ABDULQADIR A DOHADWALA, MUMBAI V. ACIT 13(3), MUMBAI

ITA 2224/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 05-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN LD
• Assessee Lawyers: MUKARRAM H SADIKOT LD
• Keywords: Bogus purchase; Business expenditure
• Section: 143(3); 133(6); 194C

Judgement Text

ITA NO.2224/M/2015 SHRI ABDULQADIR A DOHADWALA ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO. 2224/MUM/2015 ( [ [ / ASSESSMENT YEAR: 2010-2011) SHRI ABDULQADIR A. DOHADWALA 171 ZAKARIA MASJID ST FIRST FLOOR MUMBAI 400 009. / VS. ASSISTANT COMMISSIONER OF INCOME TAX 13(3) MUMBAI ./ ./PAN/GIR NO. AEMPD-1651-E ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MUKARRAM H.SADIKOT, LD. AR / RESPONDENT BY : SHRI K.RAVIKIRAN, LD. DR / DATE OF HEARING : 04/04/2017 / DATE OF PRONOUNCEMENT : 04 /04/2017 2 ITA NO.2224/M/2015 SHRI ABDULQADIR A DOHADWALA ASSESSMENT YEAR 2010-11 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-2011 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-46 [CIT(A)], MUMBAI DATED 16/02/2015 QUA CONFIRMATION OF PENALTY U/S 271(1)(C) FOR RS.11,51,670/- . 2. BRIEFLY STATED THAT THE ASSESSEE IS A RESIDENT INDIVIDUAL WHO WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) FOR IMPUGNED AY VIDE ASSESSING OFFICER [AO] ORDER DATED 28/03/2013 WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 94,99,720/- AS AGAINST RETURNED INCOME OF RS.16,50,314/- AFTER MAKING CERTAIN DISALLOWANCES. THE ASSESSEE WAS ENGAGED AS BUILDERS AND CONTRACTORS AND REFLECTED TURNOVER OF RS.22,68,35,410/-. THE ASSESSEE WAS FOUND TO HAVE MADE CERTAIN PURCHASES FROM THE FOLLOWING PARTIES:- NO. NAME OF THE SUPPLIER AMOUNT (RS.) 1. M/S ROHIT ENTERPRISES 6,64,945/- 2. M/S TEAM TRADING EST. LTD. 7,08.928/- DURING ASSESSMENT PROCEEDINGS, AO NOTED THAT THE NAME OF THE FIRST SUPPLIER WAS LISTED AS BOGUS BILL PROVIDER AS PER THE INFORMATION RECEIVED FROM THE MAHARASHTRA VAT DEPARTMENT AND FURTHER THE NOTICES ISSUED TO THE SAID SUPPLIER U/S 133(6) REMAINED UN-SERVED AND THE ACTUAL INSPECTION OF THE ADDRESS REVEALED THAT THE SAID PARTY DID NOT EXIST AT THE REGISTERED ADDRESS. SIMILARLY, THE SECOND SUPPLIER REVEALED TRANSACTION OF ONLY RS.97,300/-WITH THE ASSESSEE AS AGAINST RS.7,08,928/- REFLECTED BY THE ASSESSEE. THESE DISCREPANCIES / SHORTCOMINGS LED TO ADDITION OF RS.12,76,573/- IN THE HANDS OF THE ASSESSEE AS BOGUS PURCHASES. SIMILARLY, THE ASSESSEE PAID LABOR CHARGES TO CERTAIN PARTIES AND TO CONFIRM THE SAME, NOTICES U/S 133(6) WERE ISSUED TO FOUR PARTIES BUT NOTICES WERE RETURNED BACK UNDELIVERED BY THE POSTAL AUTHORITIES. THE ASSESSEE CONTENDED THAT ALL PAYMENTS WERE MADE 3 ITA NO.2224/M/2015 SHRI ABDULQADIR A DOHADWALA ASSESSMENT YEAR 2010-11 THROUGH BANKING CHANNELS AFTER DEDUCTING TDS @1% U/S 194C AND HENCE THE SAME CONSTITUTE GENUINE BUSINESS EXPENSES OF THE ASSESSEE. HOWEVER, NOT CONVINCED, AO DISALLOWED LABOR EXPENSES OF RS.25,62,318/- IN RESPECT OF FOUR PARTIES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. CONSEQUENTLY, THE ASSESSEE WAS SADDLED WITH A PENALTY OF RS.11,51,670/- U/S 271(1)(C) FOR BOTH THESE ADDITIONS VIDE AO PENALTY ORDER DATED 30/09/2013 WHICH WAS ALSO CONFIRMED BY THE LD. FIRST APPELLATE AUTHORITY VIDE ORDER DATED 16/02/2015 WHICH HAS BEEN CONTESTED BEFORE US. DURING PENALTY PROCEEDINGS, THE ASSESSEE CONTENDED THAT THE PURCHASES WERE GENUINE AND THE MATERIAL WAS USED AT VARIOUS SITES OF THE ASSESSEE. SIMILARLY, REGARDING LABOR PAYMENTS, IT WAS CONTENDED THAT THE REQUISITE DETAILS VIZ. NAME, ADDRESS AND PAN OF THE LABOR CONTRACTORS WERE MADE AVAILABLE TO AO DURING ASSESSMENT PROCEEDINGS AND ALL LABOR PAYMENTS WERE MADE THROUGH BANKING CHANNELS AFTER DEDUCTION OF TAX AT SOURCE, AS APPLICABLE. HENCE, THERE WAS NO WILLFUL DEFAULT ON THE PART OF THE ASSESSEE SO AS TO ATTRACT THE IMPUGNED PENALTY. HOWEVER, THE CONTENTIONS WERE REJECTED AND THE PENALTY WAS CONFIRMED. 3. BEFORE US, THE LD. COUNSEL FOR ASSESSEE [AR] PLEADED FOR THE DELETION OF THE PENALTY ON THE GROUND THAT THE PURCHASES WERE DULY SUPPORTED BY THE PURCHASE INVOICES AND THE PURCHASES WERE GENUINE AND THE ASSESSEE WAS NOT AWARE ABOUT THE ACTIVITIES OF THE SUPPLIERS. THE ASSESSEE COULD NOT PRODUCE TRANSPORT RECEIPTS DUE TO NATURE OF BUSINESS AND MERE FAILURE TO PRODUCE THE SAME DOES NOT VITIATE THE CLAIM OF THE ASSESSEE. REGARDING LABOR PAYMENTS, OUR ATTENTION WAS DRAWN TO THE TDS DETAILS FOR ALL THE QUARTERS TO CONTEND THAT DUE TDS WAS DEDUCTED FROM THE SAID PAYMENT AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. FURTHER, THE ASSESSEE PRIMA FACIE DISCHARGED THE INITIAL ONUS OF PROVING THE EXPENSES BY PROVIDING REQUISITE DETAILS TO AO DURING ASSESSMENT PROCEEDINGS. FURTHER, THE ASSESSEE DULY ACCEPTED THE QUANTUM ADDITIONS TO MAKE UP FOR THE DISCREPANCIES AND SHORTCOMINGS AND HENCE, DO NOT DESERVE PENALTY ON THE FACTS OF THE CASE. PER CONTRA, THE LD. DR SUPPORTED THE STAND TAKEN BY THE LOWER AUTHORITIES. 4 ITA NO.2224/M/2015 SHRI ABDULQADIR A DOHADWALA ASSESSMENT YEAR 2010-11 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. SO FAR AS THE PENALTY QUA BOGUS PURCHASES IS CONCERNED, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF LOWER AUTHORITIES AS THE PURCHASES REMAINED UNSUBSTANTIATED AND THE ASSESSEE FAILED TO PROVE THE ACTUAL DELIVERY OF MATERIAL. THEREFORE, THE PENALTY AGAINST ADDITION OF RS.12,76,573/- QUA BOGUS PURCHASES IS CONFIRMED. HOWEVER, REGARDING LABOR PAYMENTS, WE FIND STRENGTH IN THE ARGUMENTS OF THE LD. AR THAT THE ASSESSEE, TO A FAIR EXTENT, HAS SUCCESSFULLY DISCHARGED INITIAL ONUS OF PROVING THE EXPENSES BY SUPPLYING THE REQUISITE DETAILS AND MOREOVER, THE PAYMENTS ARE THROUGH BANKING CHANNELS AFTER DEDUCTION OF DUE TDS. THEREFORE, PENALTY, AT LEAST, TO THAT EXTENT IS NOT WARRANTED FOR KEEPING IN VIEW THE CONDUCT OF THE ASSESSEE. THEREFORE, WE DELETE PENALTY AGAINST ADDITION OF RS.25,62,318/- QUA LABOR PAYMENTS. THE AO IS DIRECTED TO RE-WORK THE PENALTY IN THE LIGHT OF OUT ABOVE ORDER. 5. THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH APRIL, 2017. (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.04.2017 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 5 ITA NO.2224/M/2015 SHRI ABDULQADIR A DOHADWALA ASSESSMENT YEAR 2010-11 / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI