Zenith Construction Co., Panvel V. Deputy Commissioner of Income-tax,

ITA 2288/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7652 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 21-02-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Rejection of books of accounts; Unexplained expenditure
• Section: 143(3); 148

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 2 288 /P U N/201 6 / ASSES SMENT YEAR : 20 1 0 - 11 ZENITH CONSTRUCTION CO., C/O V.Y. MHATRE & CO., 103 & 104, SHAH PLAZA, PRABHU ALI, NEAR ADARSH LODGE, PANVEL 410206 . / APPELLANT PAN: A AAFZ2770N VS. THE DY. COMMISSIONER OF INCOME TAX , PANVEL CIRCLE, PANVEL . / RESPONDENT / APPELLANT BY : SHRI C.H. NANIWADEKAR / RESPONDENT BY : S HRI ACHAL SHARMA / DATE OF HEARING : 1 7 . 0 4 .201 8 / DATE OF PRONOUNCEMENT: 25 . 0 4 . 201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , THANE , DATED 1 4 . 0 7 .20 1 6 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (I N SHORT THE ACT) . ITA NO. 2 288 /P U N/20 1 6 ZENITH CONSTRUCTION CO. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE DECISION OF THE AO FOR REOPENING THE ASSESSMENT U/S 148 OF THE ACT WITHOUT ANY PROPER REASONS AND/OR WITHOUT HAVING ADDITIONAL COGENT EVIDENCE ON RECORDS. 2. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.3,52,993 ON ACCOUNT OF ALLEGED BOGUS PURCHASES BY THE ASSESSEE. THE LEARNED CIT (A) FAILED TO APPRECIATE THE FACTS AND EVIDENCES SU BMITTED BEFORE THE LEARNED AO AS WELL AS LEARNED CIT (A). THE LEARNED CIT (A) FURTHER ERRED IN UPHOLDING REJECTION OF BOOKS OF ACCOUNTS AND TREATING GENUINE TRANSACTIONS AS HAWALA TRANSACTIONS. 3. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING ADDITION OF RS.3,52,933 SUSTAINED BASED ON AMOUNTS CALCULATED BY CONSIDERING THE GROSS PROFIT RATIO OF AY 2008 - 09 AS AGAINST ESTIMATED GROSS PROFIT THEREON FOR THE CURRENT ASSESSMENT YEAR. 3. THE ISSUE IN GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS A GAINST REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF BOGUS PURCHASES AT 3,52,993/ - . 5. BRIEFL Y, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN CIVIL CONSTRUCTION. THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE HAD MADE PURCHASES FROM THE PERSONS AGAINST WHOM INFORMATION HAD BEEN COLL ECTED BY THE SALES TAX DEPARTMENT FOR ALLEGED NON - PAYMENT OF VAT. AS PER INFORMATION RECEIVED, THE ASSESSEE HAD MADE PURCHASES OF 4,888/ - FROM MARUTI STEEL TRADERS AND 3,48,405/ - FROM ROHIT ENTERPRISES , TOTALING 3,52,993/ - . THE ASSESSING OFFICER CONFRONTED THE ASSESSEE IN RESPECT OF SAID INFORMATION. THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT THE PURCHASES MADE FROM ALLEGED PARTIES WERE GENUINE. NO DELIVERY SLIPS, TRANSPORT RECEIPTS, OCTROI RECEIPTS, ETC. WERE ITA NO. 2 288 /P U N/20 1 6 ZENITH CONSTRUCTION CO. 3 FURNISHED BEFORE THE ASSESSING OFFICER. THE ASSESSEE THOUGH MAINTAINED THAT THE GOODS PURCHASES HAVE BEEN UTILIZED FOR ITS CIVIL CONSTRUCTION WORK BUT TH E SAID PLEA OF ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY EVIDENCE OF CONSUMPTION BEING AVAILABLE WITH THE ASSESSEE. ACCORDINGLY, THE SAID PURCHASES WERE TREATED AS UNEXPLAINED EXPENDITURE AND WERE ADDED IN THE HANDS OF ASSESSEE. 6. BEFORE THE CIT(A), THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT TRANSACTIONS WERE SUPPORTED BY PROPER DOCUMENTARY EVIDENCE AND THE PAYMENTS TO SAID PARTIES AGAINST PURCHASES WERE THROUGH BANKING CHANNELS. FURTHER, THE ASSESSE E POINTED OUT THAT IT HAD PAID VAT TO THE CREDIT OF STATE GOVERNMENT AGAINST ALLEGED HAWALA PURCHASES. THE CIT(A) NOTED THAT THE ASSESSEE HAD NOT FURNISHED REQUISITE DETAILS TO ESTABLISH THE GENUINENESS OF SAID PURCHASES. IN VIEW THEREOF, THE ORDER OF AS SESSING OFFICER WAS UPHELD BY THE CIT(A), IN TURN, RELYING ON SERIES OF DECISIONS. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT TOTAL TURNOVER OF ASSESSEE FOR THE YEA R WAS 3.38 CRORES, AGAINST WHICH PURCHASES MADE FROM ALLEGED HAWALA PARTIES WERE VERY MEAGER AND THERE IS NO MERIT IN THE AFORESAID ADDITION. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHOR ITIES BELOW. ITA NO. 2 288 /P U N/20 1 6 ZENITH CONSTRUCTION CO. 4 10. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES MADE FROM ALLEGED DEFAULTERS OF VAT. THE SAID INF ORMATION WAS COLLECTED BY THE SALES TAX DEPARTMENT AND WAS GIVE N TO THE ASSESSING OFFICER, WHO IN TURN, REOPENED THE ASSESSMENT UNDER SECTION 148 OF THE ACT AND ASKED THE ASSESSEE TO JUSTIFY THE PURCHASES MADE FROM SAID BOGUS DEALERS. THE ASSESSEE BESIDES STATING THAT IT HAD CONSUMED THE GOODS PURCHASED FROM THE SAID PARTIES IN HIS BUSINESS OF CIVIL CONSTRUCTION, HA D NOT PLACED ON RECORD ANY TRAIL OF GOODS. FURTHER CONTENTION OF ASSESSEE WAS THAT THE PAYMENT HA D BEEN MADE TO THE SAID PARTIES THROUG H BANKING CHANNELS, BUT THE SAME CANNOT BE BASIS FOR ALLOWING PURCHASES AS GENUINE IN THE HANDS OF ASSESSEE, IN VIEW OF INFORMATION COLLECTED BY THE SALES TAX DEPARTMENT. ACCORDINGLY, THERE IS NO MERIT IN THE PLEA OF ASSESSEE AND HENCE ADDITION OF 352,993/ - IS UPHELD IN THE HANDS OF ASSESSEE. IN THIS REGARD, RELIANCE IS PLACED ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO A SSESSMENT YEAR 2010 - 11, ORDER DATED 28.04.2017. UPHOLDING THE ORDER OF CIT(A), GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 1 1 . IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF APRIL , 201 8 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 25 TH APRIL , 201 8 . GCVSR ITA NO. 2 288 /P U N/20 1 6 ZENITH CONSTRUCTION CO. 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPON DENT; 3. ( ) / THE CIT(A) - 2 , THANE ; 4. THE PR. CIT - 2, THANE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY / / / SR. PRIVATE SECRETARY , / ITAT, PUNE