T K Exports Mumbai v. Ito 25 1 5 Mumbai

P A G E 1 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 In The Income Tax Appellate Tribunal I Bench M Umbai Before Shri Rajendra Am And Shri Ravish Sood Jm Ita No 7399 Mum 201 6 Assessment Year 2007 08 M S T K Exports Plot No 6 F 11 12 Wicel Opp Seepz Midc Andheri E Mumbai 400 093 Vs Ito 25 1 5 M Umbai Pan No Aacft 3817 C Appellant R Espondent A Ppellant By Shri Rishabh Chaturvedi A R Respondent By Shri V Vidhyadhar D R Date Of Hearing 09 11 2017 Date Of Pronouncement 20 1 2 2017 O R D E R Per Ravish Sood Judicial Member The Present Appeal Is Directed Against The Order Passed By The Cit A 37 Mumbai Dated 26 09 2016 Which In Itself Arises From The Order Passed By The A O Under Sec 143 3 R W S 147 Of The Income Tax A Ct 1961 For Short Act Dated 18 03 2015 The Ass Essee Assailing The Order Of The Cit A Had Raised Before Us The F Ollowing Grounds Of Appeal P A G E 2 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 1 Learned Commissioner Of Income Tax Appeals 37 Cit A On The Facts And Circumstances Of The Case And In Law Has Erred In Upholding The Addition Made By The Assessing Officer On Account Of Purported Bogus Purchases Made By The Appellant Amounting To Rs 55 10 725 On The Basis Of Information Received From The Sales Tax Depa Rtment Mumbai With Regard To Supposed Hawala Sales By One Krishna Diam Pvt Ltd To The Appellant The Cit A Ought To Have Considered The Appellants Plea That It Had Neither Made These Bogus Purchases Nor Claimed The Same Which Is Evident From Its Audi Ted Accounts 2 Appellant Craves Leave To Present The Police Report And An Affidavit Of The Hawala Party Which Clarifies That The Bogus Purchase Bills Were Taken By Another Party With The Same Name T K Exports And Not The Appellant Appellant Craves Leave To Add To And Or Amend And Or Modify And Or Alter And Or Delete The Aforesaid Grounds Of Appeal 2 Briefly Stated The Facts Of The Case Are That The Assessee Had Filed Its Return Of Income On 30 03 2008 Declaring Total Income Of Rs Nil The Return Of Income Filed By The Assessee Was Processed As Such Under Sec 143 1 Of The Act That The A O Was I N Receipt Of Information From The Dgit Inv Mumbai That On The Basis Of Investigation S Carried Out By The Sales Tax Department Maharashtra Information Had Emerged In Respect Of Certain Person S Who Had Indulged In Issuance Of Bogus Purchase Bills With Out Delivery Of Actual Goods Th E Aforesaid Information Revealed That The Assessee Was One Of The Beneficiar Y Who Had Taken The Bogus Purchase Bills The A O On The Basis Of The Aforesaid Information Reopened The Case Of The Assessee Under Sec 147 Of The Act The Assessee In Compliance To The Noti Ce Served On Him Under Sec 148 Therein Vide Its L E Tter Dated 15 04 2014 Requested That The Original Return Of Income Filed On 30 03 2008 May Be Treated As A Return Of Income Filed In Compliance Thereto The Af Oresaid Request Of The Assessee Was Accepted And Acted Upon By The A O Who Thereafter Issued Notices Under Sec 143 2 142 1 Of The Act P A G E 3 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 3 That During The Course Of The Assessment Proceedings The A O Acting On The Aforesaid Information Gathered From The Sales Tax Department Therein Directed The Assessee To Substantiate The Genuineness And Veracity Of The Purchase Transactions Of Rs 55 10 725 Which Were Claimed To Have Been Made From M S Krishna Dian Pvt Ltd The A O Directed The Assessee To Prove The Authenticity Of The Aforesaid Purchase Transactions By Producing Details Like Bank Statement Purchase Bill S Stock Register Quantitative Details Delivery Challans Mode Of Transportation Delivery Etc In Respect Of The Aforesaid Purchases Which Wer E Claimed To Have Been Made From The Abovementioned Party As Well As Recon Cile The Purchases With The Corresponding Sales The A O Further In Order To Verify The Genuineness And Veracity Of The Purchase Transactions Under Consideration Issued Notice Under Sec 133 6 To The Aforementioned Party But However Was Informed That No Company By The Said Name Was Operating From The Said Address That In The Backdrop Of The Aforesaid Facts The A O Directed The Asses See To Furnish The Confirmat Ion Of The Aforesaid Party Along With The Latters Copy Of Bank Statement The A O Further Directed The Assessee To Produce The Aforementioned Party So That The Authenticity Of The Purchase Transactions Could Be Verified Beyond Any Scope Of Doubt The Asses See In Compliance To The Aforesaid Directions Of The A O Did Not Place On Record Any Documentary Evidence To Support The Aforesaid Purchases And Rather Stated That It Had Not Made Any Purchases From The Aforesaid Party The A O Being Of The View That The A Forementio Ned Party Viz M S Krishna Diam Pvt Ltd Had In Its Affidavit And The Statement Recorded Before The Sales Tax Department Clearly Admitted That It Was Only Providing Accommodation Bills And Had Not Carried Out Any Genuine Purchase Sale Of Goods Therefore Concluded That As The Assessee Had Failed To Come Forth With Any P A G E 4 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 Documentary Evidence To Substantiate The Authenticity Of The Aforesaid Purchase Transactions Therefore The Same Could Safely Be Characterised As Bogus Purchases Thus The A O O N The Basis Of His Aforesaid Observations Holding A Conviction That The Assessee Had Absolutely Failed To Discharge The Onus As Stood Cast Upon Him Therein Made An Addition Of Rs 55 10 725 Towards Unexplained Expenditure Incurred By The Assessee For Ma King The Aforesaid Purchases 4 Aggrieved The Assessee Carried The Matter In Appeal Before The Cit A The Hearing Of The Appeal Was Fixed On 14 07 2016 Which However Was Adjourned A T The Request Of The Assessee To 22 07 2016 However The Assessee On 22 07 2016 Again Requested For An Adjournment And The Same Was Adjourned By The Cit A To 12 08 2016 The Assessee Again On 12 08 2016 Requested For Adjournment Which Was Allowed By The Cit A Subject To The Condition That No Further Adj Ournment Would Be Allowed And The Matter Was Adjourned For 22 09 2016 However The Assessee On 22 09 2016 Again Filed An Application Seeking A N Adjournment Which Was Declined By The Cit A The Cit A Holding A Conviction The Assessee Had Adopted A Lackadaisical Approach With Regard To The Appellate Proceedings Therefore Proceeded To Dispose Of The Appeal On The Basis Of Facts Available On Record The Cit A After Referring To The Observations Recorded By The A O In The Assessment Ord Er Confirmed The Addition Disallowance Made By The A O For The Reason That The Assessee Had Taken A Lackadaisical Approach With Regard To The Appellate Proceedings Before Him By Observing As Under As Stated Earlier In The Present Case The Appellant Has Neither Attended Perso Nally Nor Through A R During The Appellate Proceedings Once Proceedings U S 147 Of The Act Was Initiated On The Appellant It Would Be Expected That The Appeal Would Be Duly Pursued However In The Instant P A G E 5 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 Case The Appellant Has Taken A Lackadaisical A Pproach With Regard To The Appellate Proceedings In View Of These Facts The Disallowance Made By The Assessing Officer Is Upheld And The Grounds Raised By The Appellant Are Dismissed 5 The Assessee Being Aggrieved With The Order Of The Cit A Had Car Ried The Same In Appeal Before Us The Ld Authorized Representative For Short A R Submitted That As The Requisite Details Which W Ere Indispensably Required On The Part Of The Assessee To Assist The Cit A And Defend Its Case Could Not Be Gathered The Refore The Assessee Being Left With No Other Alternative Had Sought Adjournments From The Cit A Which The Latter Was Pleased To Allow From Time To Time It Was Submitted By The Ld A R That Though It Remains As A Matter Of Fact That On 12 08 2016 The Ci T A Had At The Request Of The Assessee Adjourned The Hearing Of The Appeal For 22 09 2016 However The Same Was Subject To The Condition That No Further Adjournment Would Be Allowed The Ld A R Submitted That As The Requisite Details Could Still Not Be Gathered By The Assessee By 22 09 2016 Therefore A Further Request For Adjournment Was Moved Before The Cit A But However The Latter Declined To Further Adjourn The Case It Was Submitted By The Ld A R That The Cit A Thereafter Proceeded With And Di Smissed The Appeal Of The Assessee On The Basis Of Non Speaking Order The Ld A R Averred That The Assessee Assailing The Assessment Order Wherein An Addition Of Rs 55 10 725 Was Made By The A O In Respect Of Bogus Purchases Had Specifically Raised A Contention Before The Cit A That No Such Purchases Were Claimed In Its Profit And Loss Account For The Year Under Consideration The Ld A R Submitted That The Cit A Had Dismissed The Appeal Of The Assessee Without Adverting To And Dealing With The Conte Ntion Raised Before Him On Merits Per Contra The Ld Departmental Representative For Short D R Relied On The Order S Of The Lower Authorities It Was Submitted By The Ld D R That As The Assessee Had Failed To Prove The P A G E 6 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 Genuineness And Veracity Of The P Urchase Transactions Under Consideration Therefore The A O Had Rightly Made An Addition Of Rs 55 10 725 As Regards The Bogus Purchases Which Were Made By The Assessee From M S Krishna Diam Pvt Ltd During The Year Under Consideration The Ld D R Sub Mitted That The Appeal Of The Assessee Was Devoid Of Any Merit And Was Thus Liable To Be Dismissed 6 We Have Heard The Authorized Representative S For Both The Parties Perused The Orders Of The Lower Authorities And The Material Available On Record We Have Given A Thoughtful Consideration To The Issue Before Us And Find That The Case Of The Assessee Was Reopened For The Reason That As Per The Information Received By The A O From The Dgit Inv Mumbai The Assessee As A Beneficiary Had Taken Bogus Bill S Amounting To Rs 55 10 725 From A Hawala Party Viz M S Krishna Diam Pvt Ltd We Find That The Assessee On Being Called Upon By The A O To Substantiate The Authenticity Of The Purchase Transactions T Herein Submitted That It Had Not Purchase D Any Such Items During The Year Under Consideration We Find That The A O Brushing Aside The Aforesaid Explanation Of The Assessee Therein Proceeded With On The Basis Of Information Received And Concluded That The Assessee Had Incurred The Expenditure Of Rs 55 10 725 For Making The Aforesaid Purchases And Added The Said Amount In The Hands Of The Assessee We Find That The Assessee After Filing An A Ppeal Before The Cit A Had Ad Opted A Lackadaisical Approach During The Course Of The Appellate Proceedings We Find That The Cit A After Allowing Sufficient Opportunity To The Assessee Therein Declined To Allow Any Further Adjournment And Proceeded With The Matter On An Ex Parte Basis We Though Are Persuaded To Be In Agreement With The Cit A That The Casua L Approach Of The Assessee In Seeking Adjournment S Could Not Have Been Allowed To Continue Such P A G E 7 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 Therefore The Declining Of Any Further Adjournment On 22 09 2016 Was Justified Specifically When On 12 08 2016 The Cit A While Adjourning The Matter At The Request Of The Assessee Had Made It Abundantly Clear That No Further Adjournment Would Be Allowed On 22 09 2016 We Find Ourselves To Be In Agreement With The View Taken By The Cit A In The Backdrop Of The Aforesaid Facts Wherein He Had Refused To Allow Any Further Adjournment To The Assessee On 22 09 2016 We However Find That The Cit A After Declining The Adjournment To The Assessee Had Proceeded With And Disposed Of The Appeal By Way Of A Non Speaking Order We Have Perused The Or Der Of The Cit A And Find That He While Dismissing The Appeal Had Merely Referred To The Observations Of The A O And Had Failed To Advert To And Therein Adjudicate The Issue Which Was Raised By The Assessee Before Him We Are Unable To Persuade Ourselves To Accept The Disposal Of An Appeal By The Cit A Without Dealing With And Disposing Of The Issue As Had Been Specifically Raised By The Assessee Before Him We Find That As A Matter Of Fact The Cit A Had Dismissed The Appeal Of The Assessee Primarily For The Reas On That The Assessee Had Not Put Up An Appearance Before Him During The Course Of The Appellate Proceedings We Though Find Ourselves To Be In Agreement With The View Taken By The Cit A That In Case If An Assessee Adopts A Lackadaisical Approach With Rega Rd To The Appellate Proceedings Then The First Appellate Authority Being Left With No Other Alternative Cannot Keep The Hearing Of The Appeal In Abeyance And Would Be Justified In Disposing Of The Appeal On Merits We However Find That In The Present Cas E The Cit A Had Merely Dismissed The Appeal Of The Assessee Without Adverting To The Issues Which Were Raised Before Him We Are Unable To Subscribe To The Approach Of The Cit A And Being Of The Considered View That The Latter Remained Under A Statutory Obligation To Have Disposed Of The Appeal By Way Of A Speaking Order Had However Failed To Do So We P A G E 8 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08 Thus Being Of The Considered View That The Cit A Had Failed To Pass A Speaking Order Therefore Restore The Matter To His File With A Direction That Th E Issue Raised Before Him May Therein Be Disposed Of On Merits That In All Fairness As The Matter Has Been Restore D For Fresh Adjudication To The Cit A Therefore The Assessee Shall Be At A Liberty To Substantiate Its Claim Before Him 7 The Appeal Of The Assessee Is Allowed For Statistical Purposes In Terms Of Our Aforesaid Observations Order Pronou Nced In The Open Court On 20 12 2017 Sd Sd Rajendra Ravish Sood Accountant Member Judicial Member Mumbai 20 1 2 2017 Ps Rohit Kumar Copy Of The Order Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit 5 Dr Itat Mumbai 6 Guard File True Copy By Order Dy Asstt Registrar Itat Mumbai P A G E 9 Ita No 7399 Mum 2016 M S T K Exports Vs Ito Ay 2007 08