DODHIA SYNTHETICS LIMITED, MUMBAI V. ACIT, CIRCLE-1, KALYAN, MUMBAI

ITA 1509/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7116 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: AMBALAL JAIN
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1509/M/2018 ASSESSMENT YEAR: 2010-11 M/S. DODHIA SYNTHETICS LTD., HOUSE NO.98/2, NEW MAVJI COMPOUND NARPOLI, BHIWANDI 421 302 PAN: AAACD 9892J VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, KALYAN, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAK PADA, KALYAN (W)-421 301 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI AMBALAL JAIN, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 23.04.2019 DATE OF PRONOUNCEMENT : 30.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.02.2015 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF ADDITION OF RS.3,41,855/- BY LD. CI T(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN TH IS CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT AT RS.1,3 7,33,970/- VIDE ORDER DATED 08.02.2013 AS AGAINST THE RETURN O F INCOME OF ITA NO.1509/M/2018 M/S. DODHIA SYNTHETICS LTD. 2 RS.1,36,22,060/-. THEREAFTER, THE AO RECEIVED INFO RMATION FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THA T THE ASSESSEE IS BENEFICIARY OF BOGUS PURCHASES OF HAWAL A TRANSACTIONS FROM FIVE PARTIES THE DETAILS WHEREOF ARE GIVEN ON PAGE NO.2 OF THE ASSESSMENT ORDER. THE AO ACCORDIN GLY REOPENED THE ASSESSMENT OF THE ASSESSEE UNDER SECTI ON 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 DATED 2 8.06.2013 WHICH WAS COMPLIED WITH BY THE ASSESSEE BY SUBMITTI NG THAT THE ORIGINAL RETURN FILED UNDER SECTION 139(1) MAY KIND LY BE TREATED AS RETURN FILED IN COMPLIANCE OF NOTICE UNDER SECTI ON 148 OF THE ACT. THE AO CALLED UPON THE ASSESSEE TO FURNISH TH E BILLS, VOUCHERS AND OTHER EVIDENCES TO PROVE THE SAID PURC HASES AND ALSO ISSUED NOTICES UNDER SECTION 133(6) TO VERIFY THE PURCHASES INDEPENDENTLY. HOWEVER, THE ASSESSEE FAILED TO FIL E THE NECESSARY EVIDENCES IN THE FORM OF DELIVERY CHALLANS, GOODS RECEIPT NOTES AND NOR THE PARTIES WERE PRODUCED PHYSICALLY IN THE ASSESSMENT PROCEEDINGS. THE NOTICES ISSUED UNDER SECTION 133( 6) WERE RETURNED UNSERVED. THE AO FINALLY CAME TO THE CONC LUSION THAT THE PURCHASES MADE FROM THESE PARTIES WERE BOGUS FO R WHICH THE ASSESSEE WAS NOT HAVING EVIDENCES AND HAS BOOKED T HESE PURCHASES IN ORDER TO UNDERSTATE THE INCOME TO THE EXTENT OF RS.3,41,855/-. 4. THE LD. CIT(A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF AO ON THE SAME REASONING THA T ASSESSEE WAS NOT HAVING ANY PROOF OF PURCHASE OF GOODS AND T HE BILLS WERE BOOKED ONLY TO UNDERSTATE THE INCOME TO THE EXTENT OF BOGUS PURCHASES. ITA NO.1509/M/2018 M/S. DODHIA SYNTHETICS LTD. 3 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE W AS NOT HAVING THE PROOFS OF PURCHASE OF MATERIAL EXCEPT THE PURCH ASE BILLS. THE LD. A.R. SUBMITTED BEFORE US THAT THE ASSESSEE IS OPERATING IN A VERY BIG WAY AND THE TURNOVER DURING THE YEAR WAS RS.99 CRORE AND THEREFORE THE ASSESSEE WOULD NOT HAVE RES ORTED TO THE BOGUS PURCHASES OF SUCH A SMALL AMOUNT OF RS. RS.3, 41,855/-. THE LD. A.R. ALSO REFERRED THE INCOME DISCLOSED BY THE ASSESSEE DURING THE YEAR OF RS.1,37,33,970/- IN RETURN OF IN COME. THE LD. A.R. PRAYED BEFORE THE BENCH THAT SINCE THIS IS A CASE OF GENUINE PURCHASES IN THE ORDINARY COURSE OF BUSINES S, THEREFORE, THE AUTHORITIES BELOW HAVE CAME TO A WRONG CONCLUSI ON THAT THESE ARE MADE IN ORDER TO UNDERSTATE THE INCOME OF THE ASSESSEE. THE LD. A.R. CANDIDLY ADMITTED BEFORE US THAT IN SUCH A HUGE VOLUME OF TRANSACTIONS IT IS NOT ALWAYS POSS IBLE TO KEEP ALL THE RECORDS FOR SUCH PETTY PURCHASES AND REQUES TED THE BENCH TO TAKE A VERY REASONABLE AND LENIENT VIEW IN THE MATTER CONSIDERING THE VOLUME OF THE TRANSACTIONS OF THE A SSESSEE AS THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DYEING AND PROCESSING OF YARN, MANUFACTURING AND SALE OF FABRICS AND ELE CTRICITY GENERATION (WIND MILL). 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AUTHORITIES BELOW. 7. AFTER TAKING INTO ACCOUNT OF THE FACTS, WE ARE O F THE VIEW THAT ASSESSEE HAS FAILED TO PROVE THESE PURCHASES B EFORE THE AUTHORITIES BELOW. HOWEVER, THE ASSESSEE WAS HAVIN G PURCHASE BILLS BUT NOT THE DELIVERY CHALLAN, GOODS TRANSPORT NOTE, ENTRY OF RECEIPTS ETC. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT ITA NO.1509/M/2018 M/S. DODHIA SYNTHETICS LTD. 4 A REASONABLE PERCENTAGE SHOULD BE DISALLOWED IN THI S CASE AND ACCORDINGLY WE ARE INCLINED TO DISALLOW THE PURCHAS ES TO THE TUNE OF 30%. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.