RELIANCE REALTY, ULHASNAGAR V. JT CIT RG 2, KALYAN

ITA 1122/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8231 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1122 /MUM/201 7 : A.Y : 2011 - 12 M/S. RELIANCE REALTY OFFICE NO. 12 - 13, SAI DHARAMDAS MARKET, FURNITURE BAZAR, ULHASNAGAR 421 002 (APPELLANT) PAN : AA KFR5455J VS. JT. COMMISSIONER OF INCOME TAX, RANGE - 2, KALYAN (RESPONDENT) APPELLANT BY : MS. NEHA PARANJPE RESPONDENT BY : MS. N. HEMALATHA DATE OF HEARING : 24/11/2017 DATE OF PRONOUNCEMENT : 30 /11/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 3 , MUMBAI DATED 08 . 11 .2016 PERTAINING TO THE ASSESSMENT YEAR 2011 - 12 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 24 . 03 .201 4 U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE SOLITARY DISPUTE IS WITH REGARD TO THE ACTION OF THE INCOME - TAX AUTHORITIES IN TREATING THE PURCHASES OF RS.10,42,681/ - MADE BY THE ASSESSEE AS BOGUS. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELLANT - 2 ITA NO. 1122/MUM/2017 M/S. RELIANCE REALTY ASSESSEE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS REFERRED TO AN INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX AUTHORITIES TO THE EFFECT THAT THE NAME OF ONE, M/S. AANCHAL ENTERPRISES FIGURED IN THE LIST OF HAWALA DEALERS, AN ENTITY FROM WHOM ASSESSEE WAS FOUND TO HAVE MADE PURCHASES OF RS.10,42,681/ - . ON BEING ASKED TO JUSTIFY, ASSESSEE EXPLAINED THAT T HE SAID PURCHASES COMPRISED OF FLOOR TILES OF A BRAND CALLED ZEAL TOP AND THAT THE PURCHASES WERE GENUINE AND EVEN THE PAYMENT WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE ALSO EXPLAINED THAT THE TILES WERE PROCURED FOR USE IN ITS PREMISES AND THAT THE LOCAL OCTROI WAS ALSO PAID WHILE OBTAINING THE GOODS. THE ASSESSING OFFICER NOTED THAT ASSESSEE DID NOT FILE ANY CONFIRMATION OR DELIVERY CHALLAN OR STOCK REGISTER TO SHOW THE MOVEMENT OF GOODS FROM M/S. AANCHAL ENTERPRISES TO THE ASSESSEE, AND E VEN THE SUMMONS ISSUED TO M/S. AANCHAL ENTERPRISES U/S 133(6) OF THE ACT WERE RETURNED UNSERVED. THE ASSESSING OFFICER ALSO NOTED THAT THE PURCHASE BILLS ISSUED BY M/S. AANCHAL ENTERPRISES DID NOT REFER TO ANY DELIVERY CHALLAN OR DETAILS OF THE LORRY NUMB ER, DATE OF REMOVAL OR RECEIPT, ETC. AND, THEREFORE, FOR ALL THE ABOVE REASONS, HE TREATED THE PURCHASES AS NON - GENUINE AND BOGUS. ACCORDINGLY, A SUM OF RS.10,42,681/ - WAS ADDED TO THE TOTAL INCOME ON ACCOUNT OF BOGUS PURCHASES. THE SAID ADDITION HAS BEE N SUSTAINED BY THE CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. BEFORE ME, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND THAT THE COPY OF LEDGER ACCOUN T OF M/S. AANCHAL ENTERPRISES ALONGWITH THE PURCHASE BILLS AND THE DETAILS OF TRANSPORTATION ARE ON RECORD. THE LEARNED 3 ITA NO. 1122/MUM/2017 M/S. RELIANCE REALTY REPRESENTATIVE ALSO REFERRED TO A COPY OF CERTIFICATE ISSUED BY THE TILE MANUFACTURER, M/S. ZEALTOP GRANITO PVT. LTD. CONFIRMING THAT T HE GOODS WERE TRANSPORTED TO THE ASSESSEE. IT IS CANVASSED THAT THE PURCHASES BE TREATED AS GENUINE AND THE ADDITION BE DELETED. IN THE ALTERNATE, IT IS CANVASSED THAT ONLY THE PROFIT ELEMENT RELATABLE TO THE IMPUGNED PURCHASES BE ASSESSED TO TAX, SAY @ 5% , AND NOT THE ENTIRE AMOUNT OF PURCHASES. 4. THE LD. DR APPEARING FOR THE REVENUE CONTENDED THAT THE MATERIAL ON RECORD CLEARLY ESTABLISHES THAT THE PURCHASES WERE NON - GENUINE AND THE ADDITION HAS BEEN RIGHTLY SUSTAINED BY THE CIT(A). 5. I HAVE CAREFUL LY CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY, THE POINT SET - UP BY THE ASSESSING OFFICER IS THAT THERE WAS NO EVIDENCE OF MOVEMENT OF GOODS FROM M/S. AANCHAL ENTERPRISES TO THE ASSESSEE, AND EVEN THE MAHARASHTRA SALES TAX AUTHORITIES HAVE FOUND THE ALLE GED SUPPLIER, M/S. AANCHAL ENTERPRISES TO BE A HAWALA DEALER WHO HAS MERELY ISSUED INVOICES AND NOT SUPPLIED ACTUAL GOODS. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS RELIED ON THE DETAILS OF PURCHASES EFFECTED FROM M/S. AANCHAL ENTER PRISES, WHICH IS ON ACCOUNT OF FOUR INVOICES DETAILED AT PAGE 1 OF THE PAPER BOOK. IN THE PAPER BOOK, ASSESSEE HAS PLACED COPIES OF INVOICES RAISED BY M/S. AANCHAL ENTERPRISES ALONGWITH THE RESPECTIVE OCTROI RECEIPTS. A PERUSAL OF THE SAME SHOWS THAT THE OCTROI RECEIPT DOES NOT CONTAIN THE NAME OF M/S. AANCHAL ENTERPRISES AND RATHER, THE NAME IS REFERRED TO AS ONE, ADINATH. SECONDLY, EVEN THE CERTIFICATE ISSUED BY M/S. ZEALTOP GRANITO PVT. LTD. SHOWS AND MENTIONS THE NAME OF DISTRIBUTOR ADINATH TRADING C O., MUMBAI. AT THE TIME OF HEARING, IT WAS SPECIFICALLY PUT ACROSS TO THE LEARNED REPRESENTATIVE AS TO WHAT IS THE RELATION BETWEEN M/S. AANCHAL ENTERPRISES 4 ITA NO. 1122/MUM/2017 M/S. RELIANCE REALTY AND ADINATH BECAUSE AS PER THE ASSESSEE, THE PURCHASE OF GOODS ARE FROM M/S. AANCHAL ENTERPRISES, WHEREAS THE DOCUMENTS SOUGHT TO BE RELIED UPON BY THE ASSESSEE CONTAIN THE NAME OF ONE ADINATH. IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION, I FIND THAT THE CONCLUSION OF THE LOWER AUTHORITIES TO TREAT THE PURCHASES AS DOUBTFUL IS LIABLE TO BE AFFIRMED . I HOLD SO. 6. AT THE SAME TIME, IT HAS BEEN CONSISTENTLY CANVASSED BY THE ASSESSEE THAT THE TILES PURCHASED HAVE BEEN USED BY IT, A FACT WHICH HAS NOT BEEN REPUDIATED BY THE LOWER AUTHORITIES. THEREFORE, UNDER THESE CIRCUMSTANCES, FOLLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH, 356 ITR 451 (GUJARAT) , ONLY THE PROFIT ELEMENT ATTRIBUTABLE TO SUCH DOUBTFUL PURCHASES CAN BE ASSESSED TO TAX. IN THIS CONTEXT, I FIND THAT THE ONLY SAVING WHICH CAN BE EFFEC TED BY THE ASSESSEE BY MAKING PURCHASES OUTSIDE THE BOOKS IS ON ACCOUNT OF SALES TAX , AND IN THE INSTANT CASE, RATE OF SALES TAX ON THE PARTICULAR PRODUCT IS 12.5%. THEREFORE, FOLLOWING THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P . SHETH (SUPRA) THE ORDER OF THE CIT(A) IS SET - ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE DOUBTFUL PURCHASES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2017. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 30 TH NOVEMBER, 2017 *SSL* 5 ITA NO. 1122/MUM/2017 M/S. RELIANCE REALTY COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI