AHAN APPAREL P.LTD, MUMBAI V. DCIT 9(1)(1), MUMBAI

ITA 2230/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7247 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K CHATURVEDI
• Keywords: Bogus purchase; Unexplained cash credit; Accommodation entries; Capital receipt
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENC H MUMBAI BEFORE SHRI SAKTIJIT DEY, JM & SHRI G. MANJUNATHA , AM ITA NO.2230/MUM/2017 ( ASSESSMENT YEAR :2012-13 ) M/S AHAN APPAREL PVT.LTD. D-202, SONMARG APARTMENT, S.V.MART, MALAD WEST MUMBAI-400 064 VS. DCIT-9(1)(1) MUMBAI PAN/GIR NO. AAECA0983D APPELLANT ) .. RESPONDENT ) ASSESSEE BY NONE REVENUE BY V.K. CHATURVEDI DATE OF HEARING 26/06/2019 DATE OF PRONOUNCEME NT 24 / 0 7 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LD CIT(A)-16, MUMBAI, DATED 20/12/2016 AND IT PERTAINS TO ASSESSMENT YEAR-2012-13. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LD. CIT(APPEALS) ERRED IN SUSTAINING ADDITIO N OF RS. 1,57,00,000/- MADE BY ASSESSING OFFICER IN RESPECT OF UNEXPLAINED CASH CREDIT AND MADE ADDITION U/S 68 OF THE ACT. 2. THE LD. CIT (APPEALS) ERRED IN SUSTAINING ADDITI ON OF RS. 1,02,25,513/- MADE BY ASSESSING OFFICER IN RESPECT OF HAWALA PURC HASES. 3. IN SO DOING HE DID NOT APPRECIATE THE MATERIAL & SUBMISSIONS MADE BEFORE HIM. 4.YOUR APPELLANT SUBMITS THAT DUE RELIEF BE ALLOWED . ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 2 5. THE APPELLANT COMPANY CRAVES TO ADD TO, ALTER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER , AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF TEXTILES, FILED ITS RETURN OF INCOME FOR AY 2012-13 ON 27/09/ 2012, DECLARING TOTAL INCOME AT RS.3,37,27,955/-. THE CASE WAS SELE CTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS ISSUED SHARES AT PREMIUM OF RS.195 PER SHARE AND ALSO FORFEITURE SUCH SHARES FO R NON-PAYMENT OF BALANCE CONSIDERATION BY THE ALLOTTEES, THEREFORE, CALLED UPON THE ASSESSEE TO FURNISH NECESSARY DETAILS TO PROVE GENU INENESS OF TRANSACTIONS. IN RESPONSE, THE ASSESSEE HAS FILED D ETAILS INCLUDING COPY OF ITR FILED FOR THE RELEVANT YEARS, PAN NUMBE RS, FINANCIAL STATEMENT AND LEDGER ACCOUNT OF THE SUBSCRIBERS TO THE SHARE CAPITAL. THE ASSESSING OFFICER, IN ORDER TO ASCERTAIN CORREC TNESS OF CLAIM OF THE ASSESSEE, ISSUED SUMMONS U/S 131 OF THE ACT, TO THE PRINCIPLE OFFICER OF SUBSCRIBERS COMPANIES, BUT, NO COMPLIANC E BY ANY OF THE SUBSCRIBERS COMPANY TO SUMMONS ISSUED U/S 131 OF TH E ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HA S NOT FILED ANY DETAILS IN RESPECT OF FORFEITURE OF MONEY RECEIVED FROM THOSE TWO APPLICANTS FOR ALLOTMENT OF PREFERENCES THAT TOO, W ITHIN SHORT SPAN OF LESS THAN A YEAR, THEREFORE, HE OPINED THAT THE TRA NSACTIONS BETWEEN ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 3 THE PARTIES APPEARS TO BE SHAM AND ACCORDINGLY MADE ADDITIONS TOWARDS AMOUNT RECEIVED FROM TWO SUBSCRIBERS FOR AL LOTMENT OF SHARES AMOUNTING TO RS.1,62,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. SIMILARLY, THE ASSESSING OFFICER FUR THER NOTICED THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASES BILLS FROM SI DHAPAD TRADING PVT. LTD. AND CITY BASE MULTI TRADE LTD. AM OUNTING TO RS.8,18,04,105/-. THE ASSESSING OFFICER, FURTHER OB SERVED THAT BOTH PARTIES ARE APPEARED IN THE LIST OF HAWALA/SUSPICIO US DEALERS PREPARED BY THE MAHARASHTRA SALES TAX DEPARTMENT, G OVT. OF MAHARASHTRA, THEREFORE, AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL P RECEDENCE, INCLUDING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF P. SIMITH SHETH VS CIT (356 ITR 451) ESTIMATED 1 2.5% PROFIT ON ALLEGED BOGUS PURCHASES AMOUNTING TO RS.8,18,04,105 /- AND MADE ADDITIONS OF RS.1,02,25,513/- TO THE TOTAL INCOME O F THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) , THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSE SSING OFFICER TO ARGUE THAT SHARE CAPITAL RECEIVED FROM TWO SUBSCRIB ERS COMPANIES ARE GENUINE WHICH ARE SUPPORTED BY NECESSARY EVIDEN CES. THE ASSESSEE HAS FORFEITED AMOUNT RECEIVED FROM TWO COM PANIES FOR NON-PAYMENT OF BALANCE CONSIDERATION WITHIN THE AGR EED PERIOD ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 4 BETWEEN THE PARTIES, THEREFORE, MERELY FOR THE REAS ON OF FORFEITURE OF SHARES, THE TRANSACTIONS BETWEEN THE PARTIES CANNOT BE DOUBTED WHEN THE ASSESSEE HAS FILED COMPLETE SET OF DOCUMEN TS INCLUDING IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. SIMILARLY, THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER TO ARGUE THAT PURCHASE FROM ABOVE TWO PARTIES ARE SUPPORTED BY NECESSARY EVIDENCE AND THE ASSESSING OFFICER HAS MADE ADDITIONS ONLY ON THE BASIS OF INF ORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, WI THOUT ASCERTAINING TRUE NATURE OF TRANSACTIONS BETWEEN TH E PARTIES,EVEN, THOUGH, THE ASSESSEE HAS FILED COMPLETE SET OF DOCU MENTS TO PROVE GENUINENESS OF TRANSACTION BETWEEN THE PARTIES. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL P RECEDENCE, INCLUDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT (214 ITR 801)(SC) HELD THAT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF TRANSACTIONS BETWEEN THE PARTIES AND ALSO FAILED TO OFFER ANY EXPLANATION FOR FORFEITURE OF SHARES WITHIN A SHORT SPAN LESS THAN A YEAR, THEREFORE, THE ASSESSI NG OFFICER WAS RIGHT IN MAKING ADDITION TOWARDS AMOUNT RECEIVED FR OM TWO SUBSCRIBERS AS UNEXPLAINED CASH CREDIT U/S 68 OF TH E ACT. SIMILARLY, AS REGARDS ADDITIONS MADE TOWARDS ALLEGED BOGUS PUR CHASES, THE ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 5 LD. CIT(A) HELD THAT THE FACTS BROUGHT OUT BY THE L D. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CLEARLY ESTABLISH ED THE NATURE OF TRANSACTIONS BETWEEN THE PARTIES, AS PER WHICH THE ASSESSEE HAS FAILED TO PROVE PURCHASES FROM ABOVE TWO PARTIES WI TH NECESSARY EVIDENCES. THIS FACT IS FURTHER STRENGTHENED BY THE FINDINGS OF THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA WHERE TH E PARTIES HAVE ADMITTED IN THEIR STATEMENT THAT THEY ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY BUSI NESS ACTIVITIES. THE ASSESSING OFFICER AFTER CONSIDERING THE RELEVAN T SUBMISSIONS AND BY FOLLOWING THE DECISION OF THE HONBLE GUJARA T HIGH COURT IN THE CASE OF P. SIMIT SHETH (SUPRA), FAIRLY ESTIMATE D PROFIT EMBEDDED IN THOSE BOGUS PURCHASES @12.5%, THEREFORE, HE OPIN ED THAT NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. AS SESSING OFFICER AND ACCORDINGLY, DISMISSED THE GROUND TAKEN BY THE ASSE SSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. NONE APPEARED FOR THE ASSESSEE. 7. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIAL A VAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. IN RESPECT OF ADDITIONS MADE TOWARDS CAPITAL RECEIPT FROM TWO SUBSCRIBER COMPANIES U/S 68 OF THE ACT, WE FIND THAT THE ASSES SING OFFICER AS WELL AS THE LD. CIT(A) HAVE BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY, GENU INENESS OF ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 6 TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES WI TH CONCLUSIVE EVIDENCES. THE LOWER AUTHORITIES FURTHER OBSERVED T HAT ALTHOUGH THE ASSESSEE FILED CERTAIN DOCUMENTS IN ORDER TO PROVE THE IDENTITY OF THE PARTY BUT, MERE FURNISHING CERTAIN DOCUMENTS INCLUD ING PAN NUMBER WOULD NOT SUFFICIENT ENOUGH TO DISCHARGE THE ONUS C AST UPON THE ASSESSEE U/S 68 OF THE ACT. THE LOWER AUTHORITIES F URTHER OBSERVED THAT THE CONDUCT OF THE PARTIES IN SO FAR AS ALLOTM ENT OF PREFERENTIAL SHARES BY ACCEPTING PART AMOUNT AND SUBSEQUENT FORF EITURE OF AMOUNT RECEIVED FROM PARTIES FOR NONPAYMENT OF BALA NCE CONSIDERATION FOR ALLOTMENT OF SHARES GIVES RISE TO SUSPICION. THEREFORE, IT IS FOR THE ASSESSEE TO DISCHARGE THE ONUS CAST UPON IT BY FILING NECESSARY EVIDENCES. SINCE, THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION FOR FORFEITURE OF SHARES AND ALSO F AILED TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES, CAME TO THE CONCLUSION THAT TRANSACTION BETWEEN THE PARTIES ARE SHAM, WHICH ARE NOT SUPPORTED BY NECESSARY DETA ILS. FACTS REMAINS UNCHANGED, THE ASSESSEE NEITHER APPEARED NO R FILED ANY DETAILS BEFORE US TO CONTROVERT FINDINGS OF THE FA CTS RECORDED BY THE LOWER AUTHORITIES. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT THERE IS NOTHING TO OFFER FROM THE ASSESSEE SIDE IN ORDER TO PROVE THE TRANSACTIONS OF ALLOTMENT OF SHARES TO TWO SUBSCRIB ERS WITH ANY ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 7 EVIDENCES AND HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) AND REJECT GROUND TAKEN BY THE ASSESSEE. 8. COMING BACK TO THE ADDITIONS MADE TOWARDS PROFIT ELEMENT EMBEDDED IN ALLEGED BOGUS PURCHASES. WE FIND THAT T HE ASSESSING OFFICER HAS BROUGHT OUT CLEAR FACTS IN THE LIGHT OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTR A, COUPLED WITH FURTHER ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT PURCHASES FROM ABOVE TWO PARTIES A RE BOGUS IN NATURE WHICH ARE NOT SUPPORTED BY NECESSARY EVIDENC E. ALTHOUGH, THE ASSESSEE HAS FILED PRIMARY EVIDENCES IN FROM OF PURCHASE BILLS AND PAYMENT PROOF TO SUCH PURCHASES AGAINST BANKING CHANNEL, BUT FAILED TO FILE FURTHER EVIDENCES IN THE BACK DROP O F CLEAR FINDINGS FROM THE SALES TAX DEPARTMENT THAT THEY ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL BUSINESS ACTIV ITY. EVEN BEFORE US, THE ASSESSEE NEITHER APPEARED NOR FILED ANY DET AILS TO CONTROVERT THE FINDINGS OF FACT RECORDED BY THE ASSESSING OFFI CER AS WELL AS THE LD. CIT(A). WE FURTHER NOTED THAT THE ASSESSING OFF ICER HAS TAKEN SUPPORT FROM THE RATIO OF HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS SIMIT P. SHETH (SUPRA), WHERE THE HONBLE HI GH COURT HELD THAT IN CASE OF ALLEGED BOGUS PURCHASES, ONLY PROFI T ELEMENT EMBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT ENTIRE ALLEGED BOGUS PURCHASES. THE COURT FURTHER OBSERVED THAT THE PROFIT ITA NO.2230/MUM/2017 AHAN APPAREL PVT.LTD. 8 ELEMENT REQUIRED TO BE TAXED NEEDS TO BE ASCERTAINE D DEPENDING UPON FACTS OF EACH CASE AND ACCORDINGLY CONSIDERING THE FACTS OF CASE BEFORE THE COURT DIRECTED THE ASSESSING OFFICE R TO ESTIMATE AT 12.5% PROFIT ON ALLEGED BOGUS PURCHASES. THE CO-ORD INATE BENCH OF THE TRIBUNAL IN NUMBER OF CASES HAS TAKEN CONSISTEN T VIEW AND DIRECTED THE ASSESSING OFFICERS TO ESTIMATE 12.5% P ROFIT ON ALLEGED BOGUS PURCHASES. IN THIS CASE, THE ASSESSING OFFIC ER HAS ESTIMATED PROFIT @12.5% ON ALLEGED BOGUS PURCHASES. THEREFORE , WE ARE OF THE CONSIDERED VIEW THAT THE THERE IS NO REASON TO INTE RFERE WITH THE FINDINGS OF THE ASSESSING OFFICER, HENCE, WE ARE IN CLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) AND REJECT GROUND TAKEN BY THE ASSESSEE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 /07/2019 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 /07/2019 SHASHISHEKHAR SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//