ACIT, -32(1), MUMBAI V. M/S TIMES CONSTRUCTION CO., MUMBAI

ITA 1728/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3740 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 10-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAJAY J SHETHI
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) SMC BENCH, MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER ITA NO. 1728 /MUM/2020 ( A.Y. 20 1 1 - 12) ACIT 32 ( 1 ) ROOM NO. 702, 7 TH FLOOR KAUTILYA BHAVAN BANDRA KURLA COMPLEX BANDRA(E), MUMBAI - 400051 V. M/S. TIMES CONSTRUCTION COMPANY F - 121, EARTH RESIDENCY DEEP NARAYAN DUBEY MARG DAHISAR (E), MUMBAI - 400068 PAN: AAEFT3644F ( A PPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY SHRI SAJAY J. SHETHI DATE OF HEARING : 22 .09.2021 DATE OF PRONOUNCEMENT : 01 .10 .2021 O R D E R PER C. N. PRASAD (JM) 1. TH IS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 46 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 29.01.2020 FOR THE A.Y. 20 1 1 - 12 IN RESTRICTING THE DISALLOWANCE TO 12.5 % OF PURCHASES AS AGAINST THE ENTIRE PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSESSING OFFICER. 2 ITA NO. 1728/MUM/2020 (A.Y. 2011 - 12) M/S. TIMES CONSTRUCTION COMPANY 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL ENGINEERS AND CONTRACTORS , FILED RETURN OF INCOME ON 23.09.2011 FOR THE A.Y. 2011 - 12 DECLARING INCOME OF . 33,98,345 / - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. IN THE RE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THE PARTIES AS REFERRED IN ASSESSMENT ORDER. IN RESPONSE, ASSESSEE FURNISHED PURCHASE BILLS REFLECTING THE QUANTITIES AND ITEMS PURCHASED AS ALSO THE SALES BILLS REFLECTING THE QUANTITIES AND ITEMS SOLD, LEDGER ACCOUNT, COPY OF BANK STATEMENT EVIDENCING CHEQUE PAYMENT TO THE PARTIES AND SUBMITTED THAT THE PURCHASES MADE A RE GENUINE . ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES AS SUCH CONTENDED THAT AL L THE PURCHASES ARE GENUINE. 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GEN UINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE 3 ITA NO. 1728/MUM/2020 (A.Y. 2011 - 12) M/S. TIMES CONSTRUCTION COMPANY BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. ASSESSING OFFICER OBSERVED THAT THE NOTICES ISSUED U/S. 133(6) OF THE ACT TO THE PARTIES ARE RETURNED UNSERVED AND THE ASSESSEE HAS NOT PRODUCED THE PARTIES BEFORE THE ASSESSING OFFICER . IT IS THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE FAILED TO PRODUCE THE PARTIES IN SUPPORT OF ITS CLAIM THAT PUR CHASES ARE GENUINELY MADE FROM THE PARTIES. THEREFORE, ASSESSING OFFICER TREATED ENTIRE PURCHASES OF . 6,92,980 / - AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES AND VARIOUS SUBMISSIONS OF THE ASS ESSEE RESTRICTED THE DISALLOWANCE TO AN EXTENT OF 12.5% OF THE NON - GENUINE PURCHASES. 4. INSPITE OF ISSUE OF NOTICE NONE APPEARED NOR ANY ADJOURNMENT WAS SOUGHT. THEREFORE, I PROCEED TO DISPOSE OF THIS APPEAL ON HEARING LD.DR ON MERITS. 5. LD. DR VEHEMENTLY SUPPORTED THE O RDERS OF THE ASSESSING OFFICER. 6. HEARD LD.DR, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), I FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO T HE SUBMISSIONS OF THE ASSESSEE AND THE AVERM ENTS IN THE ASSESSMENT ORDER AND FOLLOWING 4 ITA NO. 1728/MUM/2020 (A.Y. 2011 - 12) M/S. TIMES CONSTRUCTION COMPANY DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P. SHETH [356 ITR 451] RESTRICTED THE ADDITION TO 12.5% OF THE NON - GENUINE PURCHASES. WHILE HOLDI NG SO, THE LD.CIT(A) OBSERVED AS UNDER: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE SUBMISSION MADE AND THE ASSESSMENT ORDER. MY CONSIDERED OPINION IS AS UNDER: I HAVE CONSIDERED THE AO'S CONTENTIONS AND THE REASONS FOR MAKING THE ADDITION. BASED ON INFORMATION FROM THE INVESTIGATION WING AND AS PER THE INFORMATION AVAILABLE FROM THE WEB SITE OF THE MAHARASHTRA SALES TAX DEPARTMENT THE PARTIES LISTED ARE ONE WHO H AVE ISSUED BOGUS PURCHASE BILLS. THE NOTICES U/S. 133(6) HAVE NOT BEEN SERVED / REPLIED. ASSESSEE DID NOT PRODUCE THE PARTIES. ONUS IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS. BASED ON THIS ASPECTS THE AO HAS MADE THE ADDITION TO INCOME IN RESPECT OF THE PURCHASES MADE FROM THE LISTED PARTIES OF RS. 6,92,980/ - THE AR HAS SUBMITTED THAT T HE MATERIAL WAS USED FOR EXECUTING WORK FOR MCGM AND THAT WITHOUT THE USE OF THE MATERIAL THE WORK COULD NOT HAVE BEEN COMPLETED. HE FURTHER STATED THAT THE WORK EXECUTION IS IN THE PRESENCE OF THE ENGINEERS OF MCGM AND MATERIAL IS RECEIVED IN THEIR PRESEN CE AND AFTER VERIFICATION THE MATERIAL IS CONSUMED AT THE SITES. UNDER SUCH CIRCUMSTANCES TO CONTEND THAT NO MATERIAL WAS RECEIVE AT ALL IS INCORRECT. HE FURTHER PLEADED THAT IF THE PARTY WAS NOT AVAILABLE THE LEGAL PROCEDURE SHOULD HAVE BEEN FOLLOWED TO T RACE THE PARTY. HE CITED DECISIONS WHEREIN THE ADDITION HAS BEEN DELETED IN ENTIRETY. HE HAS ALSO CONTENDED THAT THE PROFITS EMBEDDED IN SUCH TRANSACTIONS SHOULD BE CONSIDERED AND HAS CITED DECISIONS IN TINS CONTEXT. I HAVE CONSIDERED BOTH THE SUBMISSIONS. IT CANNOT BE DENIED THAT IF SALES ARE ACCEPTE D THEN A CORRESPONDING PURCHASE/ EXPENSE ARE A COROLLARY. UNDER SUCH CIRCUMSTANCES THE ESTIMATION OF THE PROFIT EMBEDDED IN THE TRANSACTION WOULD BE A FAIR BASIS TO DETERMINE THE INCOME. RELYING ON THE DECISION OF SIMITH P SHETH, I CONSIDER 12.5 % OF THE TRA NSACTION AMOUNT OF RS. 6,92,980/ - I. E. RS. 86, 623/ - AS THE INCOME TO BE CONSIDERED IN THESE TRANSACTIONS. THE APPELLANT GETS A RELIEF O F RS.6,06,357/ - . 7. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE 5 ITA NO. 1728/MUM/2020 (A.Y. 2011 - 12) M/S. TIMES CONSTRUCTION COMPANY LD.CIT(A) IN RESTRICTING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 12.5% OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 01 .10.2021 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. SD/ - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 01 / 10 / 2021 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM