ITO 6(3)(3), MUMBAI V. JIVANI METAL WARES P.LTD, MUMBAI

ITA 245/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0052 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 133(6); 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 245 /MUM/ 2 017 (ASSESSMENT YEAR 20 10 - 11 ) ITO 6(3)(3) ROOM NO. 524 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. M/S. JIVANJI METAL WARES PRIVATE LIMITED 67, 3 R D FLOOR DADA MANZIL MOHAMMEDALI ROAD MUMBAI - 400 003. PAN NO.AABCJ5775D ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI NITESH JOSHI DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 2 2 . 8 . 201 7 DATE OF PRONOUNCEMENT 22 . 8 . 201 7 O R D E R THE APP EAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.11.2016 PASSED BY THE LEARNED CIT(A) - 12, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF ` 34.61 LAKHS MAD E BY THE ASSESSING OFFICER RELATING TO BOGUS PURCHASES MADE FROM M/S. OM TRADERS. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERROUS METALS. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT T HAT CERTAIN DE ALERS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS AND UPON NOTICING THAT THE ASSESSEE HAS PURCHASED GOODS WORTH ` 34.61 LAKHS FROM ONE OF SUCH HAWALA DEALERS NAME D M/S. OM TRADERS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT. IN THE REOPENED ASSESSMENT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH ALL RELEVANT DETAILS TO PROVE THE GENUINENESS OF THE PURCHASES. THE ASSESSEE FURNISHED COPY OF PURCHASE BILLS, LEDGER ACCOUNT COPY OF SUPPLIER AND DETAILS OF PAYMENTS. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF THE ACT TO M/S. OM TRADERS, BUT THE SAID CONCERN M/S. JIVANJI METAL WARES PRIVATE LIMITED 2 EXPRESSED I T S INABILITY TO FURNISH DETAILS ON THE REASONING THAT ALL THE DOCUMENTS HAVE BEEN SEIZ ED BY THE SALES T AX DEPARTMENT. THOUGH, THE ASSESSEE FURNISHED CONFIRMATION LETTER OBTAINED FROM THE ABOVE SAID PARTY, THE ASSESSING OFFICER DID NOT BELIEVE THE SAME , SINCE THE SUPPLIER HA D STATED T HAT THE DOCUMENTS HAVE BEEN SEIZ ED BY THE SALES TAX DEPARTMENT. T HE ASSESS ING OFFICER ASKED THE ASSESSEE TO PRODUCE THE SUPPLIER , BUT THE ASSESSEE FAILED TO PRODUCE THE PARTY. HENCE, THE ASSESSING OFFICER DISALLOWED ENTIRE PURCHASE AMOUNT OF ` 34.65 LAKHS BY TREATING THE SAME AS UNEXPLAINED PURCHASES. 3. IN THE APPELLATE PROCE EDINGS, THE LEARNED CIT(A) DELETED THE ADDITION BY PLACING RELIANCE ON THE VARIOUS CASE LAWS. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LEARNED CIT(A) HAS PASSED A NON - SPEAK ING ORDER WITHOUT DISCUSSING ANYTHING ABOUT THE FACTS OF THE CASE AND ALSO WITHOUT SHOWING AS TO HOW VARIOUS CASE LAWS LISTED OUT IN THE ORDER ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, SHE SUBMITTED THAT ENTIRE ADDITION SHOULD BE SUSTAI NED. 5. LEARNED AR ON THE CONTRARY, SUBMITTED THAT THE ASSESSEE HAS FURNISHED DETAILS OF PURCHASE AT PAGE NO. 39 OF THE PAPER BOOK AND DETAILS OF SALES MADE OUT OF THOSE PURCHASE IN PAGE NO. 40 OF THE PAPER BOOK. ACCORDINGLY, LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CONFIRMING THE ENTIRE AMOUNT OF PURCHASES WHEN THE ASSESSEE HAS PROVED THAT IT HAS SOLD THE GOODS. LEARNED AR FURTHER SUBMITTED THAT THE SUPPLIER M/S. OM TRADERS HAS CERTIFIED THE LEDGER ACCOUNT MAINTAINED BY THE ASS ESSEE. ACCORDINGLY, HE SUBMITTED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE. 6. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICED THAT THE ASSESSEE HAS FURNISHED COPIES OF PURCHASE BILLS ALONG WITH DELIVERY CHALLANS. THE A SSESSEE HAS FAILED TO FURNISH ANY PROOF TO SHOW THAT THE MATERIALS WERE PHYSICALLY TRANSPORTED TO THE PREMISES OF THE ASSESSEE. THE LEARNED AR ALSO M/S. JIVANJI METAL WARES PRIVATE LIMITED 3 FAIRLY CONCEDED THAT THE ASSESSEE DOES NOT HAVE COPIES OF TRANSPORT BILLS. SINCE THE ASSESSEE HAS RECONCILED THE PURCHASE AND SALES, IN MY VIEW, ONLY THE PROFIT ELEMENT EMBEDDED IN THE PURCHASE SHOULD BE ASSESSED TO TAX , AS GOODS CANNOT BE SOLD WITHOUT MAKING CORRESPONDING PURCHASES. SINCE THE ABOVE SAID SUPPLIER HAS BEEN NAM ED AS A HAWALA DEALER AND SINCE THE ASSESSEE COULD NOT PRODUCE THOSE PARTY BEFORE THE AO , ONE OF THE POSSIBLE VIEW S IS THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL FROM SOME OTHER PERSON. 7. WHEN THE ABOVE ASPECTS WERE POINTED OUT TO LEARNED AR , HE SUBMITTED THAT THE VAT RATE APP LICABLE TO THE ITEM DEALT WITH BY THE ASSESSEE IS 4%. ACCORDINGLY HE SUBMITTED THAT THE PROFIT MAY BE ESTIMATED ON A REASONABLE BASIS. CONSIDERING THIS FACT AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL AT LOWER RATE, I AM OF THE VIEW THAT THE ADDITION CAN B E SUSTAINED TO THE EXTENT OF 8 % OF THE VALUE OF PURCHASE. ACCORDINGLY I SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION TO THE EXTENT OF 8 % OF THE ALLEGED BOGUS PURCHA SES MADE FROM M/S. OM TRADERS. I ORDER ACCORDINGLY. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 2 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI M/S. JIVANJI METAL WARES PRIVATE LIMITED 4 6. GUARD FILE. BY ORDER , //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI