M/S. ANIL M. RAKSHE (HUF), MUMBAI V. ITO- 21(1)(1), MUMBAI

ITA 189/MUM/2019

• Counselvise Citation: [2020] 108 COUNSELVISE.COM (IT) 8969 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 15-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEENA SRIVASTAVA
• Keywords: Reopening of assessment; Bogus purchase; Search and seizure
• Section: 143(3); 133(6); 22; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.189/M/2019 ASSESSMENT YEAR: 2010-11 M/S. PANDHE INFRACONS PVT. LTD., 157 RAILWAY LINES SUSHILA APARTMENTS, SOLAPUR, MAHARASHTRA 413 001 PAN: AAECP 9086A VS. ACIT CC 1(3), 9 TH FLOOR, PRATISHTHA BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO.617/M/2020 ASSESSMENT YEAR: 2010-11 ACIT, CENTRAL CIRCLE 1(3), 905, 9 TH FLOOR, PRATISHTHA BHAVAN, OLD C.G.O. BLDG. (ANNEXE), M.K. ROAD, MUMBAI - 400020 VS. M/S. PANDHE INFRACONS PVT. LTD., 157 RAILWAY LINES SUSHILA APARTMENTS, SOLAPUR, MAHARASHTRA 413 001 PAN: AAECP 9086A (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. DINKLE HARIA, A.R. REVENUE BY : MS. LEENA SRIVASTAVA, D.R. DATE OF HEARING : 14.10.2020 DATE OF PRONOUNCEMENT : 15.12.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST THE ORDER DATED 14.11.2019 OF THE COMMISSIONER OF INCOME TAX (APPEALS) ITA NO.189/M/2019 M/S. PANDHE INFRACONS PVT. LTD. 2 [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(A) ON JURISDICTIONAL ISSUE AS WELL AS ON MERIT. AT THE TIME OF HEARING, THE ASSESSEE DID NOT PRESS THE REOPENING OF ASSESSMENT UNDER SECTION 147 AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 3. THE SECOND ISSUE ON MERIT RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF LD CIT(A) PARTLY SUSTAINING THE ADDITION OF RS.5,09,09,688/- BEING 15% OF BOGUS PURCHASES OF RS.33,93,97,917/- AS AGAINST THE 100% DISALLOWANCE MADE BY THE AO. THE REVENUE HAS ALSO COME IN APPEAL AGAINST THE DELETION OF 85% OF THE BOGUS PURCHASES BY THE LD. CIT(A). 4. THE FACTS IN BRIEF ARE THAT ASSESSEE FILED RETURN OF INCOME ON 30.09.2010 DECLARING INCOME OF RS.16,09,04,410/- WHICH WAS LATER ON REVISED ON 16.11.2011 DECLARING THE SAME INCOME. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED UNDER SCRUTINY AND ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31.12.2012 ASSESSING THE TOTAL INCOME OF RS.16,32,36,450/-. AGAIN, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER AO RECEIVED INFORMATION FROM SALES TAX DEPARTMENT THAT ASSESSEE HAS TAKEN FICTITIOUS PURCHASE BILLS FROM HAWALA OPERATORS AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT VIDE ORDER 30.11.2016 ASSESSING THE TOTAL INCOME AT RS.16,67,37,080/- WHEREIN THE BOGUS PURCHASES FROM TWO PARTIES NAMELY SUPREME SALES RS.5,18,575/- AND UDAY ENTERPRISE RS.29,82,057/- WERE ADDED TO THE INCOME OF THE ITA NO.189/M/2019 M/S. PANDHE INFRACONS PVT. LTD. 3 ASSESSEE. ONCE MORE, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 148 ON 29.03.2017. THE REOPENING WAS AGAIN MADE ON THE BASIS OF INFORMATION RECEIVED FROM DDIT (INV.) WHICH CAME TO THE NOTICE OF DDIT(INV) DURING THE COURSE OF A SEARCH AND SEIZURE UNDER SECTION 132(1) OF THE ACT CARRIED OUT ON THE ASSESSEE ON 25.10.2016 WHEREIN IT WAS FOUND THAT ASSESSEE HAS TAKEN FURTHER BILLS OF BOGUS PURCHASES FROM THREE PARTIES NAMELY K.S. MERCANTILE COMPANY PVT. LTD. RS.13,15,03,060/-, SRIRAM TRADING CO. PVT. LTD. RS.2,10,13,616/- AND M/S. GIRNAR STEEL RS.18,68,81,241/- AGGREGATING TO RS.33,93,97,917/-. THEREAFTER, THE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THESE PARTIES BESIDES ISSUING NOTICE UNDER SECTION 133(6) OF THE ACT WHICH WERE RETURNED UNSERVED WITH THE REMARK LEFT, CLOSED OR INSUFFICIENT ADDRESS. PERTINENT TO MENTION THAT ASSESSEE HAS PRODUCED BILLS, VOUCHERS AND PROOFS OF PAYMENT TO CORROBORATE THE PURCHASES FROM THESE PARTIES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, BUILDER AND DEVELOPERS AND STATED THAT THE MATERIALS PURCHASED WERE CONSUMED IN THE CONTRUCTION. HOWEVER, THE AO WAS NOT BEING SATISFIED WITH THE GENUINENESS OF THE PURCHASES AND ADDED THE ENTIRE PURCHASES TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT THERE IS NO CORRELATION OF PURCHASES AND CONSUMPTION OF MATERIAL IN THE CONSTRUCTION AND THUS FRAMED ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT VIDE ORDER DATED 29.12.2017 ASSESSING THE INCOME AT RS.50,94,56,524/-. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION TO THE TUNE ITA NO.189/M/2019 M/S. PANDHE INFRACONS PVT. LTD. 4 OF RS.5,09,09,688/- BEING 15% OF THE ALLEGED BOGUS PURCHASES, AFTER TAKING INTO ACCOUNT THE VARIOUS JUDICIAL PRONOUNCEMENTS AS DISCUSSED BY THE LD. CIT(A) IN PARA 22 OF THE APPELLATE ORDER. THE LD. CIT(A) WHILE DECIDING THE ISSUE HAS RECORDED A FINDING THAT THE GP RATE OF THE ASSESSEE WAS 21.82% WHEREAS NP RATE WAS 7.47 AND THUS SUSTAINED THE ADDITION TO THE TUNE OF 15% OF THE BOGUS PURCHASES RESULTING INTO CONFIRMATION OF ADDITION OF RS.5,09,09,688/-. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE WAS UNDISPUTEDLY BENEFICIARY OF BOGUS PURCHASE BILLS FROM 3 PARTIES. THE AO MADE ADDITION EQUAL TO 100% OF THE BOGUS PURCHASES ON THE GROUND THAT THERE WAS NO CORRELATION BETWEEN THE PURCHASE OF MATERIALS AND CONSUMPTION THEREOF IN THE CONSTRUCTION WHEREAS THE LD. CIT(A) HAS PARTLY SUSTAINED THE ADDITION AT 15% OF THE ALLEGED BOGUS PURCHASES AFTER CONSIDERING THE GP AND NP RATE OF THE ASSESSEE DURING THE YEAR AND ALSO THE VARIOUS JUDICIAL DECISIONS AS DISCUSSED IN THE APPELLATE ORDER. WE NOTE THAT THE ASSESSEE HAS ALREADY RETURNED THE NORMAL PROFITS ON THE SAID ALLEGED BOGUS PURCHASES AND WHAT IS BEING PROPOSED TO BE ADDED IS ONLY TOWARDS THE ADDITIONAL BENEFIT WHICH THE ASSESSEE MAY HAVE DERIVED BY NON PAYMENT OF VAT AND OTHER INCIDENTAL LEVIES WHICH NEEDS TO BE TAXED. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT IT WOULD FAIR AND REASONABLE IF THE ALLEGED BOGUS PURCHASES ARE BROUGHT TO TAX @ 8%. ACCORDINGLY WE MODIFY THE ORDER OF LD. CIT(A) AND AO IS DIRECTED TO APPLY 8% IN PLACE OF 15%. 7. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.189/M/2019 M/S. PANDHE INFRACONS PVT. LTD. 5 8. SINCE WE HAVE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE, THE APPEAL OF THE REVENUE IN ITA NO.617/M/2020 BECOMES INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.12.2020. SD/- SD/- (VIKAS AWASTHY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 15.12.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.