ITO 27(2)(4), NAVI MUMBAI V. NAYAN K SHUKLA, MUMBAI

ITA 1717/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9187 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP LD
• Keywords: Bogus purchase; Unexplained expenditure; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.1717/MUM/2017 NAYAN K.SHUKLA ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1717/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER WARD 27(2)(4) 4 TH FLOOR, 418, TOWER NO. 6 VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI 400 703 / VS. NAYAN K. SHUKLA SHOP NO. 11, RAJ RAJESHWARI APARTMENTS NARAYAN NAGAR, LBS MARG GHATKOPAR (W) MUMBAI-400 086 '# ./ ./ PAN/GIR NO.AARPS-9193-D ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : POOJA SWAROOP, LD. DR ASSESSEE BY : NONE / DATE OF HEARING : 25/09/2017 / DATE OF PRONOUNCEMENT : 04 /10/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010-11 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-25 2 ITA NO.1717/MUM/2017 NAYAN K.SHUKLA ASSESSMENT YEAR 2010-11 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)25/IT-276/14-15 & IT-277/14/-15 DATED 27/12/2016 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. THE ASSESSMENT WAS FRAMED BY LD. INCOME TAX OFFICER, WARD 22(1)(4) [AO] U/S 143(3) READ WITH SECTION 147 ON 2 2/03/2014. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE AS PER ORDER S HEET NOTING. HENCE, WE PROCEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MAT ERIAL ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF CABLE WIRE AND SWITCHES UNDER PROPRIETORSHIP CONCERN NAMELY NEW TECH SALES CORPORATION WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 22/03/2014 WHERE THE INCOME OF THE ASSESSEE WAS DET ERMINED AT RS.1,08,49,626/- AFTER CERTAIN ADDITIONS ON ACCOUNT OF PURCHASES FOR RS.97,25,146/-. THE ORIGINAL RETURN WAS FILED ON 25/09/2010 AT RS.11,24,480/- WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION OF CERTAIN BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.4,87,84,572/- FROM THIRTEEN PARTIES. CONSEQUENTLY, NOTICE U/S 148 DATED 15/02/2013 WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY STATUT ORY NOTICES U/S 143(2) AND 142(1). 3 ITA NO.1717/MUM/2017 NAYAN K.SHUKLA ASSESSMENT YEAR 2010-11 2.3 NOTICES SENT U/S 133(6) TO THESE PARTIES TO CON FIRM THE TRANSACTIONS REMAINED UN-SERVED WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE WAS DIRECTED TO PRODUCE THE SAID PARTIES ALONG WITH SUPPORTING DOCUMENTS. THE ASSESSEE CONTENDED THAT MATERIAL WAS PURCHASED IN THE NORMAL COURSE OF BUSINESS WHICH HAS BEEN FURTHER SOLD WHICH IS DU LY SUPPORTED BY INVOICES AND STOCK REGISTER AND PAYMENTS WERE THROUGH BANKIN G CHANNELS AND THEREFORE, THE PURCHASES WERE GENUINE. HOWEVER, LD. AO, NOT CONVINCED, CONCLUDED THAT THE ASSESSEE COULD NOT SUBSTANTIATE DELIVERY OF MATERIAL AND ALSO COULD NOT DISCHARGE OF ONUS OF PROVING THE PUR CHASES TRANSACTIONS. FINALLY, LD. AO WORKED OUR PEAK OF CREDITS OF CURRE NT YEAR WHICH CAME TO RS.1,34,39,372/- AGAINST WHICH THE ASSESSEE WAS ENT ITLED TO GET BENEFIT OF TELESCOPING TO THE EXTENT OF RS.37,14,226/-, BEING ADDITION MAD E IN IMMEDIATELY PRECEDING AY. RESULTANTLY, NET AMOUNT O F RS.97,25,146/- WAS TREATED AS UNEXPLAINED EXPENDITURE AND ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/12/2 016 WHICH IS COMBINED ORDER FOR AY 2009-10 & 2010-11. THE LD. CI T(A) NOTED THAT CORRESPONDING SALES COULD NOT BE POSSIBLE WITHOUT M AKING ANY PURCHASES AND THEREFORE, ESTIMATION OF SUPPRESSED PROFIT EMBE DDED IN THE TRANSACTIONS WAS REQUIRED TO BE MADE AS PER VARIOUS JUDICIAL PRONOUNCEMENTS. FINALLY, LD. CIT(A) ESTIMATED THE S AME @12.5% OF BOGUS 4 ITA NO.1717/MUM/2017 NAYAN K.SHUKLA ASSESSMENT YEAR 2010-11 PURCHASES WHICH CAME TO RS.60,98,071/- AND DELETED THE BALANCE ADDITIONS. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE STAND OF LD. AO AND CONTENDED THAT THE ASSESSEE COU LD NOT SUBSTANTIATE THE DELIVERY OF MATERIAL IN ANY MANNER AND MERE POS SESSION OF PURCHASE INVOICES OR PAYMENT THROUGH BANKING CHANNELS, BY IT SELF, WAS NOT CONCLUSIVE TO ESTABLISH THE CLAIM OF THE ASSESSEE. OUR ATTENTION IS FURTHER DRAWN TO THE FACT THAT ALL NOTICES SENT U/S 133(6) WERE RETURNED BACK UN- SERVED AND THEREFORE, LD. AO CORRECTLY ASCERTAINED THE AMOUNT OF DISALLOWANCE TO BE MADE IN THIS REGARD. 5. WE HAVE CAREFULLY HEARD THE SAME AND PERUSED REL EVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE KEEPING IN VIEW THE ASSESSEES NAT URE OF BUSINESS WHICH WAS MATERIAL INTENSIVE AND COULD NOT BE CARRIED OUT WITHOUT PURCHASE OF MATERIAL. THE SALES TURNOVER ACHIEVED BY THE ASSES SEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROU GH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO PROVE ACTUAL DELI VERY OF MATERIAL OR FURNISH ANY DETAILS OF TRANSPORTATION AS REQUIRED B Y LD. AO AND ALL NOTICES SENT U/S 133(6) REMAINED UN-SERVED , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST 5 ITA NO.1717/MUM/2017 NAYAN K.SHUKLA ASSESSMENT YEAR 2010-11 POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME TO BE QUITE FAIR AND RE ASONABLE, WE FIND NO REASON TO INTERFERE WITH THE SAME AND THEREFORE, NO HESITATION IN DISMISSING REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.10.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. &0 , 0 , / DR, ITAT, MUMBAI 6. 12 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI