ITO WD 3(1), THANE V. NIMESH ANANTRAI SETH, THANE

ITA 1203/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0156 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.1203 /MUM/2016 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER - 3(1) VS. SHRI NIMESH ANANTRAI SETH ROOM NO. 3, 6TH FLOOR, B - WING ASHAR I.T. PARK, ROAD NO. 16Z WAGALE INDUSTRIAL ESTATE THANE (W) 400604 PLOT NO. A/262, ROAD NO. 16/A WAGLE INDUSTRIAL ESTATE THANE (W) 400604 PAN ACAPS4627B APPELLANT RESPONDENT APPELLANT BY: SHRI PURUSHOTTAM KUMAR RESPONDENT BY: NONE DATE OF HEARING: 05.07.2017 DATE OF PRONOUNCEMENT: 05.07.2017 O R D E R PER D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-2, THANE DATED 28.12.2015 FOR A.Y. 2009-10. 2. THE SOLE ISSUE RAISED BY THE REVENUE IN THIS APPEAL RELATES TO THE PARTIAL RELIEF GRANTED BY THE CIT(A) TO THE ASSESSE E OUT OF THE TOTAL BOGUS PURCHASE DISALLOWED BY THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S THE PROPRIETOR OF M/S. NOVA STEEL INDUSTRIES ENGAGED IN SMALL SCALE E NGINEERING WORKS. ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S . 147 OF THE INCOME TAX ACT. THE AO RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT THAT ASSESSEE HAD EFFECTED P URCHASES FROM CERTAIN PARTIES WHO HAVE BEEN DECLARED AS SUSPECTS. THESE PARTIES, IN THEIR STATEMENT/ON THE BASIS OF SPOT VERIFICATION/SURVEY, DULY ADMITTED THE FACT THAT THEY HAVE NOT ACTUALLY DELIVERED ANY GOODS BUT MERELY ISSUED BILLS AND REFUNDED CASH BACK TO THE BUYER THE DETAILS OF WHIC H ARE AS UNDER: - ITA NO. 1203/MUM/2016 SHRI NIMESH ANANTRAI SETH 2 VAT NO. NAME OF HAWALA PARTY HAWALA AMOUNT 27520270001V REKHA TRADING CO. 410022 27900588728V BALAJI TRADING 146499 27710551730V M.R. CORPORATION 114289 27820645517V V M UDYOG 64636 27950562074V S S ENTERPRISES 175045 27580551753V SUN ENTERPRISES 78848 2749 0641576V JAY INDUSTRIES 101279 27490547195V S M TRADING CO. 68723 27460624763V SARADHHA TRADING CO. 130330 27400626348V RENUKA SALES CORPORATION 385461 27210561220V NATIONAL TRADING CO. 230064 27100503032V DEEPALI ENTERPRISES 707503 27830560491V SIDDHIVINAYAK TRADING COMPANY 1093652 27500551312V ALANKAR STEELS 260600 TOTAL 3966951 DURING THE ASSESSMENT PROCEEDINGS EXPLANATION WAS C ALLED BY THE AO FROM THE ASSESSEE. THE ASSESSEE DENIED TO HAVE ANY HAWAL A TRANSACTION WITH THESE PARTIES AND STATED THAT THE TRANSACTIONS ARE GENUINE. IN ORDER TO VERIFY THE GENUINENESS OF THE ABOVE TRANSACTIONS IN FORMATION WAS SOUGHT UNDER SECTION 133(6) FROM THE ABOVE MENTIONED PARTI ES. HOWEVER, THE NOTICE WAS RETURNED BACK BY THE POSTAL AUTHORITIES. THEREFORE THE AO WAS OF THE VIEW THAT THE PURCHASES ARE BOGUS AND HE DIS ALLOWED ` 39,66,951/- AND ADDED IT TO THE INCOME OF THE ASSESSEE. 4. THE MATTER WAS CARRIED BEFORE THE CIT(A). THE CIT(A ) DISALLOWED 25% OF THE TOTAL HAWALA PURCHASES BY OBSERVING AS UNDER : - 6.6. THE CLAIM OF THE APPELLANT I.E. SALES AGAINST HAWALA PURCHASES HAVE BEEN CREDITED IN THE P&L A/C, APPEARS TO BE AC CEPTABLE TO CERTAIN EXTENT, THEREFORE, THIS IS NOT A CASE WHERE THE ENT IRE AMOUNT HAS BEEN SIPHONED OFF, BY WAY OF DEBITING BOGUS PURCHASES. T HE APPELLANT, HOWEVER, FAILED TO PRODUCE THE PARTIES FOR CROSS VE RIFICATION. SINCE THE APPELLANT COULD NOT PRODUCE THE PARTIES FOR EXAMINA TION IN PERSON, THEREFORE, VIDE ORDER SHEET NOTING DATED 21-12/2015 , THE LD AR REQUESTED TO RESTRICT THE DISALLOWANCE, AT THE MOST 25%, OF THE BOGUS PURCHASES. TAKING INTO ACCOUNT THE VARIOUS RULINGS, AS DISCUSSED ABOVE, FACTS OF THE CASE, UNAVAILABILITY OF HAWALA PARTIES FOR EXAMINATION / VERIFICATION ETC, IN MY CONSIDERED OPINION, THE DIS ALLOWANCE OF 25% I.E. RS 9,91,738/- OUT OF TOTAL HAWALA PURCHASES OF RS 3 9,66,951/-, THE APPELLANT BEING SMALL TYPE BUSINESSMAN, WILL BE REA SONABLE, TO MEET THE END OF JUSTICE. IN THIS REGARD, THE RELIANCE IS PLA CED ON THE DECISIONS OF ITA NO. 1203/MUM/2016 SHRI NIMESH ANANTRAI SETH 3 THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF VIJAY PROTEIN, SANJAY OIL CAKE INDUSTRIES ETC AS DISCUSSED ABOVE. ACCORDINGLY , THE APPELLANT WILL GET RELIEF OF RS 29,75,213/- (RS. 39,66,951/- LESS RS. 9,91,738/-) AND BALANCE DISALLOWANCE OF RS 9,91,738/- STANDS CONFIR MED. ALL THE GROUNDS OF APPEAL, AS RAISED ABOVE, ARE DECIDED ACC ORDINGLY. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HE ARD THE LEARNED D.R. AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUMENT OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASES AND IT COULD NOT PRODUCE ANY EVIDENCE TO SHOW THE ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFORMATION LETTERS FROM THE ALLEGED S UPPLIERS. HOWEVER, WE FIND THAT THE ASSESSEE IS IN POSSESSION OF PURCHASE INVOICES AND PAYMENTS ARE THROUGH BANKING CHANNELS. THEREFORE EVEN IF THE PURCHASES ARE FOUND TO BE BOGUS WE NOTE THAT SINCE THE TURNOVER HAS NOT BE EN DISPUTED BY REVENUE, IN SUCH SITUATION ADDITION WHICH CAN BE MA DE WAS ON ACCOUNT OF THE PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANS ACTIONS, WHICH THE CIT(A) HAS RIGHTLY DONE. WE ARE OF THE VIEW THAT TH E CIT(A) IS JUSTIFIED IN HIS ACTION. THEREFORE NO INTERFERENCE CALLED FOR IN HIS MATTER. 4. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY, 2017. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 5 TH JULY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -2, THANE 4. THE PR. CIT - 2, THANE 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.