PRIME CIVIL INFRASTRUCTURES P. LTD, MUMBAI V. ACIT 10(3)(2), MUMBAI

ITA 1168/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3334 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R SINDHU
• Assessee Lawyers: DIVYESH JAIN
• Keywords: Bogus purchase
• Section: 143(3); 143(1)

Judgement Text

P A G E | 1 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI G.MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 1168/MUM/2017 (ASSESSMENT YEAR: 2012 - 13 ) M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. 204, TERMINAL 9, NEHRU ROAD, NEAR ORCHID HOTEL, VILE PARLE (E), MUMBAI - 400 057 VS. ACIT 10(3) (2) , MUMBAI PAN AAECP9650J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI DIVYESH JAIN, A .R RESPONDENT BY: SHRI R. SINDHU, D.R DATE OF HEARING: 07 .02.2019 DATE OF PRONOUNCEMENT: 1 3 .02.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 17, MUMBAI DATED 16.12.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) OF THE INCOME TAX ACT (FOR SHORT I.T. ACT) FOR A.Y. 2012 - 13. THE ASSESSEE COMPANY HAS ASSAILED THE ORDER OF THE CIT(A) BY RAISING THE FOLLOWING GROUND OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSISTANT COMMISSIONER OF INCOME TAX - 10(3)(2) (THE AO) OF DISALLOWING PURCHASES AMOUNTING TO RS.5,14,701/ - . 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS A CIVIL CONTRACTOR WORKING ON VARIOUS PROJECTS OF MUNICIPAL CORPORATION OF GREATER P A G E | 2 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) MUMBAI AND OTHER GOVERNMENT , SEMI GOVERNMENT AND LOCAL AUTHORITIES HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2012 - 13 ON 29.09.2012, DECLARING TOTAL INCOME AT RS.2,60,48,500/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T. ACT. SUBSEQUE NTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2). 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O WAS IN RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THROUGH THE OFFICE OF T HE ADDL. CIT, RANGE 8(2), MUMBAI THAT THE ASSESSEE WAS A BENEFICIARY OF THE ACCOMMODATION BILLS OF PURCHASES FROM CERTAIN BOGUS HAWALA DEALERS. AS PER THE INFORMATION RECEIVED , THE CONCERNED DEALER S HAD NOT SOLD ANY GOODS BUT HAD ONLY PROVIDED ACCOMMODATIO N ENTRIES OF SALES TO THE ASSESSEE COMPANY, AS UNDER: SR. NO. NAME OF THE PARTY AMOUNTS (RS.) 1. M/S. DARSHAT TRADING PVT. LTD. 210,000 2. M/S. GAURAV ENTERPRISE 289,075 3. M/S REAL TRADERS 15,626 TOTAL 514,701 ON THE BASIS OF THE AFORESAID INFORMATION , THE A.O IN THE COURSE OF THE ASSESSMENT PROCEEDINGS CALLED FOR THE REQUISITE DETAILS IN RESPECT OF THE PURCHASE S CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. APART THEREFROM, THE ASSESSEE WAS ALSO DIRECTED TO PRODUCE THE PR INCIPAL O FFICER S OF THE AFOREMENTIONED SUPPLIER PARTIES. HOWEVER, THE ASSESSEE FAILED TO PLACE ON RECORD THE DOCUMENTARY EVIDENCE WHICH WOULD IRREFUTABLY SUBSTANTIATE THE GENUINENESS OF THE AFOREMENTIONED PURCHASE TRANSACTIONS AND ONLY FURNIS HED THE COPIES OF THE LEDGER ACCOUNTS OF THE AFOREMENTIONED PARTIES AS APPEARING IN ITS BOOKS OF ACCOUNT S ALONG WITH THE COPIES OF ITS BANK STATEMENT S SHOWING THE PAYMENTS MADE TO THE M BY CHEQUES. P A G E | 3 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) THE ASSESSEE ALSO FAILED TO COMPLY WITH THE DIRECTIONS OF THE A.O AND DID NOT PRODUCE THE PRINCIPAL OFFICER S OF THE ABOVEMENTIONED SUPPLIER COMPANIES FOR NECESSARY EXAMINATION BY THE A.O . IN THE BACKDROP OF THE AFORESAID FACTS , THE AO BEING OF THE VIEW THA T AS THE ASSESSEE COMPANY HAD FAILED TO PRODUCE THE REQUISITE EVIDENCES VIZ. TRANSPORTATION DETAILS, STOCK REGISTER, CONSUMPTION REGISTER AND DOCUMENTARY EVIDENCE PROVING DEPOSIT OF VAT BY THE AFORESAID PARTIES IN RESPECT OF THE TRANSACTIONS UNDER CONSIDER ATION, THUS CONCLUDED THAT THE ASSESSEE HAD BOOKED BOGUS PURCHASES FOR DEFLATING HIS ACTUAL PROFITS. APART THEREFROM, THE A.O WAS OF THE VIEW THAT AS THE COP IES OF THE LEDGER ACCOUNT S OF THE AFOREMENTIONED PARTIES FURNISHED BY THE ASSESSEE WERE IN THE NATU RE OF SELF SERVING DOCUMENT S , HENCE THE SAME DID NOT INSPIRE MUCH OF CONFIDENCE AS REGARDS THE VERACITY OF THE PURCHASE TRANSACTION S UNDER CONSIDERATION. IT WAS ALSO OBSERVED BY HIM THAT THE FACT THAT THE PAYMENTS TO THE AFOREMENTIONED PARTIES WERE MADE BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES COULD ALSO NOT BE TAKEN AS A SACROSANCT PIECE OF EVIDENCE. ON THE BASIS OF HIS AFORESAID DELIBERATIONS THE A.O DISALLOWED THE ENTIRE BOGUS PURCHASES AND MADE AN ADDITION OF RS. 5,14,701/ - TO THE INCOME OF THE ASS ESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) . THE CIT(A) AFTER DELIBERATING ON THE CONTENTION S ADVANCED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THE SAME AND DISMISSED THE APPEAL. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE LOWER AUTHORITIES HAD ERRED IN MAKING AN ADDITION OF THE ENTIRE AMOUNT OF PURCHASES THAT W ERE CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED P ARTIES . IT P A G E | 4 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) WAS THE CONTENTION OF THE LD. A.R THAT THE ADDITION IN THE HANDS OF THE ASSESSEE IN RESPECT OF THE UNSUBSTANTIATED PUR CHASES UNDER CONSIDERATION WAS LIABLE TO BE RESTRICTED ONLY TO THE EXTENT OF THE PROFIT THAT THE ASSESSEE WOULD HAVE MADE BY PURCHASING THE GOODS FROM THE OPEN/GREY MARKET. IT WAS SUBMITTED BY THE LD. A.R THAT THE ADDITION IN RESPECT OF THE AFOREMENTIONED UNSUBSTANTIATED PURCHASE TRANSACTIONS IN ALL FAIRNESS MAY BE RESTRICTED TO 12.5% OF THE VALUE OF PURCHASES CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTIES. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED O N THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES AGGREGATING TO RS.5,14,701/ - FROM THE CAPTIONED PARTIES WHICH HAVE BEEN DUBBED AS HAWALA DELAERS BY THE A.O ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. IT IS ALSO A FACT THAT THE GENUINENESS OF THE PURCHAS E TRANSACTIONS OF THE ASSESSEE WITH THE AFOREMENTIONED PARTIES COULD NOT BE SUBSTANTIATED BY THE ASSESSEE ON THE BASIS OF IRREFUTABLE AND CLINCHING EVIDENCE TO THE SATISFACTION OF THE A.O. HOWEVER, WE ALSO CANNOT REMAIN OBLIVIOUS OF THE FACT THAT THE SALES /RECEIPTS OF THE ASSESSEE HAD ALSO NOT BEEN DISLODGED BY THE LOWER AUTHORITIES. APART THEREFROM, THE BOOK RESULTS OF THE ASSESSEE HAVE ALSO NOT BEEN S H OWN AS NOT BEING IN CONFORMITY WITH THOSE OF THE PRECEDING YEARS IN ITS CASE. INSOFAR, THE PAYMENTS CLAIMED BY THE ASSESSEE TO HAVE BEEN MADE TOWARDS PURCHASE CONSIDERATION TO THE AFOREMENTIONED PARTIES BY CHEQUES ARE CONCERNED , WE FIND THAT THE SAME ALSO HAD NOT BEEN PROVED BY THE REVENUE TO HAVE BEEN RECEIVED BACK BY THE ASSESSEE FROM THE SAID PARTIES. IN SUM AND SUBSTANCE, IN THE BACKDROP OF THE AFORESAID FACTS IT CAN SAFELY BE CONCLUDED THAT P A G E | 5 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) THOUGH THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF HAVING PURCHASED THE GOODS FROM THE AFOREMENTIONED PARTIES TO THE SATISFACTION OF T HE A.O, BUT THEN THE FACT THAT THE GOODS UNDER CONSIDERATION WERE NOT PURCHASED AND CONSUMED BY THE ASSESSEE IN ITS BUSINESS ALSO COULD NOT BE SUCCESSFULLY PROVED BY THE REVENUE ON THE BASIS OF CLINCHING EVIDENCE. WE ARE OF THE CONSIDERED VIEW THAT IN JUXT APOSITION OF THE AFORESAID FACTS IT CAN SAFELY BE CONCLUDED THAT THE ASSESSEE HAD PURCHASE D THE GOODS UNDER CONSIDERATION, THOUGH NOT FROM THE AFOREMENTIONED PARTIES, BUT FROM UNIDENTIFIED SUPPLIERS OPERATING IN THE OPEN/GREY MARKET . ON THE BASIS OF OUR AF ORESAID OBSERVATIONS , WE ARE PERSUADED TO BE IN AGREEMENT WITH CONTENTION ADVANCED BY THE LD. A.R THAT THE ADDITION IN THE HANDS OF THE ASSESSEE WAS LIABLE TO BE RESTRICTED TO THE EXTENT OF PROFIT ELEMENT INVOLVED IN MAKING OF THE AFOREMENTIONED UNSUBSTANT IATED PURCHASES FROM THE OPEN/GREY MARKET. INSOFAR, THE QUANTIFICATION OF THE PROFIT ELEMENT/MARGIN INVOLVED IN MAKING OF SUCH PURCHASES FROM THE OPEN/GREY MARKET IS CONCERNED, WE ARE OF THE CONSIDERED VIEW THAT THE SAME AS HELD BY THE HONBLE HIGH COURT O F GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH ( 2013) 356 ITR 451 (GUJ) CAN SAFELY BE ESTIMATED AT 12.5% OF THE VALUE OF THE AFOREMENTIONED PURCHASE TRANSACTIONS UNDER CONSIDERATION. ON THE BASIS OF OUR AFORESAID OBSERVATIONS WE RESTRICT THE ADDITION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF RS.64,338/ - (I.E 12.5% OF RS.5,14,701/ - ) . THE ORDER PASSED BY THE CIT(A) IS MODIFIED IN TERMS OF OUR AFORESAID OBSERVATIO N. 7. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 3 . 02.2 019 S D / - S D / - (G. MANJUNATHA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 1 3 . 0 2 . 2 0 1 9 PS. ROHIT P A G E | 6 ITA NO. 1168/MUM/2017 AY. 2012 - 13 M/S PRIME CIVIL INFRASTRUCTURE PVT. LTD. VS. ACIT - 10(3)(2) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI