ASST CIT 25(2), MUMBAI V. SHREE SWASTIK DEVELOPERS, MUMBAI

ITA 2559/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0938 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KEYURI DESA I LD
• Keywords: Bogus purchase; Unexplained expenditure; Onus to prove
• Section: 69C; 143(3); 133(6)

Judgement Text

ITA NO.2559//M/2014 SHREE SWASTIK DEVELOPERS ASSESSMENT YEAR- 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2559/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX 25(2) ROOM NO. 108, 1 ST FLOOR, BUILDING NO. C-11, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 / VS. SHREE SWA STIK DEVELOPERS SAI SHOPPING S.V. ROAD BORIVALI STATION BORIVALI(W) MUMBAI - 400 092 ./ ./PAN/GIR NO. AAVFS-8876-P ( /APPELLANT ) : ( !' / RESPONDENT ) REVENUE BY : NAVEEN GUPTA, LD. DR ASSESSEE BY : KEYURI DESA I, LD. AR / DATE OF HEARING : 01/05/2017 / DATE OF PRONOUNCEMENT : 01 /05/2017 ITA NO.2559//M/2014 SHREE SWASTIK DEVELOPERS ASSESSMENT YEAR- 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010- 11 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-35 [CIT(A)], MUMBAI DATED 16/01/2014 QUA RESTRICTING CERTAIN ADDITION OF BOGUS PURCHASES TO THE EXTENT OF 15% AS AGAINST FULL DISALLOWANCE THEREOF OF RS.1,94,89,015/- MADE BY AO. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT FIR M, WAS ASSESSED U/S 143(3) AT RS.1,94,89,015/- VIDE ASSESSING OFFICER [ AO] ORDER DATED 27/02/2013 AS AGAINST RETURNED INCOME OF RS.99,93,8 48/- E-FILED BY ASSESSEE ON 05/10/2010 WHICH WAS LATER REVISED TO NIL ON 10/02/2011 AFTER SETTING OFF OF BROUGHT FORWARD BUSINESS LOSSE S OF RS.83,71,152/-. THE ASSESSEE WAS ENGAGED AS BUILDER & DEVELOPER. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE REFLE CTED PURCHASES OF RS.6,90,91,625/- OUT OF WHICH PURCHASES TO THE EXTE NT OF RS.1,94,89,015/- WERE MADE FROM FIVE SUPPLIERS WHO WERE LISTED AS ACCOMMODATION ENTRY PROVIDER / BOGUS SUPPLIER AS PE R THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA . THE NOTICES ISSUED TO THESE PARTIES U/S 133(6) COULD NOT BE SER VED FOR WANT OF AVAILABILITY OF THREE PARTIES AT THE GIVEN ADDRESS AND TWO OF PARTIES DID NOT RESPOND TO THE SAID NOTICE, DESPITE BEING SERVED WI TH NOTICE. THE ASSESSEE, IN SUPPORT OF HIS CLAIMS, FURNISHED INVOI CE COPIES, LEDGER EXTRACT AND BANK STATEMENTS AND CONTENDED THAT THE PURCHASES WERE GENUINE. HOWEVER, AFTER PERUSING THE STATEMENT RECO RDED BY THE SALES ITA NO.2559//M/2014 SHREE SWASTIK DEVELOPERS ASSESSMENT YEAR- 2010-11 3 TAX DEPARTMENT FROM THE REPRESENTATIVE OF ALLEGED B OGUS SUPPLIER, AO REJECTED THE CLAIM OF THE ASSESSEE AND CAME TO THE CONCLUSION THAT THE SAID PURCHASES REPRESENTED UNEXPLAINED EXPENDITURE U/S 69C AND MADE THE IMPUGNED ADDITIONS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE ADDITION W ITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 16/01/2014 WHEREIN IT CONTENDED THAT THE SAID PURCHASES WERE U TILIZED IN VARIOUS PROJECTS UNDERTAKEN BY THE ASSESSEE AND THE CONSTRU CTION WORK COULD NOT BE CARRIED OUT WITHOUT UTILIZATION OF RAW MATERIAL AND THE ASSESSEE WAS IN POSSESSION OF REQUISITE PURCHASE DOCUMENTS AND ALL PAYMENTS WERE MADE THROUGH BANKING CHANNELS AND THEREFORE, THE PU RCHASES WERE GENUINE. FURTHER, THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED U/S 44AB AND MERELY BECAUSE THE SUPPLIER DID NOT APPEAR , THE PURCHASES COULD NOT BE TREATED AS NON-GENUINE. RELIANCE WAS P LACED ON VARIOUS JUDICIAL PRONOUNCEMENTS. FINALLY, LD. CIT(A) AFTER CONSIDERING THE FACTUAL MATRIX OF THE CASE AND PERUSAL OF VARIOUS JUDICIAL PRONOUNCEMENT, ESTIMATED THE IMPUGNED ADDITIONS TO 15% OF TOTAL PU RCHASES WHICH CAME TO RS.29,23,352/- AS AGAINST RS.1,94,89,015/- MADE BY THE AO. 4. AGGRIEVED BY THE STAND OF LD. CIT(A), THE REVENU E IS IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE ASSA ILED THE ORDER OF LD. CIT(A) BY CONTENDING THAT THE ONUS TO PROVE THE PUR CHASES BEYOND DOUBT SQUARELY LIED ON THE ASSESSEE WHICH HE HAS FAILED T O DISCHARGE. THE ASSESSEE COULD NOT SHOW ACTUAL UTILIZATION OF MATER IAL IN VARIOUS PROJECTS UNDERTAKEN BY HIM AND MERELY INFLATED ITS COST BY B OOKING BOGUS PURCHASES IN THE BOOKS OF ACCOUNTS. RELIANCE WAS PLACED ON TH E ITA NO.2559//M/2014 SHREE SWASTIK DEVELOPERS ASSESSMENT YEAR- 2010-11 4 JUDGMENT OF HONBLE GUJARAT HIGH COURT IN N.K.INDUSTRIES LTD. VS. DCIT [ITA NOS. 240 & OTHERS OF 2003 DATED 20/06/2016]. 4. PER CONTRA, THE LD. COUNSEL FOR ASSESSEE [AR] PLACED RELIANCE O N THE FINDING OF LD. CIT(A) TO CONTEND THAT THE ASSES SEE WAS IN POSSESSION OF ALL PURCHASE DOCUMENTS AND ALL PAYMENTS TO THE S UPPLIERS WERE THROUGH BANKING CHANNELS AND MERELY BECAUSE THOSE P ARTIES DID NOT APPEAR BEFORE AO, THE PURCHASES MADE BY ASSESSEE CO ULD NOT BE DOUBTED. FURTHER, THE MAGNITUDE OF PROJECT WORK UND ERTAKEN BY ASSESSEE COULD NOT HAVE BEEN POSSIBLE WITHOUT ACTUAL CONSUMP TION OF MATERIAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER ANALYZING THE VARIOUS CON TENTIONS OF RESPECTIVE REPRESENTATIVES COUPLED WITH OBSERVATION / FINDINGS OF LD. CIT(A) AND AFTER APPRECIATING FACTUAL MATRIX OF THE CASE, WE F IND THAT THE CONCLUSION REACHED AT BY THE LD. CIT(A) IS A REASONABLE AND FA IR ONE IN VIEW OF THE FACT THAT THE PURCHASES MADE BY ASSESSEE WERE RELAT ED TO HIS CONSTRUCTION WORK, THE BOOKS WERE AUDITED AND THE A SSESSEE WAS IN POSSESSION OF REQUISITE PURCHASE DOCUMENTS AND ALL PAYMENTS WERE MADE THROUGH BANKING CHANNELS. THE TRIBUNAL, INVARI ABLY, IN ALL SUCH CASES, HAVE TAKEN A STAND THAT EVEN IF PRESUMING TH AT ALL PURCHASES WERE BOGUS, ENTIRE ADDITION THEREOF WAS NOT WARRANTED FO R PARTICULARLY WHEN THE SALES WERE NOT IN DISPUTE AND THE ADDITION, IF ANY, WHICH HAS TO BE MADE IN ALL SUCH CASES IS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN SUCH PURCHASE TRANSACTIONS. THE CASE LAW RELIED UPON BY LD. CIT(A) COULD NOT BE APPLIED TO THE INSTANT CASE AS THE SAID CASE LAW DEALT WITH A SEARCH CASE WHERE CERTAIN INCRIMINATING MATERIAL WAS FOUND WHICH LED TO THE ADDITIONS IN QUESTION. THEREFORE, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER ITA NO.2559//M/2014 SHREE SWASTIK DEVELOPERS ASSESSMENT YEAR- 2010-11 5 OF LD. CIT(A) AND SEE NO REASON TO INTERFERE WITH T HE SAME. HENCE, BY CONFIRMING THE SAME, WE DISMISS REVENUES APPEAL. 6. IN NUTSHELL, THE REVENUES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST MAY, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01 .05.2017 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