DCIT 2(1)(1), MUMBAI V. BLUE CIRCLE ORGANICS P.LTD, MUMBAI

ITA 2564/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3644 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SINGH LD
• Assessee Lawyers: H P SHAH LD
• Keywords: Bogus purchase; Opportunity of being heard; Revised return; Reassessment proceedings
• Section: 147; 68; 148

Judgement Text

ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO. 2564/MUM/2017 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX - 2(1)(1) ROOM NO. 561 5 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI-400 020 / VS. BLUE CIRCLE OR GANICS P. LTD. 34, EMPIRE BUILDING, 1 ST FLOOR 146, DR. D.N. ROAD, FORT MUMBAI-400 001 ./ ./PAN/GIR NO. AACCB-4918-M ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI H.P. SHAH- LD. AR REVENUE BY : SHRI MANOJ KUMAR SINGH- LD.DR !' / DATE OF HEARING : 19/02/2019 !' / DATE OF PRONOUNCEMENT : 26/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-3 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-3/IT-112/ACIT-2(1)(1)/2016-17 DATED 16/01/2017 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ALLEGED BOGUS PURCHASES AND U/S 68 OF THE ACT. ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 2 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED IN MANUFACTURING OF FINE CHEMICALS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY U/S 143 (3) READ WITH SECTION 147 ON 31/03/2015 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE 2(1)(1), MUMBAI [AO] . THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.586.59 LAKHS UNDER NORMAL PROVISIO NS AFTER CERTAIN ADDITIONS AS AGAINST REVISED RETURNED INCOME OF RS. 379.44 LACS FILED BY THE ASSESSEE ON 07/02/2011. THE ADDITION OF RS.129. 89 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES & ADDITION OF RS.77.25 LACS U/S 68 IS THE SUBJECT MATTER OF PRESENT APPEAL BEFORE US. 2.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED PURS UANT TO RECEIPT OF CERTAIN INFORMATION THAT THE ASSESSEE STOOD BENEFIT TED BY ACCOMMODATION PURCHASE BILLS AGGREGATING TO RS.129. 89 LACS FROM THREE ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EX TRACTED AT PARA 2 OF THE QUANTUM ASSESSMENT ORDER. CONSEQUENTLY, NOTICE U/S 148 DATED 13/03/2104 WAS ISSUED WHICH WAS FOLLOWED BY STATUTO RY NOTICES U/S. 143(2) AND 142(1). 2.3 THE ASSESSEE WAS ASKED TO SUBSTANTIATE PURCHASE S MADE FROM THREE SUPPLIERS. IN RESPONSE, THE ASSESSEE SUBMITTE D COPY OF PURCHASE INVOICES & BANK STATEMENTS BUT EXPRESSED INABILITY TO PRODUCE ANY OF THE PARTIES FOR VERIFICATION OF THE TRANSACTION. THE OV ERALL FACTUAL MATRIX LED THE LD. AO TO BELIEVE THAT THE ASSESSEE FAILED TO D ISCHARGE THE ONUS CASTED UPON HIM TO PROVE THE GENUINENESS OF THE PUR CHASES AND THEREFORE, THESE WERE ADDED TO THE INCOME OF THE AS SESSEE. ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 3 2.4 THE LD. AO, IN THE ALTERNATIVE, OPINED THAT SIN CE PURCHASES WERE NOT MADE BY THE ASSESSEE FROM THE STATED PARTIES, A CTUAL GOODS WERE PURCHASED FROM UNDISCLOSED SOURCES IN CASH AND THER EFORE THE SAID AMOUNT WAS DISALLOWABLE IN TERMS OF SECTION 40A (3) OF THE ACT ALSO. 2.5 ANOTHER ADDITION U/S 68 STEM FROM THE FACT THAT THE ASSESSEE WAS IN RECEIPT OF SHARE APPLICATION MONEY AGGREGATING TO RS.557.25 LACS FROM 7 ENTITIES AS PER THE FOLLOWING DETAILS: - S.NO NAME AMOUNT (IN RS.) 1. ANIKESH TRADING PVT LTD RS.25,00,000/- 2. HPL MULTI TRADE PVT LTD RS.25,00,000/- 3. IFSL LTD RS.2,00,00,000/- 4. INDRAVARUN SALES AGENCIES RS.12,25,000/- 5. ALGORITHMIC SOFTWARE SYSTEM PVT LTD RS.15,00,000/- 6. BUNIYAD CHEMICLES LTD RS.1,00,00,000/- 7. TALENT INFOWAY LTD RS.1,80,00,000/- TOTAL RS.5,57,25,000/- THE DISPUTE BEFORE US IS WITH RESPECT TO 4 ENTITIES LISTED AT SERIAL NOS.1,2,4, & 5 AGGREGATING TO RS.77.25 LACS WHICH H AVE BEEN ADDED BY LD. AO U/S 68 SINCE THE ASSESSEE FAILED TO SUBSTANT IATE THE SAME WITH DOCUMENTARY EVIDENCES. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH S UCCESS BEFORE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 16/01/2017 WHEREIN ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES WAS RESTRICTED TO 12.5% WHEREAS ADDITION U/S 68 WAS DELETED SINCE THE ASSES SEE, IN THE OPINION OF FIRST APPELLATE AUTHORITY, DEMONSTRATED THE FULF ILMENT OF PRIMARY INGREDIENTS OF SECTION 68. AGGRIEVED, THE REVENUE I S IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITT ED THAT THE ASSESSEE FAILED TO DEMONSTRATE CONSUMPTION OF MATER IAL AND THEREFORE, ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 4 FULL ADDITIONS QUA ALLEGED BOGUS PURCHASES WERE JUSTIFIED. REGARDING ADDITION U/S. 68 OF THE ACT, IT WAS SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCES BEFORE LD. AO. PER CONTRA, LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE, SH. H.P.SHAH, DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER-BOOK, SUBMITTED THAT THE ASSESSEE PURCHASED VARIOUS CHEMICALS FROM THE STATED SUPPLIE RS WHICH WERE CONSUMED IN THE MANUFACTURING PROCESS. REGARDING AD DITION U/S 68, OUR ATTENTION HAS BEEN DRAWN TO THE SUPPORTING DOCUMENT S PLACED IN THE PAPER-BOOK. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER BOOK . SO FAR AS THE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS CONCERNED, IT IS NOTED THAT THE ASSESSEE WAS ENGAGE D IN MANUFACTURING ACTIVITIES WHICH COULD NOT BE CARRIED OUT WITHOUT A CTUAL PURCHASE / CONSUMPTION OF MATERIAL. THE ASSESSEE WAS IN POSSES SION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENT TO SUPPLIERS WAS THROUGH BANKING CHANNELS. THE BOOKS OF ACCOUNTS WERE SUBJECTED TO AUDIT WHEREIN QUANTITATIVE DETAILS HAVE BEEN PROVIDED. AT THE SAME TIME, THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIER FOR CONFIRMAT ION OF THE TRANSACTIONS AND COULD NOT SUBSTANTIATE DELIVERY OF MATERIAL. UN DER THESE CIRCUMSTANCES, THE ESTIMATION OF 12.5% AS MADE BY F IRST APPELLATE AUTHORITY, IN OUR OPINION, WAS QUITE FAIR & JUSTIFI ED WHICH DO NOT REQUIRE ANY INTERFERENCE. WE ORDER SO. THIS GROUND STANDS D ISMISSED. 6. SO FAR AS THE ADDITIONS U/S 68 IS CONCERNED, THE PERUSAL OF DOCUMENTS PLACED IN THE PAPER-BOOK ON PAGE NUMBERS-148 TO 276 REVEALS THAT THE ASSESSEE HAS PLACED ON RECORD VOLU MINOUS DOCUMENTS ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 5 TO DEMONSTRATE FULFILMENT OF PRIMARY INGREDIENTS OF SECTION 68 WITH RESPECT TO 4 PARTIES. THESE DOCUMENTS ARE CERTIFIED TO HAVE BEEN FILED BEFORE LD. AO AS WELL VIDE LETTER DATED 25/03/2015. HOWEVER, FROM THE PERUSAL OF QUANTUM ASSESSMENT ORDER, IT APPEARS THA T THESE DOCUMENTS HAVE BEEN OVERLOOKED BY LD. AO SINCE THE ADDITIONS HAVE BEEN MADE FOR WANT OF ADEQUATE DETAILS / DOCUMENTARY EVIDENCES. T HEREFORE, KEEPING IN VIEW THE SAME, WITHOUT DELVING MUCH DEEPER, THIS IS SUE STAND REMITTED BACK TO THE FILE OF LD. AO FOR FRESH RE-ADJUDICATIO N IN THE LIGHT OF THESE DOCUMENTARY EVIDENCES. NEEDLESS TO ADD THAT ADEQUAT E OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED TO THE ASSESSEE, WHO, IN TURN, IS DIRECTED TO SUBSTANTIATE HIS STAND, IN THIS REGARD. THIS GRO UND STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. THE APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % MUMBAI; DATED : 26/02/2019 SR. PS : PRATIMA SHAKYAWAR : SR.PS : JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT % % % % % ITA NO. 2564/MUM/2017 M/S. BLUE CIRCLE ORGANICS PVT.LTD. ASSESSMENT YEAR: 2010-11 6 3. % % $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +, / GUARD FILE / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.