ALUWIND ARCHITECTURAL PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(1)(1), MUMBAI

ITA 1774/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0607 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAYA JAKKE
• Assessee Lawyers: HARSH KOTHARI LD AR ABC
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 142(1); 133(6); 143(1); 143(2); 147; 148

Judgement Text

1 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1774/MUM/2018 ( / ASSESSMENT YEAR:2009-10) ALUWIND ARCHITECTURAL P RIVATE LIMITED 70C, GOVT. INDUSTRIAL ESTATE CHARKOP, HINDUSTAN NAKA NEAR RELIANCE ENERGY, KANDIVALI MUMBAI-400 067. / VS. D CIT - 12(1)(1) AAYKAR BHAVAN MUMBAI-400 020. => ./ ./PAN/GIR NO. AAECA-5798-A ( >@ /APPELLANT ) : ( AB>@ / RESPONDENT ) >@C / APPELLANT BY : SHRI HARSH KOTHARI - LD. AR AB>@C / RESPONDENT BY : SHRI UDAYA JAKKE - DR / DATE OF HEARING : 05/09/2019 / DATE OF PRONOUNCEMENT : 16/09/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-20 MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-20/DCIT- 2 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 12(1)(1)/IT-23/2015-16 DATED 04/04/2017 QUA CONFIRMATION OF ADDITION TO THE EXTENT OF 30% AGAINST ALLEGED BOGUS PURCHASES FOR RS.73.37 LACS. THE ASSESSEE, VIDE LETTER DATED 28/08/2019, HAS FILED A DDITIONAL GROUND OF APPEAL WHICH IS MERELY LEGAL GROUND AND CONTEST THE VALIDITY OF REASSESSMENT PROCEEDINGS AND HENCE, TAKEN ON RECORD . THE FINAL GROUNDS OF APPEAL READ AS UNDER: - 1. THE LEARNED COMMISSIONER OF INCOME TAX {APPEALS) -20, MUMBAI, HEREINAFTER REFERRED TO AS THE CIT(APPEALS)', ERRED IN ESTIMATI NG THE PROFIT ELEMENT AT 30% AMOUNTING TO RS.22,01,3577- IN THE ALLEGED BOGUS PU RCHASES OF RS.73,37,858/-. YOUR APPELLANT SUBMITS THAT, ON THE FACTS AND IN TH E CIRCUMSTANCES OF ITS CASE, THERE BEING NO BOGUS PURCHASES AS ALLEGED BY THE AS SESSING OFFICER, THE ADDITION OF THE ESTIMATED PROFIT IN RESPECT THEREOF IS INCOR RECT AND UNCALLED FOR. 2. WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO. 1, IT IS SUBMITTED THAT, THE ESTIMATE OF PROFIT ELEMENT OF 30% IN THE ALLEGED BOGUS PURCH ASES IS WITHOUT ANY BASIS, UNREASONABLE AND HIGHLY EXCESSIVE. YOUR APPELLANT SUBMITS THAT, ON THE FACTS AND IN TH E CIRCUMSTANCES OF ITS CASE AND THE MATERIAL PLACED BEFORE THE LOWER AUTHORITIES, T HE ELEMENT OF PROFIT, IF AT ALL, IS MUCH LOWER. 3. THE REASSESSMENT PROCEEDINGS ARE ILLEGAL AND BAD IN LAW AS THE JURISDICTIONAL PRE-CONDITIONS AS REQUIRED TO BE SATISFIED AS PER S ECTION 147 TO 151 OF THE ACT HAVE NOT BEEN FULFILLED. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN CARRYING OUT ALUMINUM STRUCTURAL WORK WAS ASSESSED FOR IMPUGNED AY U/S. 1 43(3) R.W.S. 147 ON 16/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.125.11 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.73.34 LACS AS AGAINST RETURNED INCOME OF RS.51.77 LACS E- FILED BY THE ASSESSEE ON 30/09/2009 WHICH WAS PROCESSED U/S.143(1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESS EE STOOD BENEFICIARY OF 3 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 ALLEGED BOGUS PURCHASES OF RS.73.34 LACS FROM 10 PA RTIES. THE DETAILS OF THE SUPPLIERS ALONG WITH AMOUNT OF RESPECTIVE PURCH ASES HAVE ALREADY BEEN EXTRACTED AT PARA-2 OF THE QUANTUM ASSESSMENT ORDER . ACCORDINGLY, AS PER DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 2 2/03/2014. IN RESPONSE, THE ASSESSEE OFFERED ORIGINAL RETURN AND DEMANDED COPY OF REASONS RECORDED, WHICH WERE DULY SUPPLIED IN DUE C OURSE. THE STATUTORY NOTICES U/S 142(1) AND 143(2) WERE ISSUED IN DUE CO URSE OF ASSESSMENT PROCEEDINGS WHEREIN THE ASSESSEE WAS DIRECTED TO SU BSTANTIATE THE PURCHASE TRANSACTIONS. IN RESPONSE, THE ASSESSEE FU RNISHED LEDGER ACCOUNT, BILLS AND DELIVERY CHALLANS ETC. 2.3 TO CONFIRM THE PURCHASES TRANSACTIONS, NOTICES U/S 133(6) WERE ISSUED TO ALL PARTIES, HOWEVER THE SAME WERE RETURNED BACK UNSERVED BY POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE PURCHASES WERE GENUINE AND THE MATERIAL WAS ACTUALLY RECEIVED AND USED IN THE CONTRACT WORK CARRIED OUT BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION . 2.4 HOWEVER, FINDING VARIOUS DISCREPANCIES IN THE B ILLS, AS ENUMERATED IN PARA 4.2 OF THE QUANTUM ASSESSMENT ORDER, IT WAS CO NCLUDED THAT THE BILLS WERE NOT GENUINE. THE BILLS WERE STATED TO BE NOT B EARING QUALITATIVE DESCRIPTION, SITE ADDRESSES, NOT SUPPORTED BY DELIV ERY CHALLANS / TRANSPORTATION DETAILS ETC. ANOTHER OBSERVATION WAS THE FACT THAT THE PAYMENT OF SUCH PURCHASES WAS OUTSTANDING AT YEAR-E ND TO THE EXTENT OF RS.58.62 LACS OUT OF TOTAL PURCHASES OF RS.73.34 LA CS. 4 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 2.5 FINDING THAT THE PRIMARY ONUS TO ESTABLISH THE GENUINENESS OF THE PURCHASES REMAINED UNDISCHARGED BY THE ASSESSEE, LE ARNED AO TREATED THE PURCHASES OF RS.73.34 LACS AS BOGUS PURCHASES AND A DDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED THE ASSESSEE AGITATED THE STAND OF LD. AO BEFORE FIRST APPELLATE AUTHORITY WITH PARTIAL SUCCESS VIDE IMPUG NED ORDER DATED 04/04/2017 WHEREIN THE ASSESSEE, BY WAY OF ELABORAT E WRITTEN SUBMISSIONS OPPOSED THE ADDITIONS MADE BY LD. AO. THE LD. CIT(A ), AFTER DUE CONSIDERATION OF FACTUAL MATRIX AND INTER-ALIA, RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT V/S BHOLANATH POLY FABS LTD. [355 ITR 290] & CIT V/S SIMIT P. SHETH [356 ITR 451] RESTRICTED THE IMPUGNED ADDITIONS TO 30% OF ALLEGED BOGUS PURCHASE S. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. IT TRANSPI RES THAT THE REVENUE HAS NOT AGITATED THE STAND OF LD. FIRST APPELLATE AUTHO RITY ANY FURTHER. 4. THE LD. AR, DRAWING OUR ATTENTION TO THE DOCUMEN TS PLACED IN THE PAPER-BOOK, SUBMITTED THAT THERE WAS NO BASIS FOR R ESTRICTING THE ADDITIONS TO 30%. IT HAS BEEN PLEADED THAT IMPUGNED ADDITIONS MAY BE RESTRICTED TO THE EXTENT OF VAT EMBEDDED IN THE TRANSACTIONS OF ALLEGED BOGUS PURCHASES. ALTERNATIVELY, RELIANCE HAS BEEN PLACED ON THE DECI SION OF MUMBAI TRIBUNAL IN ASIAN CHEMTECH PVT. LTD. V/S ITO [ITA NO.283/MUM/2019 ORDER DATED 12/04/2019] TO SUBMIT T HAT A REASONABLE ESTIMATION MAY BE MADE AGAINST THE PURCHASES UNDER CONSIDERATION. THE LD. DR SUBMITTED THAT THE ESTIMATION WAS QUITE FAIR AND THE SAME WOULD NOT WARRANT ANY INTERFERENCE ON OUR PART. 5 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 5. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX AS WELL AS RIVAL SUBMISSIONS, WE DO NOT FIND ANY SUBSTANCE IN THE LE GAL GROUNDS RAISED BY LD. AR BEFORE US SINCE THE ORIGINAL RETURN OF INCOM E WAS PROCESSED U/S 143(1) AND THE REASSESSMENT PROCEEDINGS WERE TRIGGE RED PURSUANT TO RECEIPT OF SPECIFIC INFORMATION THAT THE ASSESSEE O BTAINED ACCOMMODATION BILLS FROM CERTAIN SUSPICIOUS DEALERS. THE SAID MAT ERIAL, IN OUR OPINION, WAS QUITE SUFFICIENT TO FORM A REASONABLE BELIEF THAT C ERTAIN INCOME ESCAPED ASSESSMENT. NOTHING MORE WAS REQUIRED AT THIS STAGE . NOTHING ON RECORD SUGGEST ANY INFIRMITY IN TRIGGERING REASSESSMENT PR OCEEDINGS AGAINST THE ASSESSEE. THE LEGAL GROUNDS RAISED BY THE ASSESSEE STAND DISMISSED. 6. SO FAR AS THE ISSUE ON MERITS IS CONCERNED, WE A RE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCH ASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE ASSE SSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS. HOWEVER, AT THE SAME TIME, NOTICE ISSUED U/S 133(6) TO ALL THE ENTITIES REMAINED UNSERVED AN D THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE PARTY TO CONFIRM THE TRANSACT IONS DESPITE ENJOYING HEALTHY CREDIT TERMS FROM THOSE SUPPLIERS. THEREFOR E, THE PRIMARY ONUS CASTED UPON ASSESSEE, TO SUBSTANTIATE THE PURCHASE TRANSACTIONS, REMAINED UN-DISCHARGED. THEREFORE, LD. CIT(A), IN OUR OPINIO N, HAS CLINCHED THE ISSUE IN THE RIGHT PERSPECTIVE. HOWEVER, CONSIDERING THE FACTUAL MATRIX, WE FIND THE ESTIMATION TO BE ON THE HIGHER SIDE. THEREFORE, KEE PING IN VIEW ASSESSEES NATURE OF BUSINESS, WE RESTRICT THE IMPUGNED ADDITI ONS TO 8% OF ALLEGED 6 ITA NO.1774/MUM/2018 ALUWIND ARCHITECTURAL PRIVATE LTD. ASSESSMENT YEAR-2009-10 BOGUS PURCHASES OF RS.73,34,858/-. THE SAME COMES T O RS.5,86,788/-. THE IMPUGNED ORDER STAND MODIFIED TO THAT EXTENT. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :16/09/2019 SR.PS:-JAISY VARGHESE 78 98 / COPY OF THE ORDER FORWARDED TO : 1. >@ / THE APPELLANT 2. AB>@ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. XY A Z , Z , / DR, ITAT, MUMBAI 6. Y[\] / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.