VEMB LIFESTYLE PVT. LTD., MUMBAI V. ACIT 11 (3)(2), MUMBAI

ITA 2518/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2049 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 23-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHINTAMANI DINGANKARLD
• Keywords: Bogus purchase; Principle of natural justice; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 132

Judgement Text

ITA NO.2518/MUM/2019 ASSESSMENT YEAR 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2518/MUM/2019 ( / ASSESSMENT YEAR:2013-14) M/S. V EMB LIFESTYLE P RIVATE LIMITED D-13, ANSA INDUSTRIAL ESTATE SAKI VIHAR ROAD, SAKI NAKA ANDHERI (E), MUMBAI-400 072. / VS. A CIT - 11(3)(2) AAYKAR BHAVAN MUMBAI 400 020 PAN/GIR NO. AACCV - 0704 - F ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI CHINTAMANI DINGANKAR-LD.SR.DR / DATE OF HEARING : 23/11/2020 / DATE OF PRONOUNCEMENT : 03/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-18, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO.CIT(A)-16/IT-10106/DCIT-11(3)-2/16-17 DAT ED 28/02/2019 ON FOLLOWING GROUNDS OF APPEAL:- ITA NO.2518/MUM/2019 ASSESSMENT YEAR 2013-14 2 1. THE ORDER PASSED U/'S. 143(3) R.W.S. 147 OF TH E ACT BY THE ID. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11(3)(2), MUMB AI (''THE ID. ASSESSING OFFICER') IS INVALID, BAD IN LAW AND AGAINST THE PRINCIPLES O F NATURAL JUSTICE. 2. (A) THE ID. COMMISSIONER OF INCOME TAX (APPEAL S) - 18, MUMBAI ('THE ID. CIT(A)') ERRED IN FACTS AND LAW-IN CONFIRMING THE A CTION OF THE ID. ASSESSING OFFICER IN SUSTAINING AN ADDITION OF RS.3,68,63,625/- BY ESTIM ATING 12.5% OF THE ALLEGED PURCHASES OF RS. 29,49,09,0007- AS PROFIT MARGIN ON THE GROUND THAT THE PARTIES WERE NOT PRODUCED AND GROSSLY IGNORING THE EXPLANAT IONS, SUBMISSIONS AND MATERIAL PLACED ON RECORD. (B) THE LD. CIT(A) ERRED IN FACTS AND LAW IN TREATI NG THE PURCHASES AS BOGUS, WITHOUT PROVIDING ANY MATERIAL OR OPPORTUNITY OF CROSS EXAM INATION OF THE PARTIES ON WHOSE STATEMENT, RELIANCE WAS SOUGHT TO BE PLACED FOR MAK ING THE ADDITION. 3. WITHOUT PREJUDICE, THE LD. CIT(A) ERRED IN FAC TS AND LAW IN ARBITRARILY ESTIMATING PROFIT ELEMENT @12.5% OF ALLEGED PURCHASES WITHOUT APPRECIATING THAT THE PRODUCT SOLD IS NOT COVERED UNDER ANY MVAT/ SALES TAX LAWS AND THEREBY IGNORING THE OVERALL GROSS PROFIT IN SUCH INDUSTRY. AS EVIDENT THE ASSESSEE IS AGGRIEVED BY ESTIMATED A DDITION ON ACCOUNT OF ALLEGED SUSPICIOUS PURCHASES. THE ASSESSEE HAS A LSO CHALLENGED THE JURISDICTION OF LD. AO TO REOPEN THE PROCEEDINGS FO R THE YEAR UNDER CONSIDERATION. HOWEVER, THE PERUSAL OF ASSESSMENT O RDER WOULD REVEAL THAT THE ASSESSMENT HAS BEEN FRAMED U/S 143(3) ONLY AND THERE ARE NO REASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDE RATION. THEREFORE, FINDING NO SUBSTANCE IN LEGAL GROUND, WE DISMISS TH E SAME. 2. NONE APPEARED FOR ASSESSEE. THE ASSESSEE FAILED TO APPEAR EVEN ON LAST DATE OF HEARING ALSO. THEREFORE, THE MATTER WAS PROCESSED WITH ON THE BASIS OF MATERIAL ON RECORD AND AFTER HEARIN G LD. SR. DR WHO PLEADED FOR CONFIRMATION OF ESTIMATED ADDITIONS. WE HAVE CAREFULLY CONSIDERED THE MATERIAL ON RECORD. OUR ADJUDICATION TO THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE IS STATED TO BE ENGAGED IN MANUFACTURING OF EMBROIDERED GARMENTS AN D MOTIFS, WHOLESALE AND RETAIL TRADING OF FABRIC AND GARMENTS . THE ASSESSEE WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 29/03 /2016. PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DCITCC-4(3), M UMBAI, IT WAS ITA NO.2518/MUM/2019 ASSESSMENT YEAR 2013-14 3 ALLEGED THAT THE ASSESSEE HAD OBTAINED BOGUS ACCOMM ODATION ENTRIES OF BOGUS PURCHASES AGGREGATING TO RS.2,949.09 LACS FRO M 4 ENTITIES. THE DETAILS OF THE SAME HAS ALREADY BEEN EXTRACTED IN P ARA 5.1 OF THE ASSESSMENT ORDER. THE INFORMATION WAS RECEIVED CONS EQUENT TO SEARCH ACTION U/S. 132 BY DGIT(INV.) IN CASE OF BALAJI GRO UP ON 30/04/2013 WHEREIN INCRIMINATING EVIDENCES WERE SEIZED WHICH I NDICATED PROCUREMENT OF ACCOMMODATION ENTRIES OF BOGUS PURCH ASES. THE ENTIRE BOGUS TRANSACTIONS WERE ADMITTED BY SHRI JAGDISH MU NDRA IN HIS STATEMENT RECORDED U/S. 132(4). ACCORDINGLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS DIRECTED T O SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.2 ALTHOUGH THE ASSESSEE FILED COPIES OF PURCHASE BILLS, LEDGER ACCOUNTS AND BANK STATEMENTS EVIDENCING PAYMENTS TH ROUGH BANKING CHANNELS. HOWEVER, NOTICES ISSUED U/S 133(6) TO CON FIRM THE TRANSACTIONS WERE RETURNED BACK UN-SERVED BY POSTAL AUTHORITIES. THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS FOR CONFIRMATION OF ACCOUNTS. THE ASSESSEE ALSO FAILED TO FILE THE COMPLETE DETAILS A S NOTED BY LD.AO IN PARA 5.3 OF THE ORDER. IN THE SAID BACKGROUND, A CO NCLUSION WAS DRAWN THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ED UPON HIM TO ESTABLISH THE GENUINENESS OF THE PURCHASES. FINALLY , LD. AO ESTIMATED AS ADDITION OF 12.5% AGAINST THESE PURCHASES WHICH RES ULTED INTO AN ADDITION OF RS.368.63 LACS IN THE HANDS OF THE ASSE SSEE. 4. ALTHOUGH THE ASSESSEE ASSAILED THE ADDITIONS BY WAY OF ELABORATE WRITTEN SUBMISSIONS, HOWEVER, THE SAME COULD NOT CO NVINCE LD. FIRST APPELLATE AUTHORITY. AFTER NOTICING THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN CIT V/S DURGAPRASAD MORE 82 ITR 540 AS WELL AS IN SUMATI DAYAL V/S CIT 214 ITR 801, LD. CIT(A) CONCURRED WITH LD. AOS FINDINGS ITA NO.2518/MUM/2019 ASSESSMENT YEAR 2013-14 4 THAT NO PURCHASES WERE ACTUALLY MADE FROM THESE PAR TIES. THEREFORE, IN THE LIGHT OF VARIOUS JUDICIAL PRECEDENTS RENDERED I N SIMILAR CIRCUMSTANCES, THE ESTIMATION OF 12.5% WAS HELD TO BE JUSTIFIED. A GGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS, IT IS QUITE EVIDENT THAT THE ASSESSEE REMAINED UNSUCCESSFUL IN DISCHARGING THE BURDEN OF ESTABLISH ING THE GENUINENESS OF THE PURCHASES. NOTICES ISSUED U/S 133(6) ELICITE D NO RESPONSE AND THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE SUPPLIER T O CONFIRM THE TRANSACTIONS. THEREFORE, THE LOWER AUTHORITIES HAD NO OPTION BUT TO MAKE ESTIMATED ADDITIONS AGAINST THESE SUSPICIOUS PURCHA SES. NO NEW MATERIAL HAS BEEN ADDUCED BY THE ASSESSEE BEFORE US THAT WOULD WARRANT US TO DEVIATE FROM THE FINDINGS OF LOWER AU THORITIES. THEREFORE, WE CONFIRM THE ESTIMATION OF 12.5% AS MADE BY LD. A O. THE GROUNDS THUS RAISED STANDS DISMISSED. THE ASSESSEE, IN ONE OF THE GROUND, HAS ASSERTED THAT NO OPPORTUNITY OF CROSS-EXAMINE THE S UPPLIERS WAS PROVIDED TO THE ASSESSEE. HOWEVER, WE FIND THAT THE INITIAL ONUS WAS ON ASSESSEE TO PRODUCE THE SUPPLIERS AND THEREFORE, TH IS PLEA CANNOT BE GIVEN MUCH WEIGHT. 6. IN NUTSHELL, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED ON 03 RD DECEMBER, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/12/2020 SR.PS:-JAISY VARGHESE ITA NO.2518/MUM/2019 ASSESSMENT YEAR 2013-14 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. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.