ASHOKA BUILDERS, MUMBAI V. ADDL CIT RG 19(3), MUMBAI

ITA 1647/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9686 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase
• Section: 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 1647 /M/ 20 1 4 ASSESSMENT YEAR : 2010 - 11 ) M/S. ASHOKA BUILDERS 209 - 212, VEENA BEENA TURNER ROAD, BANDRA (W), MUMBAI PIN: 400050 VS. ADDL CIT RG 19 (3) PIRAMAL CHAMBER, MUMBAI PIN:400012 ./ ./ PAN/GIR NO. : AABFA 3175 B ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 09 . 02.2018 DATE OF PRONOUNCEMENT : 28 . 0 3 .201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 08 . 01 .201 4 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 30 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 10 - 11 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 GROUNDS OF APPEAL BEFORE THE INCOME TAX APPELATE 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVING FAILED TO APPRECIATE THAT THE APPELLANT HAD SUBSTANTIATED THE PURCHASE MADE BY WAY OF SUBSTANTIVE EVIDENCE SUCH A S INWARD RECORDS, DELIVERY, BARK PAYMENTS ETC. ASSESSEE BY: SHRI HARI S. RAHEJA (AR) DEPARTMENT BY: SHRI SAURABH DESHPANDE (DR) ITA. NO.1647/M/2014 A.Y.2010 - 11 2 2. THE CIT(A) ERRED IN NOT GIVING CREDENCE TO THE FACTS THAT SOME SUMMONS TO THE PARTIES WERE RETURNED AS 'UNCLAIMED' THEREBY JUSTIFYING THE EXISTENCE OF THE PARTY. 3. THE CIT(A) FAILED TO GIVE WEIGHTAGE TO TH E FACT THAT WHEN THE VERY SAME PARTIES HAVE DECLARED TO THE VAT AUTHORITIES THAT THEY HAVE GIVEN ACCOMMODATION BILLS WHICH ALSO BEAR THEIR RESPECTIVE VAT AND CST REGISTRATION NUMBER, THEIR EXISTENCE CANNOT BE DENIED AND HENCE THEIR REFUSAL TO ACCEPT SUMMON S PROVES THEIR CLANDESTINE ACT OF DOING GENUINE BUSINESS BUT DEFRAUDING THE REVENUE BY FOOLING THE INCOME - TAX DEPARTMENT AND ALSO POCKETING THE. VAT RECOVERED FROM THE APPELLANT AND MANY OTHER GENUINE PURCHASERS. 4. THE APPELLANT SUBMITS THAT THE ADDITION MADE BY THE ASSESSING OFFICER REQUIRES TO BE DELETED SINCE THE ASSESSING OFFICER HAS FAILED TO REBUT THE EVIDENCE SUCH AS DELIVERY NOTE HEARING THE DETAILS OF TRUCK NUMBER, INWARD REGISTER, PROOF OF PAYMENT, ETC. PRODUCED BEFORE HIM WITHOUT MAKING ANY INDE PENDENT ENQUIRY BASING THE ADDITION ONLY ON A REPORT FROM THE VAT AUTHORITIES IN AN EXCEL SHEET FORMAT WITHOUT ',LING FOR THE STATEMENTS OF THE DEPONENTS AND WITHOUT GIVING THE APPELLANT A COPY OF THE SAME OR AFFORDING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE SAID PARTIES. 5. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT ADDITION IN RESPECT OF RS. 6,45,437./ - BEING PURCHASES OF R&1,82,6 - 37 FROM N - 1/S. AJAY STONE, AND OF RS. 4,62,800/ - BEING PURCHASES MADE FROM M/S. TOP BRICK AND SAND SUPPLIERS PERTAIN TO THE ASST. YEAR 2009 - 10 AND HENCE CANNOT BE ADDED IN THIS YEAR ESPECIALLY SINCE THE SAME HAVE NOW ALSO BEEN ADDED IN ASST. YEAR 2009 - 10 THUS AMOUNTING TO DOUBLE ADDITION. 6. WITHOUT PREJUDICE THE APPELLANT PRAYS THAT THE PURCHASES ARE GENUINE AND HENCE IN THE ALTERNATIVE WITHOUT CONCEDING TO THE SAME, AN ADHOC AMOUNT MAY BE DISALLOWED AS HAS BEEN DONE IN OTHER CASES OF SIMILAR NATURE. 7. THE APPELLANT CRAVES LEAVE TO, ADD TO, ALTER, MODIFY, DE LETE AND/OR CHANGE ALL OR ANY ABOVE GROUNDS OR BEFORE THE HEARING OF THE APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 11.10.2010 DECLARING TOTAL INCOME TO THE TUNE OF ITA. NO.1647/M/2014 A.Y.2010 - 11 3 RS.13,58,61,222/ - ALONGWITH AUDITED STATEMENT OF ACCOUNT AND TAX AUDIT REPORT IN FORM NO. 3CB & 3CD. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE S U/S 143(2) AND NOTICE U/S 142(1) OF THE I.T. ACT, 1961 WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS A FIRM ENGAG ED IN THE BUSINESS OF DEVELOPERS AND CONTRACTORS . AS PER THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT MAHARASHTRA GOVERNMENT, THE ASSESSEE HAS TAKEN HAWALA ENTRIES FROM VARIOUS PARTIES FOR BOGUS PURCHASE. THE ASSESSEE WAS FOUND TO PURCHASE THE MA TERIAL FROM SEVEN PARTIES NAMELY AJAY STONE, TOP BRICKS & SAND SUPPLIERS, MOKSH TRADING COMPANY, MANSHI TRADERS, RUM G T ENTERPRISES, KARNI GRANIMARMO PVT. LTD. & ALANKAR STEELS TOTAL TO THE TUNE OF RS.57,96,338/ - THE NOTICE S U/S 133(6) OF THE ACT WERE ISS UED WHICH WERE NOT SERVED UPON THE PARTIES . THEREAFTER, THE NOTICE WAS GIVEN TO THE ASSESSEE AND AFTER THE RECEIPT OF THE REPLY, TH E ASSESSING OFFICER ADDED THE BOGUS PURCHASE TO THE TUNE OF RS.57,96,338/ - IN THE INCOME OF THE ASSESSEE . THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 TO 4: - 4 . ALL THE ISSUES ARE IN CONNECTION WITH THE ADDITION OF BOGUS PURCHASE IN THE INCOME OF THE ASSESSEE. WE HAVE HEARD THE AR GUMENT AND ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE ASSESSING OFFICER RECEIVED THE INFORMATION FROM SALES ITA. NO.1647/M/2014 A.Y.2010 - 11 4 TAX DE PARTMENT MAHARASHTRA GOVERNMENT TO THE EFFECT THAT THE ASSESSEE HAS TAKEN THE HAWALA ENTRI ES FROM VARIOUS PARTIES INDULGING IN ISSUING OF BOGUS PURCHASE BILLS WITHOUT ACTUALLY DOING ANY SALE/PURCHASE , THEREAFTER, ON RECEI PT OF THE INFORMATION, NOTICE S U/S 133(6) OF THE ACT WERE ISSUED TO THE VARIOUS PARTIES. THEREAFTER, THE NOTICE WAS GIVEN TO THE ASSESSEE . IT WAS IN CUMBENT UPON THE ASSESSEE TO P ROVE THE PURCHASE AS GENUINE . THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE PURCHASE , THEREFORE, THE ASSESSING OFFICER ADDED THE BOGUS PURCHASE TO THE TUNE OF RS. 57,96,338/ - TO THE INCOME OF THE AS SESSEE WHICH WAS CONFIRMED BY THE CIT(A) IN APPEAL. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT AND BILLS ETC., BUT THE SAME WERE NOT CONSIDERED , T HEREFORE, THE PURCHASE WAS NOT BOGUS HENCE THE ADDI TION IS LIABLE TO BE DELETED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS ARGUED THAT THE ASSESSEE FA ILED TO PROVE THE PURCHASE BEFORE THE AO . THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE AO HENCE APPEAL OF THE ASSESSEE IS LIABLE TO BE DISMISSED . IT IS A CASE OF BOGUS PURCHASE IN WHICH THE ADDITION WAS MADE ON ACCOUNT OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA GOVERNMENT. SUBSEQUENTLY, THE NOTICES WERE GIVEN TO THE P ARTIES U/S 133(6) OF THE ACT WHICH WERE NOT SERVED. T HE NOTICE WAS GIVEN TO THE ASSESSEE WHO FAILED TO PROVE THE GENUINE NESS OF THE TRANSACTION. ANYHOW SALE IS NOT DISPUTED AND BOOKS OF ACCOUNT ARE NOT REJECTED. THE MATTER WAS CONTROVERSY HAS BEEN ITA. NO.1647/M/2014 A.Y.2010 - 11 5 ADJUDICA TED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH (2013) 38 TAXMANN.COM 385 (GUJ) IN WHICH THE PROFIT RATIO @ 12.5% WAS TAKEN INTO CONSIDERATION ON THE BASIS OF THE GP OF THE ASSESSEE. BY FOLLOWING THE PRINCIPLE LAID DOWN BY THE HONBLE GUJARA T HIGH COURT IN THE CASE SIMIT P SHETH (2013) 38 TAXMANN.COM 385 (GUJ) WE RESTRICTED THE ADDITION OF THE BOGUS PURCHASE TO THE EXTENT OF 12.5% . ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ISSUE NO 5: - 5. UNDER THIS ISSUE THE CONTENTIONS OF T HE ASSESSEE IS THAT THE ADDITION IN RESPECT OF RS.645437/ - BEING PURCHASE OF RS.182637/ - FROM M/S. AJAY STONE AND OF RS.462800/ - BEING PURCHASE MADE FROM M/S. TOP BRICK AND SAND SUPPLIERS PERTAINS TO THE A.Y. 2009 - 10 WHICH IS NOT LIABLE TO BE INCLUDED IN THIS YEAR I.E. A.Y.2010 - 11. UNDOUBTEDLY, IN THIS REGARD THE CONTENTION RAISED BY THE ASSESSEE NOWHERE DISCUSSED AND DECIDED WHILE FINALIZING THE ASSESSMENT FOR THE A.Y. 2010 - 11. THE ASSESSEE HAS PLACED RELIANCE UPON THE COPY OF BILL OF THE AJAY STONE WHICH LIES AT PAGE 37 TO 40 OF THE PAPER BOOK AND LEDGER ACCOUNT OF THE AJAY STONE WHICH LIES AT PAGE 1 OF THE PAPER BOOK. THE ASSESSEE ALSO PLACED RELIANCE UPON THE COPY OF BILLS OF M/S. TOP BRICK AND SAND SUPPLIERS WHICH LIES AT PAGE 41 TO 86 OF THE PAPER BOOK AND LEDGER ACCOUNT WHICH LIES AT PAGE 2 OF THE PAPER BOOK. THE ASSESSING OFFICER IS HEREBY DIRECTED TO EXAMINE THIS FACT IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE ASSESSEE B Y GIVING AN OPPORTUNITY OF ITA. NO.1647/M/2014 A.Y.2010 - 11 6 BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY THAT IF THIS ADDITION HAS ALREADY BEEN ADDED THE ASSESSMENT YEAR OF 2009 - 10 THEN THE SAME IS NOT LIABLE TO BE THE PART OF THE TOTAL AMOUNT TO THE TUNE OF RS.57 , 96 , 338/ - . THE SAID ADDIT ION WOULD BE DOUBLE ADDITION. THE SAID AMOUNT AFTER VERIFICATION WOULD BE LIABLE TO BE EXCLUDED FROM THE AMOUNT OF RS.57 , 96 , 338/ - FOR THE PURPOSE OF DECIDING THE PROFIT RATIO @ 12.5% WHICH HAS BEEN ADJUDICATED AT THE TIME OF ADJUDICATION UPON THE ISSUE NO. 1 TO 4. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO 6: - 6. UNDER THIS ISSUE THE ASSESSEE HAS TAKEN THE PLEA OF DELETION OF THE ADHOC DISALLOWANCE BUT THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED WHILE DECID ING THE ISSUE NOS. 1 TO 5 ABOVE, THEREFORE, WE DECIDE THIS ISSUE AGAINST THE ASSESSEE IN FAVOUR OF THE REVENUE. ISSUE NO. 7: - 7. ISSUE NO. 7 IS FORMAL IN NATURE WHICH NOWHERE REQUIRED FOR ADJUDICATION. 8 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ITA. NO.1647/M/2014 A.Y.2010 - 11 7 ORDER P RONOUNCED IN THE OPEN COURT ON 28. 0 3 . 2018 . SD/ - SD/ - ( G. S. PANNU ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 28. 03 . 2018 V.P. SINGH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI