HEENA GEMS, MUMBAI v. ASST CIT 19(1), MUMBAI

ITA 7564/MUM/2016 | 2007-2008
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 756419914 RSA 2016
Assessee PAN AAAFH4046H
Bench Mumbai
Appeal Number ITA 7564/MUM/2016
Duration Of Justice 11 month(s) 7 day(s)
Appellant HEENA GEMS, MUMBAI
Respondent ASST CIT 19(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 30-11-2017
Assessment Year 2007-2008
Appeal Filed On 23-12-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI BEFORE SHRI RAJENDRA AM AND SHRI RAM LAL NEGI JM ./ ITA NO. 7564 / MUM/ 201 6 ( / ASSESSMENT YEAR: 2007 - 08 ) M/S HEENA GEMS 2405 PANCHRATNA M.P.MARG OPERA HOUSE MUMBAI - 400004 VS. THE ASSISTANT COMMISSIONER OF INCOME TAX 19(1) MUMBAI ./ ./ PAN/GIR NO. : AAAFH 4046 H ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI NAVEEN KUMAR MISHRA (AR) / REVENUE BY : SH RI T.A. KHAN (DR) / DATE OF HEARING : 14 / 09 / 2017 / DATE OF PRONOUNCEMENT : 30 / 11 / 2017 / O R D E R PER RAM LAL NEGI JM THIS APPEA L HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 22/11/2016 PASSED BY THE LD. COMMISS IONER OF INCOME TAX (APPEALS) - 30 MUMBAI PERTAI NING TO THE ASSESSMENT YEAR 2007 - 08 WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT) . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF JEWELLERY FILED ITS RETURN OF INCOME FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 86 43 630/ - . THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE ACT. SUBSEQUENTLY A SEARCH AND SEIZURE ACTION WAS CONDUCTED IN THE CASE OF RAJENDRA JAIN GROUP/SANJAY CHOUDHARY GROUP/DHARMICH AND JAIN GROUP ON 30/10/2013 BY THE DIRECTOR GENERAL OF INCOME TAX (INV.) MUMBAI. DURING THE 2 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 COURSE OF SEARCH DOCUMENTS WERE SEIZED AND THE STATEMENTS OF CONCERNED PERSONS WERE RECORDED U/S 132(4) OF THE ACT WHICH REVEALED THAT THE GROUP CONCERNS ARE ON LY PAPER COMPANIES/FIRMS/PROPRIETORSHIP CONCERN S OPENED WITH THE PURPOSE OF FACILITATING FRAUDULENT FINANCIAL TRANSACTIONS INCLUDING PROVIDING OF ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOANS ISSUING OF BOGUS SALE BILLS ETC. IT WAS FURTHER NOTICED THAT THE ASSESSEE OBTAINED ACCOMMODATION /BOGUS ENTRIES IN ORDER TO SHOW PURCHASES FROM THREE SUCH CONCERNS NAMELY MOULIMANI IMPEX PVT. LTD SUN DIAM AND AVI EXPORTS AMOUNTING TO RS. 63 57 880/ - . 3. ACCORDINGLY NOTICE U/S 148 WAS ISSUED AND IN COMPLIA NCE THEREOF THE ASSESSEE SUBMITTED THAT RETURN FILED IN 2007 MAY BE TREATED AS RETURN FILED IN COMPLIANCE TO NOTICE U/S 148 OF THE ACT. AFTER RECEIVING THE COPY OF REASONS RECORDED THE ASSESSEE FILED OBJECTIONS AGAINST REOPENING HOWEVER THE PLEA OF THE A SSESSEE WAS REJECTED AND THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS CONFRONTED WITH THE MATERIAL SEIZED DURING SEARCH AND SEIZURE ACTION AND THE STATEMENT OF THE PERSONS RECORDED U/S 132 OF THE ACT . THE ASSESSEE WAS ALSO ASKED TO FURNISH RECONCILIATION STATEMENT TO VERIFY THE GENUINENESS OF THE PURCHASES IN QUESTION. HOWEVER THE ASSESSEE FAILED TO RECONCILE THE SALES WITH THE PURCHASES AS THE ASSESSEE ALSO FAILED TO FURNISH ANY DETAIL REGARDING SALES /CONSUMPTION OF GOODS CLAIMED TO HAVE PURCHASED FROM THE PARTIES . SINCE THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASES SHOW CAUSE NOTICE WAS ISSUED AS TO WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED U/S 145 (3) OF THE ACT AND THE A MOUNT OF BOGUS PURCHASES SHOULD NOT BE ADDED TO THE INCOME . IN RESPONSE THEREOF THE ASSESSEE FILED THE CHART GIVING PARTICULARS OF PURCHASES MADE FROM THE CONCERNED ALONG WITH COPIES OF RETAIL INVOICES COPIES OF BANK STATEMENTS AND CONFIRMATORY STATEMENTS OF ACCOUNTS ETC. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE DETAILS FURNISHED THE AO REJECTED THE BOOKS OF ACCOUNTS U/S 145 (3) OF THE ACT AND THE PURCHASES MADE 3 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 FROM THE THREE PARTIES AMOUNTING TO RS. 63 57 880/ - WAS TREATED AS BOGUS AND ADDED TO THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE DISMISSED ALL THE GROUNDS OF APPEAL OF THE ASSESSEE. THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 4. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND S OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. THE LEARNED CIT (A) ERRED IN CONF IRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE CASE UNDER SECTION 147 OF THE INCOME TAX ACT 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 63 57 880/ - ON ACCOUNT OF PURCHASES MADE BY ASSESSEE FIRM F ROM THE FOLLOWING PARTIES BY HOLDING THAT THE SAME ARE BOGUS MERELY ON THE BASIS OF INFORMATION PROVIDED BY THE DGIT (INVESTIGATION). SR. NO. NAME OF THE HAWALA PARTIES BILL AMOUNT 1. MOULIMANI IMPEX PVT. LTD. 17 43 400/ - 2. SUN DIAM 38 49 360/ - 3. AV I EXPORTS 7 65 120 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNT OF THE APPELLANT UNDER SECTION 145 (3) OF THE INCOME TAX ACT AND THEREAFTER TREATING THE TOTAL PURCHASE S MADE FROM THE ABOVE 3 PARTIES AGGREGATING TO RS. 63 57 880/ - AS BOGUS PURCHASES. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER ERRED IN CONFIRMING THE ADDITION OF AGGREGATE PURCHASES OF RS. 63 5 7 880/ - MADE BY THE AO INSTEAD OF CONSIDERING ONLY THE PROFIT MARGIN EMBEDDED IN THE ALLEGED BOGUS TRANSACTIONS. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ADDITION MADE BY THE AO HOLDING THAT THE 4 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 PURCHASES IN QUESTION ARE BOGUS MERELY ON THE BASIS OF INFORMATION PROVIDED BY THE DGIT (INV) MUMBAI. THE LD. COUNSEL FU R THER POINTED OUT THAT THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AS THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF CROSS EXAMINI NG THE PARTIES WHOSE STATEMENTS WERE RELIED UPON BY THE AO. THE DETAILS FURNISHED BY THE ASSESSEE WERE NOT TAKEN INTO CONSIDERATION AND THE ADDITION WAS MADE ON PRESUMPTION BASIS IGNORING THE EVIDENCE FURNISHED BY THE ASSESSEE. THE LD. COUNSEL WITHOUT PRE JUDICE TO THE GROUND NO. 1 TO 3 SUBMITTED THAT THE LD. COMMISSIONER HAS WRONGLY CONFIRMED THE ADDITION MADE BY THE AO IN STEAD OF CONSIDERING ONLY THE PROFIT MARGIN EMBEDDED IN THE ALLEGED BOGUS TRANSACTIONS. THE LD. COUNSEL FURTHER POINTED OUT THAT THE DEP ARTMENT HAS MADE ADDITION OF PROFIT MARGIN IN THE ASSESSEES OWN ASSESSMENTS FOR THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10. HENCE THE ADDITION CONFIRMED BY THE LD. CIT (A) IS LIABLE TO BE DELETED. 6. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE ASSESSMENT HAS FAILED TO PROVE THE GENUINENESS OF THE PURCHASES IN QUESTION THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE AO HENCE THERE IS NO INFIR MITY IN THE IMPUGNED ORDER TO INTERFERE WITH. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE DOCUMENTS ON RECORD. SO FAR AS GROUND NO. 1 OF THE APPEAL IS CONCERNED WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT (A). THE AO HAS EXERCISED THE POWERS U/S 147 OF THE ACT ON THE BASIS OF THE DOCUMENTS SEIZED DURING THE SEARCH AND SEIZURE ACTION DISCUSSED ABOVE AND THE STATEMENTS OF THE CONCERNED PARTIES RECORDED U/S 132 OF THE ACT. SO IN OUR CONSIDERED OPINION THE MATERIAL BEFORE THE AO WAS SUFFICIENT TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WHICH IS THE REQUIREMENT OF THE SECTION 147 OF THE ACT . HENCE WE UPHOLD THE FINDINGS OF THE LD. CIT (A) AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 5 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 8 . GROUN D NO. 2 3 AND 4 PERTAIN TO THE ADDITION OF RS. 63 57 880/ - CONFIRMED BY THE LD. CIT(A) . THE AO HAD MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES SHOWN BY THE ASSESSEE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AFTER REJECTING T HE BOOKS OF ACCOUNTS U/S 145 (3) OF THE ACT. WE NOTICE THAT D URING THE REASSESSMENT PROCEEDINGS THE CONFRONTED THE ASSESSEE WITH THE STATEMENTS RECORDED U/S 132 OF THE ACT AND THE DOCUMENTS SEIZED DURING SEARCH AND SEIZURE ACTION AND ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION. SINCE THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF TRANSACTIONS OF PURCHASE FROM THE THREE PARTIES MENTIONED ABOVE THE AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE ADDITION OF THE ENTIRE AMO UNT OF BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS AFFIRMED THE FINDINGS OF THE AO AFTER TAKING INTO CONSIDERATION THE CONTENTIONS OF THE ASSESSEE. APART FROM THE OTHER EXPLANATIONS T HE ASSESSEE HAS TAKEN THE PLEA THAT OPPORTUNITY WA S NOT GIVEN TO CROSS EXAMINE THE VENDORS FROM WHOM THE PURCHASES WERE MADE. HOWEVER WE FIND THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE PURCHASES WERE GENUINELY MADE FROM THE PARTIES CONCERNED . THE ASSESSEE HAS ALSO FAILED TO RECONCILE/MATCH THE INVOIC ES/BILLS SUBMITTED BEFORE THE AO WITH THE CORRESPONDING SALES. SO T HE LD. CIT (A) HAS RIGHTLY HELD THAT THE PURCHASES IN QUESTION ARE NOT GENUINE AS THE ASSESSEE HAS FAILED TO LINK THE PURCHASES WITH CORRESPONDING SALES . 9 . SO FAR AS THE QUANTUM OF ADDITI ON IS CONCERNED A S POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE WE FIND THAT THE AO HAS MADE ADDITION OF 3% OF THE TOTAL AMOUNT OF BOGUS PURCHASES IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 TAKING IN TO CONSIDERATION THE ELEME NT OF PROFIT EMBEDDED IN THE PURCHASES IN QUESTION . T HE ASSESSMENTS OF THE ASSESSEE FOR THE SAID ASSESSMENT YEARS WERE REOPENED ON THE BASIS OF MATERIAL SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION CARRIED IN THE YEAR 2007 AND THE STATEMENTS OF CO NCERNED PERSONS RECORDED U/S 132 OF THE ACT. WE 6 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 FURTHER NOTICE THAT THE AO HAS MADE ADDITION OF 3% OF THE TOTAL AMOUNT OF BOGUS PURCHASES BY TAKING IN TO CONSIDERATION THE PROFIT MARGIN EMBEDDED IN THE TRANSACTION IN BOTH THE ASSESSMENT YEARS. HENCE WE FI ND MERIT IN THE CONTENTION OF THE LD. COU N SEL FOR THE ASSESSEE THAT THE ADDITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION SHOULD BE MADE TAKING INTO CONSIDERATION THE PROFIT MARGIN EMBEDDED IN THE ALLEGED BOGUS TRANSACTIONS. SINCE THE RETURN FOR THE A SSESSMENT YEAR UNDER CONSIDERATION AND THE RETURNS FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 WERE REOPENED ON THE BASIS OF THE MATERIAL COLLECTED DURING THE SAME SEARCH AND SEIZURE ACTION CARRIED OUT IN THE YEAR 2007 THERE IS NO JUSTIFICATION IN FOLLOW ING DIFFERENT PARAMETERS TO DETERMINE THE ADDITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SUBSEQUENT ASSESSMENT YEARS . SINCE THE AO HAS MADE ADDITION OF 3% I.E. THE APPROXIMATE PROFIT ON THE TOTAL AMOUNT OF BOGUS PURCHASES MADE BY THE ASSES SEE DURING THE ASSESSMENT YEAR 200 8 - 09 AND 20 09 - 10 THE ACTION OF LD. CIT(A) IN CONFIRMING 100% ADDITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION CANNOT BE JUSTIFIED . HENCE WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AND REMIT THE FILE BAC K TO THE AO WITH THE DIRECTION TO PASS THE ASSESSMENT ORDER A FRESH DETERMINING THE ADDITION BY FOLLOWING THE SAME PRINCIPLE WHICH HAS BEEN FOLLOWED IN THE ASSESSEES OWN CASES FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 . IN THE RESULT APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH . NOVEMBER 2017 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 30 / 1 1 / 2017 ALINDRA PS 7 ITA NO. 7564/MUM/2016 ASSESSMENT YEAR: 2007 - 08 / 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 . / BY ORDER //TRUE COPY// / (DY./ASSTT. REGISTRAR) / IT AT MU MBAI