ASST CIT 31(3), MUMBAI V. S.D. INDUSTRIES, MUMBAI

ITA 213/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3567 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2015
• Court: TRIBUNAL
• Department Lawyers: AJAY
• Assessee Lawyers: SANJAY KAPADIA
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.213/M/2015 (ASSESSMENT YEAR: 2009 - 2010 ) ACIT, CC - 31(3), C - 11, 7 TH FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. / VS. M/S. S.D. INDUSTRIES, 2/10, SINGH INDUSTRIAL ESTATE, RAM MANDIR ROAD, GOREGAON (W), MUMBAI 400 104. ./ PAN : AALFS5326C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AJAY, DR / RESPONDENT BY : SHRI SANJAY KAPADIA / DATE OF HEARING : 27 .06.2016 / DATE OF PRONOUNCEMENT : 25 .08.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 9.1.2015 IS AGA INST THE ORDER OF THE CIT (A) - 34 , MUMBAI DATED 15.10.2014 FOR THE ASSESSMENT YEAR 2009 - 2010 . IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND S WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 34,88,069/ - MADE ON ACCOUNT OF NON - GENUINE PURCHASES FROM 8 PARTIES AND DIRECTING THE AO TO ACCEPT THE GP @ 20% IGNORING THE FACT THAT SOME OF THESE PARTIES ARE INCLUDE D IN THE LIST OF SUSPICIOUS AND / OR HAWALA DEALERS PROVIDED BY THE SALES TAX DEPARTMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 34,88,069/ - MADE ON ACCOUNT OF PURCHASES MADE FROM 8 PARTIES AND DIRECTING THE AO TO ACCEPT THE GP @ 20% AS THE INCOME ESCAPED FROM TAX IGNOR ING THE FACT THAT THE SALES TAX COMMISSIONER HAS RECORDED THE STATEMENT OF THESE ALLEGED PARTIES BY WAY OF AFFIDAVIT THAT THESE DEALERS ARE ENGAGED IN THE BUSINESS OF ISSUE OF BILLS WITHOUT PHYSICAL DELIVER OF MATERIALS. 3. ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 34,88,069/ - MADE ON ACCOUNT OF PURCHASES MADE FROM 8 PARTIES AND DIRECTING THE AO TO ACCEPT THE GP @ 20% IGNORING THE FACT THAT NOTICES ISSUED U/S 133(6) OF THE ACT HAVE BEE N RECEIVED BACK UNSERVED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 34,88,069/ - MADE ON ACCOUNT OF PURCHASES MADE FROM 8 PARTIES AND DIRECTING THE AO TO ACCEPT THE GP @ 20% IGNORIN G THE FACT THAT THE ONUS LIES ON THE ASSESSEE TO PRODUCE THE CONCERNED PARTIES WHICH ASSESSEE FAILED TO DO. 2 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND LABOUR JOB OF ENGINEERING GOOD S. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 7,55,840/ - . ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 147 OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 42,43,90/ - WHICH INCLUDES ADDITION OF RS. 34,88,069/ - ON ACCOUNT OF BOGUS PURCHASES. AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 . DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , CIT (A) PARTLY ALLOWED THE ASSESSEES APPEAL. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RA ISING THE ABOVE MENTIONED GROUNDS. 4. AT THE OUTSET, LD REPRESENTATIVES OF BOTH THE PARTIES AGREED TO THE POINT THA T THE ISSUE I NVOLVED IN THE REVENUES APPEAL IS AGAINST THE RELIEF GRANTED BY THE CIT (A) ON THE ADDITION INVOLVING THE ACCOMMODATION ENTRI ES QUA THE PURCHASES FROM THE SUPPLIERS, WHOSE NAMES ARE LISTED BY THE SALES TAX DEPARTMENT IN THEIR WEBSITE IE WWW.MAHAVAT.GOV.IN AS SALES TAX DEFAULTERS. THEY ALSO FAIRLY MENTIONED THAT THE TRIBUNAL IS CONSISTENTL Y TAKING A VIEW ON THE ISSUE THAT BY NOT CONFIRMING SUCH BOGUS ADDITION SUPPLIED BY SUCH PARTIES RATHER THE TRIBUNAL IS CONSISTENTLY RESORTING TO CONFIRMING THE ADDITIONS TO GP OF THE CONCERNED ASSESSEES. IN THIS REGARD THEY BROUGHT OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI PRATAP U PUROHIT VIDE ITA NO.5296/M/2013 (AY 2010 - 2011), DATED 10.02.2016. FURTHER, THEY MENTIONED THAT IF THE SAID APPROACH OF CONFIRMING THE GP BASED ADDITIONS ON SUCH BOGUS PURCHASES INVOLVING SUCH TAINTED S UPPLIERS, WHOSE NAMES ARE APPEARED IN THE SAID WEBSITE OF THE SALES TAX DEPARTMENT, THE INSTANT APPEAL FILED BY THE REVENUE SHOULD BE DISMISSED UPHOLDING THE ORDER OF THE CIT (A). 5. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE A UTHORITIES IN GENERAL AND THE CONTENTS OF PARA 2.3 IN PARTICULAR, I FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION FROM THE SAID PARA IS EXTRACTED AS UN DER: - 2.3. .......... ........... 3 FURTHER, WHILE DEALING WITH THE ASSESSEES OWN CASE FOR AY 2010 - 2011 ON IDENTICAL ISSUE I HAVE HOLD THAT AVERAGE GP OF PAST THREE YEARS IE @ 20% OF THE BOGUS PURCHASES AFTER GIVING CREDIT FOR THE GP ALREADY OFFERED AND BALANCE AS ESCAPED INCOME FOR THE PURPOSES OF TAXATION VIDE MY ORDER IN APPEAL NO. CIT(A) - 34/IT - 96/13 - 14. THEREFORE, FOLLOWING THE SAME I HOLD THAT TO JUDGE SUCH INFLATED PUR CHASE / COST ESTIMATE GP AT 20% CONSIDERING THE AVERAGE GP OF PAST 3 YEARS AND ACCORDINGLY DIRECT THE AO TO ACCEPT THE GP @ 20% OF THE BOGUS PURCHASES AND GIVE CREDIT FOR THE GP ALREADY OFFERED ON SUCH PURCHASE AND TAX THE BALANCE AS ESCAPED INCOME FOR THE PURPOSES OF TAXATION & DELETE THE BALANCE ADDITION. 6 . CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INT ERFERENCE. ACCORDINGLY, GROUND S RAISED BY THE REVENUE ARE DI SMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 2 5 T H AUGUST, 2016. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 25 .8.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI