ITO 19(3)(4), MUMBAI V. SURESH K. NANDU, MUMBAI

ITA 2189/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0528 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: DINKLE HARIYA LD
• Keywords: Bogus purchase
• Section: 69C; 143(3); 133(6)

Judgement Text

ITA NO.2189/MUM/2016 & CO NO. 175/M/17 SURESH K.NANDU ASSESSMENT YEAR-2011-2012 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2189/MUM/2016 & CO NO. 175/M/2017 ( / ASSESSMENT YEARS: 2011-12) INCOME TAX OFFICER 19 ( 3 )( 4 ) MATRU MANDIR MUMBAI 400 007 / VS. SURESH K. NANDU B-52, PANNALAL TERRACE LAMINGTON ROAD GRANT ROAD MUMBAI-400 007 ! ./ ./PAN/GIR NO. AAAPN-4085-G ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : DINKLE HARIYA, LD. AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 01/08/2017 / DATE OF PRONOUNCEMENT : 02 /08/2017 ITA NO.2189/MUM/2016 & CO NO. 175/M/17 SURESH K.NANDU ASSESSMENT YEAR-2011-2012 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2011- 12 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-30 [CIT(A)], MUMBAI DATED 08/01/2016. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE SAME. THE ONLY ISSUE INVOLVED IN THE APPEAL IS QUANTUM ADDITION AGAINST CERTAIN BOGUS PURCHASES. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN WHOLESALE TRADING OF READYMADE GARMENTS UNDER PROPRIETORSHIP CONCERN NAMELY RUTU COLLECTION, WAS ASSESSED U/S 143(3) FOR IMPUGNED AY ON 25/03/2014 AT RS.50,14,620/- AFTER SOLE ADDITION OF RS.33,61,535/- U/S 69C QUA CERTAIN BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.16,53,081/- E-FILED BY THE ASSESSEE ON 28/09/2011. THE ASSESSEE REFLECTED TURNOVER OF RS.10.86 CRORES WITH GP RATE OF 9.89%. 2.1 DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE MADE PURCHASES FROM 6 PARTIES AGGREGATING RS.33,61,535/- WHICH WERE LISTED AS NON-GENUINE PARTIES AS PER INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT . THE NOTICES ISSUED U/S 133(6) TO CONFIRM THE TRANSACTIONS WERE RETURNED UN-SERVED AS THE PARTIES WERE NOT FOUND AT THE GIVEN ADDRESSES AND THE SAME WAS CONFR ONTED TO THE ASSESSEE. THE ASSESSEE SUBMITTED LEDGER EXTRACTS, P URCHASES INVOICES AND STOCK REGISTER TO SUBSTANTIATE THE PURCHASES AN D STRESSED THAT WITHOUT PURCHASES, THERE COULD NOT BE ANY SALE. HOW EVER, NOT CONVINCED, LD. AO CONCLUDED THAT THE ASSESSEE FAILED TO PROVE THE ACTUAL DELIVERY OF ITA NO.2189/MUM/2016 & CO NO. 175/M/17 SURESH K.NANDU ASSESSMENT YEAR-2011-2012 3 MATERIAL AND THEREFORE ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 08/01/2 016 WHERE THE LD. CIT(A) AFTER APPRECIATING THE CONTENTIONS OF THE AS SESSEE AND GP RATE REFLECTED BY THE ASSESSEE RESTRICTED THE SAME TO 12 .5% OF BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, WHILE SUPPO RTING THE STAND TAKEN BY LD. AO, CONTENDED THAT THE ASSESSEE COULD NOT PROVE ACTUAL DELIVERY OF MATERIAL AND MERE PAYMENT THROUGH BANKI NG CHANNELS WAS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASES. MOREOVER, NONE OF THE SUPPLIER WAS FOUND AT THE GIVEN ADDRESS AND THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIE ON THE ASSE SSEE WHICH HE HAS FAILED TO DISCHARGE AND THEREFORE, FULL DISALLOWANC E THEREOF WAS JUSTIFIED. 4.1 PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW ATTENTION TO TH E FACT THAT WITHOUT SALE, THERE COULD BE NO PURCHASE. THE ASSESSEE WAS IN POSSESSION OF PURCHASES INVOICES, PAYMENTS WERE THR OUGH BANKING CHANNELS AND REFLECTED GP RATE WAS ON THE HIGHER SI DE AND THEREFORE, THE ACTION OF LD. CIT(A) IN RESTRICTING THE ADDITIO N TO 12.5% WAS JUSTIFIED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AS IT COULD NOT PRODUCE EVIDENCES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LE TTERS FROM THE ALLEGED BOGUS SUPPLIERS AND THUS FAILED TO SUBSTANTIATE THE PURCHASES. HOWEVER, AT THE SAME TIME, THE ASSESSEE IS IN POSSESSION OF PURCHASE INVOICES, ITA NO.2189/MUM/2016 & CO NO. 175/M/17 SURESH K.NANDU ASSESSMENT YEAR-2011-2012 4 PAYMENTS ARE THROUGH BANKING CHANNELS & DECLARED GP RATE WAS COMMENSURATE WITH OTHER YEARS AND THEREFORE, WHOLE ADDITION WAS NOT JUSTIFIED IN VIEW OF THE FACT THAT EVEN IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, THE SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, WE UPHELD T HE SAME AND SEE NO REASON TO INTERFERE WITH THE SAME. 6. RESULTANTLY, THE REVENUES APPEAL AS WELL AS ASS ESSEES CROSS OBJECTIONS STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02 .08.2017 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. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI