ITO 6(2)(3), MUMBAI V. DIVYA INFOTECH P. LTD, MUMBAI

ITA 2328/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8699 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H M SINGH
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 23 2 8 /MUM/20 1 7 ( / ASSESSMENT YEAR : 20 09 - 1 0 ) INCOME TAX OFFICER, WARD 6( 2)(3), R NO.513, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S DIYA INFOTECH PVT. LTD, 107, MEHJABEEN ARCADE, 1 ST FL., 13A, CHAKALA CROSS - LANE, MUMBAI - 400003 ./ PAN : A A BCD3991M ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI H M SINGH / ASSESSEE BY : NONE / DATE OF HEARING : 4.9.2017 / DATE OF PRONOUNCEMENT : 25. 10 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS A PPEAL BY THE REVENUE PERTAINING TO ASSESSMENT YEAR 2009 - 10 AND IT IS DIRECTED AGAINST THE ORDER DATED 24.1.2017 PASSED BY THE LD. CIT(A) . 2. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE N OR ITS AUTHORIZED REPRESENTATIVE APP EARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE 2 I.T.A. NO. 23 2 8 /MUM/201 7 THROUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEALS OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD.DR. 3 . GROUND RAISED BY THE REVENUE IS AGAINST THE DELETION OF BOGUS PURCHASES AMOUNTING TO RS.10,41,04,371/ - FROM M/S AVANCE TECHNOLOGIES LTD. AND RS. 8,65,45,627/ - FROM M/S EMPOWER INDUSTRIES INDIA LTD BY THE LD.CIT(A) AS AGAINST 100% ADDITION MADE BY THE AO ON THE GROUND OF NON GENUINE PURCHASES THAT BILLS WERE RAISED FROM THE HAWALA DEALERS NOT EXISTING AT THE ADDRESSES GIVEN BY THE ASSESSEE. 4 . FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 19. 9.2009 DECLARING TOTAL INCOME OF RS. 6,83,272 / - UNDER THE NORMAL PROVISIONS OF INCOME TAX ACT, 1961. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 1 6 .1 2 .2011 ACCEPTING THE ASSESSED INCOME AT RS . 6,83,270/ - . THEREA FTER AO RECEIV ED THE INFORMATION FROM THE DGIT(INV) AND SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS RECEIVED BOGUS BILLS OF PURCHASES FROM TWO PARTIES VIZ. M/S AVANCE TECHNOLOGIES LTD. AND M/S EMPOWER INDUSTR IES INDIA LTD AGGREGATING TO 19,06,49,998 / - . IN VIEW OF THIS DEVELOPMENT, THE AO ISSUED NOTICE U/S 148 OF THE ACT DATED 21.3.2014 FOR REOPENING OF THE ASSESSMENT. THEREAFTER THE STATUTORY NOTICE U/S 143(2) WAS AND SERVED UPON THE ASSESSEE. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS MADE PURCHASES FROM THE TWO PARTIES LISTED IN THE 3 I.T.A. NO. 23 2 8 /MUM/201 7 WEBSITE OF SALES TAX DEPARTMENT, GOM AS A SUSPICIOUS DEALERS, WHO WE RE SUPPLYING BILLS TO THE PARTIES WITHOUT PROVIDING ACTUAL AND PHYSI CAL DELIVERY OF THE MATERIAL S . THEREFORE, THE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES ALONG WITH DOCUMENTARY EVIDENCES FAILING WHICH IT WOULD BE DEEMED AS BOGUS ENTRIES OF BILLS AND WOULD BE ADDED TO THE TOTAL INCOME OF THE AS SESSEE. THE AO ALSO ISSUED NOTICES TO THE PARTIES U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF PURCHASES BUT THE SAME WERE RETURNED UNSERVED . HOWEVER, THE AO WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT TH E ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE PURCHASES AND THEREFORE ADDED THE ENTIRE AMOUNT OF BOGUS PURCHASE TO THE TOTAL INCOME OF THE ASSESSEE BY ASSESSING THE INCOME AT RS.19,13,33,270 / - VIDE ASSESSMENT ORDER DATED 25.3.2015 PASSED U/S 143(3) R.W.S.147 OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE INCLUDING THE DECISIONS OF THE INCOME TAX APPELLATE TRIBUNAL AND DIRECTED THE AO TO RESTRICT THE ADDITION AT THE GROSS PROFIT EARNED BY THE APPELLANT AND WORK OUT THE DISALLOWANCE ACCORDINGLY. BEING AGGRIEVED BY THE ORDER OF FAA , THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 4 I.T.A. NO. 23 2 8 /MUM/201 7 5 . THE LD. DR RE - ITERATED THE FACTS OF THE CASE AND R ELIED UPON THE DECISION OF THE AO AND PRAYED THAT THE ORDER OF LD.CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED. 6 . AFTER HEARING THE LD. DR AND ON PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSEE UNDOUBTEDLY HAS AVAILED HAWALA ENTRIES FROM THE TWO PARTIE S MENTIONED ABOVE AND IS A BENEFICIARY OF BOGUS PURCHASES. NO DOUBT, THE PARTIES MENTIONED ABOVE ARE LISTED IN THE WEBSITE OF GOVERNMENT OF MAHARASHTRA AS A SUSPICIOUS DEALERS A ND PROVIDING BOGUS BILLS TO VARIOUS CLIENT S WITHOUT PROVIDING, SUPPLYING AND G IVING ACTUAL PHYSICAL POSSESSION OF THE MATERIALS MENTIONED IN THE BILLS. THE AO DISALLOWED AND ADDED 100% OF SUCH BOGUS PURCHASE TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS, CREDITWOR THINESS AND IDENTITY OF THE BILLS PROVIDERS AS ALSO THE NOTICE ISSUED U/S 133(6) RECEIVED BACK WITHOUT SERVICE. THE FAA DIRECTED THE AO TO APPLY GP RATE AS EARNED BY THE ASSESSEE ON THESE TRANSACTIONS ALSO . THE CIT(A), WITHOUT GIVING ANY FINDINGS ON TH E ISSUE AND ONLY ON THE BASIS OF ITAT DECISIONS CONCLUDED THE MATTER AND DIRECTED THE AO TO DECIDE THE ISSUE AS PER THE PRECEDENT LAID DOWN BY THE ITAT. WE ALSO FIND THAT IN THE SIMILAR AND IDENTICAL FACTS OF THE CASES, THE COORDINATE BENCHES HAVE BEEN TAKING A CONSISTENT VIEW THAT SOME PERCENTAGE ADDITION RANGING FROM 5% TO 12.50% OR A REASONABLE PERCENTAGE OF THE BOGUS PURCHASE TOWARDS SAVINGS VIZ, THE ASSESSEE MIGHT HAVE 5 I.T.A. NO. 23 2 8 /MUM/201 7 PURCHASED THE MATERIAL FROM GRAY MARKET THEREBY SAVING VAT AND OTHER INCIDENTAL T AXES. IN THE INSTANT, CASE, WE ARE OF THE OPINION THAT IT WOULD BE FAIR AND REASONABLE IF ADDITION IS RESTRICTED TO THE EXTENT OF 10 % OF THE BOGUS PURCHASES . ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO MAKE ADDITION AT TH E RATE OF 10 % OF THE BOGUS PURCHASES. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH OCT , 2017 . S D SD ( D.T.GARASIA ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 25 . 10 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / TH E CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI