ACIT 28(1), NAVI MUMBAI V. ASHTAVINAYAKA CONSTRUCTION, NAVI MUMBAI

ITA 1582/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries
• Section: 148; 143(3); 133(6)

Judgement Text

AAYAKR APILAIYA AIQAKRNA AAYAKR APILAIYA AIQAKRNA AAYAKR APILAIYA AIQAKRNA AAYAKR APILAIYA AIQAKRNA A NYAAYAPIZ MAMUBA[ NYAAYAPIZ MAMUBA[ NYAAYAPIZ MAMUBA[ NYAAYAPIZ MAMUBA[- -- - MAO. MAO. MAO. MAO. IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AG GARWAL, AM AAYAKR APILA SAM AAYAKR APILA SAM AAYAKR APILA SAM AAYAKR APILA SAM . / ITA NO. 1582/MUM/2017 ( INAQA-ARNA BAYA- / ASSESSMENT YEAR 2009-10) A.C.I.T. 28(1), MUMBAI VS. M/S. ASHTAVINAYAKA CONSTRUCTION, PLOT NO. R-478, T.T.C. INDUSTRIAL AREA, MIDC, RABALE, NAVI MUMBAI ( APILAAQAI APILAAQAI APILAAQAI APILAAQAI - -- - / APPELLANT) .. ( P`%YAQAAI P`%YAQAAI P`%YAQAAI P`%YAQAAI- -- - / RESPONDENT) . / PAN NO. AADFA 1724 G SAM SAMSAM SAM . /CO NO. 300/MUM/2018 ( ARISING IN ITA NO. 1582/MUM/2017 FOR AY 2009 -10) M/S. ASHTAVINAYAKA CONSTRUCTION, PLOT NO. R-478, T.T.C. INDUSTRIAL AREA, MIDC, RABALE, NAVI MUMBAI VS. A.C.I.T. 28(1), MUMBAI ( APILAAQAI APILAAQAI APILAAQAI APILAAQAI - -- - / APPELLANT) .. ( P`%YAQAAI P`%YAQAAI P`%YAQAAI P`%YAQAAI- -- - / RESPONDENT) ! / APPELLANT BY : SHRI SATISHCHANDRA RAJORE, DR #$ ! / RESPONDENT BY : SHRI BHADRESH DOSHI, AR ! &' / DATE OF HEARING: 2 9 .1 1 .2018 ! &' / DATE OF PRONOUNCEMENT : 30 . 1 1 .2018 AADOSA AADOSA AADOSA AADOSA / O R D E R PER MAHAVIR SINGH, JM: THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS ARISING OUT OF THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-26, MUMBAI, FOR THE AY. 2009-10 IN REGARD TO ESTIMATION OF BOGU S PURCHASES MADE IN 2 ITA NO. 1582/MUM/2017 & CO NO. 300/MUM/2018 THE FIRST RE-ASSESSMENT ORDER NO. CIT(A)-26/IT/151/ 14-15 IN RESTRICTING THE ADDITION AT 12,59,752/- OUT OF TOTAL ADDITION MADE BY AO AT 69,98,624/-. IN THE SECOND RE-ASSESSMENT ORDER PASSED BY THE AO, THE CIT(A) IN APPEAL NO. CIT(A)-26/IT/35/14-15, RESTRICTING THE A DDITION OF 42,56,855/- OUT OF THE TOTAL ADDITION ON BOGUS PURCHASES AT 1,70,27,418/-. FOR THIS REVENUE HAS RAISED THE FOLLOWING THREE GROUNDS: (1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE O N ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS.57,38,872/- OUT OF ADDI TION OF RS.69, 98,624/- ( CIT(A)-26/IT/151/14-15) MADE IN THE FIRST RE- ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 ON 24.02.2014 AND RS. 1,27,70,563/- OUT OF ADDITION OF RS. 1,70,27,418/- (C1T(A)-26/IT/35/14- 15) MADE IN THE SECOND REASSESSMENT ORDER PASSED U/ S 143(3) R.W.S.147 ON 05.02.2015 BY THE ASSESSING OFFICER WITHOUT CONS IDERING THE FACT THAT THE NOTICES ISSUED U/S 133(6) OF THE INCOME TAX ACT , 1961 , TO THE PARTIES COULD NOT BE SERVED AND THE ASSESSES HAD FAILED TO PRODUCE THE PARTIES FROM WHOM THE PURCHASES WERE CLAIMED TO HAVE BEEN M ADE AND ALSO FAILED TO PROVE CONSUMPTION OR UTILIZATION OF THE M ATERIAL CLAIMED TO HAVE BEEN PURCHASED FROM THE PERSONS WHOSE EXISTENCE COU LD NOT BE ESTABLISHED BY THE ASSESSEE EVEN THOUGH REASONABLE OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSES, DESPITE THE FACT THAT ONUS LIES ON THE ASSESSES TO PROVE THE PURCHASE OF MATERIAL.' (2) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE O N ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS.57,38,872/- OUT OF ADDI TION OF' RS. 69,98,624 /- MADE IN THE FIRST RE-ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 ON 24.02.2014 AND RS. 1,27,70,563/- OUT OF ADDITION OF RS. 1,70,27,418/- MADE IN THE SECOND RE-ASSESSMENT ORDER PASSED U/S 1 43(3) R.W.S. 147 ON 05.02.2015 BY THE ASSESSING OFFICER WITHOUT CONSIDE RING THE FAD THAT THE CASE LAWS ON WHICH CIT(A) RELIED UPON APPLY TO TRADERS AND NOT T O MANUFACTURING OF CONSUMING ENTITIES.' (3) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE O N ACCOUNT OF BOGUS PURCHASES TO THE TUNE OF RS 1 ,27,70,563/- OUT OF ADDITION OF RS,1,70,27,418 /- MADE IN THE SECOND RE-ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 ON 05.02.2015 BY THE ASSESSING OF FICER WITHOUT CONSIDERING THE FACT THAT A SUM OF RS.1,50,87,838/- IS SHOWN AS 3 ITA NO. 1582/MUM/2017 & CO NO. 300/MUM/2018 OUTSTANDING CREDITOR OUT OF PURCHASES OF RS. 1,70,2 7,418/- AS ON THE YEAR END AND IN THE ABSENCE OF THE EXISTENCE OF THE PART Y, THE CORRESPONDING CREDITOR ALSO DOES NOT STAND PROVED.' 2. ASSESSEE HAS ALSO RAISED THE FOLLOWING TWO GROUN DS IN ITS CROSS- OBJECTION: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING ADDITION TO THE TUNE OF 18% OF THE ALLEGED BOGUS PURCHASES OF RS. 6 9,98,624/- OUT OF THE ADDITIONS MADE IN THE FIRST RE-ASSESSMENT ORDER PAS SED U/S. 143 R.W.S. 147 DATED 24.02.2014. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING ADDITION TO THE TUNE OF 25% OF THE ALLEGED BOGUS PURCHASES OF RS. 1 ,70,27,418/- OUT OF THE ADDITIONS MADE IN THE SECOND RE-ASSESSMENT ORDE R PASSED U/S. 143 R.W.S. 147 DATED 05.02.2015. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PART NERSHIP FIRM ENGAGED IN POWER TRANSMISSION AND CONSTRUCTION WORK EXECUTI NG TURNKEY PROJECTS RELATED TO POWER TRANSMISSION LINES AND SUB-STATION S. THIS INCLUDES APART FROM SUPPLYING MATERIALS, PROVIDING SERVICES OF LAY ING DOWN OR REPAIRING OF TRANSMISSION LINES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO RECEIVED INFORMATION FROM DGIT (INV.), MUMBAI, WHO IN TURN RECEIVED INFORMATION FROM SALES TAX DEPARTMENT OF MAHARASHTR A GOVERNMENT ABOUT SOME OF THE DEALERS PROVIDING ACCOMMODATION ENTRIES BY ISSUING BOGUS SALE BILLS, WITHOUT SUPPLYING ANY GOODS. THE SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT HAS DISPLAYED A LIST OF SUCH DEALERS ON ITS WEBSITE AND ASSESSEE BEING ONE OF THE BENEFICIARIES OF SUCH BOGUS BILLS FOR THE YEAR UNDER CONSIDERATION. THE AO IN ORDER T O ASCERTAIN THE GENUINENESS OF PURCHASES SHOWN IN THE ACCOUNTS OF T HE ASSESSEE, ISSUED NOTICES U/S. 133(6) OF THE ACT TO THE PARTIES BY RE GISTERED POST BUT THE 4 ITA NO. 1582/MUM/2017 & CO NO. 300/MUM/2018 NOTICES RETURNED UN-SERVED BY POSTAL AUTHORITIES WI TH A REMARK LEFT OR NOT AVAILABLE ON THIS ADDRESS . ASSESSEE FAILED TO FILE THE VITAL DOCUMENTS SUCH AS DELIVERY CHALLANS, TRANSPORT RECEIPTS AND OCTORO I RECEIPTS ETC., AND ACCORDINGLY AO HELD THAT THE ASSESSEE IS UNABLE TO ESTABLISH THE GENUINENESS OF THE PURCHASES MADE. ACCORDINGLY, AO WAS OF THE VIEW THAT IN VIEW OF THE INFORMATION RECEIVED FROM DGIT( INV.), MUMBAI, WHO IN TURN RECEIVED INFORMATION FROM SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT THAT ASSESSEE BEING ONE OF THE BENEFICIA RIES OF THE ACCOMMODATION ENTRIES PROVIDED BY SOME OF THE MVAT DEALERS, WHO ARE INDULGING IN ISSUING BOGUS BILLS/PURCHASE BILLS, TH E AO ADDED THE ENTIRE BOGUS PURCHASES. 4. THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON FIRS T OCCASION DATED 31- 01-2013 AND ASSESSMENT WAS COMPLETED CONSEQUENTLY M AKING ADDITION OF BOGUS PURCHASES AMOUNTING TO 69,98,624/-. SUBSEQUENTLY, ANOTHER NOTICE U/S. 148 DATED 21-03-2014 WAS ISSUED AND SER VED ON ASSESSEE AND ASSESSMENT WAS COMPLETED BY MAKING FURTHER ADDI TION ON BOGUS PURCHASES AT 1,70,27,418/-. THE CIT(A) PASSED A COMMON ORDER I N APPEAL NOS. CIT(A)-26/IT/151/14-15 & CIT(A)-26/IT/3 5/14-15, DATED 20- 12-2016. 5. WE FIND THAT AGAINST THIS COMMON ORDER, THE REVE NUE HAS PREFERRED SINGLE APPEAL AND CONSEQUENTLY THE ASSESSEE ALSO FI LED A SINGLE CROSS- OBJECTION. IT SEEMS FROM THE GROUNDS RAISED BY REV ENUE IN ITS APPEAL AND GROUNDS RAISED BY ASSESSEE IN ITS CROSS-OBJECTION T HAT THEY HAVE MIXED BOTH THE APPEALS AND AGAINST THESE TWO ORDERS, REVE NUE AS WELL AS CROSS- OBJECTION OF ASSESSEE ARE CONSOLIDATED IN ONE APPEA L. IN OUR VIEW, THIS IS TECHNICALLY WRONG AND CANNOT BE PROCESSED WITH. THI S APPEAL AND THE CROSS-OBJECTIONS ARE DEFECTIVE. HENCE, WE DISMISS THIS APPEAL OF REVENUE 5 ITA NO. 1582/MUM/2017 & CO NO. 300/MUM/2018 AND THE CROSS-OBJECTION OF ASSESSEE WITH A LIBERTY TO REVENUE AS WELL AS THE ASSESSEE TO FILE A FRESH APPEAL WITH CONDONATIO N PETITION, STATING THE REASONS SEPARATELY AGAINST THESE TWO ORDERS. THE A SSESSEE IS ALSO AT LIBERTY TO FILE CROSS-OBJECTION IN CASE THE REVENUE FILES THE APPEAL. 6. IN THE RESULT, THE APPEAL OF REVENUE AS WELL AS THE CROSS-OBJECTION OF ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-11-2018 AADOSA KI GAA AADOSA KI GAA AADOSA KI GAA AADOSA KI GAAOYANAA KULAO MAO IDNAMK OYANAA KULAO MAO IDNAMK OYANAA KULAO MAO IDNAMK OYANAA KULAO MAO IDNAMK 30 -11- 2018 KAO KI GA[ KAO KI GA[ KAO KI GA[ KAO KI GA[- -- - . .. . SD/- SD/- ( / MANOJ KUMAR AGGARWAL) ( /MAHAVIR SINGH) ( / ACCOUNTANT MEMBER) ( / JUDICIAL MEMBER) MUMBAI, DATED: 30 -11 - 2018 TNMM 6 ITA NO. 1582/MUM/2017 & CO NO. 300/MUM/2018 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//