FILTERTECHNIKS P.LTD, MUMBAI V. ITO 9(3)(2), MUMBAI

ITA 1200/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9799 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 1200 /MUM/201 7 ( / ASSESSMENT YEAR: 2 0 10 - 11 ) FILTERTECHNIKS PVT LTD. B - 5 /103 - 104, GREENLAND CO - OP SOCIETY, SHRINIVAS BAGARKA ROAD, J B NAGAR, ANDHERI (E), MUMBAI - 400059 / VS. INCOME TAX OFFICER 9(3)(2), ROOM NO.227, 2 ND 5 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT) : ( / RESPONDE NT ) ./ PAN : AABC F2208 D ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI JITENDRA SINGH / REVENUE BY : SHRI SUMAN KUMAR / DATE OF HEARING : 2 3.8 . .2017 / DATE OF PRONOUNCEMENT : 23. 8 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS APPEAL BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 20 10 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 16 , MUMBAI , DATED 22.12. 201 6 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED 2 ITA NO. 1200 /MUM/201 7 BY THE ASSESSING OFFICER DATED 3 1.3. 2 01 5 UNDER SECTION 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) . 2 . AT THE OUTSET, THE LD.COUNSEL STATED THAT THE GROUND RAISED QUA REGARDING REOPENIN G OF THE ASSESSM ENT IS NOT PRESSED. ACCORDINGLY, THE GROUND NO.1 IS DISMISSED AS NOT PRESSED. 3 . THE ONLY SURVIVING ISSUE IS WITH REGARD TO THE ORDER OF THE LD.CIT(A) IN ESTIMATING THE ADDITION OF BOGUS PURCHASE OF RS.39,95,391/ - FOR THIS THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 2. AD - HOC ADDITION BY TREATING THE PURCHASES AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT UNJUSTIFIED RS.39,95,391 / - I . THE LD. CIT(A) ERRED M MAKING AD - HOC ADDITION OF RS.39,95,391/ - BEING PURCHASES MADE FROM MY S. NIDDISH IMPEX PVT. LTD, M/ S. TARA ENTERPRISES, M/ S. TULSIANI TRADING PVT. LTD M/ S. ROHIT ENTERPRISES & M/ S. MAHAVIR SALES CORPORATION TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCU MSTANCE OF THE CASE. HENCE, AD - HOC ADDITION OF RS.39,95,391/ - UNDER SECTION 69C IS UNJUSTIFIED AND THE SAME MAY BE DELETED. II . THE LD. CIT(A) FAILED TO APPRECIATE THAT MATERIALS PURCHASE FROM M/S. NIDDISH IMPEX PVT. LTD, M/S. TARA ENTERPRISES, M/S TULSI ANI TRADING PVT. LTD, M/S. ROHIT ENTERPRISES & M/S MAHAVIR SALES CORPORATION ARE DULY ACCOUNTED IN THE BOOKS OF ACCOUNTS AND THE SAME ARE SUPPORTED BY PROPER DOCUMENTARY EVIDENCES. HENCE, THE ADHOC ADDITION OF RS.39,95,391/ -- TREATING THE SAME AS UNEXPLA INED EXPENDITURE UNDER SECTION 69C IS UNJUSTIFIED AND THE SAME MAY BE DELETED. III . WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(A) ERRED IN MAKING AD - HOC ADDITION OF RS.39,95,391/ - ON THE BASIS OF THE CERTAIN 3 ITA NO. 1200 /MUM/201 7 INFORMATION RECEIVED FROM SALES TAX DEPARTMENT WITHOUT PROVIDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS RELYING ON WHOSE STATEMENT AN ADVERSE INFERENCE HAS BEEN DRAWN AGAINST THE APPELLANT. HENCE, THE AD - HOC ADDITION OF RS.39,95,391/ - IS UNJUSTIFIED AND THE SAME MAY BE DELETED 4 . BRIEFLY STATED FACTS OF THE CASE ARE THAT THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT CARRIED OUT INVESTIGATION IN SOME OF THE CASES OF REGISTERED DEALERS AND CONSEQUENT TO SUCH INVESTIGATION IT WAS REVEALED THAT THERE ARE GOOD NUMBER OF DEAL ERS WHICH WE RE ISSUING BOGUS BILLS WITHOUT SELLING ANY PRODUCT TO VARIOUS ASSESSEES. DURING INVESTIGATION IT WAS FOUND THAT THE ASSESSEE HAS MADE PURCHASE S FROM THESES HAWALA PARTIES WHICH WORKED OUT AT RS.71,35,127 / - . THIS POSITION IS ADMITTED BY THE L D.CIT(A) BUT THE LD.COUNSEL FOR THE ASSESSEE STATED THAT THE SALES WERE NOT DOUBTED AND EVEN THE ASSESSEE HAS MAINTAINED STOCK TALLY AS WELL AS MOVEMENT OF GOODS REGISTER WHICH WAS PRODUCED BEFORE THE AO AS WELL AS THE LD. CIT(A). IT WAS CLAIMED BY THE A SSESSEE THAT THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND THE CHEQUES WERE CREDITED IN THE NAMES OF THESE PARTIES . HOWEVER, THE LD.COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS NO OBJECTION IN CASE, IF SOME PERCENTAGES O F BOGUS PURCHASE S IS DISALLOWED BY THE TRIBUNAL. THE LD.COUNSEL STA T ED THAT THE LD. CIT(A) ALSO ESTIMATED THE DISALLOWANCE OF RS.39,59,200/ - IN RESPECT OF THREE PARTIES FOR WHICH THE ALLEGED BOGUS PURCHASES WE R E MADE WHICH 4 ITA NO. 1200 /MUM/201 7 EITHER NOT EXISTED . T HE LD.CIT(A) ADMITTED THAT THE ASSESSEE PURCHASED GOODS AND INVENTORY OF TRADING GOODS HAVE BEEN MAINTAINED AND REVENUE HAS NOT DENIED THE SALES ARISEN OUT OF THE BOGUS PURCHASE S . UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT A REASONABLE DISALLOWANCE SHOULD BE MADE. T HE ASSE SS EE IS ENGAGED IN T HE BUSINESS OF MANUFACTURING AND TRADING INDUSTRIAL FILTER . GOING BY THE FACTS OF ENTIRETY, WE ARE OF THE VIE W THAT REASONABLE PROFIT OF 8% WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RECOMPUTE THE DISALLOW ANCE AFTER ESTIMATING THE PROFIT RATE 8% ON THE ABOVE BOGUS PURCHASES OF RS. RS.71,35,127/ - . WE DIRECT T HE AO ACCORDINGLY. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD AUG , 2017. S D SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 23. 8 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 5 ITA NO. 1200 /MUM/201 7 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI