Ramila Pravin Shah, Mumbai vs Department Of Income Tax

BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) सव ी बी.आर.बा करन, लेखा सद य एवं ी संजय गग , या यक सद य के सम

आयकर अपील सं./I.T.A. No.5246/Mum/2013 ( नधा रण वष / Assessment Year : 2010-11)

Asstt.Commissioner of Income बनाम/ Shri Ramila Pravin Shah, Tax-25(2), Vs. 605, Shradha Residency, st Room No.108, 1 floor, Chandavarkar Road, Bld. No.C-11, Borivali (W), Pratyakshakar Bhavan, Mumbai-400092 Bandra-Kurla Complex, Bandra (E), Mumbai-400051. (अपीलाथ /Appellant) .. ( !यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :ANVPS9225M

अपीलाथ ओर से / Appellant by Shri Love Kumar !यथ क$ ओर से/ Respondent by Shri Bhupendra Shah

सन ु वाई क$ तार(ख / Date of Hearing : 5.3.2015 घोषणा क$ तार(ख /Date of Pronouncement : 5.3.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The appeal of the Revenue is directed against the order dated

21.5.2013 passed by the ld.CIT(A)-35, Mumbai and it relates to

assessment year 2010-11.

2 ITA. No.5246/Mum/2013

2. The revenue is aggrieved by the decision of ld.CIT(A) in deleting

the disallowance of Rs.28.08 lakhs relating to unexplained expenditure

made u/s 69C of the Income Tax Act, 1961 (the Act).

3. We heard the parties and perused the record. The assessee is

engaged in the business of civil construction under the name and style of

M/s Kailash Construction Co. The total purchase expenditure claimed by

the assessee during the year under consideration was Rs.8,62,68,891/-.

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.28.08

lakhs from some of the parties, whose names found place in the list

provided by the Sales Tax Department. The AO also considered the

statements taken by Sales Tax Department from some of the parties.

During the course of hearing, the AO deputed Inspector of Income Tax to

serve notice u/s 133(6) of the Act. However, the Inspector reported that

these parties were not available at given address. The AO also asked the

assessee to submit delivery challans and stock register to prove the

movement of stock and also asked to produce these parties. However, the

assessee failed to furnish the details called for. Hence, by placing the

reliance on the statements given by these parties before the Sales Tax

Department, the AO took the view that the purchases to the tune of 3 ITA. No.5246/Mum/2013

Rs.28.08 lakhs have to be treated as unexplained expenditure.

Accordingly, he assessed the same u/s 69C of the Act.

4. The ld. CIT(A) deleted the addition and hence the Revenue is in

appeal before the Tribunal.

5. The ld. DR strongly placed reliance on the order of Assessing

Officer.

6. 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 ITA No.2959/Mum/2014 (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 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 properly analysed the facts prevailing in the

instant case and for the sake of convenience, we extract the same below:-

4 ITA. No.5246/Mum/2013 "5.3.11. I have also gone though the judicial pronouncements relied upon by the Ld AR and find that the facts of the above referred judicial pronouncements are similar to the present facts of the case and, therefore the ratio of judgments of the above referred two cases are fully applicable in the present case. Further, I have also taken into consideration the decision of jurisdictional High Court and ITAT i.e. The Commissioner of Income Tax - 1 Mumbai Vs Nikunj Eximp Enterprises Pvt, Ltd. Appeal No ITA No. 5604 of 2010 (Hon. Mumbai High Court) and Balaji Textile Industries (P) Ltd. Vs Income Tax Officer (1994) 49 lTD (Bom) 177. While in the case of Nikunj Eximp Enterprises, the Hon'ble Bombay High Court in its latest judgment has held that once the Sales are accepted, the Purchases cannot be treated as ingenuine in those cases where the appellant had submitted all details of purchases and payments were made by cheques, merely because the sellers/suppliers could not be produced before the A.O. by the assessee. Further, I have also gone through the judgment in case Balaji Textile Industries (P) Ltd. Vs Income Tax Officer by Hon. ITAT, Mumbai (1994) 49 lTD (BOM) 177 which was made as long back as 1994 and which still holds good in which was held that- "Issuing printed bills for selling the textile goods to the assessee-company at Bhiwandi was not a conclusive proof but it was a prima fade proof to arrive to a correct conclusion that the assessee purchased certain goods from certain parties at Bhiwandi.

The assessee sold those goods to 'S' and adjusted the sale proceeds against the loan taken by it from that party. The assessee's books of account and the books of account of 'S' in which the entries of sale and adjustment were made, could not be discarded merely by saying that they were not g e n u i n e e n t r i e s t h o u g h n e i t h e r t h e A s s e s s i n g O f f i c e r n o r t h e Commissioner (Appeals) opined anything in respect of those entries. Further, the purchase of the goods in the month of March 1985 did not make any difference. The assessee might not have carried on any business activities prior to March 1985, but that did not mean that the assessee was not entitled to carry on the business activity in March 1985. They could not be compelled to carry on the business activity throughout the year. There were no good reasons to disbelieve the sales made by the assessee to 'S'. No sales were likely to be effected if there were no purchases. A sale could be made if the goods were available with the seller. From all these facts on record, a reasonable and convincing inference which could be drawn, was that the assessee purchased the textile goods, sold them and adjusted the same towards the 5 ITA.

No.5246/Mum/2013

loan taken by it. Therefore, the assessee was entitled to get the entire deduction." I have also taken into consideration, the G.P Ratio/G.P. Margin of the appellant in the previous A.Y. as well as subsequent Assessment Year. If the addition made by the A.O. is accepted, then G.P. Ratio of the appellant during the present A.Y.will become abnormally high and therefore that is not acceptable because it onus of the A.O. by bringing adequate material on record to prove that such a high G.P. ratio exists in the nature of business carried out by the appellant.

Further, it has to be appreciated that (i)Payments were through banking channel and by Cheque,(ii) Notices coming back, does not mean , those Parties are bogus, they are just denying their business to avoid sales tax/VA T etc, (iii) Statement by third parties cannot be concluded adversely in isolation and without corroborating evidences against appellant,(iv) No cross examination has been offered by AO to the appellant to cross examine the relevant parties (who are deemed to be witness or approver being used by AO against the appellant) whose name appear in the website www.mahavat.gov.in and (v) Failure to produce parties cannot be treated adversely against appellant.

In view of the facts discussed above as well as binding judicial pronouncements of the jurisdictional ITAT Mumbai Bench as well as Hon'ble Mumbai High Court and other legal precedents, the addition made by the AO amounting to Rs.28,08,071/- cannot be sustained. Accordingly, the addition of Rs.28,08,071/- is deleted."

7. Hence, on a conspectus of the matter, we do not find any infirmity

in the decision of the ld. CIT(A) on this issue.

6 ITA. No.5246/Mum/2013

8. In the result the appeal of the revenue is dismissed.

The above order was pronounced in the open court on 5th Mar, 2015.

घोषणा खुले यायालय म, -दनांकः 5th March, 2015 को क$ गई ।

sd sd

(संजय गग /SANJAY GARG) ( बी.आर.बा करन / B.R. BASKARAN) या यक सदस ्य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मुंबई Mumbai:5th March,2015. व. न.स./ SRL , Sr. PS

आदे श क !त#ल$प अ%े$षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. !यथ / The Respondent.

3. आयकर आय2 ु त(अपील) / The CIT(A)- concerned

4. आयकर आयु2त / CIT concerned

5. 3वभागीय त न5ध, आयकर अपील(य अ5धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील(य अ5धकरण, मुंबई /ITAT, Mumbai