ITO 8(3)(1), MUMBAI V. THAKKAR CHEMICALS P.LTD, MUMBAI

ITA 1548/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9867 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: D C JAIN LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO 1548/MUM/2017 THAKKAR CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 1548/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER 8(3)(1) R.NO.616,6 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 063 / VS. THAKKAR CHEMICALS PVT.LTD 307,MANDVI NAVJIVAN 121/127 KAZI SAYED STREET MASJID BUNDER MUMBAI -400 003 ./ ./PAN/GIR NO. AAACT-2753-Q ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : D.C.JAIN, LD. AR REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 23/08/2017 / DATE OF PRONOUNCEMENT : 06 /09/2017 ITA NO 1548/MUM/2017 THAKKAR CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010- 11 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-14 [CIT(A)], MUMBAI DATED 28/12/2016 QUA RELIEF PROVIDED TO ASSESSEE ON ACCOUNT OF CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN TRADING OF CHEMICALS AND BULK DRUGS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 23/03/2015 AT RS.1,34,35,400/- AFTER ADDITION OF BOGUS PURCHASES FOR RS.84,72,880/-. THE ORIGINAL RETURN WAS E-FILED AT RS.30,65,399/- ON 24/09/2010 WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.84,72,880/- FROM TWO PARTIES. CONSEQUENTLY, NOTI CE U/S 148 DATED 26/08/2013 WAS ISSUED WHICH WAS FOLLOWED BY STATUTO RY NOTICE U/S 143(2) / 142(1). 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICES U /S 133(6) WERE ISSUED TO THE ALLEGED BOGUS SUPPLIERS, HOWEVER, THE SAME WERE RETURNED BACK UN-SERVED BY POSTAL AUTHORITIES. UPON CONFRONTATION, THE ASS ESSEE CONTENDED THAT THE MATERIAL WAS RECEIVED DIRECTLY A T THE PORT AND EXPORTED THEREAFTER AND THEREFORE, THE PURCHASES WE RE GENUINE AND ITA NO 1548/MUM/2017 THAKKAR CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR 2010-11 3 PAYMENTS WERE THROUGH BANKING CHANNELS. HOWEVER, NO T CONVINCED, LD. AO NOTED THAT THE ASSESSEE COULD NOT PRODUCE DOCUME NTARY EVIDENCES TO SUBSTANTIATE THE ACTUAL DELIVERY OF GOODS AND TH EREFORE, TREATED THE SAME AS BOGUS PURCHASES AND DISALLOWED THE SAME U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 28/12/2 016 WHERE LD. CIT(A) PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUN CEMENTS RESTRICTED THE SAME TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT NOTICES U/S 133(6) COULD NOT BE SERVE D SINCE NONE OF THE PARTY WAS FOUND AT THE GIVEN ADDRESS. FURTHER, THE ASSESSEE COULD NOT ESTABLISH ACTUAL DELIVERY OF MATERIAL BEFORE LD. AO AND THEREFORE, THE ADDITIONS WERE JUSTIFIED. IT WAS FURTHER CONTENDED THAT THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASS ESSEE AND MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SAME SINCE NO CONFIRMATIONS ETC. WAS FILED BY THE ASSESS EE BEFORE LOWER AUTHORITIES AND NONE OF THE PARTIES COULD BE PRODUC ED FOR CONFIRMATION OF PURCHASES. 5. PER CONTRA, LD. REPRESENTATIVE FOR ASSESSEE [AR] CONTENDED THAT THE ASSESSEE WAS IN POSSESSION OF PURCHASE DOCUMENT S, PAYMENTS WERE THROUGH BANKING CHANNELS AND THE TURNOVER ACHI EVED BY THE ASSESSEE WAS NOT IN DISPUTE. THEREFORE, LD. CIT(A) WITH DUE APPLICATION OF MIND RESTRICTED TO ADDITIONS TO 12.5% WHICH IS A CCEPTED BY THE ASSESSEE TO MAKE UP FOR THE SHORTCOMINGS AND THEREF ORE, THE SAME WAS QUITE FAIR AND REASONABLE. ITA NO 1548/MUM/2017 THAKKAR CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR 2010-11 4 6. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL SINCE ASSESSEE WAS ENGAGED IN TRADING ACTI VITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATI ONS FROM ANY OF THE ALLEGED BOGUS SUPPLIERS AND FURTHER NOTICES U/S 133(6) COULD NOT BE SERVED DUE TO NON-AVAILABILITY OF ANY OF THE PARTY AT THE GIVEN ADDRESS, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE A SSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ACTUAL DELIVER Y OF MATERIAL. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGA INST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHT LY DONE. THEREFORE, FINDING THE SAME QUITE FAIR AND REASONABLE, WE SEE NO REASON TO INTERFERE WITH THE SAME. 7. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ITA NO 1548/MUM/2017 THAKKAR CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR 2010-11 5 ! / 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