D & D METALLOYS CORPORATION, THANE V. ITO 24(1)(5), MUMBAI

ITA 1609/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0147 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 31-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.1609/M/2017 ASSESSMENT YEAR: 2009-10 M/S. D & D METALLOYS CORPORATION, C/O SHRI DEEPAK MADHAV GAVADE, 01, GANESH PRASAD, VASAI ROAD, SAMBHAJI NAGAR, VASAI, THANE-401 202 PAN: AAAFD0959P VS. ITO WARD 24(1)(5), INCOME TAX OFFICE, ROOM NO.523, 5 TH FLOOR, PIRAMAL CHAMBER, LALBAUG, MUMBAI 400 012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : MISS. N. HEMALATHA, D.R. DATE OF HEARING : 31.07.2017 DATE OF PRONOUNCEMENT : 29.08.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 09.12.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2009-10. 2. THE SHORT FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS E-FILED BY THE ASSESSEE ON 07.07.2009, DECLARING TOTAL INCOME OF RS.1,04,790/-. THE SAME WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF TH E ASSESSEE WAS REOPENED U/S 148 OF THE ACT ON 05.03.2014 AND THE ASSESSMENT ORD ER U/S 143(3) R.W.S. 147 OF THE ACT WAS PASSED ON 05.03.2015, DETERMINING TOTAL INCOME AT RS.21,95,860/-. IN THIS CASE AN INTIMATION WAS RECEIVED FROM THE OF FICE OF THE DIRECTOR GENERAL OF INCOME TAX (INV.) MUMBAI, WHEREIN, IT WAS STATED THAT AS PER INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, GOVT. OF MAHARAS HTRA, THE ASSESSEE WAS ITA NO.1609/M/2017 M/S. D & D METALLOYS CORPORATION 2 FOUND TO HAVE ACQUIRED BOGUS PURCHASE BILLS AMOUNTI NG TO RS.1,67,28,620/- FROM THE PARTIES MENTIONED BELOW:- SR. NO. NAME F.Y. AMOUNT (RS.) 1. SHAKTI TRADING COMPANY 2008-09 1,35,000/- 2. PARAS STEEL INDIA 2008-09 7,40,484/- 3. MANAV IMPEX 2008-09 67,68,162/- 4. NAMAN ENTERPRISES 2008-09 4,83,972/- 5. DAKSH ENTERPRISES 2008-09 19,36,034/- 6. MANSHI TRADERS 2008-09 17,80,749/- 7. JINKUSHAL METAL CORP. 2008-09 6,07,620/- 8. SLREE MANIBHACLRA METAL 2008-09 6,28,503 9. GREAT INTERNATIONAL 2008-09 36,48,096/- TOTAL 1,67,28,620/- 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER: 5.3.8 ON PERUSAL OF COPY OF THE LEDGER ACCOUNT FI LED BY THE APPELLANT, IT IS FOUND THAT THE DETAILS OF PURCHASES ARE FROM THE NINE HAW ALA PANTIES. IT IS TO REITERATE THAT THE CASE WAS REOPENED BY ISSUING NOTICE U/S 14 8 OF THE ACT. IN ORDER TO VERIFY THE GENUINENESS OF THE PURCHASE, NOTICES U/S 133(6) OF THE ACT WERE ISSUED BY AO TO THE ABOVE SAID PARTIES. HOWEVER, THE NOTICES HAV E BEEN RETURNED UNSERVED BY THE POSTAL AUTHORITIES'. THE APPELLANT WAS ASKED T O PRODUCE THE PARTIES. BUT THE APPELLANT HAS NOT PRODUCED ANY OF THE PARTIES. FURT HER, THE APPELLANT WAS ASKED TO PRODUCE OCTROI RECEIPTS AND DELIVERY CHALLANS OF TH E RELEVANT PURCHASE GOODS. THE APPELLANT HAS ADMITTED THAT ALL PURCHASE AND DELIVE RIES WERE MADE BY THE PURCHASING PARTIES BUT APPELLANT HAS NOT PRODUCED A NY TRANSPORT RECEIPTS IN RESPECT OF RELEVANT PURCHASED GOODS. THE APPELLANT HAS FAILED TO PRODUCE THE PARTIES, THEREBY HAS NOT DISCHARGED THE ONUS CAST U PON. KEEPING IN MIND THE TOTALITY OF CIRCUMSTANCES AS DISCUSSED ABOVE, IT WO ULD BE ADEQUATE TO MEET THE ENDS OF JUSTICE, IF THE ADDITION IS MADE ON THE PRO FIT ELEMENT OF THE BOGUS PURCHASES. IT IS FOUND THAT THE AO HAS RIGHTLY MAD E DISALLOWANCE IN THIS CASE @ 12.5 PERCENT OF THE BOGUS PURCHASES OF RS.1,67,28,6 20/- WHICH AMOUNTS TO RS.20,91,076/- WHICH ARE FOUND TO BE REASONABLE AND ENSURES THAT ONLY THE REAL INCOME GETS SUBJECTED TO TAX AND NOT A NOTIONAL INC OME OR AN EXAGGERATED AMOUNT DETERMINED IN ANY ARBITRARY MANNER. HENCE, THE GRO UNDS OF APPEAL RAISED ARE DISMISSED. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. I HAVE HEARD THE LD. D.R. AND THE LD. D.R. RELIED UPON THE DECISION OF THE TRIBUN AL, AHMEDABAD BENCH IN THE CASES OF SHWETAMBAR STEELS VS. ITO AHMEDABAD AND GA NESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRESENT CASE S HOW THAT ASSESSEE COULD NOT ITA NO.1609/M/2017 M/S. D & D METALLOYS CORPORATION 3 PRODUCE THE PARTIES FROM WHOM GOODS ARE STATED TO H AVE BEEN PURCHASED. THE SUPPLIERS WERE FOUND TO BE ENGAGED IN PROVIDING BOG US BILL WITHOUT ACTUAL DEALING OF GOODS. IN THIS REGARD, THE ASSESSEE HAS STATED THAT THEY HAD SUBMITTED QUANTITATIVE DETAILS OF STOCK WITH RESPECT OF THE S ALES WITH PURCHASES FROM THE PARTIES DURING THE ASSESSMENT PROCEEDINGS. THE ASSE SSEE HAS SUBMITTED THE DETAIL OF CORRESPONDING SALES IN RESPECT OF THE PUR CHASE FROM THE SAID PARTIES. AS MENTIONED ABOVE THE AO HAS NEVER DISPUTED OR EXA MINED THE ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY THE ASSESSEE WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED THE SALES RECEIPTS OF TH E ASSESSEE AS IT IS, THEREFORE, THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE ASSESSEE AND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE IS THE PURCHASES FROM THE PARTIES FROM WHOM BILLS HAVE BEEN TAKEN AND CHE QUES HAVE BEEN ISSUED TO THEM. PURCHASES ARE NOT IN DISPUTE BUT THE PARTIES FROM WHOM PURCHASE ARE SHOWN TO HAVE BEEN MADE ARE DISPUTED AND SUSPICIOUS . THE AO HAD MADE THE ADDITION AS SOME OF THE SUPPLIERS WERE DECLARED HAW ALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD REASON FOR MAKING FU RTHER INVESTIGATION BUT THE AO DID NOT MAKE ANY FURTHER INVESTIGATION AND M ERELY COMPLETED THE ASSESSMENT ON SUSPICION. ONCE THE ASSESSEE HAS BROU GHT ON RECORD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE, IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED THE PAYMENT DETAILS FROM THE BANK OF THE A SSESSEE AND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS A NY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED, THERE WAS NO DETAILED INVESTIGATION MADE BY THE AO HIMSELF. IT IS ALSO FOUND THAT THE PAYMENTS HAVE BEEN MADE BY ACCO UNT PAYEE CHEQUE WHICH ARE DULY REFLECTED IN THE BANK STATEMENT OF THE ASS ESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BOOK FROM THE SUPPLIERS. MERELY BECAUSE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION LETTERS WERE NOT FURNISHED, ONE CANNOT CONCLUDE THA T THE PURCHASES WERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISION OF NIKUNJ EXIMP ENTERPRISES VS. CIT 216 TAXMAN 171 (BOM). TO THIS E XTENT, I AM OF THE VIEW ITA NO.1609/M/2017 M/S. D & D METALLOYS CORPORATION 4 THAT IF THE ASSESSEE HAS FULFILLED ITS ONUS OF MAKI NG THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT C ANNOT BE PRESUMED THAT SUPPLIER WERE BOGUS SIMPLY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADDRESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN T HE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF SCRUTINY PROCEEDINGS. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THERE IS SUPPRESSIO N OF SALES. IT IS BASIC RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PURCHASE FROM SALES. ESTIMATION OF PROFIT RANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HO N'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH 356 ITR 4 51 (GUJ.). RESPECTFULLY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMAN 385 (GUJ), I DO NOT HAVE A NY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.08.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 29.08.2017. * 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.