CLONTO LOBO, Mumbai V. ITO RANGE 30(1)(2), Mumbai

ITA 2448/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4091 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Reopening of assessment; Bogus purchase
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2448 //201 9 (. . 2010-11 ) ITA NO. 2448/MUM/2019 (A.Y.2010-11) CLONTO LOBO 21, SHREEPAL SERVICES INDUSTRIAL ESTATE, PAVANBAUG, CHINCOLI, MALAD (W), MUMBAI-400054 / VS. ITO- 30(1)(2) ROOM NO. 505, C- 13, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BKC, BANDRA (E), MUMBAI-400051. PAN/GIR NO: AABPL6175E ( /APPELLANT) : ( / RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI AJAY PRATAP SINGH (DR) / DATE OF HEARING : 14/10/2020 / DATE OF PRONOUNCEMENT : 26/10/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME-TAX (APPEALS)-41, MUMBAI [IN SHORT THE CIT( A)] DATED 25.02.2018 FOR THE ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING OF CAM FOR PAC KAGING INDUSTRY. THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 IN THE CASE OF ASSESSEE WAS RE- 2 ITA NO .2448/MUM/2019 (A.Y.2010-11) OPENED ON THE BASIS OF INFORMATION RECEIVED BY DGIT (INVESTIGATIONS) THAT THE ASSESSEE HAS INDULGED IN OBTAINING BOGUS PURCHASE B ILLS AGGREGATING TO RS. 5,30,994/- FROM HAWALA DEALERS. THE ASSESSING OFFIC ER IN THE RE-ASSESSMENT PROCEEDINGS ESTIMATED GROSS PROFIT @ 18.86% ON UNPR OVED PURCHASES AND MADE ADDITION OF RS. 95,820/- ON ACCOUNT OF BOGUS P URCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29.01.2016 PASSED UNDER SECTION 143(3) R.W.SEC. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY (FAA) HELD THAT THE ENTIRE BOGUS PURCHASE S SHOULD HAVE BEEN ADDED AND ACCORDINGLY ISSUED ENHANCEMENT NOTICE UNDER SEC TION 251(2) OF THE ACT. THE CIT(A) VIDE IMPUGNED ORDER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES. HENCE, THE PRESENT APPEAL BY THE ASSESSE E. 3. SHRI AJAY PRATAP SINGH REPRESENTING THE DEPARTME NT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSI NG THE APPEAL OF ASSESSEE. 4. SUBMISSIONS MADE BY DEPARTMENTAL REPRESENTATIVE (DR) HEARD AND ORDERS OF AUTHORITIES BELOW EXAMINED. IN GROUND NO. 3 OF THE APPEAL, THE ASSESSEE HAS ASSAILED THE ACTION OF CIT(A) IN ENHAN CING THE ADDITION IN RESPECT OF BOGUS PURCHASES. A PERUSAL OF THE ASSESSMENT ORD ER SHOWS THAT THE ASSESSEE HAS FURNISHED COPIES OF INVOICES AND THE LEDGER ACC OUNTS OF THE PARTIES. THE PLEA OF ASSESSEE IS THAT THE PAYMENTS WERE MADE THR OUGH ACCOUNT PAYEE CHEQUES WHICH WERE DULY REFLECTED IN THE BANK STATE MENT AND THE MATERIAL PURCHASED WAS FURTHER SOLD. THE SALE PROCEEDS HAVE BEEN DULY CREDITED IN THE PROFIT & LOSS ACCOUNT. HOWEVER, THE ASSESSEE WAS NO T ABLE TO SUBSTANTIATE TRAIL 3 ITA NO .2448/MUM/2019 (A.Y.2010-11) OF GOODS. DELIVERY CHALLANS, LORRY RECEIPTS, STOCK REGISTER ETC. WERE NOT PRODUCED BY THE ASSESSEE. FURTHER, THE ASSESSEE FAI LED TO PRODUCE THE PARTIES FROM WHOM THE GOODS WERE PURCHASED. 5. UNDISPUTEDLY, THE DEPARTMENT NEVER QUESTIONED TH E SALES DECLARED BY THE ASSESSEE. WITHOUT PURCHASES THERE CANNOT BE SAL ES, THEREFORE, THE ONLY PRESUMPTION THAT CAN BE DRAWN IS THAT THE ASSESSEE MADE PURCHASES FROM GREY MARKET AND OBTAINED BOGUS PURCHASE BILLS. IT IS ONL Y THE PROFIT ELEMENT EMBEDDED IN THE ENTIRE BOGUS TRANSACTIONS THAT CAN BE BROUGHT TO TAX. THE ASSESSING OFFICER AFTER CONSIDERING THE TAX AUDIT R EPORT OF THE ASSESSEE AND GROSS PROFIT DECLARED BY THE ASSESSEE IN THE IMPUGN ED ASSESSMENT YEAR, ESTIMATED GROSS PROFIT AT 18.86% ON THE BOGUS PURCH ASE. I FIND ASSESSMENT ORDER FAIR AND REASONABLE. THE FINDINGS OF THE CIT( A) ON THE ISSUE ARE PERVERSE AND HENCE, SET-ASIDE. THE GROUND NO.3 OF THE APPEAL IS PARTLY ALLOWED IN THE TERMS AFORESAID. 6. IN GROUND NO.4 OF THE APPEAL, THE ASSESSEE HAS A SSAILED ADDITION OF RS. 1,60,251/- MADE BY CIT(A). THE ASSESSEE HAS CLAIMED THE SALES TAX PAYMENTS TO THE TUNE OF RS. 1,60,251/- IN RESPECT OF BOGUS PURC HASES. THE ASSESSEE HAS FURNISHED EVIDENCE IN THE FORM OF CHALLAN TO SHOW T HAT THE SALES TAX WAS ACTUALLY PAID BY THE ASSESSEE IN RESPECT OF ACCOMMO DATION ENTRIES. IT IS AN UNDISPUTED FACT THAT THE SALES TAX ON BOGUS PURCHAS E BILLS WERE INDEED PAID BY THE ASSESSEE. THE ASSESSEES CLAIM OF SALES TAX EXP ENDITURE HAS NOT BEEN DISPUTED BY THE DEPARTMENT. I FIND NO MERIT IN THE REASONING GIVEN BY THE CIT(A) IN MAKING THE ADDITION. ACCORDINGLY, THE ADD ITION OF RS. 1,60,251/- IS DELETED. THE GROUND OF APPEAL NO.4 IS ALLOWED. 4 ITA NO .2448/MUM/2019 (A.Y.2010-11) 7. THE ASSESSEE IN GROUND OF APPEAL NO. 1 & 2 HAS A SSAILED RE-OPENING OF ASSESSMENT. THE ASSESSEE HAS IMPUGNED RE-OPENING FO R THE FIRST TIME BEFORE THE TRIBUNAL. NO SUCH GROUND WAS RAISED BEFORE THE FIRST APPELLATE AUTHORITY. SINCE, NO MATERIAL IS AVAILABLE BEFORE THE BENCH TO ADJUDICATE THIS ISSUE AND RELIEF HAS BEEN GRANTED TO THE ASSESSEE ON MERITS O F THE ADDITION, GROUND NO. 1 & 2 OF THE APPEAL ARE NOT DELIBERATED UPON AT THIS STAGE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY THE 26 TH DAY OF OCTOBER, 2020. SD/- ./- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, )/ DATED: 26/10/2020 S.K., PS * , * , * , * , COPY OF THE ORDER FORWARDED TO : 1. . / THE APPELLANT , 2. */ / THE RESPONDENT. 3. 0 ( )/ THE CIT(A)- 4. 0 CIT 5. * , . . . , / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI