KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. (JV), MUMBAI V. ITO , WARD 21(2)(1), MUMBAI

ITA 2527/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5843 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2527 / / 2019 (%. .2011-12) ITA NO. 2527/MUM/2019 (A.Y.2011-12) M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO.(JOINT VENTURE), 101, PRATHMESH APARTMENT, 86 TH OLD COLLEGE ROAD, DADAR, MUMBAI 400 028 PAN:AAAAM8709M / VS. : / APPELLANT INCOME TAX OFFICER 21(2)(1), PIRAMAL CHAMBER, LALBAUG, MUMBAI 400 012 : / RESPONDENT ASSESSEE BY : SHRI JITENDRA SINGH REVENUE BY : SHRI AJAY PRATAP SINGH / DATE OF HEARING : 15/10/2020 / DATE OF PRONOUNCEMENT : 11/01/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-33, MUMBAI ( IN SHORT THE CIT (A)) DATED 01/02/2019 FOR THE ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSEE FIELD ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29/09/2011 DECLARING TOTAL INCOME OF RS.19, 38,660/-. THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT 2 ITA NO. 2527/MUM/2019 (A.Y.2011-12) THE ACT). THE CASE OF ASSESSEE WAS SELECTED FO R SCRUTINY AND STATUTORY NOTICE UNDER SECTION 143(2) OF THE ACT WAS SERVED ON THE ASSESSE E ON 11/08/2012. THE ASSESSING OFFICER RECEIVED INFORMATION FROM DGIT(INV.), MUMBA I THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.16,05,493/- F ROM M/S. KARAN ENTERPRISES. TO VERIFY GENUINENESS OF PURCHASES THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE AFOREMENTIONED DEALER. TH E NOTICE WAS RETURNED BACK UNSERVED WITH POSTAL REMARKS LEFT. THE ASSESSEE WAS ASKED TO FURNISH RELEVANT DOCUMENTS TO PROVE GENUINENESS OF PURCHASES AND THE SUPPLIER OF GOODS. THE ASSESSEE COULD NEITHER PRODUCE THE SUPPLIER NOR TH E ASSESSEE COULD FURNISH RELEVANT DOCUMENTS VIZ. PURCHASE ORDERS, DELIVERY CHALLANS, TRANSPORT BILLS, ETC. TO SUBSTANTIATE GENUINENESS OF PURCHASES. THE ASSESSING OFFICER MA DE ADDITION OF ENTIRE BOGUS PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 26/03/2014, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDE RING THE FACTS OF THE CASE CONCLUDED THAT SINCE THE ASSESSEE HAD DONE WORK IN RESPECT OF GOVERNMENT CONTRACTS, THE MATERIALS MUST HAVE BEEN UTILIZED. THE ASSESSEE MUST HAVE PROCURED MATERIAL FROM SOMEWHERE ELSE AND OBTAINED BILLS FRO M THE HAWALA DEALER. THE CIT(A) RESTRICTED THE DISALLOWANCE IN RESPECT OF BOGUS PUR CHASES TO 30%. STILL AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AS SAILING THE ADDITION SUSTAINED BY CIT(A). 3. SHRI JITENDRA SINGH, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A GOVERNMENT CONTRACTOR. THE WORK CARR IED OUT BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE DEPARTMENT. WITHOUT MATERIAL THE ASSESSEE COULD NOT HAVE PERFORMED THE CONTRACT JOB. THE ESTIMATED ADDITION MADE BY CIT(A) IS VERY MUCH ON THE HIGHER SIDE. THE NET PROFIT DECLARED BY THE AS SESSEE DURING THE FINANCIAL YEAR 2010-11 IS 4.37%. THEREFORE, THE ADDITION MAY BE R ESTRICTED TO NET PROFIT DECLARED BY THE ASSESSEE. 4. SHRI AJAY PRATAP SINGH, REPRESENTING THE DEPART MENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD. 3 ITA NO. 2527/MUM/2019 (A.Y.2011-12) DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM SUSPICIOUS DEALER IDENTIFIED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. DURING THE ASSESSMENT P ROCEEDINGS AND EVEN BEFORE THE CIT(A) THE ASSESSEE COULD NEITHER PRODUCE DOCUM ENTS TO PROVE GENUINENESS OF THE PURCHASES MADE NOR THE ASSESSEE COULD PRODUCE SUPPLIER OF GOODS. EVEN NO CONFIRMATION FROM SUPPLIER WAS FIELD BY THE ASSESSE E. 5. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. UNDISPUTEDLY, THE INCOME DECLARED BY THE ASSESSEE FROM CONTRACT WORK HAS NOT BEEN DISPUTED BY THE REVENUE. THE ASSESSEE IS A WORK CONTRACTOR. WITHO UT MATERIAL THE ASSESSEE COULD NOT HAVE COMPLETED THE CONTRACT JOB. OSTENSIBLY, T HE ASSESSEE HAS PROCURED THE MATERIAL FOR PERFORMING CONTRACT JOB EITHER FROM GREY MARKET OR ANY OTHER SOURCES. THEREAFTER, THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS FROM HAWALA OPERATOR. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. PARAMSHAKHTI DISTRIBUTORS PVT. LTD. IN INCOME TAX APPEAL NO.413 OF 2017 DECID ED ON 15/07/2019 HAS UPHELD THE PROPOSITION THAT IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN THE BOGU S PURCHASES THAT HAS TO BE BROUGHT TO TAX. ESTIMATI ON OF DISALLOWANCE AT 30% BY THE CIT(A) IS VERY MUCH ON THE HIGHER SIDE. CONSIDERIN G ENTIRETY OF FACTS, ESTIMATION OF GP @12% OF BOGUS PURCHASES WOULD MEET THE ENDS OF J USTICE. I HOLD AND DIRECT ACCORDINGLY. 6. IN THE RESULT, APPEAL BY ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 11TH DAY OF JANUARY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, '%/ DATED: 11/01/2021 VM , SR. PS(O/S) 4 ITA NO. 2527/MUM/2019 (A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT , 2. )* / THE RESPONDENT. 3. +* ( )/ THE CIT(A)- 4. +* CIT 5. -.)*% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI