DCIT 10(2)(2), MUMBAI V. MICROPOINT COMPUTER P.LTD, MUMBAI

ITA 1622/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9868 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: C S ANANTHAN LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO 1622/MUM/2017 MICROPOINT COMPUTER PRIVATE LIMITED ASSESSMENT YEAR 2009-10 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. 1622/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX 10(2)(2) R.NO.209,2 ND FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 / VS. MICROPOINT COMPUTER PRIVATE LIMITED 17/18, NAVKETAN INDUSTRIAL ESTATE OPP. ONIDA (EAST) MUMBAI -400 060 ./ ./PAN/GIR NO. AACCM-8590-Q ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : C.S.ANANTHAN, LD. AR REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 24/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-17 ITA NO 1622/MUM/2017 MICROPOINT COMPUTER PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 [CIT(A)], MUMBAI DATED 28/12/2016 QUA RELIEF GRANTED TO THE ASSESSEE ON ACCOUNT OF CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE DEALING IN COMPUTER, PERIPHERALS, AMC, FACILITY MANAGEMENT ETC ., WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 12/08/2014 AT RS.1,74,76,290/- AFTER ADDITION OF BOGUS PURCHASES FOR RS.66,72,688/-. THE ORIGINAL RETURN WAS E-FILED AT RS.1,07,93,500/- ON 29/09/2009 WHICH WAS ASSESSED I N SCRUTINY ASSESSMENT ON 16/11/2011 U/S 143(3) AT RS.1,08,03,600/-. 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. 66,72,688/- FROM TWO PARTIES. CONSEQUENTLY, NOT ICE U/S 148 DATED 08/01/2014 WAS ISSUED WHICH WAS FOLLOWED BY STATUTO RY NOTICES U/S 143(2) / 142(1). 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, THE ASSES SEE WAS ASKED TO SUPPLY THE REQUISITE INFORMATION AND PRODUCE THE PA RTIES FOR CONFIRMATION OF THE TRANSACTIONS. HOWEVER, THE ASSESSEE EXPRESSE D INABILITY TO PRODUCE THE PARTIES DUE TO LAPSE OF CONSIDERABLE PE RIOD OF TIME BUT CONTENDED THAT THE PURCHASES WERE GENUINE SINCE MAT ERIAL PURCHASED WAS USED IN THE SALE OF ASSEMBLED COMPUTERS AND THE PAYMENTS WERE THOUGH BANKING CHANNELS. THE ASSESSEE ALSO PRODUCED PURCHASE INVOICES, LEDGER EXTRACTS AND BANK STATEMENTS TO SU PPORT THE PURCHASE TRANSACTIONS. ITA NO 1622/MUM/2017 MICROPOINT COMPUTER PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 2.4 HOWEVER, THE PHYSICAL INQUIRY CONDUCTED BY THE INSPECTOR REVEALED THAT NONE OF THE PARTY EXISTED AT THE GIVEN ADDRESS AND IT WAS NOTICED THAT THE ASSESSEE COULD NOT PRODUCE DELIVERY CHALLA NS WHICH LED THE LD. AO TO DISBELIEVE THE SAID TRANSACTIONS AND CONSEQUE NTLY, ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS BOGUS PURCHASES. 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 WITH CREDIT FOR DECLARED GROSS PROFIT. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF TRANSACTION AND THE PHYSICAL INQUIR Y REVEALED THAT THE SUPPLIERS WERE NON-EXISTENT. FURTHER, THE ASSESSEE COULD NOT ESTABLISH ACTUAL DELIVERY OF MATERIAL BEFORE LD. AO AND THERE FORE, THE FULL ADDITIONS WERE JUSTIFIED. IT WAS FURTHER CONTENDED THAT THE O NUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASSESSEE AND MERE PA YMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SA ME AND THEREFORE, LD. CIT(A) ERRED IN GRANTING RELIEF TO THE ASSESSEE. 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% WITH CRED IT OF DECLARED GP , WHICH IS ACCEPTED BY THE ASSESSEE TO MAKE UP FOR TH E SHORTCOMINGS AND THEREFORE, THE SAME WAS QUITE FAIR AND REASONABLE. ITA NO 1622/MUM/2017 MICROPOINT COMPUTER PRIVATE LIMITED ASSESSMENT YEAR 2009-10 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 / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSE ES NATURE OF BUSINESS. THE SALES TURNOVER ACHIEVED BY THE ASSES SEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROU GH BANKING CHANNELS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATIONS FROM ANY OF THE ALLEGED BOGUS SUPPLIERS AND FURTHER NONE OF THE PARTIES WAS FOUND AT THE GIVEN ADDRESSES, WH ICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE ASSESSEE COULD NOT P RODUCE ANY EVIDENCE TO SUBSTANTIATE ACTUAL DELIVERY OF MATERIA L. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDI NG 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 1622/MUM/2017 MICROPOINT COMPUTER PRIVATE LIMITED ASSESSMENT YEAR 2009-10 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