ITO 25(1)(1), MUMBAI V. S.A. ENTERPRISES, MUMBAI

ITA 2469/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0123 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 08-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 2469 /MUM/ 2 017 (ASSESSMENT YEAR 20 10 - 11 ) ITO 25(1)(1) 401, C - 10, PRATYAKSHKAR BHAVAN, BANDRA EAST MUMBAI - 400 051. VS. M/S. S.A. ENTERPRISES 106C, ROOP DARS HAN SOCIETY, GULMOHAR ROAD, ANDHERI WEST MUMBAI - 400 058. ( APPELLANT ) ( RESPONDENT ) C.O. NO. 125/MUM/2017 (ASSESSMENT YEAR 2010 - 11) M/S. S.A. ENTERPRISES 106C, ROOP DARSHAN SOCIETY, GULMOHAR ROAD ANDHERI WEST MUMBAI - 400 058. VS. ITO 25(1)(1) 401, C - 10, PRATYAKSHKAR BHAVAN, BANDRA EAST MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAWFS0800N ASSESSEE BY SHRI VIMAL PUNMIYA DEPARTMENT BY SHRI RAKESH RANJAN DATE OF HEARING 8 .6 . 201 7 DATE OF PRONOUNCEMENT 5.7 . 201 7 O R D E R THE REVE NUE HAS FILED THE APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION CHALLENGING THE ORDER DATED 18.03.2016 PASSED BY LD CIT(A) - 37, MUMBAI AND THEY RELATE TO AY 2010 - 11. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN GRANTING PARTIAL RELIEF TO TH E ASSESSEE ON THE DISALLOWANCE RELATING TO BOGUS PURCHASES. THE ASSESSEE HAS FILED CROSS OBJECTION SEEKING FURTHER RELIEF. M/S. S.A. ENTERPRISES 2 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A DEALER IN SOLVENTS, DYES, CHEMICALS AND ALSO ACTING AS COMMIS SION AGENT. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, IT CAME TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.40,32,978/ - DURING THE YEAR UNDER CONSIDERATION FROM THE PARTIES, WHO WERE LISTED OUT BY THE SALES TAX DEPARTMENT AS HAWALA DEALERS, I.E., THEY PROVIDED ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIAL. HENCE THE AO TREATED THE ABOVE SAID AMOUNT OF RS.40,32,978/ - AS BOGUS PURCHASES AND DISALLOWED THE SAME. THE LD CIT( A) SUSTAINED THE ADDITION TO THE EXTENT OF 12.5% OF THE VALUE OF BOGUS PURCHASES. 3. THE LD D.R SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER AND CONTENDED THAT THE LD CIT(A) SHOULD NOT HAVE GIVEN RELIEF. ON THE CONTRARY, THE LD A.R SUBMITTED THA T THE ADDITION MADE TO THE EXTENT OF 12.5% OF BOGUS PURCHASES IS ON THE HIGHER SIDE. 4. I NOTICE FROM THE ORDER PASSED BY LD CIT(A) THAT THE ASSESSEE HAS SUBMITTED THE DETAILS OF PURCHASES, DETAILS OF SALES, PROOF OF PHYSICAL RECEIPT OF GOODS, QUANTIT Y DETAILS, INVOICES AND BANK TRANSACTIONS. ACCORDINGLY IT WAS CONTENDED THAT THE ENTIRE ADDITION SHOULD HAVE BEEN DELETED. HOWEVER, WE NOTICE THAT THE ASSESSING OFFICER DEPUTED HIS INSPECTOR TO SERVE NOTICES U/S 133(6) OF THE ACT, BUT THE SAID SUPPLIERS COULD NOT BE LOCATED. THE ASSESSEE HAS ALSO NOT FURNISHED ANY CONFIRMATION LETTER OBTAINED FROM THE SUPPLIERS NOR DID HE PRODUCE THEM BEFORE THE AO. HENCE, IN MY VIEW, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCLUSIVELY PROVED THE PURCHASES. AT THE SAM E TIME, THE ASSESSEE HAS FURNISHED THE QUANTITY DETAILS AND HAS SHOWN THAT THE GOODS HAVE BEEN SOLD. THE AO HAS NOT DOUBTED THE SALES. THERE SHOULD NOT BE ANY DISPUTE THAT THE ASSESSEE COULD NOT HAVE SOLD THE GOODS WITHOUT PURCHASING THEM. HENCE THE ASS ESSEE SHOULD HAVE PURCHASED THE GOODS, BUT THE SOURCE OF PURCHASE WAS IN M/S. S.A. ENTERPRISES 3 DOUBT, SINCE THE SUPPLIERS ARE TAINTED. UNDER THESE SET OF FACTS, THE ENTIRE DISALLOWANCE OF PURCHASES IS NOT JUSTIFIED. I NOTICE THAT THE LD CIT(A) HAS FOLLOWED THE DECISION RENDER ED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF SMIT P SHETH (356 ITR 451) TO SUSTAIN THE ADDITION TO THE EXTENT OF 12.5% OF THE VALUE OF BOGUS PURCHASES. 5. IN THE CROSS OBJECTION, THE ASSESSEE HAS CONTENDED THAT THE ESTIMATE MADE AT 12.5% IS ON THE HIGHER SIDE. THE LD A.R PLACED RELIANCE ON CERTAIN DECISIONS RENDERED BY CO - ORDINATE BENCHES TO CONTEND THAT THE TRIBUNAL HAS ALLOWED DEDUCTION OF G.P RATE DECLARED IN THE BOOKS AND IN ONE CASE, THE ADDITION WAS MADE AT 2%. IN MY VIEW, EACH CASE IS DECID ED ON THE BASIS OF FACTS AVAILABLE THEREIN AND HENCE THE SAID ORDERS CANNOT BE TAKEN AS PRECEDENCE. IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO PRODUCE ANY MATERIAL TO DEMONSTRATE THAT THE ADDITION MADE AT 12.5% OF THE VALUE OF PURCHASES IS ON THE HI GHER SIDE. HENCE I DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 5.7 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 5/7 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CI T(A) 4. CIT 5. DR, ITAT, MUMBAI M/S. S.A. ENTERPRISES 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI