DCIT 8(3), MUMBAI v. TRISTAR JEWELLERY EXPORTS P.LTD, MUMBAI

ITA 6435/MUM/2013 | 2006-2007
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 643519914 RSA 2013
Assessee PAN AABCT0755H
Bench Mumbai
Appeal Number ITA 6435/MUM/2013
Duration Of Justice 1 year(s) 9 month(s)
Appellant DCIT 8(3), MUMBAI
Respondent TRISTAR JEWELLERY EXPORTS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 31-07-2015
Assessment Year 2006-2007
Appeal Filed On 31-10-2013
Judgment Text
E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI A.D. JAIN JM AND SHRI RAJENDRA AM .. ./ I.T.A. NO. 7593 /MUM/2011 ( / ASSESSMENT YEARS : 2006-07 THE ASSTT. COMMISSIONER OF INCOME TAX -8(3) ROOM NO. 217 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. / VS. TRISTAR JEWELLERY EXPORTS PRIVATE LIMITED PLOT NO. 1 & 2 (PART) GROUND FLOOR SEEPZ-SEZ ANDHERI (EAST) MUMBAI 400 096. ./ PAN : AABCT0755H ( / APPELLANT ) .. ( ! / RESPONDENT ) ./ I.T.A. NO. 6435 /MUM/2013 ( / ASSESSMENT YEARS : 2006-07 THE DY. COMMISSIONER OF INCOME TAX -8(3) ROOM NO. 217 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. / VS. TRISTAR JEWELLERY EXPORTS PRIVATE LIMITED PLOT NO. 1 & 2 (PART) GROUND FLOOR SEEPZ-SEZ ANDHERI (EAST) MUMBAI 400 096. ./ PAN : AABCT0755H ( / APPELLANT ) .. ( ! / RESPONDENT ) ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 2 ./ I.T.A. NO. 8292 /MUM/2011 ( / ASSESSMENT YEARS : 2006-07 TRISTAR JEWELLERY EXPORTS PRIVATE LIMITED PLOT NO. 1 & 2 (PART) GROUND FLOOR SEEPZ-SEZ ANDHERI (EAST) MUMBAI 400 096. / VS. THE DY. COMMISSIONER OF INCOME TAX -8(3) ROOM NO. 217 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. ./ PAN : AABCT0755H ( / APPELLANT ) .. ( ! / RESPONDENT ) DEPARTMENT BY SHRI CHANDRA VIJAY ASSESSEE BY : SHRI PRAKASH K. JOTWANI ' # $ % & ' / DATE OF HEARING : 23-07-2015 ()*+ % & ' / DATE OF PRONOUNCEMENT : 31-7-2015 [ / O R D E R PER A.D. JAIN J.M . : .. ITA NO. 7593/MUM/2011 FOR A.Y. 2006-07 HAS BEEN FI LED BY THE DEPARTMENT WHEREAS ITA NO. 8292/MUM/2011 FOR A.Y. 2006-07 STANDS FILED BY THE ASSESSEE AGAINST THE ACTION OF THE LD. CIT( A) IN RESTRICTING THE DISALLOWANCE OF 25% OF PURCHASES MADE BY THE A.O. T O 7%. THE DEPARTMENTS CONTENTION IS THAT THE DISALLOWANCE HAD TO BE CONFI RMED IN TOTO WHEREAS ACCORDING TO THE ASSESSEE THE DISALLOWANCE REQUIRE S TO BE DELETED IN FULL. 2. AS PER THE REGISTRY THERE IS A DELAY OF 10 DAYS IN THE FILING OF THE ASSESSEES APPEAL. AS PER THE AFFIDAVIT FILED BY T HE DIRECTOR OF THE COMPANY HE WAS TRAVELLING FROM 11-11-2011 TO 7-12-2011 AND WAS NOT AVAILABLE IN INDIA FOR FILING THE APPEAL AND IT WAS THEREFORE THAT THE APPEAL WHICH OUGHT TO HAVE BEEN FILED ON 27-11-2011 GOT TO BE FILED O N 8-12-2011 INCURRING A ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 3 DELAY OF 10 DAYS. IN VIEW OF THE CONTENTS OF THE A FFIDAVIT FINDING IT TO BE A CASE OF SUFFICIENT CAUSE PREVENTING THE FILING OF T HE APPEAL IN TIME THE DELAY IS CONDONED. 3. ITA NO. 6435/MUM/2013 FOR A.Y. 2006-07 IS DEPAR TMENTS APPEAL AGAINST THE LD. CIT(A)S ACTION OF DELETION OF CONC EALMENT PENALTY OF RS. 11 94 545/- IMPOSED ON THE ASSESSEE IN THE AFORESAI D MATTER. 4. AS PER THE RECORD THE COMPLETED ASSESSMENT OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2006-07 WAS REO PENED ON THE BASIS THAT INFORMATION WAS RECEIVED FROM THE ITO -25(20(1) MU MBAI THAT DURING THE SURVEY PROCEEDINGS CONDUCTED AT THE PREMISES OF M/S ZALAK IMPEX A PROPRIETARY CONCERN OF ONE SHRI HITEN L. RAWAL. THE SAID ASSESSEE IN HIS STATEMENT RECORDED U/S 136 OF THE ACT HAD CONFESSE D TO HAVE PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF SALES AND PURC HASES TO VARIOUS PARTIES INCLUDING THE ASSESSEE WHO HAD ALLEGEDLY OBTAINED BOGUS BILLS FOR NON- EXISTING PURCHASES OF RS. 4 09 12 718/- DURING THE YEAR. THE A.O. ADDED 25% OF SUCH ALLEGED BOGUS PURCHASES TO THE INCOME OF TH E ASSESSEE. THE LD. CIT(A) REDUCED THE ADDITION TO 7% AMOUNTING TO RS. 35 LAC S. 5. BEFORE THE LD. CIT(A) THE ASSESSEE RAISED THE F OLLOWING GROUND OF APPEAL AMONGST OTHERS:- 2(E) THE LEARNED ASSESSING OFFICER FAILED TO APPRE CIATE THAT APPELLANT HAS NOT GIVEN THE OPPORTUNITY TO CROSS-EXAMINE SHRI HITEN RAWAL PROPRIETOR OF M/S ZALAK IMPEX. THE ADDITION THEREF ORE CANNOT BE SUSTAINED. 6. THE LD. CIT(A) HOWEVER DID NOT ADJUDICATE THE SAID GROUND. PLACING RELIANCE ON THE TRIBUNAL ORDER DATED 8-8-2014 PASS ED IN ITA NO. 6735/MUM/2010 FOR A.Y. 2006-07 IN THE CASE OF ACI T VS. M/S SAY INDIA JEWELLERS PVT. LTD. WHICH IS ONE OF THE PARTIES LIKE THE ASSESSEE ALLEGED TO HAVE MADE BOGUS PURCHASES FROM M/S ZALAK IMPEX. THE LD. COUNSEL FOR THE ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 4 ASSESSEE HAS CONTENDED THAT IN THE PRESENT CASE L IKE IN THE CASE OF M/S SAY INDIA JEWELLERS PVT. LTD. THE A.O. DID NOT DRAW A NY ADVERSE INFERENCE SO FAR AS REGARDS THE EXPORT OF DIAMONDS BY THE ASSESSEE A ND THAT THE ADDITION MADE WAS ONLY ON ASSUMPTIONS AND PRESUMPTIONS. IT HAS B EEN SUBMITTED THAT THE STATEMENT OF SHRI HITEN L. RAWAL PROPRIETOR OF ZAL AC IMPEX WAS NEVER PROVIDED TO THE ASSESSEE AND NO OPPORTUNITY OF CROS S EXAMINATION OF SHRI RAWAL WAS AFFORDED TO THE ASSESSEE THEREBY LEADING TO THE ILLEGAL ADDITION WHICH WAS WRONGLY SUSTAINED IN PART BY THE LD. CIT( A) THOUGH IT OUGHT TO HAVE BEEN DELETED IN FULL. 7. THE LD. D.R. ON THE OTHER HAND RELYING ON THE IMPUGNED ORDER HAS CONTENDED THAT AS PER THE ASSESSMENT ORDER THE A.O . HAD ASKED THE ASSESSEE TO PRODUCE SHRI HITEN L. RAWAL WHICH THE ASSESSEE DID NOT DO; AND THAT THEREFORE THE ADDITION MADE BY THE A.O. WAS PERFEC TLY JUSTIFIED AND IT OUGHT TO HAVE BEEN CONFIRMED IN ITS ENTIRETY. 8. HAVING HEARD THE PARTIES AND HAVING PERUSED THE MATERIAL ON RECORD WE FIND THAT THE COMPLETED ASSESSMENT OF THE ASSESSEE WAS REOPENED ON THE BASIS OF THE STATEMENT OF SHRI HITEN L. RAWAL THE PROPRI ETOR OF M/S ZALAK IMPEX. IN THIS STATEMENT RECORDED U/S 131 OF THE ACT SHRI RA WAL CONFESSED TO HAVE PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF SALES AND PURCHASES TO VARIOUS PARTIES. THE ASSESSEE WAS STATED TO HAVE OB TAINED BILLS FOR NON- EXISTING PARTIES AMOUNTING TO RS. 4 09 12 718/- D URING THE YEAR UNDER CONSIDERATION. THE ASSESSMENT ORDER DATED 21-12-20 10 WAS PASSED PURSUANT TO THE SAID REOPENING. 9. IT REMAINS UNDISPUTED THAT THE ASSESSEE WAS NEVE R PROVIDED ANY OPPORTUNITY TO CROSS EXAMINE SHRI HITEN L. RAWAL T HOUGH HE SPECIFICALLY ASKED FOR SUCH CROSS EXAMINATION. ON THE OTHER HAND THE BURDEN WAS SOUGHT TO BE SHIFTED ON THE ASSESSEE BY THE A.O. BY ASKIN G HIM TO PRODUCE SHRI RAWAL EVEN THOUGH IT WAS THE A.O. WHO HAD RELIED O N THE STATEMENT OF SHRI ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 5 RAWAL WITHOUT EITHER CONFRONTING THIS STATEMENT TO THE ASSESSEE OR PROVIDING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI R AWAL. THEREFORE THE REASSESSMENT ORDER IS AS A RESULT OF VIOLATION OF T HE NATURAL PRINCIPLE OF AUDI ALTERAM PARTEM . A STATEMENT RECORDED AT THE BACK OF A PARTY CANN OT BE USED AGAINST SUCH PARTY WITHOUT CONFRONTING SUCH STATEME NT TO THE PARTY. HENCE ON THIS SCORE ALONE THE REASSESSMENT ORDER IS UNSU STAINABLE IN THE EYE OF LAW AND WE HEREBY CANCEL THE SAME. AS A CONSEQUENCE TH E ORDER OF THE LD. CIT(A) IS ALSO CANCELLED IN TOTO. 10. FURTHER EVEN OTHERWISE BEFORE THE A.O. THE A SSESSEE HAD CONTENDED BY WRITTEN SUBMISSIONS FILED ON 25-11-2010 INTER A LIA THAT DURING THE YEAR THEY HAD PURCHASED DIAMONDS WORTH RS. 4 09 12 718/- FROM M/S ZALAK IMPEX; THAT THE ASSESSEE BEING IN AN EXPORT PROMOTI ON ZONE THE MOVEMENT OF ITS GOODS IS CONTROLLED AND CUSTOMS APPROVED; THAT THE PURCHASES BEING APPROVED PURCHASES THERE WAS NO QUESTION OF THEIR BEING BOGUS PURCHASES. THE ASSESSEE ENCLOSED THE CUSTOM APPROVED INVOICES IN RESPECT OF PURCHASES FROM ZALAK IMPEX. THESE INVOICES HAVE BEEN PRODUCED BEFORE US ALSO IN THE PAPER BOOK FILED BY THE ASSESSEE. AS PER THESE INV OICES THE GOODS PURCHASED HAD BEEN VERIFIED AND APPROVED BY THE CUSTOMS AUTHO RITY. THIS CLEARLY SHOWS THAT THE GOODS HAD ACTUALLY BEEN PURCHASED AND RECE IVED BY THE ASSESSEE. AS SUCH THESE PURCHASES COULD NOT HAVE BY ANY STRETC H OF IMAGINATION BEEN TREATED AS BOGUS PURCHASES. IT IS ALSO NOTEWORTHY T HAT THE PAYMENTS MADE BY THE ASSESSEE TO ZALAK IMPEX WERE THROUGH ACCOUNT PA YEE CHEQUES ONLY. NEITHER OF THE TAXING AUTHORITIES HOWEVER TOOK TH ESE INVOICES INTO CONSIDERATION AND WRONGLY HELD THE ASSESSEES PURCH ASES FROM ZALAK IMPEX TO BE BOGUS PURCHASES. NOTHING HAS BEEN BROUGHT ON RE CORD TO SHOW THAT THESE INVOICES WERE SELF MADE OR FABRICATED. MOREOVER TH E COMPARATIVE CHART OF PURCHASES MADE DURING THE YEAR AND THE SELLING PRIC E (PAGE 141-144) AS FILED BEFORE THE LD. CIT(A) HAS NOT BEEN REFUTED AND THIS ALSO GOES TO PROVE THE THEORY OF BOGUS BILLS AND ACCOMMODATION ENTRIES TO BE WRONG. THEREFORE THE ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 6 ORDER UNDER APPEAL IS A RESULT OF COMPLETE MISREADI NG AND NON-READING OF COGENT DOCUMENTARY EVIDENCE BROUGHT ON RECORD BY TH E ASSESSEE. FOR THIS REASON ALSO ALONG WITH THE REASON THAT THE SALES M ADE BY THE ASSESSEE WERE NEVER QUESTIONED THE ADDITION IS DELETED IN TOTO. 11. ITA NO. 6435/MUM/2013 HAS BEEN FILED BY THE DEP ARTMENT AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY OF RS. 11 94 545/-. 12. THE A.O. LEVIED THE PENALTY IN QUESTION QUA THE AFORESAID ADDITION MADE. THE LD. CIT(A) DELETED THE PENALTY HOLDING T HAT THE PENALTY WAS NOT LEVIABLE ON ADDITION MADE ON ESTIMATION BASIS AND T HAT IT DID NOT STAND CONFIRMED THAT THE ASSESSEE HAD WILLFULLY SUBMITTED IN-ACCURATE PARTICULARS TO CONCEAL ITS INCOME. 13. WE HAVE IN THE PRECEDING PORTION OF THIS ORDER CANCELLED THE ADDITION MADE IN TOTO. THEREFORE THE VERY BASIS OF THE LEV Y OF PENALTY IN QUESTION NO LONGER SURVIVES. ACCORDINGLY THE GRIEVANCE OF THE DEPARTMENT IS REJECTED AND THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY IS UPHELD. 14. IN THE RESULT ITA NOS. 7593/MUM/2011 AND 6435/ MUM/2013 FILED BY THE DEPARTMENT ARE DISMISSED WHEREAS ITA NO. 8292/ MUM/2011 FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JULY 2015. % ()*+ ' -. / 0 23-07-2015. ) % 1$ SD/- SD/- (RAJENDRA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER - ' =$ MUMBAI ; / DATED 31-07-2015 [ ITA 7593/M/11 ITA 6435/M/13 & ITA 8292/M/11 7 #.../ R.K. R.K. R.K. R.K. SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' E& () / THE CIT(A)- 38 MUMBAI 4. ' E& / CIT- CENT. IV MUMBAI 5. H#I 1 &JK ' JK+ - ' =$ / DR ITAT MUMBAI E BENCH 6. 1 L M $ / GUARD FILE. ! ( / BY ORDER ! H& & //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) - ' =$ / ITAT MUMBAI