M/S GOLD ANCHER EXIM P. LTD., MUMBAI V. ACIT - 12(2)(3), MUMBAI

ITA 1783/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3240 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 04-09-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: Bogus purchase
• Section: 13; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , G BENCH MUMBAI BEFORE : SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI M.BALAGANESH, A CCOUNTANT MEMBER ITA NO. 1783 /MUM/ 20 20 ( ASSESSMENT YEAR : 2008 - 09 ) M/S. GOLD ANCHER EXIM PVT. LTD., BA 205/206, 2 ND FLOOR RAJLAXMI COMMERCIAL, KALHER, BHIWANDI, THANE - 421 302 VS. ACIT 12(2)(3) AAYKAR BHAWAN MUMBAI 400 020 PAN/GIR NO. (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI HI RO RAI REVENUE BY SHRI PANKAJ KUMAR DATE OF HEARING 0 5 / 1 0/2021 DAT E OF PRONOUNCEMENT 08 / 10 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 1783/MUM/2020 FOR A.Y. 2008 - 09 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI IN APPEAL NO. CIT(A) - 20/IT - 10179/2 016 - 17 DATED 27/09/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 23/03/2016 BY THE LD. INCOME TAX OFFICER 12 (2)(3) (HEREINAFTER REFERRED TO AS L D. AO). ITA NO . 1783/MUM/2020 M/S. GOLD ANCHER EXIM PVT. LTD., 2 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE LD. AO BY ESTIMATING PROFIT @12.5% ON ALLEGED BOGUS PURCHASES IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN FABRICS, READYMADE GARMENTS AND SUN GLASSES. THE RETURN OF INCOME FOR THE A.Y.2008 - 09 WAS FILED ON 15/0 9/2008 DECLARING TOTAL INCOME OF RS.16,33,487/ - . THE ASSESSMENT WAS REOPENED U/S.147 OF THE ACT AFTER DUE RECORDING OF REASONS FOR REOPENING. IN THE RE - ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT ASSESSEE HAD MADE PURCHASES FROM FIVE PARTIES LISTED H EREINBELOW TO THE TUNE OF RS.567,01,954/ - : - SR. NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. ANSH MERCHANDISE PVT. LTD. (NEWPLANCE TRADING CO. PVT. LTD.) 19,32,232 2. ATHARV BUSINESS PVT. LTD.(FASTSTONE TRADING 1 PVT. LTD.) 30,01,605 3. MAHALAXM I TRADING CO. 55,40,211 4. MOHIT INTERNATIONAL 1,78,76,929 5. NATASHA ENTERPRISES 2,83,50,977 TOTAL 5,67,01,954 3.1. THE LD. AO OBSERVED THAT SECTION 13 3( 6 ) NOTICES ISSUED TO THE AFORESAID PARTIES IN THE ADDRESSES GIVEN BY THE ASSESSEE WERE RETURNED UNSERVED. THE LD. AO POINTED OUT VARIOUS DEFICIENCIES IN VARIOUS ITA NO . 1783/MUM/2020 M/S. GOLD ANCHER EXIM PVT. LTD., 3 DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE IN CONNECTION WITH THE PURCHASES. ULTIMATELY, THE LD. AO OBSERVED THAT THE CONCERNS FROM WHICH ASSESSEE HAS MADE PURCHASES BELONG TO SHRI PRAVIN KUMAR JAIN WHO WAS KNOWN TO BE AN ENTRY PROVIDER AND ACCORDINGLY , CONCLUDED THAT ASSESSEE HAD OBTAINED ACCOMMODATION BILLS FROM THE AFORESAID SUPPLIERS. HAVING SAID SO, THE LD. AO DULY APPRECIATED THE FACT THAT ASSESSEE HAD INDEED SUBMITTED THE COMPUTER GENERATED STOCK REGISTER, STOCK MOVEMENT REGISTER AND THE CORRESPONDING SALES MADE OUT OF SUCH INGENUINE PURCHASES. ACCORDINGLY, THE LD. AO OBSERVED THAT ONLY PROFIT ELEMENT EMBEDDED THEREON COULD BE BROUGHT TO TAX AND CONSIDERING THE INDUSTRY IN WHICH THE ASSESSEE IS INVOLVED I.E. TRADING IN FABRICS, HE ESTIMATED THE PROFIT PERCENTAGE TO BE AT 12.5% AND COMPLETED THE ASSESSMENT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). 3.2. WE FIND THAT THE LD. AR VEHEMENTLY ARGUED THAT THERE IS N O DISPUTE THAT THE AFORESAID FIVE SUPPLIERS HAD ONLY SUPPLIED FABRICS TO THE ASSES SEE AND IN SUPPORT OF WHICH HE ENCLOSED CERTAIN SAMPLE INVOICES FROM THE AFORESAID SUPPLIERS. HE ALSO DREW OUR ATTENTION TO THE FACT THAT ON FABRICS THERE IS NO ELIGIBILITY F OR LEVY OF VALUE ADDED TAX (VAT). HE EXPLAINED THE LOGIC BEHIND ESTIMATING THE PROFIT ELEMENT AT 12.5% TO BE THE VAT RATE AT 10% + INCIDENTAL PROFIT ARISING TO THE ASSESSEE FOR MAKING CASH PURCHASE FROM THE GREY MARKET AT 2.5%. SINCE, THERE IS NO LEVY OF V AT ON PURCHASE OF FABRICS, ONLY INCIDENTAL PROFIT COULD BE BROUGHT TO TAX. HE PLEADED THAT THE INCIDENTAL PROFIT MAY BE ESTIMATED AT 1% OF THE VALUE OF INGENUINE PURCHASES. 3.3. PER CONTRA, THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LOWER AUTHORITIE S BY STATING THAT THE SUPPLIERS WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE LD. AO AND NOTICES U/S.133(6) OF THE ACT WERE ITA NO . 1783/MUM/2020 M/S. GOLD ANCHER EXIM PVT. LTD., 4 RETURNED UNSERVED. HENCE, THE ASSESSEE HAS NOT DISCHARGED ITS ONUS AT ALL TO PROVE THE VERACITY OF THE PURCHASES. 3.4. WE FIND THAT THERE IS NO DISPUTE THAT ASSESSEE IS TRADING IN FABRICS AND THAT THE PURCHASES MADE FROM THE AFORESAID FIVE SUPPLIERS WERE IN RESPECT OF PURCHASES OF FABRICS. IT IS NOT IN DISPUTE THAT THE SALES MADE OUT OF PURCHASES MADE FROM AFORESAID FIVE SUPPLIERS WERE NOT DOUBTED BY THE REVENUE. IT IS NOT IN DISPUTE THAT PURCHASE OF FABRICS DOES NOT GET ELIGIBLE FOR LEVY OF VAT. HENCE, THE PROFIT ELEMENT TO BE ESTIMATED ON THE VALUE OF INGENUINE PURCHASES SHOULD CERTAINLY EXCLUDE THE VAT PORTION IN THE INSTANT CASE AND ONLY INCIDENTAL BENEFIT THAT ASSESSEE DERIVES BY MAKING PURCHASES OUT OF CASH IN THE GREY MARKET SHOULD BE ULTIMATELY BROUGHT TO TAX. WE FIND THAT UNDER SIMILAR CIRCUMSTANCES, THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF MAX REALTIES LLP VS. DCIT IN ITA NO.7544/MUM/2019 AND ITA NO. 161/MUM/2020 FOR A.Y.2010 - 11 DATED 16/08/2021 HAD ESTIMATED THE INCIDENTAL PROFIT ELEMENT AT 1%. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DIRECT THE LD. AO TO ADD ONLY 1% OF VALUE OF INGENUINE PURCHASES OF RS.5,67,0 1,954/ - (I.E. RS.5,67,019/ - ) AND DELETE THE REMAINING PORTION. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 08 / 10 /202 1 BY WAY OF PROPER MENTIONING I N THE NOTICE BOARD. SD/ - ( SAKTIJIT DEY ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 08 / 10 / 2021 KARUNA , SR.PS ITA NO . 1783/MUM/2020 M/S. GOLD ANCHER EXIM PVT. LTD., 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITA T, MUMBAI 1. THE APPELLANT 2. TH E RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//