OM DEVELOPERS, NAVI MUMBAI V. DCIT 15(3), MUMBAI

ITA 131/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0952 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD
• Assessee Lawyers: DEVENDRA JAIN LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

ITA.NO.131/MUM/2016 OM DEVELOPERS ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.131/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) OM DEVELOPERS OFFICE NO.14, MAHAVIR CENTRE SECTOR NO.17, VASHI NAVI MUMBAI-400 705 / VS. DEPUTY COMMISSIONER OF INCOME TAX 15(3) MUMBAI ./ ./PAN/GIR NO. AAAFO-9862-A ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) A SSESSEE BY : DEVENDRA JAIN,LD. AR RE VENUE BY : RAJAT MITTAL, LD. DR / DATE OF HEARING : 06/12/2017 / DATE OF PRONOUNCEMENT : 10/01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-26 CIT(A)], MUMBAI, APPEAL NO. CIT(A)-26/IT/771/13-14 DATED 16/10/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-15(3), MUMBAI [AO ] U/S 143(3) OF ITA.NO.131/MUM/2016 OM DEVELOPERS ASSESSMENT YEAR-2010-11 2 THE INCOME TAX ACT,1961 ON 20/03/2013. THE SOLE GROUND RAISED IN THE APPEAL READS AS UNDER:- THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLO WANCE OF ALLEGED BOGUS PURCHASE MADE BY THE A.O ONLY TO THE EXTENT OF RS.27,89,100/ - ( I.E GROSS PROFIT @ 23.42% OF THE ALLEGED BOGUS PURCHASES). THE ADDITION RETAINED TO THE TUNE OF RS.27,89,100/- MAY PLEASE BE DELETED.. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AS BUILDER & DEVELOPER WAS ASSESSED U/S 143(3) AT RS.1,48,22,370/- AFTER CERTA IN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.26,1 0,200/- E-FILED BY THE ASSESSEE ON 28/09/2010. 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX AUTHORITIES REGARDING DEALERS INDULGING IN PROVIDING ACCOMMODA TION BILLS, IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS FROM TWO SUCH PARTIES AGGREGATING TO RS.1,19, 09,038/-. NOTICES ISSUED U/S 133(6) TO THESE PARTIES TO CONFIRM THE T RANSACTIONS RETURNED BACK UNDELIVERED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN / REFUSED. THE ASSESSEE, IN SUPPORT, PRODUCED PURCHASE BILLS, DELIVERY CHALLANS ETC. HOWEVER, NOT CONVINCED, LD. AO, PLACI NG RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS, TREATED THE SAID P URCHASES AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 16/10/20 15 WHERE LD. CIT(A) AFTER CONSIDERING THE FACTUAL MATRIX RESTRIC TED THE DISALLOWANCE TO 23.42% OF ALLEGED BOGUS PURCHASES , BEING GROSS PROFIT REFLECTED BY THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APP EAL BEFORE US. ITA.NO.131/MUM/2016 OM DEVELOPERS ASSESSMENT YEAR-2010-11 3 4. THE LD. COUNSEL FOR ASSESSEE [AR] REITERATED THE CONTENTIONS THAT THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS INCLUDING DELIVERY CHALLANS AND WEIGH BRIDGE STATEM ENTS AND THEREFORE, IMPUGNED ADDITIONS WERE NOT JUSTIFIED. OUR ATTENTIO N IS ALSO DRAWN TO HIGHER GROSS PROFIT RATE BEING REFLECTED BY THE ASSESSEE IN THE IMPUGNED AY. PER CONTRA, LD. DR DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY OF THE PARTY FOR CON FIRMATION OF ACCOUNT AND NOTICES U/S 133(6) REMAINED UN-SERVED . 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSES SEE IS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND ALREADY REFLECTED HIGH GROSS PROFIT RATE OF 23.42%. WE ARE OF THE CONSIDERED OPINION THAT T HERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL CONS IDERING THE NATURE OF ASSESSEES BUSINESS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM ANY OF THE IMPUGN ED SUPPLIER AND COULD NOT PRODUCE ANY PARTY FOR CONFIRMATION, WHICH CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION , THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VALUE ADDED TAX [VAT] AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, ON FACTUAL MA TRIX, WE FIND THE RATE OF 23.42% TO BE ON THE HIGHER SIDE AND THEREFORE, E STIMATE THE ADDITIONS @8% OF ALLEGED BOGUS PURCHASES OF RS.1,19,09,038/- WHICH COMES TO ITA.NO.131/MUM/2016 OM DEVELOPERS ASSESSMENT YEAR-2010-11 4 RS.9,52,723/-. THE ORDER OF FIRST APPELLATE AUTHORI TY STANDS MODIFIED TO THAT EXTENT. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY,2018. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGAR WAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10.01.2018 . SR.PS:- THIRUMALESH ! / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI