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Income Tax Appellate Tribunal, BENCH “SMC” MUMBAI
Before: SHRI A.D.JAIN
सुनवधई की तधयीख / Date of Hearing : 04. 07.2016 घोषणध की तधयीख /Date of Pronouncement :04.07.2016 आदेश / O R D E R PER A D JAIN (JM) This is assessee's appeal for assessment year 2009-10 challenging the order of Id.CIT(A) dated 12.3.2015.
None appeared on behalf of the assessee despite service of notice. However, finding that the matter can be proceeded with in the absence of the assessee, I am doing so.
The brief facts of the case are that the assessee filed a return of income on 26.09.2009, declaring a total income of Rs.12,56,635/-. Information was received from the Investigation Wing, vide letter F.No.DGIT/(Inv)/Carr.Field /2012-13, dated 26.12.2012, communicated vide letter F No.CIT-14/Corr. Field /2012-13 dated 27.12.2012 of CIT-14, Mumbai Office of DGIT, that the Sales Tax Department, Mumbai has identified bogus billers/accommodation entry providers and have recorded their statements; and that the Sales Tax Department has provided the list of bogus billers/ accommodation entry providers and the beneficiaries who have utilized the services of these bogus billers. In the said letter it has been mentioned that the assessee has taken accommodation entries of bogus purchases from three parties, i.e., (1) M/s Seva Enterprises Rs.81,640/-(2) M/s Motion Traders Pvt.Ltd.Rs.1,08,859/- and (3) M/s Jain Trading Corporation Rs.1,06,875/- totaling to Rs.2,97,374/-. The case was proceeded with u/s 147 and 148 of the Income Tax Act, 1961 and the statements were recorded from the above three parties. The AO issued notice u/s 148 to the assessee, calling for it to explain as to why these purchases should not be treated as bogus purchases and added to the total income of the assessee. In response, the assessee asked the AO to provide the copies of the statements of these persons recorded by the sales tax department and submitted copies of ledger accounts of M/s Jain Trading Corporation, M/s Motion Traders Pvt Ltd, M/s Seva Enterprises, along with bank statement, etc. The AO acceded to the 3 assessee’s request. The AO issued notice to these parties, calling for explanation regarding the purchase entries to these three parties. Apropos the notices issued to M/s Seva Enterprises and M/s Jain Trading Corporations, no response was received, whereas the notice issued to M/s Motion Traders Pvt Ltd returned unserved. Therefore, the AO was of the opinion that the assessee had failed to substantiate the claim and, accordingly, he made an addition of Rs.2,97,374/-as unexplained expenditure u/s 69C of the Act and framed the assessment u/s 143 r.w.s.147 of the Act at an amount of Rs.15,54,010/-.Aggrieved by the decision of the AO, the assessee preferred an appeal before the ld.CIT(A). The ld. CIT(A) confirmed the action of the AO by holding as under : ''3.3. I have considered the facts of the case and submission made. The appellant neither during the assessment nor during appeal has furnished quantitative details. It is not submitted that any stock register has been maintained and the quantitative details are reconciled. Therefore, this is a case where quantitative details are not furnished. Therefore, in absence of quantitative details and reconciliation, it has not been substantiated that any genuine purchase has been made by the appellant for the bogus bills obtained from these suppliers. Hence, the order of the AD is therefore upheld and this ground of appellant is dismissed.
4. The IInd ground of appeal is regarding addition of Rs.1,06,875/- on account of Unexplained Expenditure in the case of Returned Goods. Regarding purchase of Rs.1,06,87S/- from Jain Trading Co. the assessee has claimed that purchases debited in the accounts has been reversed in subsequent year since the goods have been returned. Copy of ledger account has also been produced and it has been submitted that P&L account has been credited in subsequent year by such goods returned and therefore, if the disallowance is made in this year also, it would amount double taxation.
4 4.1. Fact of the case and submission made have been considered carefully. The return of goods, if any, has affected the computation of income of AY 2010-11/ but in AY 2009-10 the fact remains that the goods claimed as purchased are bogus. The appellant has not shown the physical quantitative tally of the good so purchased with the statement of inventory as on 31.03.2009. Therefore, veracity of the claim is not verifiable. Moreover any payment for this purchase by account payee cheque is also not shown. Therefore, the addition made by the AO in this regard is hereby upheld. However, to avoid double taxation, if any, the assessee may undertake appropriate remedial measure in A. Y. 2010-11”
Aggrieved by the order of ld.CIT(A), the assessee is in appeal before the Bench.
I have heard the ld.DR and have perused the record available, including the orders of the authorities below.
I find from the orders of the authorities below that the AO has made the addition under section 69C of the Act on the basis of the report provided by the State Sales Department and the statements of the parties, as recorded by the Sales Tax Department. The Id. CIT(A) has also confirmed the addition made by the AO. I find from the record that though the assessee has provided documentary evidences but these documents have not been considered by the authorities below and they made the addition only on the basis of third person evidence without giving any opportunity to the assessee. Therefore, in view of this legal and factual aspect, I feel that if the assessee be given opportunity before the AO to substantiate its case, it will meet the ends of justice and no prejudice would be caused to the revenue. It 5 is seen that this Tribunal has considered an identical issue in the case of Deepak Popatlal Gala, in ITA No. 5920/M/13 and vide order dated 27.3.2015, it has held as under:- “10. The next issue relates to disallowance made out of purchases and assessed u/s 69C of the Act. We heard the parties and perused the record. The total purchase expenditure claimed by the assessee during the year under consideration was Rs.7,36,27,555/-. The AO noticed that the Sales Tax Department of Government of Maharashtra has listed out names of certain dealers, who were alleged to have been providing accommodation entries without doing actual business. The AO noticed that the assessee made purchases to the tune of Rs.38.69 lakhs from two parties named M/s Umiya Sales Agency Pvt Ltd and M/s Mercury Enterprises, whose names found place in the list provided by the Sales Tax Department. The AO placed full reliance on the enquiries conducted by Sales Tax Department in respect of the parties, referred above. Accordingly, the AO took the view that the purchases to the tune of Rs.38.69 lakhs have to be treated as unexplained expenditure. Accordingly, he assessed the same u/s 69C of the Act.
The ld. CIT(A) deleted the addition and hence the Revenue is in appeal before the Tribunal.
The ld. DR strongly placed reliance on the order of Assessing Officer. 13. On the other hand, the ld. AR submitted that the additions made in the case of some other assesses on identical reasons have been deleted by the Co-ordinate Benches of the Tribunal in the following cases : a) Ramesh Kumar and Co V/s ACIT in (AY-2010-11) dated 28.11.2014; b) DCIT V/s Shri Rajeev G Kalathil in ITA No.6727/Mum/2012 (AY-2009-10) dated 20.8.2014; and c) Shri Ganpatraj A Sanghavi V/s ACIT in ITA No. 2826/Mum/2013 (AY-2009-10) dated 5.11.2014 In all the above said cases, the Co-ordinate Benches of the Tribunal has held that the AO was not justified in making the addition on the 6 basis of statements given by the third parties before the Sales Tax Department, without conducting any other investigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the Sales tax department. We notice that the ld.CIT(A) has taken note of the fact that no sales could be effected without purchases. He has further placed reliance on the decision rendered by Hon’ble Gujarat High Court in the case of CIT Vs. M.K. Brothers (163 ITR 249). He has further relied upon the decision rendered by the Tribunal in the cae of ITO Vs. Premanand (2008)(25 SOT 11)(Jodh), wherein it has been held that where the AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. The Ld CIT(A) has also appreciated the contentions of the assessee that he was not provided with an opportunity to cross examine the sellers, which is required to be given as per the decision of Hon’ble Kerala High Court in the case of Ponkunnam Traders (83 ITR 508 & 102 ITR 366). Accordingly, the Ld CIT(A) has deleted the impugned addition. On a careful perusal of the decision rendered by Ld CIT(A) would show that the first appellate authority has analysed the issue in all angles and applied the ratio laid down by the High Courts and Tribunals in deciding this issue. Hence, we do not find any reason to interfere with his order on this issue.” There also, no independent enquiry has been conducted by the Department. Since the issue raised in this appeal stands covered by the order of Tribunal, the ld.DR did not object for setting aside the appeal to the file of the AO for fresh consideration of the issue. Therefore, in the interest of interest justice and fair play, I set aside the order of ld. CIT(A) and restore this issue to the file of the AO for fresh application of mind on the documentary evidences as provided by the assessee. The assessee shall be provided due and adequate