ROLLMANS ALUMINIUM PVT LTD, MUMBAI V. ITO 8(1)(2), MUMBAI

ITA 04/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8393 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO. 04 /MUM/201 9 ( / ASSESSMENT YEAR: 20 0 9 - 1 0 ) ROLLMANS ALUMINIUM PVT. LTD. 113, ISMAIL CURTEY ROAD, NEAR, JAMLI MOHALLA, PYDHONIE, MUMBAI - 400003 . / VS. ITO 8(1)(2) 662, AAYAKAR BHAVAN 6 TH FLOOR, M.K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABCR5232K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 09 / 01 / 20 20 /DATE OF PRONOUNCEMENT: 15 / 01 / 2020 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 27 . 0 8 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 14 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 1 0 . 2 . THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS.386082/ - @ 12.5% OF THE PURCHASES OF RS.3088658/ - WITHOUT APPRECIATING THE FACT THAT: - 1. THE PURCHASES ARE DULY SUPPORTE4D BY PURCHASE BILLS AND DELIVERY CHALLAN. ASSESSEE BY : NONE REVENUE BY: SHRI AKHTAR ALI ANSARI (DR) ITA NO. 04 / M/201 9 A.Y.20 0 9 - 1 0 2 2. THE PAYMENT ARE MADE BY CROSS ACCOUNT PAYEE CHEQUE AND MADE TO THE PARTY FROM WHOM PURCHASES ARE EFFECTED. 3. THE SUPPLIER HAS CONFIRMED THE TRANSACTION. 4. THE SALES OUT OF PURCHASES HAVE BEEN ACCEPT ED. 5. THERE IS NO EVIDENCE TO SHOW THAT THE PURCHASE CONSIDERATION HAS COME BACK TO ASSESSEE. 6. THE SUPPLIER HAS ACCOUNTED FOR T HE PURCHASES AND PAID TAXES THEREON 7. THE STOCK REGISTER IS MAINTAINED BY THE APPELLANT. THE APPELLANT CRAVE LEAVE TO ADD, A MEND OR ALTER THE ABOVE GROUNDS OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 11 . 09 .20 0 9 DECLARING TO TAL INCOME TO THE TUNE OF RS . 8,51,600 / - FOR THE A.Y. 2009 - 10 . THE RETURN WAS PROCESSED U/S 143(1) OF THE I . T. ACT 1961 . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF ALUMINIUM PRODUCTS AND TRADING OF THE SAME. THEREAFTER, AN INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING DEPARTMENT , MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS MADE THE BOGUS PURCHASE ENTRIES OF RS. 30,88,658 / - FROM THE FOLLOWING TWO PARTIES. NAME OF THE PARTY HAWALA TIN PAN AMOUNT WOODLAND MERCANTILE COMPANY PRIVATE LIMITED 27660623683V AAACW7141F 6,46,097 STARWOOD MERCANTILE COMPANY PRIVATE LIMITED 27920625577V AA KCS9393K 24,42,561 TOTAL 30,88,658 4. THE CASE OF THE ASSESSEE WAS REOPENED U/S 147/ 148 OF THE ACT. THE NOTICE U/S 147/148 OF THE ACT DATED 09.03.2016 WAS ISSUED AND SERVED UPON THE ASSESSEE. T HE AO RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASE IN SUM OF RS. 3,86 , 082 / - . THE TOTAL INCOME OF THE ASSESSEE WAS ASSE SSE D TO THE TUNE OF RS.12,37,680 / - . FEELING AGGRIEVED, THE ASSESSEE ITA NO. 04 / M/201 9 A.Y.20 0 9 - 1 0 3 FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ADDITION RAISED BY THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . 5 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE DEPARTMENT AND HAS GONE THROUGH THE CASE CAREFULLY . U PON CAREFUL CONSIDERATION WE FIND THAT ASSESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFERENCE HAS BEEN DRAWN DUE TO THE INABILITY OF THE ASSE SSEE TO PRODUCE THE SUPPLIERS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED THEN HUNDRED PERCENT DISALLOWANCE FOR BOG US PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT 18.6.20 14 . IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION WE ARE OF THE CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. HOWEVER, IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS PRAYED THAT WHEN ONLY T HE PROFITS EARNED BY THE ASSESSEE ON THESE BOGUS PURCHASE TRANSACTION IS TO BE TAXED THE N GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE AND OFFERED TO TAX SHOULD BE REDUCED FROM THE STANDARD 12.5% BEING DIRECTED TO BE DISALLOWED ON ACCOUNT OF BOGUS PURCHASE. 6. UP ON CAREFUL CONSIDERATION, WE FIND CONSIDERABLE COGENCY IN THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE, AS OTHERWISE IT WILL BE DOUBLE JEOPARDY TO THE ASSESSEE. ACCORDINGLY, WE MODIFY THE ORDER OF ITA NO. 04 / M/201 9 A.Y.20 0 9 - 1 0 4 LEARNED CIT - A AND DIRECT THAT THE DISALLOWAN CE IN THIS CASE BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASES AS REDUCED BY THE GROSS PROFIT RATE ALREADY DECLARED BY THE ASSESSEE ON THESE TRANSACTIONS I.E. G.P. @ 10.67 % . ACCORDINGLY, WE ALLOWED THE CLAIM OF THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL FI LED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED ACCORDINGLY . ORDER PRONOUNCED IN THE OPEN COURT ON 15 /01/2020 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 15 /01/2020 V IJAY PAL SINGH/ SR. P.S. / COPY OF THE OR DER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI