ASST CIT 10(1)(2), MUMBAI V. KSHITIJ INERIORS P.LTD, MUMBAI

ITA 2427/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3766 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABIRAM KARTIKEYAN
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Bogus purchase
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO S . 2427 & 2428/MUM/2017 (A.Y S : 2009 - 10 & 2010 - 11) ASST. CIT 10(1)(2) ROOM NO. 651 , AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400 020 V . M/S. KSHITIJ INTERIORS PVT. LTD. 210, NEW APOLLO ESTATE PREMISES CO - OPERATIVE SOCIETY LTD., OLD NAGARDAS ROAD, 23, MOGRA VILLAGE, ANDHERI (E), MUMBAI 400 069 PAN NO : AABCK 8174 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VISHWAS V. MEHENDALE DEPARTMENT BY : SHRI ABIRAM KARTIKEYAN DATE OF HEARING : 30.07.2018 DATE OF PRONOUNCEMENT : 10 .08 .2018 O R D E R PER C.N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE REVENUE FOR THE ASSESSMENT YEARS 2009 - 10 & 2010 - 11 CHALLENGING THE ORDER OF THE LD.CIT(A) IN RESTRICTING THE DISALLOWANCE AT 12.5% OF THE GROSS PROFIT O N THE ALLEGED BOGUS PURCHASES. 2 ITA NOS. 2427 & 2428/MUM/2017 (A.YS: 2009 - 10 & 2010 - 11) M/S. KSHITIJ INTERIORS PVT. LTD 2. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET SUBMITTED THAT THE APPEAL S OF THE ASSESSEE FILED FOR THE ASSESSMENT YEARS 2009 - 10 & 2010 - 11 CHALLENGING THE ORDER OF THE LD.CIT(A) IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE PURCHASES HAS BEEN DECIDED BY THE TRIBUNAL S USTAINING THE ORDER OF THE LD.CIT(A) FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P. SETH [356 ITR 451] , CIT V. VIJAY M. MISTRY CONSTRUCTION LTD., [355 ITR 498] AND CIT V. BHOLA NATH POLY FAB [355 ITR 290]. THEREFO RE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE ORDER OF THE TRIBUNAL THE APPEALS OF THE REVENUE FOR A.Y. 2009 - 10 & 2010 - 11 MAY BE CONSIDERED FOR DIS POSAL. 3. LD. DR VEHEMENTLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIV AL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE CROSS APPEALS OF THE ASSESSEE IN CHALLENGING THE ORDER OF THE LD.CIT(A) IN RESTRICTING THE PROFIT ELEMENT AT 12.5% OF THE BOGUS PURCHASES HAS BEEN CONSIDERED BY THE COORDINATE BENCH AND IT H AS AFFIRMED THE ORDER OF THE LD.CIT(A) OBSERVING AS UNDER: - 2.8. THE RATIO LAID DOWN IN THE CASE OF M/S NEETA TEXTILES VS INCOME TAX OFFICER 6138/MUM/2013, ORDER DATED 27/05/2013, SHRI JIGAR V. SHAH VS INCOME TAX OFFICER (ITA NO.1223 /M/2014) ORDER DATED 22/01/2016, M/S IMPERIAL IMP. & EXP. VS INCOME TAX OFFICER ITA NO.5427/MUM/2015, ORDER DATED 18/03/2016 SUPPORTS THE CASE OF THE ASSESSEE AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER. HOWEVER, AS RELIED BY THE LD. DR, THE HON'BLE GUJ ARAT HIGH COURT IN THE CASE OF N.K. INDUSTRIES LTD.,ETC VS DCIT (SUPRA) CONSIDERING VARIOUS DECISIONS 3 ITA NOS. 2427 & 2428/MUM/2017 (A.YS: 2009 - 10 & 2010 - 11) M/S. KSHITIJ INTERIORS PVT. LTD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AND THE HON'BLE APEX COURT DISMISSED THE SLP VIDE ORDER DATED 16/01/2017 (SLP NO.(C) 769 OF 2017). WE FIND THAT IN THAT CASE, DURING SEARCH PROCEEDINGS, CERTAIN BLANK SIGNED CHEQUE BOOKS AND VOUCHERS WERE FOUND AND THUS THE PURCHASES MADE FROM THESE CONCERNS, WERE TREATED AS BOGUS BY THE ASSESSING OFFICER. 2.9. THE HON'BLE GUJARAT HIGH COURT IN N.K. INDUSTRIES LTD . VS DCIT (IT APPEAL NO.240, 261, 242, 260 AND 241 OF 2003), VIDE ORDER DATED 20/06/2016 CONSIDERED THE DECISION OF THE TRIBUNAL AND VARIOUS JUDICIAL DECISIONS INCLUDING THE CASE OF VIJAY PROTEINS AND SANJAY OILCAKES INDUSTRIES LTD., M/S WOOLEN CARPET FAC TORY VS ITAT (2002) 178 CTR 420 (RAJ.), THE TRIBUNAL WAS HELD TO BE JUSTIFIED IN DECIDING THE CASE AGAINST THE ASSESSEE. THE HON'BLE APEX COURT CONFIRMED THE DECISION OF THE HIGH COURT FOR ADDING THE ENTIRE INCOME ON ACCOUNT OF BOGUS PURCHASES (SLP (C) NO. S 769 OF 2017, ORDER DATED 16/01/2017. 2.10. IN SUCH TYPE OF CASES, BROADLY, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THIS TRIBUNAL HAS FOLLOWED THE DECISIONS FROM HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SETH (2013) 356 ITR 451 (G UJ.), CIT VS VIJAY M. MISTRY CONSTRUCTION LTD. (2013) 355 ITR 498 (GUJ.), CIT VS BHOLA NATH POLY FAB. (P.) LTD. (2013) 355 ITR 290 (GUJ.) AND VARIOUS OTHER DECISIONS OF THE TRIBUNAL AND THE DECISION OF M/S NIKUNJ EXIMP(SUPRA) FROM HON'BLE JURISDICTIONAL HI GH COURT, WHEREIN, THE AGGREGATE DISALLOWANCE WAS RESTRICTED TO 12.5%. ADMITTEDLY, THERE CANNOT BE SALE WITHOUT PURCHASES. THE CASE OF THE REVENUE IS THAT THERE IS BOGUS NATURE OF PURCHASES MADE FROM SUPPLIERS AND THE PARTIES WERE NOT FOUND EXISTING AT THE GIVEN ADDRESSES. 2.11. ADMITTEDLY, IN SUCH TYPE OF CASES, THERE IS NO OPTION BUT TO ESTIMATE THE PROFIT WHICH DEPENDS UPON THE SUBJECTIVE/OBJECTIVE APPROACH OF AN INDIVIDUAL AND THE MATERIAL FACTS AVAILABLE ON RECORD. IN THE PRESENT APPEAL, THE ASSESSEE IS A INTERIOR DECORATOR, CONTRACTOR, MANUFACTURER AND RESELLER OF FURNITURE AND FIXTURE. THE LD. ASSESSING OFFICER WAS HAVING INFORMATION THAT THE ASSESSEE MADE PURCHASES FROM CERTAIN PARTIES, WHO DEALS IN BOGUS BILLING/HAWALA TRANSACTIONS. IN SPITE OF OPP ORTUNITIES PROVIDED TO THE ASSESSEE, THESE PARTIES WERE NOT PRODUCED BY THE ASSESSEE. THE ASSESSEE COULD NOT SUBSTANTIATE THE PURCHASES MADE FROM HAWALA DEALERS/CLAIMED PARTIES. EVEN BEFORE THIS BENCH, ON SPECIFIC ASKING TO PRODUCE THE PARTIES BEFORE THE A SSESSING OFFICER, THE LD. COUNSEL FOR THE ASSESSEE SHOWED HIS INABILITY TO PRODUCE THEM. THE LD. ASSESSING OFFICER MADE THE ADDITION TO THE EXTENT OF 100% OF SUCH BOGUS PURCHASES WHICH WAS RESTRICTED TO 4 ITA NOS. 2427 & 2428/MUM/2017 (A.YS: 2009 - 10 & 2010 - 11) M/S. KSHITIJ INTERIORS PVT. LTD 12.5% BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT SEEMS THAT THE FIRST APPELLATE AUTHORITY HAS ALREADY TAKEN A LENIENT VIEW/REASONABLE VIEW, THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONE R OF INCOME TAX (APPEAL). IT IS MADE CLEAR THAT, DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE AGREED FOR THE ADDITION MADE BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). THUS, BOTH THE APPEALS, BEING ON IDENTICAL FACTS, ARE DISMISSED. FINALLY, THE AP PEALS OF THE ASSESSEE ARE DISMISSED . 5. IN VIEW OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE SUSTAINING THE ORDER OF THE LD.CIT(A) WE REJECT THE GROUNDS OF APPEAL OF THE REVENUE FOR THE SAME REASONING AND DECISION OF THE TRIBUNAL IN ASSESSEES APPEALS . 6. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH AUGUST , 2018 . SD/ - S D/ - (N.K. PRADHAN) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 10/ 08/2018 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM