ABHIJEET PLASTICS INDIA PVT LTD, MUMBAI V. ITO 12(1)(1), MUMBAI

ITA 1428/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8186 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DHARAM VEER SING H
• Keywords: Bogus purchase; Opportunity of being heard
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS. 1426 TO 1428/MUM/2019 (ASSESSMENT YEARS: 2009-10 TO 2011-12) ABHIJEET PLASTIC (INDIA) P. LTD. 38-C GOVERNMENT INDL. ESTATE CHARKOP, KANDIVALI (W) MUMBAI 400067 VS. DC I T - 12(1)(1) ROOM NO. 223, 2ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AAGCA5929F APPELLANT RESPONDENT APPELLANT BY: SHRI VIMAL PUNMIYA RESPONDENT BY: SHRI DHARAMVEER SINGH DATE OF HEARING: 12.03.2020 DATE OF PRONOUNCEMENT: 13.07.2020 O R D E R PER R.C. SHARMA, AM THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) FOR ASSESSMENT YEARS 2009-10 TO 2011-12 IN THE MATTER O F ORDERS PASSED UNDER SECTIONS 1343(3)/147 OF THE INCOME TAX ACT, 1961 (H EREINAFTER 'THE ACT'). 2. IN ALL THE APPEALS THE ASSESSEE IS AGGRIEVED FOR UP HOLDING 100% DEDUCTION ON ACCOUNT OF BOGUS PURCHASE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUS ED. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS MANUFACTURER OF MOULD AND ITS ARTICLES. THE CASE WA S RE-OPENED ON THE INFORMATION RECEIVED BY INCOME TAX MUMBAI FROM SALE S TAX DEPARTMENT THROUGH DGIT(INV.), MUMBAI THAT ASSESSEE WAS ENGAGE D IN THE PRACTICE OF INFLATING THE PURCHASES THROUGH THE HAWALA PARTIES BY TAKING BOGUS BILLS WITHOUT DELIVERY OF GOODS FROM PARTIES. ON THE BASI S OF INFORMATION FROM SALES TAX DEPARTMENT, LD. A.O. MADE ADDITION AT 100 % OF ALLEGED PURCHASE AND LD. CIT(A) CONFIRMED THE SAME AT 100% OF ALLEGED PURCHASE. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTI ON OF THE AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NOS . 1426 20 1428/MUM/2019 ABHIJEET PLASTIC (INDIA) P. LTD 2 4. IT WAS ARGUED BY THE LEARNED A.R. THAT THE ASSESSEE HAS FILED ALL DOCUMENTARY EVIDENCES BEFORE THE AO TO PROVE THE GE NUINENESS OF THE PURCHASES AND THAT THE AO MERELY RELIED ON SALES TA X DEPARTMENTS INFORMATION AND MADE THE ADDITION. AS PER THE LEARN ED A.R. IN VIEW OF THE DECISION OF THE MUMBAI BENCHES IN THE CASE OF G.V. SONS NO ADDITION CAN BE MADE MERELY ONLY BASIS OF INFORMATION FROM SALES TAX DEPARTMENT. AS PER THE LEARNED A.R. ASSESSEE HAS MADE PURCHASES FR OM VARIOUS PARTIES. AFTER MAKING THESE PURCHASES FROM THEM, THE ASSESSE E SOLD THESE AND OFFERED THE INCOME ARISING FROM THE SAID SALES FOR TAX PURPOSES. IT IS A UNIVERSAL TRUTH THAT SALES CANNOT TAKE PLACE IF THE RE ARE NO PURCHASES. WHEN THE SALES ARE ACCEPTED, THE SAME ARISES BY VIR TUE OF FOREMOST PURCHASES MADE, HENCE SUCH PURCHASES BY NO MEANS AR E QUESTIONABLE OR TO BE DISPUTED. THE LD. AO CANNOT USE ONE ASPECT OF THE MATTER (I.E. ACCEPTING SALES) WHILE IGNORING THE OTHER EQUALLY R ELEVANT AND NECESSARY ASPECTS, (I.E. DISPUTING PURCHASES). LAW DOES NOT P ERMIT A PERSON TO BOTH APPROBATE AND REPROBATE. THIS PRINCIPLE IS BASED ON THE DOCTRINE OF ELECTION WHICH POSTULATES THAT NO PARTY CAN ACCEPT AND REJECT THE SAME INSTRUMENT AND THAT 'A PERSON CANNOT SAY AT ONE TIM E THAT A TRANSACTION IS VALID AND THEREBY OBTAIN SOME ADVANTAGE, TO WHICH H E COULD ONLY BE ENTITLED ON THE FOOTING THAT IT IS VALID, AND TURN AROUND AND SAY IT IS VOID FOR THE PURPOSE OF SECURING SOME OTHER ADVANTAGE. T HE ASSESSEE HAD PURCHASED GOODS FROM THESE PARTIES AND PAYMENTS THE REOF WERE MADE VIDE ACCOUNT PAYEE CHEQUE. THE LEARNED COUNSEL FOR THE A SSESSEE ALSO FILED COMPLETE BOOKS OF ACCOUNT OF TRANSACTIONS, PURCHASE BILLS, ACKNOWLEDGEMENT OF GOODS TO PROVE THE GENUINENESS O F PURCHASE. WITH REGARD TO THE OBSERVATION OF THE AO THAT THE SUPPLI ES OF THE GOODS HAVE GIVEN STATEMENT TO THE EFFECT THAT THEY HAVE ONLY G IVEN BILLS WITHOUT SUPPLY OF GOODS, THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE ALLEGED STATEMENTS OF THE OWNERS OF THE SAID CONCER NS ARE NOT PROVIDED TO THE ASSESSEE, IF ANY RECORDED. THE ASSESSING OFFICE R IS A QUASI JUDICIAL AUTHORITY. HE MUST EXERCISE AN INDEPENDENT MIND WHI LE FRAMING AN ASSESSMENT. WHILE DOING SO, HE MUST ACT IN THE BEST INTEREST OF THE ASSESSEE. ANY DOCUMENTS OR MATERIAL OR EVIDENCE WHI CH THE ASSESSING OFFICER WISHES TO RELY ON FOR THE PURPOSE OF MAKING AN ASSESSMENT MUST BE ITA NOS . 1426 20 1428/MUM/2019 ABHIJEET PLASTIC (INDIA) P. LTD 3 PROVIDED TO THE ASSESSEE SO THAT THE ASSESSEE CAN P RESENT AN ARGUMENT AGAINST THE SAME, IF ANY, THUS GIVING A REASONABLE OPPORTUNITY OF BEING HEARD. THE ASSESSMENT ORDER THUS IS BAD IN LAW AND REQUIRES TO BE QUASHED. FOR THIS PURPOSE RELIANCE WAS PLACED ON TH E FOLLOWING JUDICIAL PRECEDENTS: - 1) SC JUDGMENT IN CASE OF PCIT, SURAT VS. TEJUA RO HITKUMAR KAPADIA. 2) ITAT JUDGMENT IN THE CASE OF M/S SHREE SUNDHA S TEELS PVT. LTD. VS. ITO 5(3)(2). 3) ITAT JUDGMENT IN THE CASE OF ITO 25(3)(4) V/S SHRI SUNIL B DOSHI. 4) ITAT JUDGMENT IN THE CASE OF M/S MIRAJ ELECTRIC AL & MECHANICAL CO.PVT LTD V/S DCIT-10(2)(2). 5) ITAT JUDGMENT IN THE CASE OF ASST.CIT 19(3) V/S M/S STEEL LINE (INDIA). 6) ITAT JUDGMENT IN THE CASE OF SHRI TEJRAJ MANROO P CHAND TAK V/S ITO RG 18(3)(4). 7) ITAT JUDGMENT IN THE CASE OF NAGESHWAR STEEL HOUSE V/S ITO 19(2)(4). 8) ITAT JUDGMENT IN THE CASE OF KANAK STEEL INDIA V/S ITO 18(2)(1). 9) ITAT JUDGMENT IN THE CASE OF SHRI BHANSALI META L & ALLOYS V/S ITO 19(1)(2). 10) ITAT JUDGMENT IN THE CASE OF ASIAN CHEMTECH PVT . LTD. V/S ITO 9(1)(4). 11) HIGH COURT JUDGMENT IN THE CASE OF PCIT-32 VS. M/S UNI PACKS (INDIA). 12) ITAT JUDGMENT IN THE CASE OF CHAGANLAL PUKHRAJ PARMAR V/S ITO 29(1)(2). 13) ITAT JUDGMENT IN THE CASE OF AMIT MODY V/S ITO 25(2)(1). 5. ON THE OTHER HAND, THE LEARNED D.R. RELIED ON THE O RDERS PASSED BY THE AUTHORITIES BELOW AND CONTENDED THAT THE AO HAS MADE DETAILED ENQUIRY WITH REGARD TO THE GENUINENESS OF PURCHASES AND THEREAFTER CAME TO THE CONCLUSION THAT ONLY TO REDUCE THE PROFIT AS SESSEE HAS TAKEN PURCHASE BILLS WITHOUT ACTUAL DELIVERY OF GOODS. HE CONTENDED THAT THE ORDERS THE AUTHORITIES BELOW SHOULD BE UPHELD. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO DE LIBERATED ON THE VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED TO BY THE LOWER AU THORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY THE LEARNED A .R. DURING THE COURSE OF ITA NOS . 1426 20 1428/MUM/2019 ABHIJEET PLASTIC (INDIA) P. LTD 4 HEARING BEFORE ME. FROM THE RECORD I FOUND THAT ON THE INFORMATION FROM SALES TAX DEPARTMENT THE AO HAD ADDED THE ENTIRE PU RCHASES IN ASSESSEES INCOME. THE GROSS PROFIT SHOWN BY THE AS SESSEE IN THE RESPECTIVE YEARS ARE AS UNDER: - A.Y. 2009-10 16.47% A.Y. 2010-11 12.75% A.Y. 2011-12 14.88% I ALSO FOUND THAT THE ASSESSEE HAS PAID VAT ON THE GOODS SO PURCHASED. LOOKING TO THE GROSS PROFIT RATIO DECLARED BY THE A SSESSEE IT IS CLEAR THAT THE ASSESSEE HAS SHOWN VERY REASONABLE GROSS PROFIT RAT IO IN ALL THE YEARS UNDER CONSIDERATION. THERE ARE VARIOUS JUDICIAL PRO NOUNCEMENTS TO THE FACT THAT IN CASE GROSS PROFIT SHOWN BY THE ASSESSEE IS 15% OR MORE NO ADDITION IS WARRANTED. IN THE INSTANT CASE THE ASSESSEE HAS DECLARED GROSS PROFIT OF 16.47% IN A.Y. 2009-10, ACCORDINGLY I DIRECT THE AO NOT TO MAKE ANY ADDITION. HOWEVER, IN ASSESSMENT YEARS 2010-11 AND 2011-12 THE GROSS PROFIT SHOWN BY THE ASSESSEE IS 12.75% AND 14.88%, WHICH ARE LOWER THAN 15%. ACCORDINGLY I DIRECT THE AO TO MAKE ADDITION T O THE EXTENT OF SHORTFALL IN GROSS PROFIT IN THESE TWO YEARS AS COMPARED TO T HE GROSS PROFIT OF 15% I.E. 2.25% IN A.Y. 2010-1 & 0.12@ IN A.Y. 2011-12. I DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FOR A.Y. 2009-10 IS ALLO WED WHEREAS APPEALS FOR A.Y. 2010-11 AND A.Y. 2011-12 ARE ALLOW ED IN PART, IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED ON 13 TH JULY, 2020 UNDER RULE 24(4) OF ITAT RULES. MARGINAL DELAY IN PRONOUNCEMENT OF JUDGEMENT IS DUE TO COMPLETE DOCK DOWN UNDER COVID 19. SD/ - (R.C. SHARMA) ACCOUNTANT MEMBER MUMBAI, DATED: 13 TH JULY, 2020 ITA NOS . 1426 20 1428/MUM/2019 ABHIJEET PLASTIC (INDIA) P. LTD 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -20, MUMBAI 4. THE PR.CIT - 12, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.