NIRMAN ELECTRONICS P.LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 1423/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9758 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 131

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1423 /MUM/ 2017 (ASSESSMENT YEAR 20 1 1 - 1 2 ) NIRMAN ELECTRONICS PVT. LTD. 4, ANNAPURNA SADAN BEHIND MOONLIGHT SHOPPING CENTRE, ANDHERI KURLA ROAD ANDHERI EAS T MUMBAI - 400 069. PAN : AAACN8193L VS. ITO 10(3)(1) 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI MAHESH SABOO DEPARTMENT BY SHRI S.K. BEPARI DATE OF HEARING 1 4 .9. 201 7 DATE OF PRONOUNCEMENT 14 . 9 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09 - 01 - 2017 PASSED BY LD CIT(A) - 17, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2011 - 12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING TH E ADDITION RELATING TO ALLEGED BOGUS PURCHASES. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A DEALER AND MANUFACTURER OF ELECTRONIC GOODS LIKE CPU DIGITAL ANALOG. CONSEQUENT TO THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THA T CERTAIN PARTIES (CALLED HAWALA PARTIES) ARE INDULGING IN PROVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS, THE REVENUE EXAMINED THOSE DETAILS. IT WAS NOTICED THAT THE ASSESSEE HEREIN HAS PURCHASED GOODS DURING THE YEAR UNDER C ONSIDERATION FROM THE PARTIES LISTED AS HAWALA PARTIES AGGREGATING TO RS.85,01,430/ - . HENCE THE AO REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION. NIRMAN ELECTRONICS PVT. LTD. 2 3. BEFORE AO, THE ASSESSEE ONLY FURNISHED PURCHASE BILLS, BANK STATEMENTS, LEDGER ACCOUNT COPI ES ETC. THE AO ISSUED SUMMONS U/S 131 OF THE ACT AND THEY WERE RETURNED UNSERVED. HENCE THE AO ASKED THE ASSESSEE TO PRODUCE THE SUPPLIERS, BUT THE SAME WAS NOT COMPLIED WITH. SINCE THE SALES WAS ACCEPTED BY THE AO, THE ASSESSING OFFICER TOOK THE VIEW T HAT THE ASSESSEE HAS PURCHASED GOODS FROM GREY MARKET AND AVAILED ACCOMMODATION BILLS TO ACCOUNT FOR THE SAME. ACCORDINGLY THE AO TOOK THE VIEW THAT THE PROFIT ELEMENT INVOLVED IN THE IMPUGNED PURCHASES SHOULD BE ASSESSED, WHICH HE ESTIMATED AT 12.50% OF THE VALUE OF PURCHASES ON THE BASIS OF DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SMIT P SHAH (356 ITR 451). THE AO ASSESSED THE SAME AND THE LD CIT(A) ALSO CONFIRMED THE SAME. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. 4. TH E LD A.R SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS IN ORDER TO PROVE THE GENUINENESS OF PURCHASES BY FURNISHING COPIES OF PURCHASE BILLS, PAYMENT DETAILS ETC. THE ASSESSEE HAS ALSO PROVED THAT THE SAID GOODS HAVE BEEN SOLD. HE FURTHER SUB MITTED THAT THE APPLICABLE VAT RATE ON MOST OF THE GOODS WAS ONLY 5%. HE SUBMITTED THAT THE SUPPLIERS HAVE BEEN DECLARED AS HAWALA DEALERS, SINCE THEY DID NOT PAY THE VAT TAX. HE SUBMITTED THAT THE SAME WOULD NOT MAKE THE PURCHASES NON - GENUINE. ACCORDIN GLY HE SUBMITTED THAT THE ADDITION CONFIRMED BY LD CIT(A) SHOULD BE DELETED. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE SHOULD HAVE MADE PROFIT ON THE VALUE OF PURCHASES AND HENCE THE LD CIT(A) WAS JUSTIFIED IN ADOPTING THE G.P RATE FOR MAKIN G ADDITION. 5. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD. SINCE THE ASSESSEE HAS PROVED THE SALE OF GOODS, THE AO CHOSE TO ADD THE PROFIT ELEMENT INVOLVED IN THE PURCHASES. THE AO WAS CONSTRAINED TO COME TO THAT CONCLUSION, SINCE THE IMP UGNED SUPPLIERS HAVE ADMITTED BEFORE THE SALES TAX AUTHORITIES THAT THEY NIRMAN ELECTRONICS PVT. LTD. 3 HAVE PROVIDED ONLY ACCOMMODATION ENTRIES. FURTHER SUMMONS ISSUED BY THE AO TO THE SUPPLIERS HAVE BEEN RETURNED BACK AND THE ASSESSEE ALSO COULD NOT OBTAIN CONFIRMATION LETTERS FROM T HEM OR PRODUCE THEM BEFORE THE AO. HAD THEY BEEN GENUINE SUPPLIERS, SUCH THINGS WOULD NOT HAVE HAPPENED. HENCE THERE IS MERIT IN THE INFERENCE DRAWN BY THE AO THAT THE ASSESSEE COULD HAVE PURCHASED GOODS FROM THE GREY MARKET AND OBTAINED THE ACCOMMODATIO N BILLS TO ACCOUNT FOR THEM. IN THAT CASE, THE AO WAS JUSTIFIED IN ESTIMATING THE PROFIT ELEMENT INVOLVED IN THE IMPUGNED PURCHASES. 6. I NOTICE THAT THE ASSESSEE HAD DECLARED G.P RATE OF 14.23% AND 15.58% DURING THE YEARS RELEVANT FOR AY 2009 - 10 AND 2010 - 11 RESPEPCTIVELY. DURING THE YEAR UNDER CONSIDERATION, THE G.P RATE HAS COME DOWN TO 9.82%, A REDUCTION OF ALMOST 6%. I NOTICE THAT THE TURNOVER OF THE ASSESSEE HAS INCREASED FROM RS.246 LAKHS IN THE IMMEDIATELY PRECEDING YEAR TO RS.426 LAKHS. THE INCREASE IN TURNOVER MAY BE ONE OF THE REASONS FOR THE FALL IN G.P, BUT ANOTHER POSSIBILITY IS THAT THE ASSESSEE MIGHT HAVE INFLATED IMPUGNED PURCHASES ALSO. HENCE I AM OF THE VIEW THAT THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE. THE TAX AUTHORITIES HAVE ESTIMATED THE PROFIT THAT WOULD HAVE BEEN MADE BY THE ASSESSEE ON THE VALUE OF ALLEGED BOGUS PURCHASES @ 12.50% AND IN MY VIEW, THE SAME IS REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE DISCUSSED ABOVE. ACCORDINGLY I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD CIT(A) AND HENCE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 4 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 1 4 / 9 / 20 1 7 NIRMAN ELECTRONICS PVT. LTD. 4 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. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI