SHRI RAJESHKUMAR P. TRIVEDI, MUMBAI V. INCOME TAX OFFICER - 19(3)(1), MUMBAI

ITA 1128/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8901 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM I.T.A. NO. 1128/MUM/2018 ( ASSESSMENT YEAR: 2010 - 11 ) SHRI RAJESHKUMAR P. TRIVEDI 301, AMRUT NAGAR, NEAR JAIN MANDIR ROAD, VIRAR (W), THANE, M UMBAI - 401 303 VS. ITO 19(3)(1) MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 PAN/GIR NO. ACGPT 6044 H ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : NONE RESPONDENT BY : SHRI S. K. BEPARI DATE OF HEARING : 03.10.2018 DATE OF PRONOUNCEMENT : 04.10 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI (LD.CIT(A) FOR SHORT) DATED 15.12.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 201 0 - 11. 2. T HE ISSUE RAISED IS THAT THE LD.CIT(A) ERRED IN SUSTAINING DISALLOWANCE OF 12.5% OF BO GUS PURCHASE AMOUNTING TO RS. 9,80,196/ - . 3. T HE GROUNDS OF APPEAL READ AS UNDER: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS L D. CIT(A)] HAS ERRED IN UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER AND DISALLOWING THE PURCHASE TO THE EXTENT OF 12.5% OF RS.78,41,571 AMOUN TING TO RS.9,80,196 ON ACCOUNT OF PURCHASE FROM NON GENUINE PURCHASE PARTIES. 2 ITA NO. 1128/MUM/2018 4. IN THIS CASE , THE ASSESSIN G OFFICER (A.O. FOR SHORT) HAD RECEIVED INFORMATION REGARDING PARTYS INDULGING IN ISSUING BOGUS SALES BILLS WITHOUT SUPPLYING ANY GOODS. SUCH PARTIES FROM WHOM THE APPELLANT HAS SHOWN PURCHASES DURING THE YEAR IS TABULATED HEREUNDER: SR. NO. NAME OF THE HAWALA PARTIES F.Y. AMOUNT (RS.) 1 HENIL SALES AGENCY 2009 - 10 4,73,132/ - 2 AVINASH ENTERPRISES 2009 - 10 10,70,343/ - 3 RAJESHWARI METAL INDUSTRIES 2009 - 10 27,94,773/ - 4 KONICA TUBES INDUSTRIES 2009 - 10 35,03,323/ - TOTAL 78,41,571/ - IN THE ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE ASSESSEE TO ESTABLISH EH GENUINENESS OF PURCHASES FROM THESE PARTIES. NOTICE ISSUED U/S. 133(6) OF THE INCOME TAX ACT, 1961 TO THESE PARTIES AT THE ADDRSS PROVIDED BY THE ASSESSEE WAS RETURNED BY THE POSTAL AUTHORITIES. THUS , THESE PARTIES COULD NOT BE TRACED. THE ASSESSEE COULD NOT PRODUCE THESE PARTIES BEFORE THE A.O. NOR PRODUCE SUPPORTING DOCUMENTS SUCH AS DELIVERY CHALLAN, TRANSPORT RECEIPTS, ETC. APPLYING THE RATIO OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS SIMIT P. SHETH [2013] 356 ITR 451 (GUJ.). THE A.O. DISALLOWED 12.5% OF THE IMPUGNED PURCHASES. 5. A GAINST THE ABOVE ORDER , THE ASSESSEE APPEALED BEFORE THE LD. CIT(A). 6 . THE LD. CIT(A) CONF I RMED THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF 12.5% OF THE BOGUS PURCHASE. 7 . AGAINST ABOVE ORDER OF L D. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 3 ITA NO. 1128/MUM/2018 8 . WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. THE NOTICE HA S RETURNED UNSERVED. IN OUR CONSIDERED OPINION, THE ISSUES RAISED CAN BE ADJUDICATED BY HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 9 . WE FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFIC ER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS. THE ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTI ES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELATING TO REOPENING REMAIN ED UN - ASSAILED BEFORE THE LD. CIT(A). IN SUCH FACTUAL SCENARIO, THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO, IT IS AMPLY CLEAR THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS IS BOGUS AND NON - EXISTENT. 1 0 . THE SALES TAX DEPARTMENT IN ITS ENQUIRY HAS FOUND THE PARTIES TO BE PROVIDING BOGUS ACCOMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE 4 ITA NO. 1128/MUM/2018 PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES HAVE RETURNED UNSERVED. ASSES SEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NEITHER THE ASSESSEE HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES. IN SUCH CIRCUMSTANCES, THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. WE FIND IT FURTHER STRANGE THAT ASSESSEE W ANTS THE REVENUE TO PRODUCE ASSESSEES OWN VENDORS, WHOM THE ASSESSEE COULD NOT PRODUCE. THE PURCHASE BILLS FROM THESE NON - EXISTENT/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES. IN LIGHT OF THE OVERWHELMING EVIDENCE, THE REVENUE AUTHORITI ES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS DULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC). IN THE PR ESENT CASE, THE ASSESSEE WANTS THAT THE UNASSAILABLE FACT THAT THE SUPPLIERS ARE NON - EXISTENT AND, THUS, BOGUS SHOULD BE IGNORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF HONBLE APEX COURT DECISIONS. 1 1 . WE FURTHER FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE FACTS OF THAT CASE WERE DIFFERENT. FURTHERMORE, THE SALES IN THAT CASE WERE BASICALLY TO GOVERNMENT DEPARTMENTS. HENCE, THE RATIO FROM THIS DECISION IS NOT FULLY APPLICABLE ON THE FACTS OF THE CASE. 5 ITA NO. 1128/MUM/2018 12 . IN THESE CIRCUMSTANCES, THE LE ARNED 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 VIDE 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. IT WAS EXPOUNDED THAT WHEN PURCHASE BILLS HAVE BEEN FOUND TO BE BOGUS, 100% DISALLOWANCE WAS REQUIRED. THE SPECIAL LEAVE PETITION AGAINST TH IS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 1 3 . HOWEVER, WE NOTE THAT THIS IS NOT AN APPEAL BY THE REVENUE. HENCE, IT WILL NOT BE APPROPRIATE TO CONSIDER AND TAKE AWAY THE RELIEF ALREADY GRANTED BY THE ASSESSING OFFICER AND LD. COMMISSIONER OF INCOME TAX (APPEALS) TO THE ASSESSEE. AS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT WHEN SALES ARE NOT DOUBTED 100% DISALLOWANCE FOR BOGUS PURCHASE IS NOT DISALLOWABLE. HENCE, WE CONFIRM THE ORDER OF LD. CIT (A). 14 . SINCE THE ABOVE ORDER HAS BEEN PASSED FOLLOWING THE HONBLE APEX COURT AND HONBLE HIGH COURT DECISION, THE DECISIONS OF TRIBUNAL REFERRED BY THE LD. COUNSEL OF THE ASSESSEE ARE NOT RELEVANT. 1 5 . IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.10.2018 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 04.10.2018 RO SHANI , SR. PS 6 ITA NO. 1128/MUM/2018 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI