ITO 19(3)(3), MUMBAI V. SHRAVAN K BISHNOI, MUMBAI

ITA 2047/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0522 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND KUMAR LD
• Keywords: Bogus purchase; Opportunity of being heard; Additional evidence; Onus to prove
• Section: 69C; 143(3); 133(6); 147

Judgement Text

ITA NO.2047/MUM/2015 SHRAVAN K. BISHNOI ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2047/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER 19(3)(3) 2 ND FLOOR, MATRU MANDIR TARDEO ROAD MUMBAI 400007 / VS. SHRAVAN K . BISHNOI PROP. M/S GANPAT STEEL C/O POONAM ENTERPRISES GROUND FLOOR, SHOP NO.2 KHEMRAJ BHAVAN NEAR ALANKAR CINEMA MUMBAI 400 004 !' ./ ./PAN/GIR NO. AMDPB-5985-G ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : ARVIND KUMAR, LD. DR / DATE OF HEARING : 23/05/2017 / DATE OF PRONOUNCEMENT : 26 /05/2017 ITA NO.2047/MUM/2015 SHRAVAN K. BISHNOI ASSESSMENT YEAR-2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. IN THE CAPTIONED APPEAL FOR ASSESSMENT YEAR [AY] 2011-12, THE REVENUE IS AGGRIEVED BY RELIEF PROVIDED TO ASSESSEE ON ACCOUNT OF CERTAIN BOGUS PURCHASES BY LD. COMMISSIONER OF INCOME TAX (APPEALS)- 30 [CIT(A)], MUMBAI VIDE ORDER DATED 09/01/2015. NO NE HAS APPEARED ON BEHALF OF ASSESSEE DESPITE BEING PROVIDED WITH S UFFICIENT OPPORTUNITY OF BEING HEARD AND THEREFORE, WE PROCEED TO DECIDE THE APPEAL BASED ON MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE. 2. FACTS LEADING TO DISPUTE ARE THAT CONSEQUENT TO R ECEIPT OF CERTAIN INFORMATION OF BOGUS PURCHASES FROM SALES TAX DEPARTMENT, THE ASSESSEE, BEING RESIDENT INDIVIDUAL, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 VIDE ASSESSING OFFICER ORDER DATED 10/02/2014. THE ASSESSMENT WAS COMPLETED AT RS.67,6 2,500/- AFTER ADDITION OF RS.57,80,415/- U/S 69C ON ACCOUNT OF BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.9,82,080/- E-FILED BY THE ASSESSEE ON 21/09/2011 WHICH WAS PROCESSED U/S 143(1). THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF TRADING OF IRON & STEEL & PIPE FITTINGS. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS FOU ND TO HAVE MADE PURCHASES FROM THE FOLLOWING SUSPICIOUS DEALERS:- S.NO. NAME OF THE PARTY AMOUNT (RS.) 1. SIDDHIVINAYAK STEEL 49,49,311 2. SEEMANT TRADING COM 2,41,642 3 . BAJARANGI STEEL & METAL P.LTD 5,89,462/ - TOTAL 57,80,415/ - ITA NO.2047/MUM/2015 SHRAVAN K. BISHNOI ASSESSMENT YEAR-2011-12 3 NOTICES ISSUED U/S 133(6) REMAINED UN-SERVED. HOWEVER, TO SUPPORT THE PURCHASES, THE ASSESSEE PRODUCED LEDGER EXTRACTS, PURCHASE INVOICES, BANK STATEMENTS, CHART SHOWING DETAILS OF PURCHASES AND CORRESPONDING SALES, COPIES OF SALE BILL AND STATEMENT OF PEAK PO INT CALCULATION. HOWEVER, NOT CONVINCED, LD. AO PLACING RELIANCE OF VARIOUS JUDICIAL PRONOUNCEMENTS TREATED THE PURCHASES AS NON-GENUINE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED E XPENDITURE U/S 69C. 3. AGGRIEVED, THE ASSESSEE, CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 09/01/2 015 WHERE THE ASSESSEE PRODUCED ADDITIONAL EVIDENCES TO SUBSTANTI ATE THE PURCHASES, AGAINST WHICH REMAND REPORT WAS CALLED FROM THE AO. THE LD. CIT(A) AFTER CONSIDERING THE FACTUAL MATRIX PLACED RELIANC E ON SEVERAL JUDICIAL PRONOUNCEMENTS AND CONCLUDED THE MATTER IN THE FOLL OWING MANNER:- 2.4.38 AS NARRATED EARLIER, THE LD. A.O. IN THIS C ASE HAS HIMSELF HELD THAT THE PARTIES FROM WHOM THE PURCHASES WERE MADE BY THE APPELLANT WERE FOUND TO BE BOGUS AND THAT IS THE REASON FOR WHICH THEY WERE NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE MOTIVE BEHIND OBTAINING BOGUS BILL S, THUS, APPEARS TO BE INFLATION OF PURCHASE PRICE SO AS TO SUPPRESS TRUE PROFITS. I N ORDER TO ESTIMATE AS TO WHAT COULD BE THE GP WHICH THE APPELLANT HAS SUPPRESSED WHICH WAS EMBEDDED IN THE ALLEGED PURCHASES, IT IS SEEN THAT THE APPELLANT H AS SHOWN DIFFERENT GP % IN DIFFERENT YEARS THUS, BETRAYING ANY CLEAR PICTURE A BOUT THE ACTUAL GP. SUCH A VARIATION ALSO POINTS TO THE FACT THAT THE APPELLAN T HAS MANIPULATED HIS ACCOUNTS THOUGH LD. AO HAS NOT DOUBTED THE RECEIPTS FROM SAT E OF PRODUCTS. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF REASON ING GIVEN FOR ESTIMATION IN CIT VS. SIMIT P. SHETH , I HOLD THAT THE PROFIT ELEMENT EMBEDDED AND SUPPRES SED IN THE ALLEGED PURCHASES WERE TO THE EXTENT OF 25%. HENCE , ADDITION TO THE EXTENT OF 25 % IS UPHELD AND BALANCE IS DELETED. IN THIS CASE, HIGHER ESTIMATION IS ALSO MADE IN VIEW OF THE DETAILED INVESTIGATION CARRIED OUT B Y THE LD. AO WHICH HAS CLEARLY BROUGHT OUT THAT WHEN THE SO CALLED ACCOUNT PAYEE C HEQUES WERE ISSUED, THE SAME WERE WITHDRAWN IN CASH ON THE VERY SAME DAY OR THE IMMEDIATE NEXT FEW DAYS THUS, LEADING TO A PREPONDERANCE OF PROBABILITY THAT THE ENTIRE PURCHASE TO SUBSTANTIALLY ITA NO.2047/MUM/2015 SHRAVAN K. BISHNOI ASSESSMENT YEAR-2011-12 4 REDUCE HIS TRUE PROFITS. AS SEEN EARLIER IN THE CA SE OF VIJAY PROTEINS (SUPRA), THIS IS A CASE WHICH CALLS FOR THE DISALLOWANCE AS ABOVE AS T HE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GENUINENE SS OF THE PURCHASES [ KACHWALA GEMS 288 ITR 10 (SC)]. ACCORDINGLY, THE GROUND RAI SED IS PARTLY ALLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE ORDER OF LD. AO TO CONTEND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES MADE BY HIM IN ANY MANNER AND MERE PRODUC TION OF DOCUMENTS WAS NOT SUFFICIENT TO PROVE THE ACTUAL DE LIVERY OF GOODS. THE ASSESSEE FAILED TO PRODUCE THE PARTIES BEFORE LD. A O AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS. NOTICES ISSUED U/S 13 3(6) REMAINED UN- SERVED AND COMPLETE ONUS TO PROVE THE PURCHASES SQU ARELY LIED ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THER EFORE, RIGHTLY BEEN SADDLED WITH FULL DISALLOWANCE. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUMENTS OF L D. DR THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS O F PROVING THE PURCHASES AND IT COULD NOT PRODUCE EVIDENCES TO SHO W ACTUAL DELIVERY OF MATERIAL. HOWEVER, EVEN IF ALL THE PURCHASES ARE FO UND TO BE BOGUS, WE FIND THAT SALES TURNOVER HAS NOT BEEN DISPUTED BY T HE REVENUE AND MOREOVER, THE ASSESSEE IS IN POSSESSION OF BASIC PU RCHASE DOCUMENTS. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE TRANSA CTIONS, WHICH LD. CIT(A) HAS RIGHTLY DONE SO. THEREFORE, THE ORDER OF LD. CIT(A) BEING, FAIR AND REASONABLE, REQUIRE NO INTERFERENCE ON OUR PART AND THE SAME IS HEREBY CONFIRMED. ITA NO.2047/MUM/2015 SHRAVAN K. BISHNOI ASSESSMENT YEAR-2011-12 5 6. THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 26. 05.2017 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