ITO-11(2)(4), MUMBAI V. SUPERFLO FILTERS PVT LTD, MUMBAI

ITA 1920/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3700 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 02-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL V I RTUAL COURT G BENCH MUMBAI BEFORE SHRI JUSTICE P P BHATT, PRESIDENT & SHRI M.BALAGANESH, AM ITA NO. 1920 /MUM/ 2019 ( ASSESSMENT YEAR : 2011 - 12 ) ITO - 11(2)(4), MUMBAI ROOM NO.349, 3 RD FLOOR AAYA KAR BHAVAN M.K.ROAD, MARINE LINES MUMBAI 400 020 VS. M/S. SUPERFLO FILTERS PVT. LTD., B - 5/103 - 104, GREENLAND CO - OP SOCIETY, SHRINIVAS BAGARKA ROAD, J.B.NAGAR, ANDHERI - EAST MUMBAI 400 059 PAN/GIR NO. AADCS4955N (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI V. VINODKUMAR ASSESSEE BY NONE DATE OF HEARING 15 / 09 /2020 DATE OF PRONOUNCEMENT 28 / 10 / 2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 1920/MUM/2019 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 18 , MUMBAI IN APPEAL NO. CIT(A) - 18/IT - 10141/ITO - 11(2)(4)/17 - 18 DATED 11/01/2018 (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 26/12/2017 BY THE LD. LD. INCOME TAX OFFICER 11(2)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 1920 /MUM/ 2019 M/S. SUPERFLO FILTERS PVT. LTD., 2 2. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS, WE FIND THAT THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF 12 .5% AS AGAINST 100% MADE BY THE LD. AO IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 2.1. NONE APPEARED ON BEHALF OF THE ASSESSEE. 3. WE HAVE HEA RD THE LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT IT IS NOT IN DISPUTE THAT ASSESSEE MADE PURCHASES FROM SEVEN PARTIES AS TABULATED BELOW TO THE TUNE OF RS.1,36,19,291/ - , WH OSE NAMES APPEAR ED IN THE TAINTED LIST OF HA WALA DEALERS IN THE WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, WHICH INFORMATION WAS SUBSEQUENTLY PASSED ON TO THE DGIT (INVESTIGATION), MUMBAI BASED ON WHICH THE ASSESSMENT FOR A.Y.2011 - 12 IN THE HANDS OF THE ASSESSEE HAD BEEN REOPENED FO R THE PURPOSE OF DISALLOWING THE PURCHASES MADE BY THE ASSESSEE FROM THOSE SUPPLIERS: - SR NO NAME OF HAWALA DEALER PAN NO OF THE HAWALA DEALER TIN NO AMOUNT 1 NIDDHISH IMPEX AACCN6984H 27600648257V 675000 2 KOTSONS IMPEX PVT LTD AACCK9104C 279 40584729V 4473578 3 TISHA ENTERPRISES AGVPP0871D 27950739002V 559713 4 DHARAM TRADERS AADCD5447J 27020798732V 1582875 5 MAHAVIR SALES CORP. AMMPM3778R 27090707756V 2246625 6 TULSIANI TRADING AADCT0405G 27440688212V 2529000 7 MOK SHA IMPEX ANFPD5613C 27630793110V 1552500 TOTAL : 13619291 ITA NO . 1920 /MUM/ 2019 M/S. SUPERFLO FILTERS PVT. LTD., 3 3.1. IN RE - ASSESSMENT PROCEEDINGS, WE FIND THAT THE LD. AO SOUGHT TO EXAMINE THE VERACITY OF THE PURCHASES. WE FIND THAT THE AFORESAID TAINTED SUPPLIERS HAD DEPOSED BEFORE THE MAHARA SHTRA SALES TAX DEPARTMENT THAT THEY ARE ENGAGED IN PROVIDING ACCOMMODATION SALE BILLS TO VARIOUS PARTIES INCLUDING THE ASSESSEE AND THAT THEY HAD NOT ACTUALLY SUPPL Y THE GOODS. WE FIND THAT BEFORE THE LD. AO, THE ASSESSEE DID NOT FURNISH THE PURCHASE BILL S, DELIVERY CHALLANS, PROOF OF TRANSPORTATION OF GOODS AND COPIES OF THE RELEVANT BANK STATEMENTS, WHERE PAYMENTS TO ALLEGED HAWALA DEALERS WERE REFLECTED. HOWEVER, THE ASSESSEE PRODUCED STOCK REGISTER, BOOKS OF ACCOUNTS BEFORE THE LD. AO WHICH THE LD. AO OBSERVED THAT THEY WERE NOT MAINTAINED PROPERLY AND ACCORDINGLY , PROCEEDED TO REJECT THE SAME. SINCE, THE VERACITY OF THE PURCHASES WERE NOT PROVED BY THE ASSESSEE BEYOND DOUBT, THE LD. AO PROCEEDED T O DISALLOW THE ENTIRE PURCHASES, B EING 100% VALUE OF RS. 1,36,19,491/ - IN THE ASSESSMENT, DESPITE THE FACT THAT THE CORRESPONDING SALES MADE BY THE ASSESSEE OUT OF SUCH PURCHASES HAD BEEN ACCEPTED. WE FIND THAT THE LD. CIT(A) THOUGHT IT FIT TO BRING TO TAX ONLY THE PROFIT ELEMENT EMBEDDED IN THE VALUE OF SUCH PU RCHASES AND RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% BY PLACING RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P SHETH REPORTED IN 356 ITR 451 (GUJ) . AGAINST THE SAID DIRECTION OF THE LD. CIT(A), THE ASSESSEE HAD NOT PREFERRED ANY APPEAL BEFORE US AND ONLY THE REVENUE HAD PREFERRED THIS IMPUGNED APPEAL. WE FIND THAT EVEN THOUGH THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF PURCHASES MADE FROM THE AFORESAID SUPPLIERS, THE CORRESPONDING SALES MADE OUT OF SUCH P URCHASES HAS NOT BEEN DISPUTED BY THE REVENUE BEFORE US. HENCE, IT COULD BE SAFELY CONCLUDED THAT ASSESSEE COULD HAVE MADE PURCHASES FROM THE GREY MARKET IN ORDER TO HAVE SOME SAVING IN INDIRECT TAXES AND THE INCIDENTAL PROFIT ELEMENT THEREON BY WAY OF MAK ING PURCHASES IN CASH. WE ITA NO . 1920 /MUM/ 2019 M/S. SUPERFLO FILTERS PVT. LTD., 4 ALSO FIND THAT THIS TRIBUNAL IN SERIES OF DECISIONS HAD HELD THAT ADOPTION OF 12.5% AS PROFIT ELEMENT EMBEDDED IN NON - GENUINE PURCHASES WOULD BE REASONABLE. HENCE, THE ADOPTION OF PROFIT PERCENTAGE BY THE LD. CIT(A) @12.5% IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE IS VERY REASONABLE, WHICH IN OUR CONSIDERED OPINION, DOES NOT WARRANT ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED ON 28 / 10 /2020 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. S D/ - ( JUSTICE P P BHATT ) SD/ - (M.BALAGANESH) PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 28 / 10 / 2020 KAR UNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBA I 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//