M/S NIKET METAL CORPORATION, MUMBAI V. ITO - 19(2)(4), MUMBAI

ITA 16/MUM/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3242 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-01-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 16/MUM/2021 (ASSESSMENT YEAR 2009-10) M/S. NIKET METAL CORPORATION 11, KIKA STREET MUMBAI-400 004. PAN : AAAFN3103B VS. ITO-19(2)(4) MATRU MANDIR GRANT ROAD 2 ND FLOOR MUMBAI - 07. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. SMITA VERMA DATE OF HEARING 11 . 1 0 .2021 DATE OF PRONOUNCEMENT 11.10.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS IS AN APPEAL BY THE ASSESSEE WHEREIN THE ASSES SEE IS AGGRIEVED THAT THE LEARNED CIT-A HAS ERRED IN SUSTAINING 12.5% DIS ALLOWANCE ON ACCOUNT OF BOGUS PURCHASES. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENG AGED IN THE BUSINESS OF TRADING IN FERROUS AND NON-FERROUS METAL. INFORMATI ON WAS RECEIVED FROM THE SALES TAX DEPARTMENT THAT ASSESSEE HAS THAT IN BOGU S PURCHASES OF RS. 17.35 CORES. THE ASSESSMENT WAS ACCORDINGLY REOPENED. TH E ASSESSING OFFICER IN THIS CASE HAS MADE 12.5% ADDITION ON ACCOUNT OF BOGUS PU RCHASE AMOUNTING TO RS. 21,69,124/-. THE AO WHILE MAKING THE DISALLOWANCE H AS MADE FOLLOWING OBSERVATIONS :- THE SUBMISSION/DETAILS FURNISHED BY THE ASSESSEE AND ALSO THE MATERIALS AVAILABLE ON RECORD HAVE BEEN CAREFULLY PERUSED AND CONSIDERED. FROM THE ABOVE DISCUSSIONS, THE FOLLOWINGS FACTS EMERGE - (I) THE SALE TAX DEPARTMENT HAS CONDUCTED INDEPENDENT ENQUIRES IN EACH OF THE 'NON GENUINE' PARTIES AND CONCLUSIVELY PROVED THA T THESE PARTIES ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION E NTRIES ONLY. THE PARTIES ARE ISSUING BILLS WITHOUT DELIVERING ANY GOO DS AND SERVICES. M/S. NIKET METAL CORPORATION 2 (II) INDEPENDENT ENQUIRIES/INVESTIGATIONS HAVE BEEN CARRIED OUT BY THIS OFFICE UNDER THE I.T. ACT AND THE ASSESSEE HAS BEEN DULY CONF RONTED WITH THE SAME. EVIDENTLY, THE ASSESSEE HAD ADOPTED A MODUS OPERANDI TO REDUCE HIS TRUE PROFITS BY INFLATING HIS EXPENSES INCLUDING PURCHASE EXPENSES BY TAKING ACCOMMODATION ENTRIES FROM SUCH PARTIES. (III) THE ASSESSEE WAS ASKED TO PRODUCE THE SAID NON GENUINE DEALERS' FOR EXAMINATION, BUT THE ASSESSEE FAILED TO DO SO. THUS, I N THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE PURCHASES TO THE EXTENT MADE FROM T HE ABOVE SAID PARTIES REMAINED UNVERIFIABLE AND HENCE I ARRIVE AT A CONCL USION THAT THE PURCHASES SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS ARE INF LATED AND NON-GENUINE PURCHASES ARE DEBITED TO TRADING ACCOUNT TO SUPPRESS TH E TRUE PROFITS TO BE DISCLOSED TO THE DEPARTMENT. (IV) THE ASSESSEE COULD NOT FILE THE VITAL DOCUMENTS S UCH AS DELIVERY CHALLANS, TRANSPORT RECEIPTS, OCTROI RECEIPT FOR PAYMENT OF OCTROI DUTY, RECEIPT OF WEIGHBRIDGE FOR WEIGHING OF GOODS, EXCISE GATE PASS, GOODS INWARD REGISTER MAINTAINED AT GO DOWN/WAREHOUSE/STORAGE HOUSE ETC. WHA TEVER DOCUMENTS PLACED ON RECORD IS NOT CAPABLE OF SUSTENANCE. THE ITEMS SHOWN TO HAVE PURCHASED FROM THE SAID PARTIES ARE OF SUCH IN NATUR E THAT THEY REQUIRE SEPARATE TRANSACTION. HENCE THE MODE OF TRANSPORTATION IS NOT EXPLAINED PROPERLY. V) THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THE GEN UINENESS OF PURCHASES MADE BY THE ASSESSEE. (VI) MERE FILING OF DETAILS IN SUPPORT OF PURCHASES AND PAYMENT THROUGH ACCOUNT PAYEE CHEQUE CANNOT BE CONCLUSIVE IN A CASE WHERE GENUINENESS OF TRANSACTION IS IN DOUBT. PAYMENT BY ACCOUNT PAYEE CHEQU ES ARE NOT SACROSANCT (VII) THE SALES TAX DEPARTMENT CERTIFIED T HAT THE AFORESAID PARTIES ARE 'NON GENUINE OPERATORS' AFTER CONDUCTING INDEPEN DENT ENQUIRIES. IT IS EVIDENT THAT THE ASSEESSEE DID NOT MAKE ANY EFFORT, TO C ONTROVERT THE FINDING RECORDED BY THE DGIT (INV.) AND IT MA4E NO EFFORTS TO P RODUCE THE SELLER PARTIES. (VIII) IF ALL THE EVIDENCES POINT TO THE FACT THAT NO AC TUAL GOODS WERE SUPPLIED BY THE ABOVE PARTIES, THEN THE ARGUMENT OF ASSESSEE T HAT IT PURCHASED GOODS IN GOOD FAITH IS NOT TENABLE. THUS, FROM THE ABOVE ANALYSIS OF THE FACTS, IT IS CRYS TAL CLEAR THAT THE PURCHASES MADE BY THE ASSESSEE FROM THE ABOVE PARTIE S AND CLAIMED AS EXPENSES IN HIS PROFIT AND LOSS ACCOUNT ARE NOT GENUI NE. 3. UPON ASSESSEES APPEAL ID CIT(A) CONFIRMED THE S AME. 4. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION I FIND THAT ASS ESSEE HAS PROVIDED SOME M/S. NIKET METAL CORPORATION 3 DOCUMENTARY EVIDENCE FOR THE PURCHASE. BUT VITAL DO CUMENTS IN SUPPORT OF PURCHASE HAVE NOT BEEN PROVIDED AS NOTED PARA (IV) OF THE ASSESSING OFFICERS ORDER REFERRED ABOVE. ADVERSE INFERENCES HAVE BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. NO ONE TO ONE CORRELATION OF THE PURCHASE HAS BEEN DONE BY THE AO. NOR ANY EXAMINATI ON HAS BEEN DONE FOR THE HUGE BOGUS PURCHASE WHETHER IT IS A PART OF CIR CUITATIOUS ROTATION OF FUND. BE AS IT MAY, IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE D ONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITHOUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DATED 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED P ERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN SALES ARE NOT DOUBT ED. HOWEVER IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSE E SAVINGS ON ACCOUNT OF NON-PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION IN MY CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES M EETS THE END OF JUSTICE. HENCE I UPHOLD THE ORDERS OF THE AUTHORITIES BELOW. 6. IN THE RESULT ASSESSEES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11.10.2021. SD/- (SHAMIM YA HYA) ACCOUNTANT MEMBE R MUMBAI; DATED : 11/10/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT M/S. NIKET METAL CORPORATION 4 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI