INVENTUM ENGINEERING COMPANY PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 10(1)(2), MUMBAI

ITA 1836/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7141 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Assessee Lawyers: RAHUL R SARDA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 142(1); 133(6); 147; 148

Judgement Text

ITA.NO.1836/MUM/2018 INVENTUM ENGINEERING COMPANY PVT.LTD ASSESSMENT YEAR- 2011-12 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1836/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) INVENTUM ENGINEERING COMPANY PRIVATE LIMITED 201, KUBER COMPLEX NEW LINK ROAD, ANDHERI(E) MUMBAI 400 053 / VS. INCOME TAX OFFICER - 10(1)(2) AAYKAR BHAVAN,M.K.ROAD MUMBAI- 400 020 ! ./ ./PAN/GIR NO. AAACI-5761-R ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : RAHUL R. SARDA, LD.AR REVENUE BY : N. HEMALATHA, LD. DR / DATE OF HEARING : 24/05/2018 / DATE OF PRONOUNCEMENT : 22/06/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)-17 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-17/IT-103/10159/17- 18 DATED 22/01/2018 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED ITA.NO.1836/MUM/2018 INVENTUM ENGINEERING COMPANY PVT.LTD ASSESSMENT YEAR- 2011-12 2 BY LD. INCOME TAX OFFICER-10(1)(2), MUMBAI [AO] U/S 14 3(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 29/06/2016 WHEREIN TH E INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.7, 36,730/- AFTER CERTAIN ADDITIONS AS AGAINST RETURNED INCOME OF RS. 5,45,720/- E-FILED BY THE ASSESSEE ON 29/09/2011 WHICH WAS PROCESSED U/S 143(1). THE ONLY ISSUE INVOLVED UNDER APPEAL IS ESTIMATED ADDITION A GAINST CERTAIN ALLEGED BOGUS PURCHASES. 2.1 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.1,91,007/- FROM THREE SUCH ENTITIES, THE DETAILS OF WHICH HAS BEEN EXTRACTED IN PARA-4.1 OF THE QUANTUM ASSESSMENT ORDER. CONSEQUENTLY, STATUTORY NOTICE U/S 148 DATED 28/03/2016 WAS ISSUE D TO THE ASSESSEE WHICH WAS FOLLOWED BY NOTICES U/S 143(2) AND 142(1) . DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ENGINEERING GOODS. 2.2 THE ASSESSEE DEFENDED THE PURCHASES MADE BY HIM AND SUBMITTED DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE SAME. HOW EVER, NOTICES ISSUED U/S 133(6) TO ALL THE ENTITIES ELICITED NO S ATISFACTORY RESPONSE. THE ASSESSEE EXPRESSED INABILITY TO PRODUCE THE PARTIES FOR CONFIRMATION OF ACCOUNTS. FINALLY, NOT CONVINCED WITH ASSESSEES SU BMISSIONS, LD. AO TREATED THESE PURCHASE AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 22/01/2 018 WHERE LD. ITA.NO.1836/MUM/2018 INVENTUM ENGINEERING COMPANY PVT.LTD ASSESSMENT YEAR- 2011-12 3 CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSION CONF IRMED THE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEA L BEFORE US. 4. THE AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], SHRI RAHUL R.SARDA, DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN TH E PAPER- BOOK CONTESTED THE STAND OF LOWER AUTHORITIES WHICH WAS CONTROVERTED BY LD. DEPARTMENTAL REPRESENTATIVE, MS. N.HEMALATHA. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDER ED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITIES. THE MATERIAL ON RECORD REVEALS THAT THE ASSESSEE HAS PURCHASED INTEGRATED CIRCUITS CHIPS [IC] FROM THE SUPPLIERS. THE WEIGHT OF EACH CHIP WAS VERY LOW IN THE RANGE OF 1 TO 1.3 GRAMS PER CHIPS AND THEREFORE, THE SAME DID NOT REQ UIRE ANY HEAVY TRANSPORTATION. THE SAID RAW MATERIAL WAS ESSENTIAL TO MANUFACTURE HEATERS, WHICH WAS THE LINE OF ASSESSEES BUSINESS. THE ASSE SSEE HAS ALSO FURNISHED QUANTITATIVE DETAILS OF CONSUMPTION OF THESE CHIPS. FURTHER, THE SALES TURNOVER ACHIEVED BY THE ASSESSE E HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROU GH BANKING CHANNELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT CONCLUSIVELY SUBSTANTIATE THE PURCHASES MADE BY HIM AND FAILED T O PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACTIONS. NOTICES ISSU ED U/S 133(6) ELICITED NO SATISFACTORY RESPONSES. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST ITA.NO.1836/MUM/2018 INVENTUM ENGINEERING COMPANY PVT.LTD ASSESSMENT YEAR- 2011-12 4 POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES. HENCE, THE ADDITI ON ON GROSS BASIS AGAINST THE SAME WAS NOT JUSTIFIED. WE ESTIMATE THE SAME @12.5% OF ALLEGED BOGUS PURCHASES OF RS.1,91,007/. CONSEQUENTLY, THE ADDITION TO THE EXTENT OF RS.23,876/- STAND CONFIRMED AND BALAN CE ADDITION STAND DELETED. 6. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE,2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22.06.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI