ACIT 30(1), MUMBAI v. DHANANJAY MISHRA, MUMBAI

ITA 7287/MUM/2014 | 2010-2011
Pronouncement Date: 07-10-2016 | Result: Dismissed

Appeal Details

RSA Number 728719914 RSA 2014
Assessee PAN AFLPM1475K
Bench Mumbai
Appeal Number ITA 7287/MUM/2014
Duration Of Justice 1 year(s) 9 month(s) 30 day(s)
Appellant ACIT 30(1), MUMBAI
Respondent DHANANJAY MISHRA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 07-10-2016
Assessment Year 2010-2011
Appeal Filed On 08-12-2014
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D MU MBAI BEFORE SHRI B.R. BASKARAN ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO.7287/MUM/2014 FOR ASSESSMENT YEAR: 2010-11 ACIT 30(1) C-13 R.NO. 503 PRATYAKSH KAR BHAVAN BANDRA (E) MUMBAI-400051. VS. SHRI DHANANJAY MISHRA YEOMAN MARINE SERVICES UNIT NO. 29 NEELGIRI INDS. ESTATE T.J. ROAD SEWRI (W) MUMBAI-400015. PAN: AFLPM1475K (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NITIN WAGHMODE ( SR. DR) ASSESSEE BY : SHRI SATISH R. MODY (AR) DATE OF HEARING : 12.07.2016 DATE OF PRONOUNCEMENT : 07.10.2016 O R D E R PER PAWAN SINGH JM: 1. THE PRESENT APPEAL U/S. 253 OF THE INCOME-TAX ACT I S DIRECTED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-34 MUMBAI DATED 29.09. 2014 FOR AY-2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MARINE CONTRACT FILED RETURN OF INCOME FOR RELEVAN T AY ON 15.10.2010 DECLARING TOTAL INCOME OF RS. 57 11 308/-. THE RETURN OF INCO ME WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESS MENT OBSERVED THAT ASSESSEE HAS MADE CERTAIN PURCHASES FROM THE PERSON S WHO WERE IDENTIFIED AS HAWALA TRADERS BY SALES TAX DEPARTMENT STATE OF MA HARASHTRA. THOSE HAWALA TRADER USED TO ISSUE BOGUS BILLS WITHOUT DELIVERY O F GOODS. THUS THE AO MADE THE ADDITION OF RS. 72 60 177/- U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHEREIN THE ENTIRE ADDITION WAS DELETED. THUS AGGR IEVED BY THE ORDER OF CIT(A) THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 2 ITA NO. 7287/M/2014 SHRI DHANANJAY MISHRA 3. WE HAVE HEARD LD. THE DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND THE LD. AUTHORISED REPRESENTATIVE (AR) OF ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD DR FOR THE REVENUE ARGU ED THAT DURING THE ASSESSMENT PROCEEDING THE AO ISSUED NOTICE U/S 133 (6) OF THE ACT TO THE PARTIES TO ASCERTAIN THE GENUINENESS OF THE PARTIES THE FRO M WHOM THE ASSESSEE HAS PURCHASED THE MATERIAL. THE NOTICE SENT TO SUCH PAR TIES EITHER NOT SERVED OR RETURNED UN-SERVED. OUT OF WHICH NOTICE WAS NOT SE RVED ON TWO PARTIES TWO NOTICES RETURN BACK UNSERVED AND ON REMAINING TWO O N WHICH THE NOTICE WAS SERVED NO REPLY RECEIVED. THE AO FURTHER GAVE THE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION AND GENUINE NESS OF THE EXPENSES. THE ASSESSEE FAILED TO PRODUCE THE PARTIES FROM WHOM TH E PURCHASES WERE MADE THUS THE GENUINENESS OF THE EXPENSES INCURRED ON PU RCHASE WERE TREATED AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. THE LD. CIT(A) DELETED THE ENTIRE ADDITION DESPITE THE FACT THAT GENUINENESS OF THE P ARTIES WAS NOT PROVED. LD. DR PRAYED FOR SETTING ASIDE THE ORDER OF THE CIT(A) AN D TO RESTORE THE ORDER OF AO. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE ARGUED THAT FULL DETAILS OF PURCHASES WERE SUBMITTED DURING THE COURSE OF ASSES SMENT. THE ASSESSEE MADE THE PAYMENT OF RS. 27 71 059/- THROUGH BANKING TRAN SACTION. AND THE BALANCE WAS SHOWN AS OUTSTANDING PAYABLE THE ASSESSEE HAS E XPLAINED THE SOURCE OF EXPENDITURE FOR THE ENTIRE AMOUNT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REPAIRING AND MAINTENANCE OF NAVAL AND OTHER SHIPS. THE ASSESSEE IS REQUIRED TO RAW-MATERIAL LIKE STEEL ALUMINIUM PIPES CUNI PIPES S.S. PIPES BRASS RODS M. S. STEEL SHEETS ETC. TO EXECUTE THESE CONTRACT. AS ASSESSEE DEALS WITH THE GOVERNMENT DEPARTMENT LIKE NAVAL DOCKYARD WHO IS SC RUTINIZED IN ALL THE PAYMENTS AND EXPENSES BEFORE SETTLING THE BILLS AS PER THE TERMS AND CONDITION OF THE CONTRACT. THE ASSESSEE HAS GIVEN ALL DOCUMEN TARY PROOF TO THE AO WHICH INCLUDES THE PURCHASE ORDER INVOICES CHALLAN COP Y OF GOODS INWARD RECEIPTS. DESPITE THE ABOVE EVIDENCE THE AO MADE THE ADDITIO N OF ENTIRE PURCHASE TREATING AS BOGUS PURCHASES. OUT OF THE PURCHASED M ATERIAL OF RS. 25 62 560/- FROM COLOURSHOP TRADING CO. WAS ON THE BASIS OF CRE DIT LETTER OF BANK AND PAYMENTS WERE ROUTED THROUGH BANKS HENCE THE BANK L.C. THE COPY OF 3 ITA NO. 7287/M/2014 SHRI DHANANJAY MISHRA AFFIDAVIT AND THE STATEMENT ON WHICH THE AO RELIED WERE NOT SUPPLIED TO THE ASSESSEE. THE AO RELIED UPON THE STATEMENT OF THIRD PARTY WITHOUT SUPPLYING IT TO THE ASSESSEE. IT WAS FURTHER ARGUED THAT THE UNU SED MATERIAL WAS INCLUDED IN THE CLOSING STOCK. THE AO DID NOT CONSIDER THIS ASP ECT AND ADDED THE EXPENDITURE THE ASSESSEE WAS HAVING A CLOSING STOC K OF RS. 1 00 88 102/- WHICH INCLUDES THE MATERIAL UNUSED. THE AO NOT CONSIDERED THE STOCK AVAILABLE WITH THE ASSESSEE NOR REJECTED THE STOCK REGISTER. LD. A R OF THE ASSESSEE FURTHER SUBMITTED THAT HE HAS PLACED ON RECORD THE COMPLETE DETAILS OF STOCK REGISTER DETAILS OF PURCHASE ORDER INVOICES CHALLAN AND GO ODS INWARD RECEIPT AS PER PAPERBOOK PAGE NO. 17 TO 128. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO WHILE MAKING THE ASSESS MENT OBSERVED THAT ASSESSEE HAD AFFECTED THE PURCHASES FROM FOLLOWING PARTIES WHICH WERE IDENTIFIED BY THE SALES TAX DEPARTMENT AS UNDER: SR. NO. NAME OF THE PARTY AMOUNT SO CALLED PURCHASES MADE (RS.) 1 V3 ENTERPRISES 9 48 886 2 SHRI SAI TRADING CO. 9 33 814 3 ROHIT ENTERPRISES (MATERIAL) 9 36 287 4 NIDDHISH IMPEX PVT. LTD. 9 42 568 5 DEEP ENTERPRISES 9 36 062 6 COLOURSHOP TRADING CO. PVT. 25 62 560 TOTAL- 72 60 177 THE AO ISSUED NOTICE TO ALL THE PARTIES OUT OF WHIC H THE NOTICES WERE SERVED UPON TWO PARTIES TWO NOTICE RETURNED BACK UN-SERVE D AND THE REMAINING TWO ON WHICH NOTICE WERE SERVED NO REPLY WAS RECEIVED. TH E AO FURTHER OBSERVED THAT ASSESSEE FAILED TO PRODUCE THE PARTIES FOR VERIFICA TION THE GENUINENESS OF THE EXPENSES WERE NOT PROVED AND TREATED THE ENTIRE EXP ENDITURE AS UNEXPLAINED EXPENDITURE FROM THESE SIX PARTIES. THE AO NOT DISC USSED IN ITS ORDER THE CONTENTION OF THE ASSESSEE THE EVIDENCE OF PURCHAS ES DELIVERY OF GOODS AND THE PAYMENT MADE THROUGH BANKING TRANSACTION AS WELL AS THE STOCK REGISTER. BEFORE THE CIT(A) THE SIMILAR CONTENTION WAS RAISED BY TH E ASSESSEE. LD. CIT(A) REPRODUCED THE SUBMISSION OF ASSESSEE IN ITS ORDER. AFTER CONSIDERING THE 4 ITA NO. 7287/M/2014 SHRI DHANANJAY MISHRA CONTENTIONS OF THE ASSESSEE THE AO CONCLUDED THAT ASSESSEE GAVE VALID EXPLANATION WITH SUBSTANTIATING EVIDENCE IN RESPECT OF COST INCURRED TOWARDS THE PURCHASES DURING THE COURSE OF BUSINESS. IT WAS FUR THER CONCLUDED THAT THE ASSESSEE FURNISHED BANK STATEMENT CHALLAN AND COPY OF INWARD RECEIPT AND DELETED THE ENTIRE ADDITION. THE COORDINATE BENCH OF THIS TRIBUNAL HIRALAL CHUNNILAL JAIN VS. ITO-ITA NO. 4547/MUM/2014 DT. 01.01.206 RELYING UPON THE DECISION OF HONBLE JURISDICTIONA L HIGH COURT IN NIKUNJ EXIMP ENTERPRISES (P) LTD. (SU PRA) KALATHIL TRISTAR JEWELLERY HELD AS UNDER: IN THE CASE OF NIKUNJ EXIMP(SUPRA) THE HON'BLE BOMB AY HIGH COURT HAS HELD IF SALES WERE NOT DOUBTED BY THE AO AND COPIES OF B ANK STATEMENT SHOWING ENTRIES OF PAYMENT THROUGH ACCOUNT PAYEE CHEQUES TO THE SUPPLIERS COPIES OF INVOICES FOR PURCHASES AND A STOCK STATEMENT I.E. STOCK RECONCILIATION STATEMENT ARE FILED PURCHASED COULD NOT BE REJECTED FURTHER THE CO-ORDINATE BENCH OF ITAT MUMBAI IN CA SE OF ACIT VS. TARLA R. SHAH- ITA NO. 5295/M/2013 DT. 02.02.2016 RELYING UPON THE DECISION OF SHRI RAMESH KUMAR & CO.(SUPRA) VS. ACIT IN ITA NO. 2959/ M/2014 AND RAJEEV G. KALATHIN IN ITA NO. 6727/M/2013 HELD AS UNDER: 5.1 NOW THE ISSUE BEFORE US IS WHETHER THE AFORESA ID CASE OF THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DE CISIONS CITED BY THE LD. COUNSEL. IN THE CASE OF ITA NO.6727/MUM/2012 (AY-20 09-10) DATED 20.08.2014 WE FIND THAT THE SIMILAR ADDITION WAS MA DE ON THE BASIS OF INFORMATION AVAILABLE ON WEBSITE OF SALES TAX DEPAR TMENT GOVERNMENT OF MAHARASHTRA WHICH WAS DELETED BY THE TRIBUNAL. THE RELEVANT PARA 2.4 IS EXTRACTED AS BELOW. 2.4. 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL BEFORE US. WE FIND THAT AO HAD MADE THE ADDITION AS ONE OF THE SUPPLIER WAS DECLARED A HAWALA DEALER BY THE VAT DEPARTMENT. WE AGREE THAT IT WAS A GOOD STARTING POINT FOR MAKING FURTHER INVESTIGATIO N AND TAKE IT TO LOGICAL END. BUT HE LEFT THE JOB AT INITIAL POINT ITSELF. SUSPICION OF HIGHEST DEGREE CANNOT TAKE PLACE OF EVIDENCE. HE COULD HAVE CALLED FOR THE DETAILS OF THE BANK ACCOUNTS OF THE SUPPLIERS TO FIND OUT AS WHETH ER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. WE FI ND THAT NO SUCH EXERCISE WAS DONE. TRANSPORTATION OF GOOD TO THE SI TE IS ONE OF THE DECIDING FACTOR TO BE CONSIDERED FOR RESOLVING THE ISSUE. THE FAA HAS GIVEN A FINDING OF FACT THAT PART OF THE GOODS RECE IVED BY THE ASSESSEE WAS FORMING PART OF CLOSING STOCK. AS FAR AS THE CASE O F WESTERN EXTRUSION INDUSTRIES. WWW.TAXGURU.IN ITA/6727/MUM/2012/RGK 4( SUPRA) IS CONCERNED WE FIND THAT IN THAT MATTER CASH WAS IMM EDIATELY WITHDRAWN BY THE SUPPLIER AND THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS. BUT IN THE CASE BEFORE US THERE IS NOTHING IN THE ORDER OF T HE AO ABOUT THE CASH TRAIL. SECONDLY PROOF OF MOVEMENT OF GOODS IS NOT IN DOUBT. THEREFORE 5 ITA NO. 7287/M/2014 SHRI DHANANJAY MISHRA CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE UNDER APPEAL WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOE S NOT SUFFER FROM ANY LEGAL INFIRMITY AND THERE ARE NOT SUFFICIENT EVIDEN CE ON FILE TO ENDORSE THE VIEW TAKEN BY THE AO. SO CONFIRMING THE ORDER OF T HE FAA WE DECIDE GROUND NO.1 AGAINST THE AO.' THUS KEEPING IN VIEW THE DECISION OF THE COORDINAT E BENCH OF THIS TRIBUNAL WHERE THE AO HAS NOT DISPUTED THE USE OF MATERIAL N OR DISPUTED THE STOCK OF THE ASSESSEE HENCE WE DO NOT FIND ANY ILLEGALITY OR IN FIRMITY IN THE ORDER OF LD CIT(A) I N THE RESULT APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER 2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 07/10/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITA T MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY/