IMPERIAL MARK TRADE (I) P.LTD, THANE V. DCIT CC 7(2), MUMBAI

ITA 1453/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9747 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2013-2014
• Appeal Filed On: 02-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Transfer pricing; International transaction; Additional evidence; Sham transactions
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI PAWAN SINGH , JUDICIAL MEMBER IT A NO. 1453/MUM./2017 (ASSESSMENT YEAR: 2013 - 1 4 ) M/S. IMPERIAL MARK TRADE (I) PVT. LTD SHOP NO.48, FIRST FLOOR DATTANI SQUARE MALL BHAGOLA NAKA, VASAI GAON ROAD VASAI (W) THANE 401 202 PAN NO. AAACI5213L . APPELLANT V/S DY. CIT, C.C. - 7(2) AAYAKAR BHAVAN M.K.ROAD, MUMBAI 400 020 . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI. ANAND MOHAN DATE OF HEARING 06/11/2019 DATE OF ORDER - 0 7/01/2020 O R D E R PER: SHAMIM YAHYA THIS IS AN APPEAL BY THE ASS ESSEE AGAINST THE ORDER OF THE A SSESSING O FFICER DATED 29/03/2016 U/S.143(3) R.W.S. 144C(1) OF THE INCOME TAX ACT, 1961 PURSUANT TO THE DIRECTION OF THE D ISPUTE R ESOLUTION P ANEL DATED 23/12/2016. ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 2 2. T HE GROUNDS OF APPEAL READ AS UNDER : - BEING AGGRIEVED BY THE ORDER OF DCIT, CENTRAL CIRCLE - 7(2), MUMBAI ('LEARNED ASSESSING OFFICER') ISSUED UNDER SECTION 143(3) READ WIT H SECTION 144C(13) OF THE INCOME - TAX ACT, 1961 ('ACT'), THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING GROUNDS WHICH IT IS PRAYED MAY BE CONSIDERED INDEPENDENTLY WITHOUT PREJUDICE TO ONE ANOTHER; 1.0) JURISDICTION EXERCISED BY THE LEARNED T RANSFER PRICING OFFICER IS BAD I N LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE DRP - 1, MUMBAI ('DRP') ERRED IN CONFIRMING THE DETERMINATION OF THE ARM'S LENGTH PRICE ('ALP') AT NIL BY THE LEARNED TRANSFER PRICING OFFICER ('TPO'J IN HIS OR DER UNDER SECTION 92CA BY TREATING THE SPECIFIED DOMESTIC TRANSACTIONS ('SDT'J AS BOGUS AND SHAM TRANSACTIONS. THE REFERENCE MADE TO THE LEARNED TPO BY THE LEARNED ASSESSING OFFICER UNDER SECTION 92CA IS MERELY FOR THE PURPOSE OF VERIFICATION AND DETERMINA TION OF THE ALP OF THE SDT AND THEREFORE, THE LEARNED TPO EXCEEDED HIS JURISDICTION BY CHARACTERIZING THE SDT AS BOGUS TRANSACTIONS WITHOUT UNDERTAKING ANY BENCHMARKING / FUNCTIONAL ANALYSIS OF THE SAME. THEREFORE, THE TRANSFER PRICING ADJUSTMENTS AGGREGA TING TO RS. 245,45,18,050 CONFIRMED BY HON'BLE DRP IS BAD IN LAW AND NEEDS TO BE DELETED. 2.0) DISALLOWANCE / TRANSFER PRICING ADJUSTMENT OF HIGH SEAS PURCHASES OF CRUDE PALM OIL AMOUNTING TO RS. 1,22,70,68,280 2.1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN REJECTING THE OBJECTION RAISED BY THE APPELLANT THAT THE DATE OF ENTERING INTO CONTRACT FOR PURCHASE OF CRUDE PALM OIL AND THE ACTUAL DATE OF IMPORT MENTIONED IN THE TAX INVOICE WERE INTERCHANGED BY THE LEAR NED TPO BASED ON WHICH THE PURCHASES WERE HELD TO BE NON - GENUINE AND SHAM TRANSACTIONS. 2.2) HON'BLE DRP ERRED IN CONFIRMING THAT THE PURCHASE OF CRUDE PALM OIL WAS IN THE NATURE OF BOGUS PURCHASE MERELY BASED ON THE OBSERVATION OF LEARNED TPO IN RELATION TO THE DATES OF PURCHASES, IGNORING THE SUBMISSION AND FOLLOWING DOCUMENTARY EVIDENCES PRODUCED BY THE APPELLANT BEFORE THE LEARNED TPO IN SUPPORT OF THE GENUINENESS OF THE SDT: A) COPIES OF CONTRACT OF PURCHASES B) COPIES OF TAX INVOICES C) COPIES OF BILL OF LADING ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 3 D) CONFIRMATIONS FROM THE PARTIES TO WHOM THE GOODS SO IMPORTED WERE SUBSEQUENTLY SOLD ON HIGH SEAS BASIS E) QUANTITATIVE ANALYSIS AND RECONCILIATION OF PURCHASE AND SALES F) ONE - TO - ONE NEXUS OF PURCHASES VIS - A - VIS SALES THEREFORE , THE TRANSFER PRICING ADJUSTMENT ON PURCHASE OF CRUDE PALM OIL AMOUNTING TO RS. 1,22,70,68,280 CONFIRMED BY HON'BLE DRP IS BAD IN LAW AND NEEDS TO BE DELETED. 3.0) DISALLOWANCE / TRANSFER PRICING ADJUSTMENT OF PURCHASE OF QUAR GUM (SPLIT) AMOUNTING TO RS. 1, 00,82 , 50 , 230 3.1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN DISMISSING THE OBJECTION RAISED BY THE APPELLANT THAT THE LEARNED TPO HAS TREATED THE DATE OF ENTERING INTO CONTRACT FOR PURCHASE OF GUAR GUM I.E. 1 MARCH 2013 AS THE ACTUAL DATE OF PURCHASE INSTEAD OF THE DATE OF DELIVERY AND PURCHASE AS MENTIONED IN THE TAX INVOICE I.E. 31 MARCH 2013 BASED ON WHICH THE PURCHASES WERE HELD TO BE NON - GENUINE AND SHAM TRANSACTIONS. 3.2) HON'BLE DRP ERRED IN CONFIRMING THAT THE PURCHASE OF GUAR GUM WAS IN THE NATURE OF BOGUS PURCHASE MERELY BASED ON THE OBSERVATION OF LEARNED TPO IN RELATION TO THE DATES OF PURCHASES, IGNORING THE SUBMISSIONS AND FOLLOWING DOCUMENTARY EVIDENCES PRODUCED BY THE APPELLANT IN SUP PORT OF THE GENUINENESS OF THE SDT; A) COPIES OF TAX INVOICES OF BUYER (APPELLANT) AS WELL AS THE SELLER I.E. STRIDE MULTITRADE PVT LTD B) COPY OF ACKNOWLEDGED INTIMATIONS TO THE GODOWN IN RELATION TO TRANSFER OF GOODS BY THE BUYER (APPELLANT) AS WELL AS THE SELLER (STRIDE MULTITRADE PVT LTD) C) QUANTITATIVE ANALYSIS AND RECONCILIATION OF PURCHASE AND SALES THEREFORE, THE TRANSFER PRICING ADJUSTMENT ON PURCHASE OF GUAR SPLIT (GUM) AMOUNTING TO RS. 1,00,82,50,230 CONFIRMED BY HON'BLE DRP IS BAD IN LAW AN D NEEDS TO BE DELETED. 4.0) DISALLOWANCE / TRANSFER PRICING ADJUSTMENT OF SALES RETURN OF QUAR SEEDS AMOUNTING TO RS. 21 , 91,99,540 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN MAKING PROTECTIVE ADDITION OF THE SALES RETURNS AMOUNTING TO RS. 21,91,99,540 BY STATING THAT THE LEARNED TPO HAS NOT VERIFIED THE DETAILS OF SALES RETURN UPON RE FERENCE MADE TO HIM EVEN AFTER SPECIFIC DIRECTION ISSUED BY THE HON'BLE DRP. ACCORDINGLY, THE TRANSFER PRICING ADJUSTMENT OF SALES RETURN ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 4 OF GUAR SEEDS AMOUNTING TO RS. 21,91,99,540 IS BAD IN LAW AND NEEDS TO BE DELETED. 5.0) DISALLOWANCE OF LOSS ON H IGH SEA SALES OF CRUDE PALM OIL AMOUNTING TO RS. 8.82 , 90 , 741/ - 5.1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP ERRED IN CONFIRMING THE DISALLOWANCE OF THE ALLEGED LOSS ON HIGH SEAS SALES OF RS. 8,82,90,741 MADE BY THE LEARNED ASSESSING OFFICER IGNORING THE SUBMISSIONS OF THE APPELLANT THAT THE FIGURES CONSIDERED BY THE LEARNED ASSESSING OFFICER DOES NOT PERTAIN TO THE APPELLANT'S CASE AND IGNORING THE FACT THAT THE APPELLANT HAS ACTUALLY EARNED PROFIT OF RS 13,05,01,658 FROM THE HIGH SEAS OF CRUDE PALM OIL. 5.2) HON'BLE DRP ERRED IN CONFIRMING THE OBSERVATIONS MADE BY THE LEARNED ASSESSING OFFICER IGNORING THE SEVERAL DOCUMENTARY EVIDENCES PRODUCED IN SUPPORT OF THE HIGH SEAS TRANSACTIONS BY THE APPELLANT. THEREFORE , THE ADDITION OF ALLEGED LOSS ON HIGH SEA SALES OF CRUDE PALM OIL AMOUNTING TO RS. 8,82,90,741 IS BAD IN LAW AND NEEDS TO BE DELETED. 6.0) THE APPELLANT COMPANY CRAVES LEAVE TO ADD, TO AMEND, ALTER / DELETE AND / OR MODIFY THE ABOVE GROUNDS OF APPEAL ON O R BEFORE THE FINAL HEARING. 3. BRIEF FACTS ARE THAT ASSESSEE WAS INCORPORATED IN 1999. THE ASSESSEE COMPANY IS MAINLY ENGAGED IN TRADING OF EDIBLE OILS, GAURGUM, GUARSEED AND OTHER PRODUCTS. IT UNDERTAKES THE ACTIVITIES BY WAY OF PHYSICAL TRADING AS WELL AS ON COMMODITY EXCHANGE. IN THE CASE OF PHYSICAL TRADING IT EITHER DIRECTLY PURCHASES AND SELLS GOODS OR SELLS THE GOODS AFTER PROCESSING WHICH IS DONE BY OTHERS ON JOB WORK BASIS. 4. DURING THE YEAR, THE ASSESSEE HAS ENTERED INTO FOLLOWING SPECIFIED TR ANSACTIONS WITH ITS ASSOCIATES ENTERPRISES WHICH IS AS FOLLOWS : SR.N O. NATURE OF TRANSACTION NAME OF ASSOCIATED ENTERPRISE AMOUNT IN INR METHOD 1 PURCHASE OF GUAR SEED STRIDE MULTITRADE P. LTD. 21,91,99,540 CUP 2 PURCHASE OF CRUDE PALM OIL EMPIRE MULTITRADE P. LTD. 60,91,80,233 CUP ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 5 3 PURCHASE OF CRUDE PALM OIL KULDEEP OVERSEAS P. LTD. 55,75,91,557 CUP 4 PURCHASE OF CRUDE PALM OIL AISH W ARY A M ARK TRADE INDIA PVT. LTD. 6,02,96,490 CUP 5 PURCHASE OF GUAR GUM SPLIT STRIDE MULTITRADE P. LTD. 100,82,50,230 CUP 5. DURING THE YEAR, THE ASSESSEE HAS CLAIMED TO HAVE MADE PURCHASES WITH THE AFORESAID COMPANIES. THE DETAILS OF THE SAME WERE CALLED FOR BY THE TPO. IT WA S STATED THAT AS REGARDS PURCHASE OF CRUDE PALM OIL ALL THE PURCHASES HIGH SEAS PURCHASES AND ASSESSEE HAS NOT TA KEN ANY PHYSICAL DELIVERY OF THE GOODS BUT BEFORE LANDING OF CONSIGNMENT IT HAS SOLD THE GOODS BY AGREEMENT OF SALE TO IMPETU S MARKTRADE, WOPL, RSIL AND FRAME IMPEX UNDER HIGH SEA SALE, AFTER MOVEMENT OF GOODS FROM THE TERRITORIAL BORDER OF EXPORTER BUT BEFORE ARRIVAL OF GOODS INTO THE TERRITORIAL BORDER OF INDIA I.E. BEFORE THE SHIP REACHED THE INDIAN SHORES . 6. A FTER DETAILED EXAMINATION , THE TRANSFER PRICING OFFICER FOUND TRANSACTION TO BE BOGUS . T HE TRANSFER PRICING O FFICER NOTED THAT THE ASSESSEE HAD MADE HIGH SEAS PURCHASES FROM THE FOLLOWING: - EMPIRE MULTI TRADE RS.60,91,80,233/ - KULDEEP OVERSEAS RS.55,75,91,557/ - AIS HWARYA MARK TRADE INDIA RS.6,02,96,490/ - 7. IN THE PURCHASES MADE FROM ALL THE ABOVE PARTIES, THE TPO HAS OBSERVED THAT THE DATE OF PURCHASE AS PER THE INVOICE COPY SUBMITTED BY THE ASSESSEE WAS DIFFERENT FROM THE DATE OF PURCHASES AS PER THE INVOICE COPY OF THE THIRD PARTY. THE TPO HAS ALSO OBSERVE D THAT THE ASSESSEE HAD SHOWN AN EARLIER DATE OF PURCHASE IN ITS INVOICE COPY AS AGAINST THE DATE OF THE ORIGINAL BUYER WHICH IS MUCH AFTER THE DATE OF THE PURCHASES SHOWN BY THE ASSESSEE. SINCE ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 6 THE DATES AS MENTIONED BY THE ASSESSEE IN THE INVOICE DID NOT MATCH WITH THE DATE OF PURCHASE OF THE ORIGINAL BUYER, THE SAME COULD NOT BE TREATED AS HIGH SEAS PURCHASE AS THE SAME WAS BOGUS PURCHASE SHOWN BY THE ASSESSEE. 8. WITH REGARD TO PURCHASE OF GUAR SPLIT, THE TPO HAS OBSERVED THAT THE ASSESSEE HAD WRITTEN A LETTER TO THE WAREHOUSE ON 4/3/2013 INFORMING THE WAREHOUSE ABOUT THE SALE OF GUAR SPLIT WHICH WAS PURCHASED BY THE ASSESSEE FROM STRIDE MULTI - TRADE LIMITED AS PER THE LETTER DATED 1/3/2013 TO THE WAREHOUSE OWNER, HOWEVER , THE PURCHASE WAS BOOKED BY THE ASSESSEE ON 31/03/2013. THEREFORE, CONSIDERING THE DIFFERENCE IN THE DATE OF LETTER ISSUED TO THE WAREHOUSE AND THE DATE OF PURCHASE AS TAKEN BY THE ASSESSEE, THE SAID PURCHASE WAS TREATED AS BOGUS TRANSACTION ENTERED INTO BY THE ASSESSEE. 9. WITH R E GARD TO THE PURCHASE OF GUAR SEE D, THE TPO HAS COMMENTED THAT THE ASSESSEE ITSELF HAS AGREED TO THE NON GENUINENESS OF THE PURCHASE TRANSACTION HENCE, THE SAME WAS TREATED AS BOGUS TRANSACTION ENTERED INTO BY THE ASSESSEE. THE TPO FINALLY CONCLUDED AS UND ER: - IN VIEW OF THE ABOVE DISCUSSION THE TOTAL ADJUSTMENTS MADE TO THE INTERNATIONAL TRANSACTIONS REPORTED BY THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 2013 STANDS AS BELOW : SR.NO. PARTICULARS AMOUNT IN RS. ALP 1 PURCHASE OF CRUDE PALM OIL FROM EMPIRE MULTITRADE P. LTD. 60,91,80,233 NIL 2 PURCHASE OF CRUDE PALM OIL FROM KULDEEP OVERSEAS P. LTD. 55,75,91,557 NIL 3 PURCHASE OF CRUDE PALM OIL FROM AISHWARYA MARK TRADE INDIA P. LTD. 6,02,96,490 NIL ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 7 4 PURCHASE OF GUAR SEED STRIDE MULTITRADE P. LTD 21,91,99,540 NIL 5 PURCHASE OF GUAR GUM SPLIT FROM STRIDE MULTITRADE P. LTD. 100,82,50,230 NIL TOTAL 245,45,18,050 NIL 10. U PON ASSESSEE'S OBJECTION, THE DRP REFERRED TO SEVERAL CASE LAWS ON THE ISSUE OF BOGUS TRANSACTIONS. THEREAFTER , IT AFFIRMED THE TPO'S ACTION BY OBSERVING AS UNDER : - 1.2.21 WE HAVE GONE THROUGH THE SUBMISSION OF THE ASSESSEE AND THE ORDER OF THE TPO. THE OBJECTION OF THE ASSESSEE THAT IT WAS OUTSIDE THE JURISDICTION OF THE TPO TO VERIFY THE GENUINENESS OF THE TRANSACTION IS NOT ACCEPTED BECAUSE WHEN AO TRANSFERS A CASE TO THE TRANSFER PRICING OFFICER IT BECOMES THE OBLIGATION OF THE TPO TO VERIFY IF THE TRANSACTIONS ARE GENUINE AND THEN DETERMINE THE ALP. HENCE, THE TPO HAS RIGHTLY VERIFIED THE GENUINENESS OF THE TRANSACTION. ACCORDINGLY THE SAID GROUND OF THE ASSESSEE IS DISMISSED. 1.2.22 AS REGARDS HIGH SEAS PURCHASES MADE BY THE ASSESSEE, WE AGREE WITH THE OBSERVATION OF THE TPO THAT THE DATE OF PURCHASE AS PER THE INVOICE OF TH E ASSESSEE AND AS PER THE INVOICE OF THE FINAL BUYER CANNOT VARY AND THERE CANNOT BE A DIFFERENCE IN THE DATES OF INVOICES. MOREOVER, WE FIND THAT ALL THE PARTIES TO THE SO CALLED 'HIGH SEAS SALES' ARE FROM RUCHI SOYA GROUP AND THE TRANSACTIONS HAVE BEEN A RRANGED IN ORDER TO CREATE A FACADE AND TO HOODWINK THE REVENUE. ALL THE CASE LAWS CITED SUPRA ARE APPLICABLE ON ALL FOURS TO THE FACTS OF THIS CASE, HENCE, THE ADDITION OF RS. 122,70,68,280/ - MADE BY THE TPO ON ACCOUNT OF HIGH SEAS PURCHASES OF PALM OIL IS CONFIRMED AND THE OBJECTION OF THE ASSESSEE IS REJECTED. 1.2.23 AS REGARDS PURCHASES OF GUAR SPLIT BY THE ASSESSEE IT IS OBSERVED BY THE PANEL THAT THE LETTERS ISSUED TO THE WAREHOUSE OWNERS IS MUCH BEFORE THE PURCHASE DATE OF THE GOODS BY THE ASSESSEE I .E. IF THE PURCHASES ITSELF ARE DONE ON 31/03/2013 THEN HOW COULD THE SUPPLIER INTIMATE THE WAREHOUSE ON 01/03/2013 ABOUT THE FUTURE PURCHASES. HENCE, THE ORDER OF THE TPO ON ADDITION OF RS. 100,82,50,230/ - TREATING THE PURCHASE OF GUAR SPLIT AS BOGUS PURC HASES IS CONFIRMED AND THE OBJECTION OF THE ASSESSEE IS REJECTED. AN ATTEMPT WAS MADE TO FURNISH CERTAIN ADDITIONAL EVIDENCE IN THE FORM OF PURPORTED ACKNOWLEDGEMENT COPIES OF LETTERS SUBMITTED TO THE GODOWN BY STRIDE MULTI TRADE AND BY THE COMPANY. HOWEVE R, NO REASONS HAVE BEEN GIVEN AS TO WHY THESE COULD NOT BE PRODUCED BEFORE THE AO. IN FACT, NO APPLICATION ADVERTING TO DRP RULES FOR ADDUCING EVIDENCE HAS BEEN SUBMITTED. WE FIND ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 8 THESE DOCUMENTS TO BE SELF SERVING. AS THE TRANSACTIONS HAVE BEEN HELD AS BO GUS, WE TURN DOWN THE REQUEST AND DISMISS THE ASSESSEE'S REQUEST. 1.2.24 AS REGARDS PURCHASES OF GUAR SEEDS BY THE ASSESSEE IT IS OBSERVED THAT THE ASSESSEE HAS BY MISTAKE SHOWN THE PURCHASE OF GUAR SEEDS INSTEAD OF SHOWING THE SAME AS SALES RETURN AND EV EN THE TPO HAS MENTIONED IN DETAIL ABOUT THE REASON FOR ADDITION. HENCE, THE AO IS DIRECTED TO VERIFY IF THE ASSESSEE HAS BY MISTAKE SHOWN PURCHASES INSTEAD OF SALES RETURN AND ALSO VERIFY IF THE CORRESPONDING SALES WERE GENUINELY BOOKED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AND IF THE FACTS OF THE ASSESSEE ARE CORRECT, THE AO IS DIRECTED TO RECTIFY THE ORDER ACCORDINGLY. D ISALLOWANCE OF LOSS OF RUPEES RS. 8,82,90 ,741/ - 11. O N THIS ISSUE THE ASSESSING OFFICER OBSERVED THAT ON PERUSAL OF THE DETAILS OF PURCHASE AND SALE SUBMITTED BY THE ASSESSEE, IT WAS NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS MADE TRANSACTION OF HIGH SEAS PURCHASE AND SALE OF COMMODITIES. THE TOTAL SALE AND PURCHASES OF SUCH HIGH SEAS TRANSACTIONS DURING THE YEAR IS TABULATED BELOW: COMMODITY PURCHASE AMOUNT SALE AMOUNT LOSS CRUDE PALM OIL 327,19,29,222/ - 318,36,38,481/ - 8,82,90,741/ - 12. A FTER EXAMINING THE ISSUE , T HE A SSESSING OFFICER FOUND TRANSACTION TO BE BOGUS. THE AO'S FINDING IN THIS REGARD ARE SUMMARISED AS UNDER : - IT WAS OBSERVED FROM THE DETAILS PROVIDED BY THE ASSESSEE THAT IN CERTAIN CASES THE ASSESSEE HAD IMPORTED GOODS ON HIGH SEAS BASIS WHICH WERE ACTUALLY PURCHASES OF RUCHI SOYA INDUSTRIES LIMITED. IN HIGH SEAS SALES, THE AGREEMENT SHOULD BE ENTERED ON A STAMP PAPER AFTER DISPATCH FROM THE PORT OF ORIGIN AND BEFORE DELIVERY AT THE PORT OF DESTINATION, THE BILL OF LADING SHOULD BE ENDORSED IN THE NAME OF THE NEW BUYER. THE ENDORSEMENT SHOULD MENTION THAT THE GOODS ARE BEING TRANSFERRED ON HIGH SEAS BASIS AND THE AMOUNT OF GOODS SHOULD ALSO BE MENTIONED. THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED BEFORE THE AO ANY OF THESE DOCUMENTS AS MENTIONED. ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 9 SEARCH OPERATIONS WERE CARRIED OUT ON M/S RUCHI SOYA INDUSTRIES LIMITED AND DURING THE COURSE OF SEARCH INCRIMINATING DOCUMENTS PERTAINING TO THE ASSESSEE WERE FOUND FN THE PREMISES OF RUCHI SOYA INDUSTRIES LIMITED. DURING THE COURSE OF SEARCH THE STATEMENT OF DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED A ND THE DIRECTOR IN HIS STATEMENT HAD STATED THAT HE WAS ALSO AN EMPLOYEE OF RUCHI SOYA INDUSTRIES LIMITED. THE ASSESSEE COMPANY HAD NEITHER IMPORTED THE GOODS NOR CLEARED THE GOODS. BOTH IMPORTING AND CLEARING OF THE GOODS WERE DONE BY M/S RUCHI SOYA INDU STRIES LIMITED. THE ACTUAL HIGH SEAS SALES WERE DONE BY RUCHI SOYA INDUSTRIES LIMITED AND THE ASSESSEE COMPANY WAS MERELY AN INTERMEDIARY COMPANY WHERE THE PURCHASES WERE SHOWN AND ALSO THE SALE WAS SHOWN ON THE SAME DAY ITSELF AT A MUCH LOWER PRICE. HEN CE, THE ASSESSEE COMPANY HAD SHOWN THE TRANSACTION IN THE BOOKS OF ACCOUNTS WITHOUT ACTUALLY EXECUTING ANY DOCUMENTS / TAKING DELIVERY OF THE GOODS ETC. 13. U PON ASSESSEE'S OBJECTION THE DRP UPHELD THE ASSESSING OFFICER'S ACTION BY OBSERVING AS UNDER : - 2.2.3 WE HAVE GONE THROUGH THE ASSESSMENT ORDER, THE AO HAS MENTIONED IN DETAIL THE ENTIRE TRANSACTION OF HIGH SEAS SATE & PURCHASE EXECUTED BY THE ASSESSEE AND IT IS ALSO SEEN THAT THE AO HAS TAKEN EFFORTS TO CARRY OUT THE INVESTIGATION THROUGH THE DE TAILS AVAILABLE ON RECORD OF M/S RUCHI SOYA INDUSTRIES TO COME TO A FINAL CONCLUSION. WE CONCUR WITH THE FINDINGS GIVEN BY HIM ON THE BASIS OF DATA EMANATING FOUR RECORDS. HENCE, THE DISALLOWANCE OF LOSS ON ACCOUNT OF HIGH SEAS PURCHASE AND SALE BY THE AO IS UPHELD AND THE OBJECTION FILED BY THE ASSESSEE IS REJECTED . 14. A GAINST THE ABOVE ASSESSEE IS IN APPEAL BEFORE THE ITAT. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. IT IS NOTED THAT ASSESSEE HAS BEEN SEEKING ADJOURNMENT ON ONE PRETEXT OR AN OTHER FOR SEVERAL OCCASIONS. ACCORDINGLY THIS APPEAL HAS BEEN HEARD EX PARTE . ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 10 15. U PON CAREFUL CONSIDERATION WE FIND THAT THERE IS AN UN EQUIVOCAL FINDING IN DETAIL THAT THE TRANSACTIONS CLAIMED BY THE ASSESSEE ARE BOGUS. THE A SSESSING O FFICER , THE T RANSFER P RICING O FFICER AS WELL AS THE DISPUTE RESOLUTION P ANEL HAVE DEALT WITH THE ISSUE IN DETAIL AND THEREAFTER , THEY HAVE GIVEN A CLEAR CUT FINDING THAT THE TRANSACTIONS ARE BOGUS. UPON CAREFULLY CONSIDERING THE ORDERS OF AUTHORITIES BELOW , WE FIND TH AT ALL THE ISSUES RAISED BY THE ASSESSEE HAVE BEEN ANSWERED ELABORATELY AND THESE ORDERS DO NOT NEED ANY INTERFERENCE ON OUR PART. IN THIS REGARD , WE WOULD ALSO LIKE TO REFER TO THE DECISION OF ITAT REFERRED BY THE LEARNED THAT DEPARTMENT AL REPRESENTATIVE ON A SIMILAR BOGUS TRANSACTION INVOLVING THE SAME PARTY I.E. RUCHI INDUSTRIES IN THE CASE OF M/S. MARSHAL MULTITRADE PVT. LTD., IN ITA NO.3758/MUM/2018 DATED 19/07/2019 WHEREIN THE ITAT HAS CONCLUDED AS UNDER : - 14. WE HAVE HEARD BOTH THE COUNSEL PERUSED THE RECORDS, WE FIND THAT ASSESSEE COMPANY DURING THE YEAR HAS ENGAGED IN HIGH SEA PURCHASE AND SALE TRANSACTION ON 16 DIFFERENT OCCASIONS ON BACK - TO - BACK BASIS. THE ORIGINS OF THE GOODS WHERE THE SAME AND ULTIMATE DESTINATION WAS SAME THAT IS RUCHI SOYA LIMITED. THE TRANSACTIONS WERE ENTERED INTO IN A SHORT PERIOD OF 2 MONTHS . EXCEPT FOR 2 TRANSACTIONS WHERE SMALL PROFIT OF RS. 6,280/ - WAS BOOKED, LOSSES OF RS. 241842096/ - WERE BOOKED. ALL THESE TRANSACTIONS ARE ENTIRELY NON - - DELIVERY BASED. THE CONTRACTS FOR THE HIGH SEA SALES WERE ENTERED MID OF SEPTEMBER 2012 TO OCTOBER 2012. THE CONTRACTS WERE NOT REGISTERED. IN THESE CIRCUMSTANCES IT WAS AMPLY CLEAR THAT THE TRANSACTIONS WERE DUBIOUS IN NATURE AND REQUIRED PROPER EXPLANATION. THE FACT THAT THE TRANSACTIONS WERE UNUSUAL THE ULTIMATE CONSIGNEE WAS RUCHI SOYA LTD. WAS GLARING. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO GIVE DETAILS OF ITS SISTER CONCERN'S. BUT THE ASSESSEE NEVER GAVE THE DETAILS. THE DETAIL OF SISTER CONCERN WOULD CERTAIN LY SHED LIGHT ON THE PARTIES WITH WHOM THE TRANSACTIONS HAVE BEEN ENTERED AS TO WHETHER THEY ARE AT ARM'S LENGTH WITH EACH OR NOT. THE UNUSUAL LOSS HENCE OBVIOUSLY NEEDED EXPLANATION. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR THE U NUSUAL LOSS. THE ASSESSEE NEVER GAVE ANY EXPLANATION. THE ASSESSING OFFICER WITHOUT ANY APPLICATION OF MIND AND WITHOUT BRINGING ON RECORD THE REPLY OR THE RESULT OF ANY FURTHER ENQUIRY LACONICALLY PASSED THE SUMMARY ASSESSMENT ORDER ALLOWING THE HUGE LOSS . ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 11 15. IN THESE CIRCUMSTANCES THE LEARNED COUNSEL OF THE ASSESSEE'S CONTENTION THAT ASSESSEE HAS PROVIDED ALL THE NECESSARY DETAILS AND THE ASSESSING OFFICER HAS APPLIED HIS MIND IS CLEARLY NOT SUSTAINABLE. THE CASE LAWS REFERRED BY THE LD COUNSEL OF THE ASSE SSEE ARE NOT APPLICABLE ON THE FACTS OF THE CASE. IN OUR CONSIDERED OPINION ON THE FACTS OF THIS CASE THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF DENIEL MERCHANTS P. LTD. AND ANTHER (SUPRA) IS FULLY APPLICABLE. IN THE SAID CASE HONOURABLE APEX COURT HAS EXPOUNDED THAT 'IN ALL THESE CASES, WE FIND THAT THE COMMISSIONER OF INCOME TAX HAD PASSED AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 WITH THE OBSERVATIONS THAT THE ASSESSING OFFICER DID NOT MAKE ANY PROPER INQUIRY WHILE MAKING THE AS SESSMENT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE(S) INSOFAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. ON THAT BASIS THE COMMISSIONER OF INCOME TAX HAD, AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OF FICER TO CARRY THOROUGH AND DETAILED INQUIRY. IT IS THIS ORDER WHICH IS UPHELD BY THE HIGH COURT. WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE HIGH COURT. THE SPECIAL LEAVE PETITIONS ARE DISMISSED'. 16. WE FIND THAT THE ABOVE CASE LAW IS FULLY APPL ICABLE ON THE FACTS OF THIS CASE. RATHER IN THE PRESENT CASE BEFORE US THE ASSESSEE HAS NOT GIVEN THE EXPLANATION FOR THE UNUSUAL LOSS DESPITE INQUIRY. IT HAS ALSO NOT GIVEN DETAILS OF SISTER CONCERN. THIS IS VITAL IN VIEW OF THE DUBIOUS NATURE OF LAYERED TRANSACTION. HENCE IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT IN OUR CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT. HENCE, WE UPHOLD THE SAME. THE ORDER APPLIES MUTATIS MUTANDIS TO BOTH THE APPEALS. 16. U PON CAREF UL CONSIDERATION OF THE ISSUE INVOLVED W E ARE OF THE CONSIDERED OPINION THAT THE ORDERS OF AUTHORITIES BELOW DO NOT NEED ANY INTERFERENCE O N OUR PART. ACCORDINGLY , WE UPHOLD THE SAME . 17. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 7 / 0 1 / 2 0 2 0 S D / - S D / - PAWAN SINGH SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 7 / 0 1 / 2 0 2 0 ITA NO.1453/MUM/2017 M/S. IMPERIAL MARK TRADE (I) PVT. LTD 12 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI