SM Feeds & Farms India Private Limited, CHENNAI V. DCIT Company Range 6(2), CHENNAI

ITA 1048/CHNY/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5301 (ITAT-CHENNAI)
• Duration Of Justice: 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 28-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K RAVI
• Keywords: Bogus purchase
• Section: 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ! / S.P. NO.150/CHNY/2018 (IN I.T.A. NO.1048/CHNY/2018) & '& / ASSESSMENT YEAR : 2014-15 & ./ ITA NO.1048/CHNY/2018 & '& / ASSESSMENT YEAR : 2014-15 M/S SM FEEDS & FARMS INDIA PRIVATE LIMITED, LUCKY BUILDING, NO.938, 12 TH CROSS STREET, MKB NAGAR, VYASARPADI, CHENNAI - 600 039. PAN : AANCS 2321 N V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY RANGE 6(2), CHENNAI. ( PETITIONER & APPELLANT) (*+,-/ RESPONDENT) ,- . / / APPELLANT BY : SHRI K. RAVI, ADVOCATE *+,- . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 11.04.2018 2!' . 1$ / DATE OF PRONOUNCEMENT : 16.04.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNA I, DATED 29.12.2017 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2 S.P. NO.150/CHNY/18 I.T.A. NO.1048/CHNY/18 2. SHRI K. RAVI, THE LD.COUNSEL FOR THE ASSESSEE, S UBMITTED THAT THERE WAS A SURVEY IN THE PREMISES OF THE ASSESSEE ON 23.12.2013. ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE O F SURVEY OPERATION, ACCORDING TO THE LD. COUNSEL, THE REVENUE AUTHORITI ES REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFICER WITHOUT REJECTING THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IN THE REGULAR COURSE OF ITS BUSINESS, ESTIMATED THE PROFIT AT 5.5% ON THE TOTAL SALES. A CCORDING TO THE LD. COUNSEL, UNLESS THE BOOKS OF ACCOUNT ARE NOT REJECT ED, THE ASSESSING OFFICER CANNOT ESTIMATE THE PROFIT IN RESPECT OF SA LES AND PURCHASE RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, ACCOR DING TO THE LD. COUNSEL, THE ESTIMATION OF PROFIT MAY BE RESTRICTED TO PURCHASE AND SALES WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT FOR THE ASSESSMENT Y EARS 2011-12, 2012- 13 AND 2013-14, AN IDENTICAL ISSUE CAME BEFORE THIS TRIBUNAL. ACCORDING TO THE LD. D.R., THE ASSESSEE INFLATED THE PURCHASE S BY FALSELY CLAIMING THAT THE PURCHASES WERE MADE FROM NON-EXISTENT ENTI TIES. ACCORDING TO THE LD. D.R., THE ASSESSEE HAS NOT PURCHASED ANY MA TERIAL AND INFLATED THE PURCHASES IN THE BOOKS TO THE EXTENT OF 24.86 CRORES. ACCORDING TO THE LD. D.R., DURING THE COURSE OF SURVEY OPERATION , THE REVENUE 3 S.P. NO.150/CHNY/18 I.T.A. NO.1048/CHNY/18 AUTHORITIES IMPOUNDED THE DOCUMENTS RELATING TO INF LATION OF PURCHASES. THEREFORE, ACCORDING TO THE LD. D.R., THE BOOKS SAI D TO BE MAINTAINED BY THE ASSESSEE DO NOT REFLECT THE CORRECT STATE OF AF FAIRS OF THE ASSESSEES BUSINESS. 4. SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REP RESENTATIVE FURTHER SUBMITTED THAT A STATEMENT WAS RECORDED FRO M THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY. DURING THE COURS E OF SURVEY OPERATION, ACCORDING TO THE LD. D.R., THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY ADMITTED THAT THE PURCHASES WERE N EVER MADE AND THE PAYMENTS WERE ALSO NOT MADE. THE MANAGING DIRE CTOR SPECIFICALLY ADMITTED BEFORE THE REVENUE AUTHORITIES THAT THE AS SESSEE-COMPANY BOOSTED THE SALES ALSO. BASED UPON THE MATERIAL FO UND DURING THE COURSE OF SURVEY OPERATION AND THE CLARIFICATION MADE BY T HE MANAGING DIRECTOR, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HA D NO OTHER WAY EXCEPT TO ESTIMATE THE PROFIT. THIS TRIBUNAL FOR THE ASSE SSMENT YEARS 2011-12, 2012-13 AND 2013-14, FOUND THAT THE PROFIT HAS TO B E ESTIMATED AT 5.5% ON THE ENTIRE TURNOVER INCLUDING BOGUS PURCHASES AN D FICTITIOUS SALES. IN FACT, ACCORDING TO THE LD. D.R., THE ASSESSING OFFI CER AND THE CIT(APPEALS) HAVE FOLLOWED THE ORDER OF THIS TRIBUN AL ON IDENTICAL SITUATION. 4 S.P. NO.150/CHNY/18 I.T.A. NO.1048/CHNY/18 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THERE WERE INFLATED PURCHASES AND THE PAYMENTS WERE NOT MADE. IN FACT, THE ASSESSEE ADMITTED THAT THE PURCHASES WERE RECORDED AS IF THEY WERE MADE FROM NON-EXISTENT ENTITIES. THE SALES WE RE ALSO ADMITTEDLY BOOSTED. IN SUCH CIRCUMSTANCES, THE BOOKS OF ACCOU NT SAID TO BE MAINTAINED BY THE ASSESSEE MAY NOT REFLECT THE CORR ECT STATE OF AFFAIRS OF THE ASSESSEES BUSINESS TRANSACTIONS. WHEN THE REV ENUE AUTHORITIES CLAIM THAT THEY HAVE IDENTIFIED 24.86 CRORES OF PURCHASES FROM NON- EXISTENT ENTITIES, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE ASSESSING OFFICER HAD NO OTHER WAY EXCEPT TO ESTIMA TE THE PROFIT OF THE ASSESSEE. 6. WHEN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT Y EARS 2011-12, 2012-13 AND 2013-14 CAME BEFORE THIS TRIBUNAL, THE LD.COUNSEL FOR THE ASSESSEE HIMSELF SUBMITTED THAT HE WOULD NOT HAVE A NY OBJECTION TO ESTIMATE THE GROSS PROFIT AND TURNOVER REASONABLY. AFTER TAKING INTO CONSIDERATION OF AVERAGE PROFIT DISCLOSED BY THE AS SESSEE FOR EARLIER ASSESSMENT YEAR FROM 4% TO 6%, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ESTIMATION OF PROFIT AT 5.5% WOULD MEET THE ENDS OF JUSTICE. SINCE BOTH THE AUTHORITIES BELOW FOLLOWED THE ORDER OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2011-12, 5 S.P. NO.150/CHNY/18 I.T.A. NO.1048/CHNY/18 2012-13 AND 2013-14, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 7. SINCE THE APPEAL WAS DISPOSED OF, THE STAY PETIT ION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. THEREFORE, THE STAY P ETITION IS DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT, BOTH THE APPEAL AND THE STAY PETI TION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 16 TH APRIL, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 16 TH APRIL, 2018. KRI. . *156 76'1 /COPY TO: 1. ,- /APPELLANT 2. *+,- /RESPONDENT 3. 0 81 () /CIT(A)-15, CHENNAI-34 4. PRINCIPAL CIT-6, CHENNAI. 5. 69 *1 /DR 6. :& ; /GF.