Income Tax Appellate Tribunal - Mumbai
Ramesh L Jain (Huf), Mumbai vs Income Tax Officer 19(3)(1), Mumbai on 13 March, 2019
आयकर अपीऱीय अधिकरण "D" न्यायपीठ मुंबई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI
BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER
AND SHRI RAVISH SOOD, JUDICIAL MEMBER
आयकर अपीऱ सं./I.T.A. No.7057/Mum/2017
(नििाारण वर्ा / Assessment Year : 2010-11)
Shri. Ramesh L. Jain बिाम/ ITO 19(3)(1)
(HUF), Prop. M/s. Ramdev Mumbai
Impex , 138/30, 3 r d vs.
Kumbharwada,
Mumbai 400 004
स्थायी ऱेखा सं ./ PAN:AAJHR8745Q
(अपीऱाथी /Appellant) .. (प्रत्यथी / Respondent)
Assessee by: Shri. Praful L. Vora
Revenue by : Shri. D.G. Pansari
सुनवाई की तारीख /Date of Hearing : 07.03.2019
घोषणा की तारीख /Date of Pronouncement : 13.03.2019
आदे श / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER :
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-29, Mumbai dated 08.09.2017, which in turn arises from the order passed by the A.O u/s. 143(3) r.w.s 147 of the Income-Tax Act 1961, (for short „IT Act‟), dated 20.01.2016 for A.Y 2010-11. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal :
1. Ld. A.O. has not maintained date wise proceeding sheet, has not recorded the reasoning for reopening of the case before issue of Notice u/s. 147/148 of the Act.
Subsequent recording of reasoning after issuance of Notice is not permissible, any additions or amendments in reasons to believe is also not permissible Ld. A.O. has merely relied on DIGT(I) Mumbai and Sales Tax Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 2 ITA No. 7057/Mum/2017 Department informations, has not made any inquiries in that respect, relied on borrowed informations and opinions of other authorities, are also not allowed for reopening of the completed assessment proceedings. Therefore, Notice u/s. 147/148 is liable to be quashed and all collateral proceedings are also liable to be annulled and / or set aside. This ground is not decided by Ld. CIT(A), Mumbai which goes to the root of the matter. A.O. has not given the copy of reasons records at the time of issuing of Notice u/s/^7/148 of the Act. to the Appellant.
2. Ld. A.O. has not brought any documents and evidence in respect of informations in respect of vendors in dispute, no materials are available on record and if available not given to the Appellant at any stage of proceedings, therefore, there is a clear violation of rules of natural justice by Ld. A.O. and for the reasons assessment order passed is liable to be set aside on this count also with impugned appeal order.
3. Ld. A.O. and Ld-CIT (Appeals) did not considered the Paper Book submitted during the course of assessment proceedings at all and/or not properly considered while deciding the matter of the Appellant. Allegations of non productions of details called for are false, baseless and against the evidence on record.
4. Additions made by Ld. A.O. and sustained by Ld. CIT(A) are based on suspicion, conjectures, surmises based on third parties opinion. Appellant has disclared and disclosed his initial burden by adducing and producing the details asked for and therefore, further burden is on the authorities to bring sufficient materials to discard the evidences submitted with the Paper-Book, which has not been done by the lower authorities, therefore, both orders passed by the lower authorities may be set aside, additions may be deleted or may be reduced to token amount in the interest of justice, the objections of non production of transport receipts, Appellant says that the purchased effected are from local market and sales are also effected to local vendees, hence, transportation of goods are effected by hand handcart or small tempos and the charges paid to them are debited to Profit and Loss Accounts. As regards production of delivery challans with invoices, both lower authorities are grossly erred in making such allegations as they failed to verify the details submitted. In any case the ward delivery challan is not defined in the IT Act. Appellant refers the meaning of the 2 Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 3 ITA No. 7057/Mum/2017 word 'chalan' as given in the Law of Lexicon 2nd Edition by Shri P. Ramantha Aiyar at page-299 is as under:-
"Chalan" : An invoice of goods etc. in revenue matter.
Thus Tax Invoices submitted with the details are sufficient further both the lower authorities have not considered the judgments cited, especially copies of judgments submitted by Ld. A.R. with his letter dated 09.01.2017 to CIT (A)-30, Tardeo, Mumbai in which it is categorically held that when payments made to the vendors have been proved such purchases cannot be denied nor can be considered as bogus purchases in absence of any corroborative evidence brought by the department. Therefore, additions made by Ld. AO and sustained by Ld. CIT(A) in appeal order may be deleted.
6. Appellant craves the liberty with prayer to allowed to add or to alter or to amend or to change any grounds of appeal on or before of the hearing of this appeal.
7. Appellant may be allowed to submit an application for issuing of an Ad-Interim Stay Order and an Absolute Stay Order and Paper-Book after filing of this appeal.
8. Cost may be awarded to Appellant
2. Briefly stated, the assessee HUF which is engaged in the business of trading in ferrous & non-ferrous metals had filed its return of income for A.Y 2010-11 on 25.09.2010, declaring total income at Rs. 5,27,930/-. The return of income filed by the assessee was processed as such u/s. 143(1) of the I.T Act. Subsequently, on the basis of the information received by the A.O from the DGIT (Inv) Wing, Mumbai, that the assessee had procured bogus purchase bills from certain hawala dealers, its case was reopened u/s. 147 of the I.T Act. The assessee in compliance to the notice issued u/s. 148 of the I.T Act, dated 26.02.2015 requested that its „Original‟ return of income may be treated as the return filed in response thereto.
3. During the course of the assessment proceedings the AO called upon the assessee to substantiate the genuineness and veracity of the purchases aggregating to an amount of Rs. 3,86,87,972/- made from 3 Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 4 ITA No. 7057/Mum/2017 49 parties. In reply, the assessee furnished the addresses of the parties under consideration. The A.O in order to verify the authenticity of the purchase transactions which were claimed by the assessee to have been made from the aforementioned parties issued notices u/s. 133(6) of the IT Act to them. However, all the notices were returned unserved by the postal authorities with the remarks "not known", "no such address", "left" etc. The assessee in order substantiate the purchases which were claimed to have been made from the aforementioned parties placed on record certain documentary evidences viz. (i) copies of bank statement evidencing payments made to them through banking channels by account payee cheques; and (ii) details of the purchases made from the aforementioned parties alongwith the corresponding sales. However, the A.O not being satisfied with the evidences that were produce by the assessee in its attempt to buttress its claim of having made genuine purchases from the aforementioned parties, declined to accept the same. In the backdrop of the aforesaid facts the A.O concluded that the assessee had not made any genuine purchases from the aforementioned parties. The A.O observing that the assessee had carried out purchases of the goods under consideration from unidentified sources, therefore, concluded that it would have benefited by procuring the goods from the open/grey market at a discounted value as against that shown in its books of accounts. In the backdrop of his aforesaid deliberations the A.O relied on the judgment of the Hon‟ble High Court of Gujarat in the case of CIT vs. Simit P. Sheth (2013) 356 ITR 451 (Guj) and quantified the profit element that the assessee would had made by carrying out purchases from undisclosed sources @ 12.5% of the aggregate value of such purchases of Rs. 3,86,87,972/-, resulting to a consequential addition of Rs. 48,35,997/- in the hands of the assessee.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, as the assessee failed to put up an appearance before 4 Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 5 ITA No. 7057/Mum/2017 the CIT(A) on various occasions when the matter was fixed for hearing, therefore, the appellate authority holding a conviction that the assessee has adopted a lackadaisical approach with regard to the appeal proceeding, dismissed the appeal.
5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Authorised Representative (for short „A.R‟) for the assessee at the very outset of the hearing of the appeal submitted that the CIT(A) had erred in disposing off the appeal without adjudicating the same on merits. It was submitted by the Ld. A.R that though the assessee due to certain compelling circumstances could not put up an appearance before the appellate authority, however, the latter remained under a statutory obligation to have disposed off the appeal after deliberating on the merits of the case in the backdrop of the grounds which were raised by the assessee before him.
6. Per contra, the Ld. Department Representative (for short D.R) relied on the orders of the lower authorities.
7. We have heard the Authorised Representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, a perusal of the order of the CIT(A) reveals that the assessee despite having been afforded sufficient opportunity had failed to put up an appearance before the first appellate authority. In fact, except for on one occasion i.e. on 17.05.2017, wherein an application for adjournment was filed by the assessee, on all other dates the assessee had neither put up an appearance or sought an adjournment before the said appellate authority. We are absolutely in agreement with the observation of the CIT(A) that the assessee had adopted a lackadaisical approach with regard to the appeal proceedings before him. However, at the same time we also cannot remain oblivious of the fact that despite such non-cooperation on the part of the assessee the CIT(A) still remained 5 Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 6 ITA No. 7057/Mum/2017 under a statutory obligation to have disposed off the appeal after addressing the respective grounds of appeal raised by the assessee, in the back drop of the facts and the material available on record. In the case before us, we find that the CIT(A) had merely referred to the facts of the case and the observations drawn by the A.O and had failed to adjudicate the appeal on merits, as was required under the law. We are unable to persuade ourselves to subscribe to the aforesaid approach of the CIT(A), as the latter as observed by us hereinabove remained under a statutory obligation to have disposed off the appeal on merits by way of a speaking order. Our aforesaid view is fortified by the judgment of the Hon‟ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF)(2016) 240 Taxman 133 (Bom). We thus in terms of our aforesaid observations restore the appeal to the file of the CIT(A) with a direction to dispose off the same on merits. Needless to say, the CIT(A) in the course of the set aside proceedings shall afford an opportunity of being heard to the assessee.
8. The appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 13.03.2019.
आदे श की घोषणा खऱ
ु े न्यायाऱय में ददनांकः 13.03.2019 को की गई
Sd/- Sd/-
(B.R. BASKARAN) (RAVISH SOOD)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, dated: 13.03.2019
Nishant Verma
Sr. Private Secretary
6
Shri Ramesh Lal Jain (HUF) Vs. ITO 19(3)(1), Mumbai 7 ITA No. 7057/Mum/2017 copy to...
1. The appellant
2. The Respondent
3. The CIT(A) - Concerned, Mumbai
4. The CIT- Concerned, Mumbai
5. The DR Bench,
6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 7