Itxa/971/2017 Of Pr. Commissioner Of Income Tax -20 v. Dhananjay Mishra

Digitallysigned by1/4MEERAMEERAMAHESHMAHESHJADHAVJADHAVDate:2021.09.30 IN THE HIGH COURT OF JUDICATURE AT BOMBAY11:42:14+0530ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 971 OF 2017 Pr. Commissioner of Income Tax-20 V/s. ….Appellant Dhananjay Mishra …Respondent ---- Mr. N. C. Mohanty for AppellantMr. Satish Mody a/w Ms Aasifa Khan for Respondent ---- CORAM : K.R. SHRIRAM &R. I. CHAGLA JJ DATED : 28[th] SEPTEMBER 2021 P.C. : 1This appeal is filed impugning an order dated 7[th] October 2016 passedby Income Tax Appellate Tribunal (ITAT) whereby, the ITAT confirmed theorder passed by CIT (Appeals) dismissing the appeal of the revenue. Mr.Mohanty states he is not pressing question no.6.1 but is pressing onlyquestion no.6.2 in the appeal. We find that no question of law arises and thequestion as framed in the appeal is also a question of fact and cannot becalled a question of law. 2The assessee was engaged in the business of marine contract and filedreturn of income for the relevant A.Y. 2010-2011 declaring the total incomeof Rs.57,11308/-. The Assessing Officer while assessing the return ofincome, observed that assessee has made certain purchases from personswho were identified as Hawala Traders by Sales Tax department, State of Maharashtra, who used to issue bogus bills without delivery of goods. TheAssessing Officer, therefore, made addition of Rs.72,60,177/- under Section69C of the Income Tax Act 1961 (the said Act) on account of unexplainedexpenditure under Section 69C of the Act. The assessment was completedunder Section 143(3) of the Act assessing a total income ofRs.1,29,71,484/-. 3Aggrieved by this assessment order, respondent filed an appeal beforeCIT (Appeals), who deleted the entire addition. The CIT (Appeals)concluded that the assessee had given valid explanation with substantiatingevidence in respect of cost incurred towards purchases required in thecourse of his business and in support of his contention, has filed relevantbank statements, challan copies etc. In the assessment order, the primaryreliance is on affidavits filed by one Vinit A Jamsandekar and Rasiklal BShah when Sales Tax investigated the affairs of those persons who wereproprietors / partners of three concerns which were allegedly doing businessof issuing bogus bills. Copies of those affidavits, though it is stated in theorder as annexed thereto, has not been annexed to the order or filed in thisappeal and Mr. Mody for respondent states they were never provided withcopies of those affidavits. In fact, the CIT (Appeals) in his order has evenrecorded respondent’s grievance that these affidavits were not provided torespondent nor any opportunity was given to defend his position or cross-examined those people. 4The CIT (Appeals) has also recorded that even the fact that there were unused material included closing stock worth Rs.1,00,88,102/-, etc., waseven considered in the assessment order. Even the fact that respondent hadpaid Rs.25,62,560/- through the Bank L.C. to one of the parties allegedlydoing business of issuing bogus bills, has also not been dealt with in theassessment order. 4The CIT (Appeals) has also recorded that even the fact that there were unused material included closing stock worth Rs.1,00,88,102/-, etc., waseven considered in the assessment order. Even the fact that respondent hadpaid Rs.25,62,560/- through the Bank L.C. to one of the parties allegedlydoing business of issuing bogus bills, has also not been dealt with in theassessment order. 5The department has impugned this order of CIT (Appeals) beforeITAT, which also observed that Assessing Officer has relied upon third partystatement without supplying it to the assessee or considered the closingstock or considered the fact that payments were made through bankingchannels including by way of letters of credit. Since none of those pointswere discussed in the assessment order, the ITAT concluded, that theAssessing Officer having not disputed the used material or disputed thestock of the assessee, it did not find any illegality or infirmity in the order ofCIT (Appeals). In our view also the assessment order could not have beenpassed by the Assessing Officer without granting an opportunity torespondent to defend his position or cross-examine the two persons onwhose affidavits, the Assessing Officer had relied upon to conclude thatrespondent had made certain purchases from those persons identified asHawala Traders. The Assessing Officer also should have investigated furtheror should have dealt with in his assessment order as to why he was notaccepting the explanation of respondent that he had paid in excess ofRs.25,62,560/- through the Bank L.C. to one of the parties allegedly doingbusiness of issuing bogus bills. 6In our view, the Tribunal has not committed any perversity or appliedincorrect principles to the given facts and when the facts and circumstancesare properly analysed and correct test is applied to decide the issue at hand,then, we do not think that question as pressed raises any substantialquestion of law. 7The appeal is devoid of merits and it is dismissed with no order as tocosts. (R. I. CHAGLA J) (K.R. SHRIRAM, J.)