S.S. FANCY YARN P.LTD, THANE V. ASST CIT CIR 1, KALYAN

ITA 1789/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9945 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: MRS ARATI VISSANJI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 1789 /MUM/20 16 (ASSESSMENT YEAR 20 10 - 11 ) I.T.A. NO. 1790/MUM/2016 (ASSESSMENT YEAR 2011 - 12) S.S. FANCY YARN PVT.LTD. 504, SATRUNJA Y DARSHAN GOKUL NAGAR, BHIWANDI DISTRICT THANE - 421 302. VS. ACTI CIRCLE 1 KALYAN ( APPELLANT ) ( RESPONDENT ) PAN NO . AALCS7621R ASSESSEE BY MRS. ARATI VISSANJI DEPARTMENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING 13 .7 . 201 7 DATE OF PRONOUN CEMENT 13 . 7 . 201 7 O R D E R PER BENCH: - BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A) - 2, THANE AND THEY RELATE TO THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DYEING AND PRINTING OF YARN. THE REVENUE RECEIVED INFORMATION PUBLISHED BY THE SALES T AX DEPARTMENT OF MAHARASHTRA GOVERNMENT ABOUT HAWALA DEALERS, I.E., PEOPLE WHO WERE ISSUING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS. THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED FURNACE OIL FROM TWO OF SUCH DEALERS NAMED M/S UDAY E NTERPRISES AND M/S RUMEET ENTERPRISES TO THE TUNE OF RS.8,83,234/ - AND RS.12,70,935/ - RESPECTIVELY IN THE YEARS RELEVANT TO AY 2010 - 11 AND 2011 - 12. THE PROPRIETOR OF M/S RUMEET ENTERPRISES HAD ADMITTED IN AN AFFIDAVIT ABOUT THE BOGUS BILLS ISSUED BY HIS C ONCERN. THE SALES TAX DEPARTMENT HAD DRAWN INFERENCE ABOUT M/S UDAY ENTERPRISES ALSO. HENCE THE AO REOPENED THE ASSESSMENTS OF BOTH S.S. FANCY YARN PV T.LTD. 2 THE YEARS UNDER CONSIDERATION AND DISALLOWED THE PURCHASES CITED ABOVE. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS USED THE FURNACE OIL FOR OPERATING ITS BOILER AND HENCE THE SAME IS A CONSUMABLE ITEM FOR THE ASSESSEE. SHE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL TH E DETAILS SUCH AS COPY OF INVOICES, DELIVERY CHALLANS, LORRY NUMBER, THE OCTROI RECEIPTS, PAYMENT DETAILS ETC. IN ORDER TO PROVE THE GENUINENESS OF PURCHASES. SHE SUBMITTED THAT THE AO SHOULD NOT HAVE BLINDLY PLACED RELIANCE ON THE REPORT OF THE SALES TAX AUTHORITIES. SHE FURTHER SUBMITTED THAT THE AO AS WELL AS LD CIT(A) DID NOT EXAMINE THE DOCUMENTS FURNISHED BY THE ASSESSEE. SHE SUBMITTED THAT THE LD CIT(A) HAS SUSTAINED THE ADDITION BY CONSIDERING THE CONSUMPTION RATIO AND THE G.P RATIO DECLARED BY T HE ASSESSEE. SHE SUBMITTED THAT THERE WAS INCREASE IN CONSUMPTION RATE OF OIL IN THE YEARS UNDER CONSIDERATION, BUT THE SAME WOULD DEPEND UPON VARIOUS FACTORS. SHE SUBMITTED THAT THE G.P RATE OF AY 2010 - 11 WAS COMPARABLE WITH THAT OF AY 2009 - 10. SHE SUB MITTED THAT THE G.P RATE HAS FALLEN DOWN IN AY 2011 - 12, BUT THE SAME IS COMPARABLE WITH THE RATE OF GROSS PROFIT DECLARED IN AY 2012 - 13, WHICH HAS BEEN ACCEPTED BY THE AO. ACCORDINGLY SHE SUBMITTED THAT THE ADDITIONS HAVE BEEN SUSTAINED BY THE LD CIT(A) W ITHOUT PROPER REASONS. 4. ON THE CONTRARY, THE LD D.R STRONGLY SUPPORTED THE ORDER PASSED BY LD CIT(A) IN BOTH THE YEARS. 5. WE NOTICE THAT THE ASSESSEE HAS FURNISHED SAMPLE COPIES OF PURCHASE BILLS ALONG WITH DELIVERY CHALLANS AND OCTROI PAYMENT R ECEIPTS. THE VEHICLE NUMBER SHOWN IN THE DELIVERY CHALLANS MATCHES WITH THE WEIGHMENT SLIPS. THESE DOCUMENTS, PRIMA FACIE, WOULD SHOW THAT THE MATERIALS HAVE BEEN TRANSPORTED FROM THE END OF THE SUPPLIER. HOWEVER, WE NOTICE THAT THE ASSESSEE COULD NOT F URNISH CONFIRMATION LETTERS OBTAINED FROM THE SUPPLIERS AND THE ASSESSEE HAS ALSO NOT FURNISHED DETAILS OF ALL THE ALLEGED BOGUS PURCHASES. S.S. FANCY YARN PV T.LTD. 3 6. ON A PERUSAL OF THE ORDER PASSED BY LD CIT(A), WE NOTICE THAT THE LD CIT(A) HAS FIRST COMPUTED THE RATIO OF Q UANTITY OF OIL CONSUMED WITH THE QUANTITY OF YARN PRODUCED. IT WAS NOTICED THAT THE CONSUMPTION RATE WAS HIGH IN THE TWO YEARS UNDER CONSIDERATION. FURTHER THE LD CIT(A) HAS COMPUTED THE RATE OF G.P AND NOTICE THE RATE OF G.P HAS FALLEN DOWN IN THE TWO Y EARS UNDER CONSIDERATION. ACCORDINGLY HE HAS TAKEN THE VIEW THAT THE ADDITION MADE BY THE AO WAS JUSTIFIED. 7. HOWEVER, THE LD A.R HAS CONTENDED THAT THE INCREASE IN CONSUMPTION RATE OF OIL WOULD DEPEND UPON VARIOUS FACTORS INCLUDING THE PROBLEMS IN F URNACE AND HENCE THE SAME CANNOT BE TAKEN AS A SCIENTIFIC PROOF. SHE HAS ALSO SUBMITTED THAT THE G.P. RATE OF 10.03% DECLARED IN AY 2010 - 11 IS COMPARABLE WITH THE G.P RATE OF 10.80% DECLARED IN AY 2009 - 10. THOUGH THE RATE OF G.P HAS FALLEN DOWN TO 6.48% IN AY 2011 - 12, THE SAME IS COMPARABLE WITH THE G.P RATE OF 5.03% DECLARED IN AT 2012 - 13. THE LD A.R SUBMITTED THAT THE FALL IN G.P RATE WAS DUE TO BUSINESS COMPULSIONS AND THE SAME CANNOT BE CONSIDERED TO BE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. WE ALSO FIND MERIT IN THE SAID CONTENTIONS. 8. IN VIEW OF THE ABOVE, WE SUGGESTED THAT THIS ISSUE MAY BE PUT AT REST BY SUSTAINING ADDITION TO THE EXTENT OF 12.50% OF THE ALLEGED BOGUS PURCHASES, SINCE THE ASSESSEE COULD NOT PROVE THE GENUINENESS FULLY AND T HE REVENUE ALSO HAS FAILED TO PROVE THE BOGUS NATURE OF PURCHASES TO THE HILT. THE LD A.R AGREED TO THE SAME AND THE LD D.R ALSO DID NOT OBJECT. 9. IN VIEW OF THE ABOVE, WE MODIFY THE ORDERS PASSED BY LD CIT(A) IN BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE AO TO SUSTAIN ADDITION TO THE EXTENT OF 12.50% OF THE VALUE OF ALLEGED BOGUS PURCHASES IN BOTH THE YEARS UNDER CONSIDERATION. S.S. FANCY YARN PV T.LTD. 4 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER HAS BE E N PRONOUNCED IN T HE COURT ON 13 .7 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 13 / 7 / 20 1 7 CO PY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI