ITO 21(3)(3), Mumbai V. M/S STANDARD PRINTERS, Mumbai

ITA 238/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7646 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHIL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings; Set aside
• Section: 143(3); 133(6); 48; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO S . 238 & 239/MUM/2019 ASSESSMENT YEAR: 2009 - 10 & 2010 - 11 ITO 21(3)(3) R OOM NO. 211 , 2 ND F LOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 4000 12. VS. M/S STANDARD PRINTERS 107, PRAGATI INDUSTRIAL ESTATE, N.M. JOSHI MARG, CURRY ROAD, MUMBAI 400011. PAN NO. AALFS 5979 D APPELLANT RESPONDENT REVENUE BY : MR. R. BHOOPATHIL, DR ASSESSEE BY : MR. SANJAY R. PARIKH, CA DATE OF HEARING : 20 /01/2020 DATE OF PRONOUNCEMENT : 29/01/2020 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEAL S BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 48 [IN SHORT CIT(A)], MUMBAI AND ARISE OUT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT ). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE OF THESE APPEALS BY A COMMON ORDER. M/S. STANDARD PRINTERS ITA NOS. 238 & 239/M/2019 2 ITA NO. 238/MUM/2019 (AY : 2009 - 10 ) 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING ONLY 12.5% ADDITION OF RS. 1,28,779/ - ON THE BOGUS PURCHASES AS AGAINST THE AOS STAND OF DISALLOWING 30% OF THE BOGUS PURCHASES, IGNORING THE FACT THAT THE ACTION OF THE ASSESSING OFFICER WAS ONLY BASED ON CREDIBLE IN FORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT, THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FAILED TO PROVE THE GENUINENESS OF THE PURCHASE TRANSACTIONS. 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 30.09.2009 DECLARING TOTAL INCOME OF RS. 15,415/ - . ON RECEIPT OF INFORMATION FROM T HE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS VIDE ACCOMMODATION ENTRIES FROM ENTRY PROVIDER (M/S. PADMAVATI ENTERPRISES) AMOUNTING TO RS. 10,30,234/ - , THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 DATED 17.01.2014. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) T O THE ABOVE PARTY, CALLING FOR INFORMATION. HOWEVER, THE NOTICE ISSUED BY HIM WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN. TO ASCERTAIN THE GENUINENESS OF PURCHASES, THE AO ISSUED NOTICE U/S 142(2) DATED 01.01.2015 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AFORESAID TRANSACTION SHOULD NOT BE TREATED AS BOGUS AND BE DISALLOWED M/S. STANDARD PRINTERS ITA NOS. 238 & 239/M/2019 3 ACCORDINGLY. IN RESPONSE TO IT THE ASSESSEE BY FILING LEDGER COPY OF THE PURCHASES, STATED THAT THE TRANSACTION HAS BEEN EFFECTED THROUGH CHEQUES ON LY AND THAT THE PURCHASES MADE FROM THE PARTY WAS GENUINE. HOWEVER, THE AO WAS NOT CONVINCED WITH THE SAID EXPLANATION OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE FAILED TO PRODUCE THE STOCK REGISTER, DELIVERY CHALLAN, LORRY RECEIPT, TRANSPORTATION DE TAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, RELYING ON THE DECISION OF THE GUJRAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH 356 ITR 451 (GUJ), THE AO ESTIMATED THE PROFIT @ 30% OF THE TOTAL AMOUNT OF RS. 10,30,234/ - WHICH COMES TO R S. 3,09,070/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 25.10.2018, THE LD. CIT(A) HELD AS UNDER: IN VIEW OF THE ABOVE, THE FINDINGS OF THE AO REGARDING PURCHASES BEING BOGUS A RE UPHELD. HOWEVER, THE ADDITION OF BOGUS PURCHASE @ 30% AND 31% OF TOTAL PURCHASES AS MADE BY THE AO IS UNFAIR AND NOT REASONABLE. IT IS PROVEN THAT ASSESSEE HAS OBTAINED BOGUS BILLS FROM THE PARTY FROM WHICH ASSESSEE DID NOT PURCHASE THE GOODS. AT THE SA ME TIME IT DID PURCHASE THE GOODS FROM SOME OTHER SUPPLIERS, MAY BE WITHOUT BILL, IT IS FAIR TO ASSUME THAT ASSESSEE WOULD HAVE PURCHASE D THE GOODS FROM SOME OTHER SOURCES, SAY GREY MARKET AND TRIED TO GIVE THE PURCHASES A COLOUR OF GENUINENESS BY OBTAININ G FICTITIOUS INVOICES FOR THE SAME FROM THE CONCERNS MENTIONED ABOVE. IN VIEW OF THIS, IT IS HELD THAT 12.5% OF THE ESTIMATED PROFIT IN THIS VENTURE IS REASONABLE AND FAIR. THEREFORE, AO IS DIRECTED TO ADD ONLY 12.5% OF BOGUS PURCHASES EACH OF RS. 10,30,23 4/ - OF A.Y. 2009 - 10 AND RS. 11,84,764/ - OF A.Y. 2010 - 11. IN VIEW OF THIS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. M/S. STANDARD PRINTERS ITA NOS. 238 & 239/M/2019 4 5. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTS THE ORDER PASSED BY THE AO, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIES ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS MENTIONED EARLIER, THE NOTICE ISSUED BY THE AO U/S 133(6) TO M/S. PADMAVATI ENTERPRISES IN THE ADDRESS GIVEN BY THE ASSESSEE WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN. HOWEVER, THE ASSESSEE FILED BEFORE THE AO THE LEDGER COPIES OF THE PURCHASES MADE FROM THE SAID PARTY AND ALSO STATED THAT THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUE S ONLY. THE ASSESSEE FAILED TO PRODUCE BEFORE THE AO THE STOCK REGISTER, DELIVERY CHALLAN, LORRY RECEIPT, TRANSPORTATION DETAILS . IN SUCH A SITUATION LIKE THE PRESENT ONE, THE LD. CIT(A) HAVING CONSIDERED THE BRIEF FACTS AND CIRCUMSTANCES, HAS RIGHTLY ES TIMATED THE PROFIT EMBEDDED IN SUCH PURCHASES @ 12.5% OF RS. 10,30,234/ - . THEREFORE, WE UPHOLD THE ORDER OF THE LD. CIT(A). FACTS BEING IDENTICAL, OUR DECISION FOR AY 2009 - 10 APPLIES MUTATIS MUTANDIS TO AY 2010 - 11. 7. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2020. SD/ - SD/ - ( VIKAS AWASTHY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 29/01/2020 RAHUL SHARMA, SR. P.S. M/S. STANDARD PRINTERS ITA NOS. 238 & 239/M/2019 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI