ASST CIT CIR 3, KALYAN V. SHREE SAI ENTERPRISES, MUMBAI

ITA 1754/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9145 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V G GINDE
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries; Retraction
• Section: 143(3); 133(6)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM & SHRI SHAKTIJIT DEY, JM ITA NO.1754/MUM/2017 : ASST.YEAR 2010-2011 ASST.COMMISSIONER OF INCOME - TAX CIRCLE 3 KALYAN (W). / VS. M/S.SHREE SAI ENTERPRISES OM SAI BUILDING, NO.5, SHIP NO.2 BEHIND HEENA GARDEN PIPE LINE ROAD, GANDHARE KALYAN (WEST) 421 301. PAN : AAZFS9709B. ( / APPELLANT) ( / RESPONDENT) APPELLANT BY : SHRI PURUSHOTTAM KUMAR RESPONDENT BY : SHRI V.G.GINDE / DATE OF HEARING : 24.08.2017 / DATE OF PRONOUNCEMENT : 03.10.2017 / O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 29.12.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-2011. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES FROM RS. 2,05,72,590/- TO RS.20,57,260/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN GRANTING ABOVE RELIEF TO THE ASSESSEE FIRM DESPITE THE FACT THAT THE PARTNERS OF THE ASSESSEE FIRM, THEMSELVES OFFERED THE SAID AMOUNT FOR TAXATION IN THE CURRENT A.Y. 2010-11 VIDE THEIR LETTER DATED 20.03.2013 IN RESPONSE TO SHOW CAUSE NOTICE DATED 11.03.2013 AS THE SAID ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 2 DEALERS WERE ENGAGED IN THE ACTIVITIES OF PROVIDING ACCOMMODATION ENTRIES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING ABOVE RELIEF WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FIRM, ON THE SIMILAR ISSUE, HAS REVISED ITS RETURN OF INCOME FOR THE A.Y. 2011-12 BY INCLUDING THE INCOME OF RS. 1,72,42,968/- ON ACCOUNT OF PURCHASES MADE FROM THE SAME BOGUS HAWALA DEALERS AND PAID TAXES OF RS. 67,14710/- THEREON. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE ASSESSEE CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY GROUND OF APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE NATURE OF BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 25/09/2010 DECLARING TOTAL INCOME OF RS.24,79,080/-. THE RETURN WAS PROCESSED U/S. 143(1). FROM THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT MUMBAI, IT WAS REVEALED BY THE A.O. THAT THE ASSESSEE HAS MADE THE ALLEGED PURCHASES WORTH RS.2,05,72,590/- FROM THE HAWALA OPERATORS. THEREFORE, THE CASE OF THE ASSESSEE WAS SELECTED FOR THE SCRUTINY U/S 143(3) OF THE INCOME TAX ACT, 1961. THE A.O. HAD ASSESSED THE INCOME OF APPELLANT AT RS.2,30,51,670/- BY MAKING ADDITION OF RS.2,05,72,590/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES FROM ALLEGED HAWALA DEALERS. THE DETAILS OF PURCHASES MADE FROM THE VARIOUS HAWALA DEALERS ARE AS UNDER:- ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 3 SI. NO. NAME OF THE PARTIES F.Y. 2009 - 10 A.Y.2010-11 IN RS. 1 AMBIKA TRADE IMPEX 9,04,134 / - 2 ANKIT ENTERPRISES 16,53,332 / - 3 ANKUR SALES CORPORATION 8,01,689 / - 4 BHUMI SALES CORPORATION 8,09,351 / - 5 KOHINOOR CORPORATION 3.59.749 / - 6 MAGNUM ENTERPRISES 4,71,718 / - 7 MAHAVIR ENTERPRISES 6,94,098/ - 8 MARSHAL ENTERPRISES 8,33,915 / - 9. MAYANK ENTERPRISES 8,27,256 / - 10. MEREDIAN SALES AGENCY PVT. LTD. 14,12,720 / - 11. MOKSH TRADING CORPORATION 6,02,711 / - 12, M R CORPORATION 11,23,179 / - 13. NAVPAD EXPORTS PVT.LTD. 21,69,978 / - 14. PRATMESH IMPEX PVT. LTD. 19,69,550 / - 15. RAMDEV TRADING 2,32,968 / - 16. SKAND INDUSTRIES 7,03,742 / - 17. SMARTLINK TRADEX PVT. LTD. 19,91,742 / - ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 4 18. STHAPNA TRADE IMPEX PVT. LTD. 19,66,801 / - 19. VAISHALI ENTERPRISES 10,43,957 / - 4. THE ADDITIONS WERE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT I) INFORMATION RECEIVED FROM SALES TAX DEPARTMENT BY WAY OF STATEMENT / AFFIDAVIT STATING THAT THE IMPUGNED SUPPLIERS ARE SUSPICIOUS DEALERS. II) THE ASSESSEE WAS GIVEN OPPORTUNITY TO PRODUCE THE SUPPLIERS BUT THE APPELLANT COULD NOT PRODUCE THE SUPPLIERS. III) THE ASSESSEE COULD NOT FILE PART OF THE INFORMATION REQUIRED BY THE A.O. IN THE FORM OF TRANSPORT RECEIPTS SUCH AS VEHICLE NO., TYPE OF VEHICLE, TRANSPORT RECEIPTS, OCTROI RECEIPT, ETC. THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE IMPUGNED PURCHASES. 5. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO NOTED THAT IN RESPONSE TO ASSESSING OFFICERS SHOW CAUSE NOTICE TO PROVE THE GENUINENESS OF THE PURCHASES THE ASSESSEE HAS VIDE LETTER DATED 20.03.2013 STATED AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LETTERS U/S 133(6) WAS ISSUED BY YOUR HONOUR CALLING FOR INFORMATION FROM CREDITORS. MAJORITY OF THE SAID LETTERS U/S 133(6) LETTERS WERE EITHER UNSERVED OR WERE SERVED BUT NO RESPONSE WAS RECEIVED BY YOUR HONOUR FROM THEM. ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 5 AS THE SAID MATTER WAS BROUGHT TO OUR NOTICE, WE TRIED TO CONTACT THE CREDITORS BUT EXCEPT FOR GIVING CONFIRMATIONS THEY WERE NO READY TO FURNISH ANY OTHER DETAILS. ON INQUIRY WITH OUR BROKER THROUGH WHOM THE GOODS WERE PURCHASED WE HAVE BEEN APPRISED THAT THE SAID PERSONS WERE ONLY GIVING ACCOMMODATIONS BILLS AND THE SAID PERSONS HAVE AGREED BEFORE THE SALES TAX AUTHORITIES THAT THEY ARE HAWALA DEALERS. ON GOING THROUGH THE SITE OF MAHAVAT OF MAHARASHTRA GOVERNMENT WE HAVE ALSO SEEN THAT DEALERS MENTIONED IN YOUR LETTER FROM SR. NO. 1 TO 19 ARE HAWALA DEALERS. WE ALL PARTNERS OF THE FIRM HAD A MEETING AMONGST US AND WERE PERPLEXED TO SEE THAT WE HAVE BEEN CHEATED BY BROKER THROUGH WHOM WE HAD PURCHASED THE GOODS. IT IS ALSO A FACT THAT IF THE SAID MATERIAL WOULD NOT HAVE BEEN RECEIVED AT THE SITE WE COULD NOT HAVE BEEN ABLE TO COMPLETE THE CONSTRUCTION OF BUILDINGS AS THE QUANTUM OF THE MATERIAL IS VERY LARGE. THIS PURCHASES FROM THE SAID DEALER HAVE ALSO BEEN CARRIED OUT IN NEXT FINANCIAL YEAR I.E. Y.E. 31.03.2011 (A.Y. 2011-12). ON DISCUSSION OF THE ABOVE SITUATION, WE PARTNERS OF THE FIRM HAVE DECIDE TO PURCHASE PEACE AND WE DO WANT TO GO IN FOR UNNECESSARY LITIGATIONS. WE ARE READY TO PAY TAX ON THE PURCHASES MADE BY US FROM SUCH HAWALA DEALERS. WE ARE ALSO IN THE PROCESS OF REVISING OUR RETURN OF INCOME FOR THE A.Y. 2011- 12, WERE IN ALSO THE PURCHASES FROM THE SAID DEALERS ARE CARRIED OUT. 6. FROM THE ABOVE IT IS EVIDENT THAT THE DISALLOWANCES ADDITION FOR BOGUS PURCHASES WAS MADE BY THE ASSESSING OFFICER NOT ONLY ON THE BASIS OF ENQUIRY CONDUCTED BY HIM BUT ALSO ON THE BASIS OF ACCEPTANCE OF THE BOGUS ACTIVITY INDULGED BY THE ASSESSEE. THERE IS NO RETRACTION WHATSOEVER ON RECORD. ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 6 7. AGAINST THE ABOVE ORDER ASSESSEE APPEALED BEFORE THE LEARNED CIT(A). LD CIT(A) CONSPICUOUSLY DID NOT MENTION ANYTHING ABOUT THE ASSESSEE'S ACCEPTANCE BEFORE THE ASSESSING OFFICER REGARDING ASSESSEES INDULGING IN BOGUS PURCHASE ACTIVITY AND CONCEDING TO PAY TAX THEIR UPON. WITHOUT MENTIONING THIS ASPECT LEARNED CIT(A) NOTED THE CONTENTIONS OF THE ASSESSEE AND LACONICALLY CONCLUDED AS UNDER:- 7.2 FURTHER, THE APPELLANT HAS FILED /PRODUCED BEFORE THE A.O. AND THE UNDERSIGNED, COPIES OF INVOICES ISSUED BY SUPPLIER OF VARIOUS DATES, BANK STATEMENT SHOWING PAYMENT BY BANK CHEQUES TO THE SUPPLIERS. IN VIEW OF THE ABOVE FACTS, THE ADDITION IS NOT JUSTIFIED AS PER THE RATIO LAID DOWN IN THE FOLLOWING DECISIONS: I. CIT VS. NIKUNJ EXIMP ENTEPRISES PVT. LTD. (2015) 372 1TR 619 (BOM) II. DCIT VS. RAJIV G. KALATHIL (2015) 67 SOT 0052 (MUM) III. WESTERN EXTRUSION INDUSTRIES, ITA NO. 6579/MUM/2010, ORDER DATED 13/11/2013, IV. ACIT 25(2), MUMBAI VS. RAMILA PRAVIN SHAH, MUMBAI- ITA NO.5246/MUM/2013. V. ITO -25(3)(2), MUMBAI VS. SHRI DEEPAK POPATLAL GALA, MUMBAI - ITA NO.5920/MUM/2013 AND ITA NO. 6203/MUM/2013. (A.Y. 2010-11) VI. RAMESH KUMAR & CO., MUMBAI VS. ACIT 21(1), MUMBAI- ITA NO. 2959/MUM/2014 (A.Y.2010-11) VII. SHRI GANPATRAJ A. SANGHAVI, MUMBAI VS. ACIT 15(3), MUMBAI - ITA NO.2826/MUM/2013 (A.Y. 2009-10) VIII. RAJESH P.SONI 100 TTJ 892 (AND) PARA 6.32 PAGE 45 OF CIT(A)'S ORDER). ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 7 THE A.O. HAD NOT BROUGHT ON RECORD ANY EVIDENCE SHOWING THAT THE PAYMENTS MADE BY BANK CHEQUES BY THE APPELLANT TO THE SUPPLIERS WERE IMMEDIATELY WITHDRAWN BY THE SUPPLIERS AND REFUNDED BACK THE SAME TO THE APPELLANT. IT HAS ALSO BEEN NOTICED THAT WITHOUT THE IMPUGNED PURCHASES THE CONSTRUCTION WORK CARRIED OUT BY THE APPELLANT WOULD NOT BEEN POSSIBLE. THEREFORE THE ADDITION MADE BY THE A.O. ON ACCOUNT OF IMPUGNED PURCHASES IS NOT JUSTIFIED, HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, IT IS VERY MUCH LIKELY THAT THE APPELLANT HAD RECEIVED SOME BENEFIT ON ACCOUNT OF IMPUGNED PURCHASES FROM GRAY MARKET. 7.3 THE CONTENTION OF THE APPELLANT THAT HE HAD NOT RECEIVED ANY BENEFIT ON ACCOUNT OF IMPUGNED PURCHASES FROM GRAY MARKET CANNOT BE ACCEPTED. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE UNDER APPEAL, THE SAID BENEFIT HAS BEEN ESTIMATED @ 10% OF THE HAWALA PURCHASES OF RS.2,05,72,590/- FOR A.Y. 2010-11. THEREFORE THE ADDITIONS MADE BY THE A.O. ARE CONFIRMED TO THE EXTENT OF RS.20,57,260/- FOR A.Y. 2010-11. THE APPELLANT GETS RELIEF OF RS.1,85,15,330/- FOR A.Y. 2010-11. THE A.O. IS DIRECTED ACCORDINGLY. THE ISSUE OF PENALTY NEEDS TO BE CONTESTED BY THE APPELLANT SEPARATELY AS THIS APPEAL IS ONLY AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961. 8. AGAINST ABOVE ORDER OF LEARNED CIT(A) REVENUE IS IN APPEAL BEFORE THE ITAT. 9. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS, ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 8 ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELATING TO REOPENING REMAINS UN-ASSAILED. IN SUCH FACTUAL SCENARIO THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO IT IS AMPLY CLEAR THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS ARE BOGUS AND NON-EXISTENT. ASSESSEE HAS HIMSELF AGREED BEFORE THE ASSESSING OFFICER AND SUBMITTED A LETTER THAT IT IS INDULGING IN BOGUS ACTIVITY AND HAS AGREED TO PAY TAX THEREUPON. AS CONTENDED BY THE REVENUE IN THE GROUNDS OF APPEAL ABOVE SIMILAR CONCESSION WAS GIVEN FOR ASSESSMENT YEAR 2011-2012 ALSO AND ASSESSEE HAS PAID TAX FOR THAT YEAR ALSO. 10. IN SUCH CIRCUMSTANCES WE FIND THAT IT WAS INCUMBENT UPON THE LEARNED CIT(A) TO PROPERLY DEAL WITH THE ISSUE AND COMMENT UPON THE ASPECT OF CONCESSION OF THE ASSESSEE AND ACCEPTANCE BEFORE THE ASSESSING OFFICER ABOUT THE BOGUS ACTIVITY BEING INDULGED INTO AND OFFER TO PAY TAX THEREUPON. THE HONBLE SUPREME COURT IN THE CASE OF KAPURCHAND SHRIMAL V. CIT [(1981) 131 ITR 451 (SC)] HAS EXPOUNDED THAT IT IS THE DUTY AS WELL AS JURISDICTION OF THE APPELLATE AUTHORITY TO CORRECT THE ERRORS IN THE ORDER'S OF THE AUTHORITIES BELOW, AND REMIT THE MATTER FOR RECONSIDERATION WITH DIRECTIONS AS REQUIRED, UNLESS PROHIBITED BY LAW. ITA NO.1754/MUM/2017. M/S.SHREE SAI ENTERPRISES. 9 11. ACCORDINGLY IN THE INTEREST OF JUSTICE WE REMIT THE ISSUE TO THE FILE OF THE LEARNED CIT(A). LEARNED CIT(A) IS DIRECTED TO CONSIDER THE ISSUE AFRESH AND PROPERLY DEAL WITH THE ISSUE OF ADMISSION BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ABOUT ITS INDULGENCE IN BOGUS ACTIVITY AND AGREEMENT TO PAY TAXES THEREUPON. NEEDLESS TO ADD ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 12. IN THE RESULT THIS APPEAL BY THE REVENUE IS STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF OCTOBER, 2017. SD/- SD/- ( SHAKTIJIT DEY ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 03.10.2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.