCHASES MADE FROM M/S. SHREE SHIVAM CORPORATION WE ARE INCLINED TO U PHOLD THE FINDINGS OF THE ASSESSING OFFICER. 8. COMING TO THE OTHER ADDITION THE ASSESSING OFFI CER IN OUR OPINION WAS RIGHT IN HOLDING THAT NO EXPORT OF GOODS CAN BE MADE WITHOUT PURCHASE. THE ASSESSING OFFICER REASONABLY ESTIMATE D 25% OF THE SALE CONSIDERATION AS A MARGIN. THE PERCENTAGE WOULD BE MUCH MORE WHEN SHRI GURVINDER SINGH KOCHER 5 CALCULATED ON PURCHASE. THUS IN OUR OPINION THE AS SESSING OFFICER HAS RIGHTLY ESTIMATED PURCHASES AT ` 23 84 942/-. AS THE ASSESSEE HAS ONLY DECLARED PURCHASE OF ` 8 22 143/- THE BALANCE ESTIMATE PURCHASE HAVE RIGHTLY BEEN HELD AS UNACCOUNTED PURCHASE AND ADDIT ION HAS BEEN MADE. SUCH ADDITION IS WARRANTED U/S. 69C OF THE ACT. THU S WE UPHOLD THE ORDER OF THE ASSESSING OFFICER AND REVERSE THE ORDE R OF THE FIRST APPELLATE AUTHORITY ON THIS ISSUE. 9. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED. ORDER HAS BEEN PRONOUNCED ON 29 TH DAY OF SEPTEMBER 2011. SD/- (R.V. EASWAR) PRESIDENT SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED : 29 TH SEPTEMBER 2011. COPY TO : 1. THE APPELLANT 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