DCIT CIR 6(2)(1), MUMBAI V. DELLA TECNICA INTERIOR DESIGN P. LTD, MUMBAI

ITA 196/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9866 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO 196/MUM/2017 DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 196/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(2)(1),ROOM NO.563 AAYKAR BHAVAN M.K.ROAD, CHURCHGATE MUMBAI 400 020 / VS. DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED 781, PARSI COLONY, N.M.JOSHI MARG KHODABAD CIRCLE MUMBAI -400 017 ./ ./PAN/GIR NO. AABCD-2765-K ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 21/08/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12 ITA NO 196/MUM/2017 DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 [CIT(A)], MUMBAI DATED 03/11/2016 QUA DELETION OF CERTAIN ADDITIONS ON ACCOUNT OF BOGUS PURCHASES FOR RS.3,56,16,927/-. NONE HAS APPEARED ON BEHALF OF ASSESSEE DESPITE SERVICE OF NOTICE AND NO ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE P ROCEED TO DISPOSE-OFF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RE CORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED AS INTERIOR DECORATOR & REAL ESTATE DEVELOPERS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 30/03/2015 AT RS.13,43,44,480/- AFTER ADDITION OF BOGUS PURCHASES FOR RS.3,56,16,927/-. THE ORIGINAL RETURN WAS FILED AT RS.9,87,27,549/- ON 30/09/2009, WHICH WAS ASSESSED AT THE SAME FIGURES IN SCRUTINY ASSESSMENT U/S 143(3). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.3,56,16,927/- FROM TWENTY FIVE PARTIES. CONSEQUE NTLY, NOTICE U/S 148 DATED 20/03/2014 WAS ISSUED WHICH WAS FOLLOWED BY S TATUTORY NOTICE U/S 143(2) / 142(1). 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICES U /S 133(6) WAS ISSUED TO THE ALLEGED BOGUS SUPPLIER, HOWEVER, THE SAME COULD NOT BE SERVED AS PER INSPECTORS REPORT . THE ASSESSEE, IN SUPPORT, PRODUCED LEDGER EXTRACTS, PURCHASE BILLS, PAYMENT DETAILS, B ANK STATEMENTS ETC. AND CONTENDED THAT THE PURCHASES WERE GENUINE. HOWE VER, LD. AO NOTED THAT THE ASSESSEE COULD NOT PRODUCE TRANSPORTATION RECEIPTS TO ITA NO 196/MUM/2017 DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 PROVE ACTUAL DELIVERY OF MATERIAL, CONFIRMATION FRO M THE ALLEGED SUPPLIERS AND COULD NOT PRODUCE ANY PARTY FOR CONFIRMATION OF THE TRANSACTION. IT WAS FURTHER NOTED THAT THESE PARTIES ADMITTED TO HA VE INDULGED IN ISSUANCE OF ACCOMMODATION BILLING BEFORE SALES TAX AUTHORITIES. FINALLY, NOT CONVINCED WITH THE ASSESSEES CONTENTIONS / SUB MISSIONS, LD. AO TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 03/11/2016 WHE RE LD. CIT(A) NOTED THAT THE SALES REFLECTED BY THE ASSESSEE HAS BEEN ACCEPTED AND THEREFORE THE IMPUGNED ADDITIONS WERE NOT JUSTIFIED . RELIANCE WAS PLACED ON SEVERAL JUDICIAL PRONOUNCEMENTS. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT NOTICES U/S 133(6) COULD NOT BE SERVE D SINCE NONE OF THE PARTY WAS FOUND AT THE GIVEN ADDRESS. FURTHER, THE ASSESSEE COULD NOT ESTABLISH DELIVERY / CONSUMPTION OF MATERIAL BEFORE LD. AO AND THEREFORE, THE ADDITIONS WERE JUSTIFIED. IT WAS FURTHER CONTEN DED THAT THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASS ESSEE AND MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SAME SINCE NO CONFIRMATIONS ETC. WAS FILED BY THE ASSESS EE BEFORE LOWER AUTHORITIES AND NONE OF THE PARTIES COULD BE PRODUC ED FOR CONFIRMATION OF PURCHASES. 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE / CONSUMPTION OF MATERIAL SINCE ASSESSEE WAS ENGAGED AS REAL ESTATE ITA NO 196/MUM/2017 DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 DEVELOPERS , WHICH IS MATERIAL INTENSIVE. THE SALES TURNOVER A CHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE A ND THE PAYMENTS WERE THROUGH BANKING CHANNELS. AT THE SAME TIME, TH E ASSESSEE COULD NOT PRODUCE ANY CONFIRMATIONS FROM ANY OF THE 25 ALLEGED BOGUS SUPPLIERS AND FURTHER NOTICES U/S 133(6) COULD NOT BE SERVED DUE TO NON- AVAILABILITY OF ANY OF THE PARTY AT THE GIVEN ADDRE SS, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE ASSESSEE COULD NOT P RODUCE ANY EVIDENCE TO SUBSTANTIATE ACTUAL DELIVERY OF MATERIA L. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. WE ESTIMATE THE SAME @8% KEEPING IN VIEW THE ASSESSEE S NATURE OF BUSINESS AND OVERALL FACTS OF THE CASE. ACCORDINGLY , WE SUSTAIN THE ADDITION TO THE EXTENT OF 8% OF BOGUS PURCHASES OF RS.3,56,16,927/- WHICH COMES TO RS.28,49,354/-. 6. RESULTANTLY, THE REVENUES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ITA NO 196/MUM/2017 DELLA TECNICA INTERIOR DESIGN PRIVATE LIMITED ASSESSMENT YEAR 2009-10 5 ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. #&. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI