ITO WD 3(5), THANE V. S.S.METAL & ALLOYS, THANE

ITA 253/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7515 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN LD
• Assessee Lawyers: SUBODH RATNAPARKHI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 148

Judgement Text

ITA NOS.200-201,253- 254/MUM/2016 S.S.METAL & ALLOYS ASSESSMENT YEARS: 2009-10 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 200 & 201/MUM/2016 ( / ASSESSMENT YEARS: 2009-10 & 2011-12) S.S.METAL & ALLOYS NO.F/72,1 ST FLOOR ETERNITY MALL, L.B.S.MARG THANE(W) - 400 604 / VS. INCOME TAX OFFICER WARD - 3(5) ASHAR IT PARK, 6 TH FLOOR, B-WING, ROOM NO. 5 ROAD NO. 16-Z WAGLE INDUSTRIAL ESTATE THANE (W) 400 604 ./ ./PAN/GIR NO. AAEFS-7374-M ( /APPELLANT ) : ( !' / RESPONDENT ) & ./I.T.A. NO. 253 & 254/MUM/2016 ( / ASSESSMENT YEARS: 2009-10 & 2011-12) INCOME TAX OFFICER WARD - 3(5) ASHAR IT PARK, 6 TH FLOOR, B-WING, ROOM NO. 5 ROAD NO. 16-Z WAGLE INDUSTRIAL ESTATE THANE (W) 400 604 / VS. S.S.METAL & ALLOYS NO.F/72,1 ST FLOOR ETERNITY MALL, L.B.S.MARG THANE(W) - 400 604 ./ ./PAN/GIR NO. AAEFS-7374-M ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : SUBODH RATNAPARKHI, LD. AR REVENUE BY : V.JENARDHANAN, LD. DR / DATE OF HEARING : 10/04/2018 / DATE OF PRONOUNCEMENT : 11/04/2018 ITA NOS.200-201,253- 254/MUM/2016 S.S.METAL & ALLOYS ASSESSMENT YEARS: 2009-10 & 2011-12 2 / O R D E R PER BENCH 1. THESE ARE CROSS-APPEALS FOR ASSESSMENT YEARS [AY ] 2009-10 & 2011-12 WHICH CONTEST COMMON ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, THANE [CIT(A)] , ITA NO. 253 & 254/13-14 DATED 28/10/2015 QUA CERTAIN ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. SINCE COMMON ISSUES ARE INVOLVED, WE DISPOSE-OFF TH E SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND B REVITY. 2.1 FACTS AS EMANATING FROM ASSESSMENT ORDER FOR AY 2009-10 DATED 31/01/2014, AS PASSED BY LD. INCOME TAX OFFICER, WA RD-3(3), THANE U/S 143(3) READ WITH SECTION 147, ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF TRADING OF IRON & STEEL SCRAP HAS BEEN ASSESSED AT RS.74.52 LACS, INTER-ALIA, AFTER CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES OF RS.65.87 LACS AS AGAINST RETURNED INCOME OF RS.7.35 LACS E-FILED BY THE ASSESSEE ON 30/09/2009. THE ORIGINAL RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S 143(1). THE REASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUANCE OF NOTICE U/S 148 DATED 18/09/2013 WHICH WAS FOLLOWED BY STATUTORY NO TICES U/S 143(2) & 142(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.65,87,051/- FROM SEVEN SUCH PARTIES, THE DETAILS OF WHICH HAVE BEEN EXTRACTED AT PAGE NUMBER-2 OF THE QUANTUM ASSESSMENT ORDER. THE ITA NOS.200-201,253- 254/MUM/2016 S.S.METAL & ALLOYS ASSESSMENT YEARS: 2009-10 & 2011-12 3 ASSESSEE DEFENDED THE PURCHASES MADE BY HIM BUT NOT ICES ISSUED U/S 133(6) TO THE AFORESAID SUPPLIERS TO CONFIRM THE TR ANSACTIONS ELICITED NO RESPONSE. FINALLY NOT CONVINCED WITH ASSESSEES SUB MISSIONS AND EXPLANATIONS, LD. AO DISALLOWED THE SAME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 28/10/2 015 WHERE LD. CIT(A), AFTER CONSIDERING THE FACTUAL MATRIX AND RE LYING UPON CERTAIN JUDICIAL PRONOUNCEMENTS RESTRICTED THE IMPUGNED ADD ITIONS TO RS.9,58,390/- BY APPLYING THE GROSS PROFIT RATE OF 16.10% REFLECTED BY THE ASSESSEE IN AY 2012-13 TO THE TURNOVER OF IMPUG NED AY AND DELETED THE BALANCE ADDITION. THE DISALLOWANCE, IN EFFECT, AS SUSTAINED BY LD. CIT(A) CAME TO 14.55% OF ALLEGED BOGUS PURCHASES OF RS.65,87,051/. AGGRIEVED, THE ASSESSEE AS WELL AS THE DEPARTMENT I S IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITT ED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE ACTUAL DELIVERY OF MATERIAL AND PAYMENT THROUGH BANKING CHANNEL ALONE WAS NOT SUFFI CIENT TO PROVE THE GENUINENESS OF THE PURCHASES. PER CONTRA, LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE [AR] DREW ATTENTION TO THE FACT THAT THE ASSESSEE WAS A TRADER AND COULD NOT THE ACHIEVE THE TURNOVER WITHOUT ACTUAL PURCHASE OF MATERIAL AND THEREFORE, THE ADDI TION AS SUSTAINED BY LD. CIT(A) WAS ON THE HIGHER SIDE. OUR ATTENTION HA S BEEN DRAWN TO THE SUPPORTING DOCUMENTS PLACED IN THE PAPER-BOOK. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE ITA NOS.200-201,253- 254/MUM/2016 S.S.METAL & ALLOYS ASSESSMENT YEARS: 2009-10 & 2011-12 4 NO SALE WITHOUT PURCHASE OF ACTUAL MATERIAL SINCE T HE ASSESSEE WAS ENGAGED IN TRADING ACTIVITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENT TO THE SUPPLIERS WAS THROUGH BANKING CHANNELS. THE ASSESSE E WAS MAINTAINING ADEQUATE STOCK RECORDS. AT THE SAME TIME, THE ASSES SEE COULD NOT PRODUCE ANY PARTY FOR CONFIRMATION OF THE ACCOUNT A ND NOTICES SENT U/S 133(6) ELICITED NO RESPONSE. ALL THESE FACTORS CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE SO. HOWEVER, KEEPING IN VIEW THE FACTUAL MATRIX AN D ASSESSEES NATURE OF BUSINESS, WE FIND THE ESTIMATED EFFECTIVE RATE O F 14.55% TO BE ON THE HIGHER SIDE AND THEREFORE WE REDUCE THE SAME TO 8% OF ALLEGED BOGUS PURCHASES , WHICH COMES TO RS.5,26,964/-. THE ORDER OF LD. CI T(A) STAND MODIFIED TO THAT EXTENT. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISSED WHEREAS THE APPEAL FILED BY THE ASSESSEE STAND PARTLY ALLOWED. 6. THE ASSESSEE, IN AY 2011-12, HAS BEEN SADDLED WI TH SIMILAR ADDITIONS OF RS.1,68,15,478/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE LD. CIT(A) HAS ESTIMATED THE IMPUGNED ADDITIONS AT 16.62% OF ALLEGED BOGUS PURCHASES . WE FIND THAT THE IMPUGNED ORDER IS COMMON ORDER FOR AY 2009-10 AS WELL AS FOR AY 2011-12. THE REFORE, FACTUAL MATRIX BEING SIMILAR, TAKING THE SAME STAND, WE RES TRICT THE IMPUGNED ITA NOS.200-201,253- 254/MUM/2016 S.S.METAL & ALLOYS ASSESSMENT YEARS: 2009-10 & 2011-12 5 ADDITIONS TO 8% OF ALLEGED BOGUS PURCHASES WHICH COMES TO RS.13,45,238/-. RESULTANTLY, THE REVENUES APPEAL S TANDS DISMISSED WHEREAS THE APPEAL FILED BY THE ASSESSEE STAND PART LY ALLOWED. 7. IN NUTSHELL, ITA NOS. 253-254/MUM/2016 STANDS DI SMISSED WHEREAS ITA NOS. 200-201/MUM/2016 STANDS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL, 2018 SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11 . 04.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. ! '# , $ '#% , / DR, ITAT, MUMBAI 6. !&' / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI