SANDEEP L SHIRKE, NAVI MUMBAI V. ITO 22(3)(4), NAVI MUMBAI

CO 23/MUM/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2980 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 131

Judgement Text

ITA NO.7043/M/2013 & C.O. 23/MUM/2015 SANDEEP LAXMAN SHIRKE ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.7043/MUM/2013 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER 22(3)(4) 3 RD FLOOR, TOWER NO.6 VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI / VS. SANDEEP LAXMAN SHIRKE 302, NAVYUG APARTMENTS PLOT NO.82,SECTOR-44 SEAWOODS, NERUL WEST NAVI MUMBAI 400 706 ( !' /APPELLANT ) : ( #$!' / RESPONDENT ) & CROSS OBJECTION NO.23/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) SANDEEP LAXMAN SHIRKE 302, NAVYUG APARTMENTS PLOT NO.82,SECTOR-44 SEAWOODS, NERUL WEST NAVI MUMBAI 400 706 / VS. INCOME TAX OFFICER 22(3)(4) 3 RD FLOOR, TOWER NO.6 VASHI RAILWAY STATION COMPLEX, VASHI NAVI MUMBAI %! ./ ./PAN/GIR NO. AHZPS-4177-N ( !' /APPELLANT ) : ( #$!' / RESPONDENT ) ITA NO.7043/M/2013 & C.O. 23/MUM/2015 SANDEEP LAXMAN SHIRKE ASSESSMENT YEAR-2010-11 2 ASSESSEE B Y : K.M. KAPADIA ,LD. AR REVENUE BY : ARVIND KUMAR, LD. DR / DATE OF HEARING : 22/05/2017 / DATE OF PRONOUNCEMENT : 24/05/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY THE REVENUE FOR ASSESSME NT YEAR [AY] 2010-11 AND CROSS APPEAL BY ASSESSEE ASSAILS THE OR DER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-33 [CIT(A)], M UMBAI DATED 03/09/2013. THE SOLE ISSUE INVOLVED HERE IS CERTAIN ADDITION ON ACCOUNT OF BOGUS PURCHASES WHICH WE TAKE UP IN SUCCEEDING PARAGRAPHS. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF GARMENTS EXPORTS UNDER PROPRIETORSH IP CONCERN KONKAN INDUSTRIES , WAS ASSESSED U/S 143(3) VIDE ASSESSING OFFICER [A O] ORDER DATED 05/03/2013 WHERE THE TOTAL INCOME OF THE ASSE SSE WAS ASSESSED AT RS.1,22,03,181/- AS AGAINST RETURNED INCOME OF R S. 4,22,829/- FILED BY THE ASSESSE ON 11/01/2011 AFTER SOLE ADDITION OF CE RTAIN BOGUS PURCHASES FOR RS.1,17,80,352/-. THE ASSESSEE REFLECTED TURNO VER OF RS.1.20 CRORES AGAINST WHICH DECLARED NET PROFIT WA S RS.5,19,284/-. DURING ASSESSMENT PROCEEDINGS, THE ASSESSE WAS FOUN D TO HAVE MADE PURCHASES FROM TWO PARTIES NAMELY SHIVRAJ TRADERS & VINAYAK ENTERPRISES DURING THE IMPUGNED AY WHICH WERE LISTED AS SUSPICIOUS DEALER ON THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT . SUMMONS ITA NO.7043/M/2013 & C.O. 23/MUM/2015 SANDEEP LAXMAN SHIRKE ASSESSMENT YEAR-2010-11 3 ISSUED U/S 131 FOR THE PRODUCTION OF SUPPLIERS AND NOTICES ISSUED U/S 133(6) TO CONFIRM SALES TRANSACTIONS YIELDED NO RES ULT, WHICH LED THE AO TO TREAT THESE PURCHASES AS BOGUS PURCHASES AND THEREFORE, THE SAME WERE DISALLOWED. RESULTANTLY, ALL PURCHASES CLAIMED BY THE ASSESSEE GOT DISALLOWED. 3. AGGRIEVED THE ASSESSEE ASSAILED THE SAME BEFORE LD. CIT(A) WITH PARTIAL SUCCESS VIDE IMPUGNED ORDER DATED 03/09/201 3 WHERE THE ASSESSEE, IN SUPPORT OF PURCHASES, SUBMITTED VARIOU S DOCUMENTS LIKE PURCHASES INVOICES, QUANTITATIVE DETAILS, DELIVERY CHALLANS, BANK PAYMENTS DETAILS, INVOICE CUM PACKING LIST, SHIPPIN G BILL FOR EXPORT AND BILL OF LADING ETC. ALONG WITH CONFIRMATORY LETTERS FROM THE SUPPLIERS. AFTER PERUSING THE SAME, LD. CIT(A) WAS, TO A CERTAIN EXT ENT, CONVINCED WITH THE CLAIM OF THE ASSESSEE AND RESTRICTED THE SAID D ISALLOWANCE TO RS.2,98,818/-. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE DREW OUR ATT ENTION TO THE FACT THAT THE ASSESSE FAILED TO SUBSTANTIATE THE PURCHAS ES BY PRODUCTION OF SUPPLIERS DESPITE BEING MAKING PURCHASES FROM THESE TWO PARTIES ONLY AND MERE PRODUCTION OF PURCHASES DOCUMENTS WAS NOT SUFFICIENT TO PROVE THE CLAIM CONCLUSIVELY AND THEREFORE, LD. CIT(A) ER RED IN PROVIDING THE QUANTUM RELIEF TO THE ASSESSEE. 5. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE SUFFERED FULL DISALLOWANCE O F PURCHASES DURING THE YEAR WHEREAS NO SALES COULD EVER BE ACHIEVED WITHOU T MAKING ANY PURCHASES. NEVERTHELESS, THE ASSESSEE WAS IN POSSES SION OF RELEVANT PURCHASE AND SALES DOCUMENTS WHICH WERE PRODUCED BE FORE LD. CIT(A) ITA NO.7043/M/2013 & C.O. 23/MUM/2015 SANDEEP LAXMAN SHIRKE ASSESSMENT YEAR-2010-11 4 WHO AFTER APPRECIATING THE SAME WAS CONVINCED WITH THE CLAIM OF THE ASSESSEE AND RIGHTLY RESTRICTED THE SAID DISALLOWAN CE AND THEREFORE, NO INTERFERENCE WAS CALLED FOR IN THE MATTER. 6. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE RELEVANT MATERIAL ON RECORD. UPON PERUSAL OF PARA 4 & 5 OF IMPUGNED ORDER OF LD. CIT(A), WE NOTE THAT THE ASSESSEE HAS PRODUCED VARI OUS DOCUMENTS IN SUPPORT OF PURCHASE / SALE VIZ. PURCHASE INVOICES, DELIVERY CHALLANS, BANK PAYMENT DETAILS, SALE INVOICE CUM PACKING LIST , SHIPPING BILL FOR EXPORT, BILL OF LADING AND CONFIRMATION LETTER FROM THE SUPPLIERS. THE ASSESSEE WAS ALSO SUCCESSFUL IN RECONCILING THE QUA NTITATIVE DETAILS. WE ALSO NOTE THAT THE ASSESSEE HAS MADE TOTAL PURCHASE S OF RS.117.80 LACS DURING THE YEAR AGAINST SALE OF RS.120.79 LACS AND TOTAL PURCHASES HAVE BEEN DISALLOWED BY THE REVENUE, WHICH IS NOT JUSTIF IED AT ALL. THEREFORE, UNDER THE CIRCUMSTANCES, AT THE MOST, THE ASSESSEE COULD SUFFER DISALLOWANCE TO ACCOUNT FOR PROFIT ELEMENT ONLY EMB EDDED IN THESE TRANSACTIONS, WHICH LD. CIT(A) HAS RIGHTLY DONE. TH E LD. CIT(A) AFTER CONSIDERING THE FACTUAL MATRIX AND GROSS PROFIT EAR NED BY THE ASSESSEE, RESTRICTED THE SAID DISALLOWANCE TO RS.2,98,818/- W HICH IS FAIR AND REASONABLE ON THE FACTS AND CIRCUMSTANCES. WE NOTE THAT LD. CIT(A) HAS ERRED IN APPRECIATING THE GP RATE EARNED BY THE ASS ESSEE DURING THE IMPUGNED AY. HOWEVER, WE DO NOT FIND IT NECESSARY T O INTERFERE WITH THE CONCLUSION OF LD. CIT(A) AND THEREFORE, CONFIRM THE DISALLOWANCE OF RS.2,98,818/- NOTWITHSTANDING THE GP RATE EARNED BY THE ASSESSEE. ITA NO.7043/M/2013 & C.O. 23/MUM/2015 SANDEEP LAXMAN SHIRKE ASSESSMENT YEAR-2010-11 5 7. THE ASSESSEE, IN ITS CROSS APPEAL, HAS ASSAILED THE ACTION OF LD. AO IN MAKING FULL DISALLOWANCE OF PURCHASES. AS WE HAVE CONFIRMED THE ORDER OF LD. CIT(A), THE SAME RESULTS INTO DISMISSA L OF BOTH THE APPEALS. 8. IN NUTSHELL, BOTH THE APPEALS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24. 05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. #. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI