DCIT 12(2)(1), MUMBAI vs. D R COATS INK AND RESINS P.LTD, MUMBAI

The Revenue as well as assessee have filed the above mentioned appeal as well as cross objection against the order dated 28.04.2017 passed CO. No. 240/M/2018 A.Y. 2011-12 by the Commissioner of Income Tax (Appeals)-20, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011-12.

The revenue has filed the present appeal against the order dated 28.04.2017 passed by the Commissioner of Income Tax (Appeals)-20, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011- 12.

The Revenue has raised the following grounds: - “

We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:- CO. No. 240/M/2018 A.Y. 2011-12 “5.4 I have gone through the assessment order and submissions made in this regard. It is noted that the A.O. had made addition out of purchase made by the assessee to the tune of 12,49,15,141/- on the basis of the information received from the VAT authorities. The A/R of the assessee has vehemently opposed the additions and submitted that the purchases were genuine. It was also submitted that payment was all made through banking channel and the delivery of materials was supported by delivery challans. It is stated that the A.O. had made addition on the basis of information received from VAT authorities without affording opportunity of cross-examination the assessee. It is noted that the entire matter pertains to hawala purchases from so called suspicious dealers as per the information of VAT authorities. The A.O. has disallowed these purchases as the assessee could not produce these parties for verification. It is noted that primary onus to establish that the purchases were genuine, was on the assessee. The assessee is only payable to discharge the complete onus. It is also noted that A.O. has simply made addition on the basis without much enquiry into the facts of the case. On the other assessee has filed copies of bills, bank statement etc. to establish that purchases were genuine. On the face of these evidence the entire purchases cannot be held to be bogus merely on the basis of a statement of seller who was never cross examined by the assessee. It is also noted that the items purchased were used as input into assessee’s product for sales which have been accepted by the department.”

On appraisal of the above mentioned finding, we find that the CIT(A) has decided the matter of controversy on the basis of the decision in ITA. No.4858/M/17 CO. No. 240/M/2018 A.Y. 2011-12 the case of (i) CIT Vs. Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj) (ii) CIT Vs. Simit P. Sheth (2013) 356 ITR 451 (Guj) (iii) CIT Vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (iv) ITO Vs. Permanand (2007) 107 TTJ 395 (Jd) (Trib) (v) Shri Madhukant B. Gandhi Vs. ITO Bench „B‟ Dated 23.02.2010 (AY 2005-06) & (vi) Sanjeev Woolen Mills Vs. CIT (2005) 279 ITR 434 (SC). The CIT(A) has considered the Gross Profit (G.P) ratio of the bogus purchase items. Moreover, we also find that the issue has duly been covered with the decision of the ITAT in the assessee’s own case in ITA. No.2143/M/2017 & 2144/M/2017 dated 30.12.2019. Taking into account all the facts and circumstances of the case, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfered with at this appellate stage. Accordingly, we decide this issue in favour of the assessee against the revenue.

The assessee has raised the following cross-objections.:-

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the interest charges 234B of the Act. The assessee has filed the application for condonation of delay.

The Ld. Representative of the assessee has argued that the assessee no doubt filed the present cross-objection delayed for the period of 32 days but the delay is very much explained and unintentional and in this regard the facts have already been filed, therefore, the delay is liable to be condoned in the interest of justice. On appraisal of the application and affidavit, we noticed that the appeal has been filed delayed on account of the reason that the department’s appeal papers for A.Ys. 2009-10 & 2010-11 (though filed prior to the appeal for A.Y. 2011-12) were served on the assessee on 11th July, 2018 and the assessee company inadvertently overlooked the date of receipt of the Form No.36 & grounds of appeal for A.Y. 2011-12 and the time limit for filing the C.O, consolidated and filed the cross-objections for all three years together, therefore, in the said circumstances and ITA. No.4858/M/17 CO. No. 240/M/2018 A.Y. 2011-12 specifically considering this fact that the delay is not so long, we condone the delay. C.O. NO.1 & 2 9. Under these issues the assessee has challenged the reopening of assessment u/s 147 of the Act. These issues are dealt and discussed by the Hon’ble ITAT in the assessee’s own case in & 2144/M/2017 dated 30.12.2019 for the A.Y.2008-09 & 2009-10 respectively. By honoring the same we decide these issues against assessee. C.O. NO. 3 10. Issue no. 3 has already been decided in ITA. No.4858/M/2017, therefore, there is no need to decide the same. Accordingly, we decide this issue against the assessee. C.O. NO.4 11. Issue no. 4 is in connection with the interest charged u/s 234B of the Act. It is consequential on account of the demand raising if any, therefore, applicable in accordance with law, hence, nowhere required for specific any adjudication.