MANOJ S. MEHTA, MUMBAI V. TIO 27(2)(2), NAVI MUMBAI

CO 95/MUM/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3097 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATYANARAYANA RAJU
• Assessee Lawyers: KETAN N GODA
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.7524/MUM/2016 : ASST.YEAR 2008-2009 THE INCOME TAX OFFICER WARD 27(2)(2) MUMBAI. / VS. SHRI MANOJ S.MEHTA M/S.DEVANKUR STEEL 31, AHMEDABAD STREET CARNAC BUNDER MUMBAI . PAN : ACJPM8523H. ( / APPELLANT) ( / RESPONDENT) CO NO.95/MUM/2017 : ASST.YEAR 2008-2009 SHRI MANOJ S.MEHTA M/S.DEVANKUR STEEL 31, AHMEDABAD STREET CARNAC BUNDER MUMBAI . / VS. THE INCOME TAX OFFICER WARD 27(2)(2) MUMBAI. ( CROSS OBJECTOR ) ( / RESPONDENT) REVENUE BY : SHRI SATYANARAYANA RAJU (SR.DR) ASSESSEE BY : SHRI KETAN N.GODA / DATE OF HEARING : 18.05.2017 / DATE OF PRONOUNCEMENT : 06.07.2017 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) WHEREIN 2.3% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE WAS SUSTAINED BY THE LEARNED CIT(A) AS AGAINST 12.5% SUSTAINED BY THE ASSESSING OFFICER, THUS GRANTING RELIEF OF RS.37,91,959 TO THE ASSESSEE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER:- ITA NO.7524/MUM/2016 & CO NO.95/MUM/2017. SHRI MANOJ S.MEHTA. 2 2.1 THE ASSESSING OFFICER RECEIVED INFORMATION WAS RECEIVED FROM SALES TAX DEPARTMENT THROUGH THE DGIT(LNV), MUMBAI REGARDING FICTITIOUS PURCHASES. THE ASSESSEE'S NAME APPEARS AS ONE OF THE BENEFICIARIES OF ACCOMMODATION BILLS. AS PER THE INFORMATION RECEIVED, THE AO OBSERVED THAT THE ASSESSEE HAS MADE BOGUS PURCHASES FROM THE FOLLOWING FOUR PARTIES, AS UNDER: - SR. NO. PARTY WHO HAVE ISSUED BOGUS BILLS TO THE ASSESSEE AMOUNT (RS.) 1 TRISHUL TRADERS 2,82,37,779 2. DASHMESH STEEL TRADING 49,87,910 3. RUMEET ENTERPRISES 7,62,191 4. KINJAL INDUSTRIAL CORPORATION 25,78,748 TOTAL 3,65,66,625 2.2 DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE AO HAS VERIFIED THIS FACT AND CONFIRMED FROM THE PURCHASE STATEMENT OF THE ASSESSEE. NOTICES U/S 133(6) OF THE I.T. ACT WERE ISSUED TO' THE ABOVE MENTIONED PARTIES TO VERIFY THE IDENTITY OF THE PURCHASE PARTIES AND GENUINENESS OF THE PURCHASE TRANSACTION. SINCE THE NOTICES HAD BEEN RETURNED UNSERVED, THE ASSESSEE WAS ASKED TO PRODUCE THE PARTIES ALONG WITH THE COPIES OF LEDGER ACCOUNT OF THE ASSESSEE IN THEIR BOOKS, NATURE OF GOODS SOLD ALONG WITH SAMPLE COPIES OF BILLS ISSUED, COPY DELIVERY CHALLANS FOR GOODS DISPATCHED ALONG WITH TRANSPORT BILLS, COPY OF BANK STATEMENT SHOWING THE RELEVANT RECEIPTS AND ITA NO.7524/MUM/2016 & CO NO.95/MUM/2017. SHRI MANOJ S.MEHTA. 3 PAYMENT OF OUTSTANDING RECEIVED AFTER THE END OF THE YEAR. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY PURCHASES MADE FROM THE ABOVE FOUR PANES AMOUNTING TO RS. 3,65,66,625/- SHOULD NOT BE TREATED AS BOGUS PURCHASE IN CASE SINCE HE IS NOT ABLE TO PRODUCE THE PARTIES FOR VERIFICATION. IN RESPONSE, THE ASSESSES FURNISHED LEDGER EXTRACTS OF ALL THE PARTIES THEREBY STATING THAT THE PAYMENTS TO THESE PARTIES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE ONLY. COPIES OF BILLS ETC. WERE ALSO FILED, HOWEVER, THE ASSESSEE DID NOT PRODUCE THE ABOVE SAID PARTIES TO ESTABLISH THEIR VERACITY. 2.3 SINCE THE ASSESSEE COULD NOT PRODUCE THE ABOVE MENTIONED PARTIES AND ALSO COULD NOT PROVIDE THE EVIDENCES OF THE PURCHASE LIKE DELIVERY CHALLANS, TRANSPORT BILLS ETC., THE AO HELD THAT PURCHASES SHOWN TO HAVE BEEN MADE WITH THE ABOVE MENTIONED PARTIES ARE NOT GENUINE TRANSACTIONS. 3. THE ASSESSING OFFICER CONCLUDED AS UNDER:- ACCORDINGLY, I HEREBY ESTIMATE THE G.P. PERCENTAGE AT 12.5%, KEEPING IN MIND THE PRINCIPLE LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF H.M. ESUFALI ABDULALI THAT THE METHOD TO BE ADOPTED MUST BE WHICH IS APPROXIMATELY NEARER TO THE TRUTH, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS GUJARAT HIGH COURT DECISION IN THE CASE OF SIMIT P. SHETH (2013) (356 ITR 451 (GUJ.) BEING THE POSSIBLE PROFIT OUT OF THE PURCHASES MADE THROUGH NON-GENUINE PARTIES KNOWN AS TAINTED PURCHASES AND THEREBY, I HEREBY MAKE AN ADDITION OF RS.45,70,828/- [12.5% OF RS. 3,65,66,625/-]. 4. UP ON ASSESSEE'S APPEAL LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THESE PURCHASES WERE BOGUS AS THE ASSESSEE HAS FAILED TO SUBMIT NECESSARY EVIDENCES AS REQUIRED TO PROVE THAT THE PURCHASES WERE NOT BOGUS. HOWEVER DESPITE HOLDING SO LEARNED CIT(A) PROCEEDED TO HOLD THAT ADDITION SHOULD BE MADE ONLY TO THE EXTENT OF 2.3% OF ITA NO.7524/MUM/2016 & CO NO.95/MUM/2017. SHRI MANOJ S.MEHTA. 4 THE BOGUS PURCHASES BEING THE GROSS PROFIT RATE OF ASSESSEE. LEARNED CIT-A DID NOT DEAL WITH THE CASE LAWS REFERRED BY THE ASSESSING OFFICER IN DELETING ADDITION. 5. AGAINST THIS ORDER REVENUE HAS FILED APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 7. UP ON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCE HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER DISPUTE. IN THESE CIRCUMSTANCES LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO.240 OF 2003 IN THE CASE OF N K INDUSTRIES VS DY CIT , ORDER DATED 20.06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.01.2017. 8. HOWEVER, I NOTE THAT DESPITE THE ABOVE PRECEDENCE THE ASSESSING OFFICER HAS MADE AN ADDITION ONLY TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASE. HENCE IT WOULD NOT BE APPROPRIATE TO TAKE AWAY THE RELIEF ALREADY GRANTED BY THE ASSESSING OFFICER. . ACCORDINGLY I HOLD THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE. HENCE I SET ASIDE THE ORDER OF LEARNED CIT(A)AND RESTORE THAT OF ASSESSING OFFICER. 9. HENCE REVENUES APPEAL IS STANDS ALLOWED. ITA NO.7524/MUM/2016 & CO NO.95/MUM/2017. SHRI MANOJ S.MEHTA. 5 10. ASSESSEE'S CROSS OBJECTION; 10.1 THE ASSESSEE'S CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF LEARNED CIT(A) AND AGAINST THE ORDER OF THE ASSESSING OFFICER. 10.2 SINCE I HAVE ALREADY UPHELD THE ORDER OF THE ASSESSING OFFICER IN THE REVENUES APPEAL AS ABOVE, THIS CROSS OBJECTION BY THE ASSESSEE IS STANDS DISMISSED. 11. IN THE RESULT REVENUES APPEAL STANDS ALLOWED AND THE ASSESSEE'S CROSS OBJECTION IS STANDS DISMISSED ORDER PRONOUNCED ON THIS 06 TH DAY OF JULY, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 06 TH JULY, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : TRUE COPY / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.