JAY WOOD INDUSTRY, RAIGAD V. DCIT PANVEL CIRCLE, MUMBAI

ITA 2441/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9909 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: RUCHI RATHOD LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO.2441/M/2017 JAY WOOD INDUSTRY ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 2441/MUM/2017 ( / ASSESSMENT YEAR: 2011-12) JAY WOOD INDUSTRY PLOT NO.L-65 MIDC,TALOJA DISTT. RAIGAD MUMBAI / VS. DEPUTY COMMISSIONER OF INCOME TAX PANVEL CIRCLE PANVEL MUMBAI ./ ./PAN/GIR NO. AAAFJ-0718-N ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ASSESSEE BY : RUCHI RATHOD, LD.AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 04/09/2017 / DATE OF PRONOUNCEMENT : 06/09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011- 12 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX(APPEALS)- 1 ITA NO.2441/M/2017 JAY WOOD INDUSTRY ASSESSMENT YEAR 2011-12 2 [CIT(A)], MUMBAI DATED 02/01/2017 QUA CONFIRMATION OF CERTAIN BOGUS PURCHASES FOR RS.33,40,279/-. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE E BEING RESIDENT FIRM ENGAGED IN MANUFACTURING OF WOODEN CRATES, BOXES, PALLETS ETC. WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 23/03/2015 AT RS.2,03,83,626/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.33,40,279/-. THE ORIGINAL RETURN OF INCOME W AS E-FILED ON 19/09/2011 AT RS.1,70,13,348/- WHICH WAS PROCES SED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.33,40,279/- FROM THREE PARTIES. CONSEQUENTLY, NO TICE U/S 148 DATED 16/07/2013 WAS ISSUED TO THE ASSESSEE WHICH WAS FOL LOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). THE ASSESSEE REFLECT ED NET PROFIT OF RS.1.70 CRORES AGAINST TURNOVER OF RS.21.58 CRORES WHICH TRANSLATED INTO NET PROFIT RATE OF 7.88%. 2.3 THE ASSESSEE CONTENDED THAT THE PURCHASE TRANSA CTIONS WERE GENUINE SINCE THE MATERIAL WAS CONSUMED AND PAYMENT S WERE THROUGH BANKING CHANNELS. RELIANCE WAS PLACED ON SEVERAL JU DICIAL PRONOUNCEMENTS TO SUPPORT VARIOUS CONTENTIONS. HOWE VER LD. AO NOTED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE DELIVE RY OF MATERIAL BY PRODUCING DELIVERY CHALLANS ETC. AND ALSO COULD NOT PRODUCE ANY OF THE ITA NO.2441/M/2017 JAY WOOD INDUSTRY ASSESSMENT YEAR 2011-12 3 SUPPLIER TO CONFIRM THE TRANSACTIONS AND THEREFORE, TREATING THE SAME AS NON-GENUINE, ADDED THE SAME TO THE INCOME OF THE AS SESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 02/01/2 017 AND REITERATED THE SAID CONTENTIONS. HOWEVER, THE LD. CIT(A) CONFI RMED THE ADDITIONS BY NOTING THAT THE REQUISITE DETAILS CALLED FOR BY THE LD. AO WERE NOT FILED AND NONE OF THE PARTY WAS PRODUCED FOR CONFIRMATION OF THE TRANSACTIONS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] WHILE DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER BOOK, CONTENDED THAT THE ASSESSEE PURCHASED RAW MATERIAL LIKE WOOD, NAILS, SCREW, BOLTS, CHEMICALS ETC. FROM THE SAID PARTIES WHICH WAS DULY CONSUMED IN TH E MANUFACTURING OF WOODEN BOXES AND PALLETS AS PER VARIOUS CONSUMPTION DETAILS FILED BY THE ASSESSEE. OUR ATTENTION IS FURTHER DRAWN TO THE GP/NP RATE REFLECTED BY THE ASSESSEE FOR SEVERAL YEARS. THE LD. AR, IN T HE ALTERNATIVE, CONTENDED THAT A REASONABLE ESTIMATION OF ADDITION MAY BE MADE AGAINST THESE TRANSACTIONS. PER CONTRA, LD. DR CONTENDED THAT THE ASSESSEE COULD NOT PRODUCE DELIVERY CHALLANS AND ALSO COULD NOT PRODUCE ANY OF THE SUPPLIERS FOR CONFIRMATION AND T HEREFORE, FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE SAID TRAN SACTIONS. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASE / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS WHICH WAS MATERIAL IN TENSIVE AND COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF MATERIAL. THE SALES TURNOVER ITA NO.2441/M/2017 JAY WOOD INDUSTRY ASSESSMENT YEAR 2011-12 4 ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES AND GP/NP RATE REFLECTED BY THE ASSESSEE WAS IN TUNE WITH EARLIER YEARS. AT THE SAME TIME, THE ASSESSEE COULD NOT SUBSTANTIATE ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PROD UCE ANY CONFIRMATIONS ETC. FROM THE ALLEGED BOGUS SUPPLIERS , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. WE ESTIMATE THE SAME @12.5%, KEEPING IN VIEW THE OVERALL FACTS AND CIRCU MSTANCES. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSE SSEE IN THE LIGHT OF OUR ABOVE ORDER. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 SR.PS:- THIRUMALESH ITA NO.2441/M/2017 JAY WOOD INDUSTRY ASSESSMENT YEAR 2011-12 5 / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI