MRUNAL RAHUL WARADKAR, MUMBAI V. DCIT 15(2), MUMBAI

ITA 2368/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8705 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Bogus purchase
• Section: 69C; 143(3); 142(1); 133(6)

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 68 /MUM/20 17 ( / ASSESSMENT YEAR : 20 11 - 12 ) MRS.MRUNAL RAHUL WARADKAR, (NEE MRUNAL SHAMSUNDAR NAIK) 4 TH FLOOR, APPOLLO ARCATE , R K SINGH MARG, OPP PARSI PANCHYAT ROAD, ANDHERI (E), MUMBAI - 400069 / VS. ASSTT .COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE 15(2) , MATRU MANDIR, GRANT ROAD, MUMBAI - 400007 . ./ PA N : ADFPN8528A ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : NONE / RE VENUE BY : SHRI RAJAT MITTAL / DATE OF HEARING : 4.9.2017 / DATE OF PRONOUNCEMENT : 25 . 1 0 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS A PPEAL BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2011 - 12 AND IT IS DIRECTED AGAINST THE ORDER DATED 20.1.2017 PASSED BY THE LD. CIT(A) . AT THE OUTSET, WE WOULD LIKE TO MENTION T HAT NEITHER THE ASSESSEE N OR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL 2 I.T.A. NO. 23 68 /MUM/201 7 WAS CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THR OUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEALS OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD. DR. 2. THE SOLE ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINST THE SUSTENANCE OF ADDITION OF RS. 32,44,172 / - AT THE RATE OF 12.5% OF ALLEGED BO GUS PURCHASE S OF RS. 2,59,53,378/ - BY THE CIT(A) AS AGAINST THE TOTAL DISALLOWANCE MADE BY THE AO OF SUCH ALLEGED PURCHASES U/S 69C OF THE ACT . 3. FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN OF INCOME ON 20.9.2011 DECLARING TOTAL INCOME OF RS. 4 4,50,120/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT . THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND PROCESS UNDER SECTION 143(2) AND 142(1) WAS FOLLOWED. THEREAFTER AO RECEIV ED THE INFORMATION FROM THE DGIT(INV) AND SALES TAX D EPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS RECEIVED BOGUS BILLS OF PURCHASES FROM FIVE PARTIES VIZ. (I) NAVKAR ENTERPRISES, (II) SAILEELA TRADING PVT LTD, (III) SIDDHI VINAYAK TRADERS, (IV) SIDDHI ENTERPRISES AND (V) SAI JAN TRADING PRIVAT E LIMITED. THE ASSESSEE MADE TOTAL PURCHASES OF RS.9,43,05,205/ - DURING THE YEAR . IN VIEW OF THIS , AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES ALONG WITH THE DOCUMENTARY EVIDENCES AS THE SUPPLIERS NAMES WERE LISTED IN THE WEBSIT E OF 3 I.T.A. NO. 23 68 /MUM/201 7 SALES TAX DEPARTMENT, GOM AS A SUSPICIOUS DEALERS, WHO WERE SUPPLYING BILLS TO VARIOUS PARTIES WITHOUT PROVIDING ACTUAL AND PHYSICAL DELIVERY OF THE MATERIAL S . THEREFORE, THE AO VIDE ORDER SHEET ENTRY DATED 19.2.2014 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 ASSESSEE. 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 WITH THE REMARK OF POSTAL AUTHORITIES NOT KNOWN. SINCE THE ASSESSEE FAILED TO REPLY AND RESPONSE TO THE QUERIES AND EXPLANATION CALLED FOR BY THE AO , HE AGAIN CALLED UPON THE ASSESSEE TO P RODUCE SAI JAN TRADING PVT LTD FOR VERIFICATION AND AGAIN THE ASSESSEE FAILED TO DO SO. THEREFORE, THE AO CAME TO THE CONCLU SION THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER AND PURCHASES WERE NOT GENUINE AND MADE ADDITION FOR THE ASSESSMENT YEAR 2010 - 11 IN RESPECT OF FOLLOWING PARTIES: I) SAI JAN TRADING PRIVATE LIMITED. RS.55,05,686/ - II) SAILEELA TRADING PVT LTD, RS.78,84,385/ - (III) SIDDHI ENTERPRISES RS.1,22,14,557/ - (IV) SIDDHI VINAYAK TRADERS RS.3,48,750/ - ---- -------------- RS.2,59,53,378/ - ACCORDINGLY, THE ASSESSMENT WAS FRAMED AT RS.3,13,75,730/ - VIDE ORDE R DATED 27.3.2014 PASSED UNDER SECTION 143(3) OF THE ACT. 4 I.T.A. NO. 23 68 /MUM/201 7 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA, WHO IN TURN BY FOLLOWING THE DECISION RENDERED IN APPEAL NO.CIT(A) - 36/IT - 236/ACIT - 24(2)/2015 - 16 FOR AY 2009 - 10 V IDE PARA 5 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION AT 12.5% OF THE BOGUS PUR CHASES FROM FOUR PARTIES. ACCORDINGLY, THE LD.CIT(A) DIRECTED THE AO TO RESTRICT THE ADDITION TO RS.32,44,172/ - BEING 12.5% OF TOTAL PURCHASES OF R S.2,59,53,378/ - . AGAIN AGGRIEVED BY THIS DECISION OF THE LD.CIT(A), THE ASSESSEE IN SECOND APPEAL BEFORE THIS TRIBUNAL. 5 . THE LD.DR RE - ITERATED THE FACTS OF THE CASE AND RELIED UPON THE DECISION OF THE AO AND PRAYED THAT THE ORDER OF LD.CIT(A) BE SET A SIDE 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 FOUR PARTIES MENTIONED HEREIN ABOVE AND THUS IS A BENEFICIARY OF BOGUS PURCHASES. NO DOUBT, T HE PARTIES MENTIONED ABOVE ARE LISTED IN THE WEBSITE OF GOVERNMENT OF MAHARASHTRA AS A SUSPICIOUS DEALERS AND ENGAGED IN PROVIDING BOGUS BILLS TO VARIOUS CLIENT S WITHOUT PROVIDING, SUPPLYING AND GIVING ACTUAL PHYSICAL POSSESSION OF THE MATERIALS MENTIONED IN THE BILLS. THE AO DISALLOWED AND ADDED 100% OF SUCH BOGUS PURCHASE S TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS, 5 I.T.A. NO. 23 68 /MUM/201 7 CREDITWORTHINESS AND IDENTITY OF THE BILLS PROVIDERS AS ALSO THE NOT ICE ISSUED U/S 133(6) RECEIVED BACK WITHOUT SERVICE. THE FAA DIRECTED THE AO TO RESTRICT THE ADDITION AT 12.5 % OF TOTAL BOGUS PURCHASES MADE FROM FOUR PARTIES. THE CIT(A), BY FOLLOWING HIS PREDECESSORS DECISION IN APPEAL NO.CIT(A) - 36/IT - 236/ACIT - 24(2)/20 15 - 16 FOR AY 2009 - 10 RESTRICTED THE DISALLOWANCE AT THE RATE OF 12.5% OF BOGUS PURCHASES. 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 FR OM 5% TO 12.50% TO RESTRICT THE LEAKAGE OF REVENUE WHICH HAS RESULTED FROM ASSESSEES PURCHAS ING THE MATERIAL FROM GRAY MARKET THEREBY SAVING VAT AND OTHER INCIDENTAL TAXES. IN THE INSTANT CASE, WE FIND THAT THE LD.CIT(A) PASSED A VERY REASONABLE AND P ROPER ORDER RESTRICTING THE ADDITION TO 1 2.5 % OF BOGUS PURCHASES BY FOLLOW ING HIS PREDECESSORS ORDER . THEREFORE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF LD.CIT(A) AS THERE BEING NOT ANY DEFECT , INFIRMITY OR ILLEGALITY AND HENCE DISMISS T HE APPEAL OF THE ASSESSEE. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH OCT , 2017 . SD S D ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 25 . 10 .2017 SR.PS:SRL: 6 I.T.A. NO. 23 68 /MUM/201 7 / 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 F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI