PARUL L SHAH, MUMBAI V. ITO 17(2)(1), MUMBAI

ITA 1127/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9947 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 1127 / MUM/20 1 6 ( / ASSESSMENT YEAR : 20 0 9 - 10 ) SHRI PERUL L SHAH PROP.SHREE GAJANAN PAPER CORP., B - 15, ROYAL INDUSTRIAL ESTATE, 5 - B, NAIGAON CROSS ROAD, WADALA, MUMBAI - 400031 / VS. INCOME TAX OFFICER, 17(2)(1), CIRCLE - 20(2), MUMBAI. ( / APPELLANT ) .. ( / RESPO NDENT ) ./ ./PAN NO. : AA FP S 3767D / APPELLANT BY: SHRI JITENDRA SINGH / RESPONDENT BY SHRI SAURABHKUMAR / DATE OF HEARING : 4 .7. 201 7 / DATE OF PRONOUNCEMENT : 13. 7. 201 7 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 3 2 , MUMBAI D A T ED 4.12.2015 PERTAINING TO A.Y. 20 0 9 - 10. 2. ONLY ISSUE RAISED IN THE GROUNDS OF APPEAL IS AGAINST THE UPHOLDING THE ADDITION AT THE RATE OF 12.5% OF THE TOTAL PURCHASES BY THE LD.CIT(A) AS MADE BY THE AO. 3. THE AO , UPON RECEIVING THE INFORMATION FROM THE VAT DEPARTMENT, G OVT OF MAHARASHTRA T HAT THE ASSESSEE HAS TAKEN ENTRIES OF BOGUS PURCHASE TO THE TUNE OF RS.1,20,91,063/ - IN FINANCIAL YEAR 2008 - 09, ISSUED NOTICE U/S ITA NO . 1127 / M/1 6 2 148 OF THE INCOME TAX ACT, 1961 ON 22.2.2013 WHICH WAS COMPLIED WITH BY THE ASSESSEE BY SUBMITTING THAT THE RETURN OF IN COME FILED ON 29.9.2009 DECLARING TOTAL INCOME OF RS.6,62,970/ - BE TREATED AS RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER, T HE AO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT ON 28.1.2014 TO EIGHT PARTIES FROM WHOM THE ASSES SEE WA S ALLEGED TO HAVE TAKEN ENTRIES OF BOGUS PURCHASES AMOUNTING TO RS.1,20,91,063/ - . HOWEVER, THE SAME WERE R ETURNED UNSERVED AND ACCORDINGLY THE AO ISSUED NOTICE TO THE ASSESSEE DATED 21.3.2014 CALLING UPON THE ASSESSEE AS TO WHY THE SAID PURCHASES S HOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE . THE ASSESSEE VIDE LETTER DATED 24.3.2014 SUBMITTING BEFORE THE AO THAT ALL THE PURCHASE WERE GENUINE AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND THE SUPPLIERS OF MATERIALS WERE REGISTERED WITH SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA . MOREOVER, THE GOODS PURCHASED FROM THESE PARTIES HAVE BEEN SOLD TO VARIOUS PARTIES IN THE MARKET AND SALES THEREFROM STAND INCLUDED IN THE TOTAL TURNOVER OF THE ASSESSEE AND THEREFORE NO FURTHER ADDTITION/ DISALLOWANCE WA S CALLED FOR AS THE ASSESSEE HAS ALREADY SHOWN PROFIT FROM THE SAID PURCHASE S AND SALE IN THE PROFIT AND LOSS ACCOUNT. HOWEVER, THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE TO THE TUNE OF RS.1,20,91,063/ - BEING BOGUS PURCHASES BY FRAMING THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 30.3.2014 BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,32,12,970/ - INTERALIA MAKING OTHER DISALLO WANCES. ITA NO . 1127 / M/1 6 3 4 . IN THE APPELLATE PROCEEDINGS BEFORE THE LD.CIT(A), THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVI NG AND HOLDING AS UNDER : 4.9 IN THE INSTANT CA S E, THE APPELLANT IS NOT IN A POSIT I ON TO PROVE THE EXISTENCE OF T H E SUPPLIES. THE S T AT E MENT OF THE APPELLANT BEFORE TH AO THAT NO OT H ER RE C ORDS EXCEPT PURCHASE BILLS AND PAYMENT DETAILS ARE MAINTAINED COUPLED WITH THE RESULT OF THE ENQUIRIES M ADE BY THE AO IS ENOUGH CIRCUMSTANTIAL EVIDENCE CASTING A STRONG DOUBT ON T HE NATURE OF T HE TRANSACTION . I AM OF THE FIRM BELIEF THAT THE APPELLANT HAD MADE CASH PURCHASE FROM OTHER PARTIES WHICH WE R E NOT RECORDED IN THE BOOKS. THE APPELLANT T OOK ONLY B ILLS FROM THEE 8 PARTIES CANNOT BE ADDED AS BOGUS AND WHAT NEEDS TO BE TAXED IS THE PROF IT ELEMENT EMBEDDED IN SUCH TRANSITION. I AM OF T HE OPINION TH A T THE DISALLOWANCE ON THE ISSUE OF BOGUS PURCHASES BE RE S TRIC T ED TO 12.5% OF THE BOGUS PURCHASE DEBITED BY T HE APPELLANT IN HIS BOOKS. THEREFORE , I DIRECT THE AO TO ESTIMATE PROFIT 12.5% ON T HE TOTAL ALLEGED BOGUS PURCHASE OF RS.1,20,91,063/ - WHICH WORKS OUT OF RS.15,11,383/ - . THE AMOUNT OF RS.15,11,383/ - IS SUSTAINED OUT OF T HE ADDITION OF RS.1,20,91,063/ - MADE BY T HE AO. THE APPELLANT GETS A RELIEF OF THE BALANCE RS.1,05,79,680/ - . THE SING LE GROUND OF APPEAL IS PARTLY ALLOWED. 5 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE DO NOT FIND ANY MERIT IN THE CONTENTION S OF THE LD.AR THAT THE PURCHASE S MADE WERE GENUINE AND WERE DULY PROVED BY PRODUCING ALL THE NECESSARY EVIDENCES SUCH AS INVOICES OF BILLS, PAYMENT S PROOFS AND CORRESPONDING SALES OF THE MATERIAL BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND, THE LD.DR STRONGLY RELIED UPON THE ORDER OF CIT(A). HAVING CONSIDERED THE FACTUAL MATRIX OF THE CASE, WE FIND THE THE LD. CIT(A) HAS CONSIDERED THE ISSUE AT LENGTH AND THEREAFTER PASSED A VERY REASONED ORDER DIRECTING THE AO TO ALL 12.50% OF THE BOGUS PURCHASES TO THE TOTAL INCOME OF THE AS SESSEE ON THE REASONING THAT ENTIRE PURCHASES COULD NOT BE TREATED AS INCOME OF THE ITA NO . 1127 / M/1 6 4 ASSESSEE. IN OUR OPINION, THE ORDER OF LD.CIT(A) IS VERY REASONABLE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE SAME BY DISMISS ING THE APPEAL OF THE ASSESSEE . 6. IN THE RES U LT THE APPEAL OF THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13TH JUL Y , 2017 . 13 TH JUL Y , 2017 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 13. 7.2017 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CO NCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI