INCOME TAX OFFICER 27(3)(5), MUMBAI V. M/S.VILSAN ENGINEERING INDUSTRIES, MUMBAI

ITA 1209/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2640 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA LD
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 148

Judgement Text

M/S. VILSAN ENGINEERING INDUSTRIES ITA NO.1209-11/MUM/2018 (AYS -2009-10 TO 2011-12) 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1209/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) ./ I.T.A. NO.1210/MUM/2018 ( / ASSESSMENT YEAR: 2010-11) ./ I.T.A. NO.1211/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER - 27(3)(5) ROOM NO.428, 4 TH FLOOR TOWER NO.6, VASHI RAILWAY STN. VASHI, NAVI MUMBAI. / VS. VILSAN ENG INEERING INDUSTRIES 427/3, NAGESH PATIL WADI KHARDEV NAGAR, CHEMBUR MUMBAI-400 071. ! ./ ./PAN/GIR NO. AAGFV-0666-D ( !# /APPELLANT ) : ( $!# / RESPONDENT ) / APPELLANT BY : SHRI RAJIV GUBGOTRA - LD.DR / RESPONDENT BY : NONE / DATE OF HEARING : 27/02/2019 / DATE OF PRONOUNCEMENT : 08/03/2019 / O R D E R PER BENCH 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [AY] 2009-10 TO 2011-12 CONTEST COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX M/S. VILSAN ENGINEERING INDUSTRIES ITA NO.1209-11/MUM/2018 (AYS -2009-10 TO 2011-12) 2 (APPEALS)-25, MUMBAI, [CIT(A)], APPEAL NOS. CIT(A)-25/IT-237,238 & 239/2015-16/266 D ATED 14/12/2017 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE AND NO VALID ADJOURNMEN T APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE- OFF THESE APPEALS ON THE BASIS OF MATERIAL ON RECORD AND AFTER HEARING L D. DEPARTMENTAL REPRESENTATIVE [DR], SHRI RAJIV GUBGOTRA, WHO SUPPORTED THE ORDER OF LD. ASSESSING OFFICER. 2.1 FACTS AS EMANATING FROM QUANTUM ASSESSMENT ORDE R DATED 19/03/2015 FOR AY 2009-10 ARE THAT THE ASSESSEE BEI NG RESIDENT FIRM STATED TO BE ENGAGED IN MANUFACTURING OF ELECTRICAL CONTROL PANELS, FABRICATION AND MAINTENANCE WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147. THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.92.60 LACS AFTER SOLD ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR RS.86.32 LACS AS AGAINST RETURNED INCOME OF RS. 6.28 LACS FILED BY THE ASSESSEE ON 25/09/2009 WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED PURS UANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MUMBAI AS WELL AS DGIT (INVESTIGATION), MUMBAI THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES OF PURCHASES AGGREGATING TO RS.86.32 LACS F ROM 6 SUSPICIOUS PARTIES WITHOUT OBTAINING ANY MATERIAL / GOODS. CON SEQUENTLY, NOTICE U/S 148 DATED 24/03/2014 WAS ISSUED TO THE ASSESSEE WHI CH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). THE DETAI LS OF SUPPLIERS FROM WHOM SUCH ENTRIES ARE STATED TO HAVE BEEN PROCURED BY THE ASSESSEE HAS ALREADY BEEN EXTRACTED IN PARA-4.2 OF THE QUANTUM ASSESSMENT ORDER. M/S. VILSAN ENGINEERING INDUSTRIES ITA NO.1209-11/MUM/2018 (AYS -2009-10 TO 2011-12) 3 2.3 NOTICES SENT U/S 133(6) TO VARIOUS SUPPLIERS TO CONFIRM THE TRANSACTIONS ELICITED NO SATISFACTORY RESPONSE AND THE SAME WERE RETURNED BACK UNDELIVERED BY THE POSTAL AUTHORITIES . THE SAID FACT WAS CONFRONTED TO THE ASSESSEE VIDE SHOW-CAUSE NOTICE W ITH A DIRECTION TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. ALTHOUGH TH E ASSESSEE DEFENDED THE PURCHASES BY SUBMITTING THAT THE PURCHASES WERE GENUINE BUT FAILED TO PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACT IONS. IT WAS NOTED THAT EXCEPT FOR PURCHASE BILLS, THE ASSESSEE COULD NOT P RODUCE ANY OTHER EVIDENCE OR DOCUMENT LIKE DELIVERY CHALLAN, LORRY RECEIPTS, WEIGHING SLIP TO DEMONSTRATE ACTUAL PURCHASE OF GOODS FROM THE ST ATED DEALERS AND THEREFORE, CONCLUSIVELY FAILED TO SUBSTANTIATE THES E PURCHASES. RESULTANTLY, THE PURCHASES WERE DISALLOWED AND ADDE D TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH P ARTIAL SUCCESS BEFORE LD. FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 14/12/2017 WHEREIN IT WAS HELD THAT MERE PAYMENT THROUGH BANKI NG CHANNELS WAS NOT SACROSANCT AND FURTHER, AS RIGHTLY HELD BY LD. AO, THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES WITH COGENT DOCUMENTA RY EVIDENCES. HOWEVER, AT THE SAME TIME, RELYING UPON THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN CIT VS. NIKUNJ EXIMP ENTERPRISES P. LTD. [372 ITR 619] & THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. SIMIT P. SHETH [ITA NO. 553 OF 2012 DATED 16/01/2013] & VARIOUS OTHER DECISIONS, CAME TO A CONCLUSION THAT ONLY AN ESTIMATED ADDITION RANGING FROM 12.5% TO 25% WAS A REASONABLE ESTIMATION OF PROFIT ELEMENT EMBED DED IN THESE TRANSACTIONS. FINALLY, THE ESTIMATION WAS MADE @12. 5% OF ALLEGED BOGUS PURCHASES AND THE BALANCE ADDITION WAS DELETED . AGGRIEVED, THE REVENUE M/S. VILSAN ENGINEERING INDUSTRIES ITA NO.1209-11/MUM/2018 (AYS -2009-10 TO 2011-12) 4 IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE IS NOT UNDER APPEAL AGAINST ESTIMATION OF 12.5%. 4. WE HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING THE OBSERVATION OF FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER. AFTER DUE CONSIDERATION OF FACTUAL MATRIX, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF M ATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE ASSESSE E WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO THE VARIOUS SUPPLIERS WAS THROUGH BANKING CHANNELS. HOW EVER, AT THE SAME TIME, THE ASSESSEE FAILED TO PRODUCE ANY OF THE PAR TIES TO CONFIRM THE TRANSACTIONS AND NOTICES SENT U/S 133(6) ELICITED N O SATISFACTORY RESPONSE. THE ASSESSEE FAILED TO SUBSTANTIATE THE P URCHASED TRANSACTION WITH COGENT DOCUMENTARY EVIDENCE. UNDER THE CIRCUMS TANCES, THE PROFIT ELEMENT EMBEDDED IN THESE TRANSACTIONS WAS TO BE BR OUGHT TO THE TAX, WHICH LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DON E SO. IN OUR OPINION, THE ESTIMATION OF 12.5% IS QUITE REASONABLE ONE. THEREF ORE, FINDING NO INFIRMITY IN THE IMPUGNED ORDER, WE DISMISS THE REV ENUES APPEAL. 5. FACTS AND NATURE OF ADDITIONS IN AYS 2010-11& 20 11-12 ARE QUITE SIMILAR AS IN AY 2009-10. THE IMPUGNED ORDER IS COM MON ORDER FOR ALL THE THREE AYS. THE FIRST APPELLATE AUTHORITY HAS RE STRICTED THE ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. FACTS AND CIRCUMSTANCES, BEING PARI- MATERIA THE SAME , TAKING THE SAME VIEW, WE DISMISS THE REVENUES APPEALS FOR THESE TWO AYS ALSO. 6. RESULTANTLY, ALL THE APPEALS STAND DISMISSED. M/S. VILSAN ENGINEERING INDUSTRIES ITA NO.1209-11/MUM/2018 (AYS -2009-10 TO 2011-12) 5 ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MARCH, 2019. SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08/03/2019. SR.PS:- JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ,- & . , . , / DR, ITAT, MUMBAI 6. -/01 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.