PUSHPA NARESHKUMAR DHANANIA, MUMBAI V. ITO WD 17(2)(5), MUMBAI

ITA 2569/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0079 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.2569/M/2017 ASSESSMENT YEAR: 2009-10 SMT. PUSHPA NARESHKUMAR DHANANIA, 24, SARASWATI SADAN, 1 ST FLOOR, 113, KESHAVJI NAIK ROAD, FORT, MUMBAI PAN: ADWPD 7778D VS. ITO WARD 17(2)(5), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI B.S. BIST, D.R. DATE OF HEARING : 13.06.2017 DATE OF PRONOUNCEMENT : 21.06.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 10.01.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2009-10. 2. THE ONLY EFFECTIVE GROUND IS RELATING TO ADDITIO N OF RS.19,27,910/- ON ACCOUNT OF BOGUS PURCHASES. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS IN THE BUSINESS OF TRADING IN PIPE FITTINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER (HEREINAFTER REFERRED TO AS THE AO) FOUND THAT ASSESSEE HAS MADE PURCHASE S FROM FOLLOWING PARTIES. S. NO. NAME AMOUNT 1. ASIAN TUBE TRADING 5,79,280/- 2. SIDDHIVINAYAK STEELS 19,53,618/- 3. SONA TOOL TRADERS 4,82,586/- 4. CHANCHAL TUBE CORPORATION 16,64,395/- 5. SHRITI ENTERPRISES 5,04,400/- ITA NO.2569/M/2017 SMT. PUSHPA NARESHKUMAR DHANANIA 2 6. SURAT TUBE CORPORATION 15,28,197/- 7. ASIAN STEEL 17,37,414/- 8. KUSHAL STEEL CORPORATION 1,47,680/- 9. BHAGYALAXMI STEEL CORPORATION 3,96,240/- 10. REVATI STEEL TRADERS 4,16,780/- 11. LAXMI TRADING CO. 4,25,869/- 12. SAGAR STEEL TRADERS 10,22,320/- 13. MARUTI STEEL TRADERS 16,50,623/- 14. SHIV INDUSTRIES 16,63,854/- 15. RUPANI & CO. 17,54,429/- 3. THE AO WANTED TO VERIFY THE GENUINENESS OF PURCH ASES FROM THE ABOVE PARTIES. THE AO HAS RECEIVED THE INFORMATION FROM THE OFFICE OF DIT(E), MUMBAI AND FROM THE SALES TAX DEPARTMENT, MUMBAI RE GARDING SUSPICIOUS PARTIES WHO ARE ONLY PROVIDING ACCOMMODATION ENTRIE S WITHOUT DOING ACTUAL BUSINESS. THEREFORE, ASSESSEE WAS ASKED TO PRODUCE THE PARTIES AND DIRECTED TO FURNISH THE EXPLANATION ON THE PURCHASES PURPORTED TO HAVE MADE FROM THE AFORESAID PARTIES AND THE DETAILS OF BROKERS/AGENTS THROUGH WHOM PURCHASES WERE CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE INCL UDING NAME, ADDRESS, CONTACT NUMBER ETC. TO PROVE THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE, IN HIS REPLY, HAS FURNISHED THE COPIES OF LEDGER AC COUNTS OF THE PURCHASE PARTY, PURCHASE BILL AND PAYMENT DETAILS. HOWEVER, ASSESS EE COULD NOT PRODUCE ALL THE DOCUMENTARY EVIDENCES. NOTICES SERVED TO ALL T HESE ABOVE PARTIES WERE RETURNED UNSERVED. THEREFORE, AO HAS TREATED THESE PURCHASES FROM ABOVE PARTIES AS BOGUS AND ADDED THE AMOUNT OF RS.19,27,9 10/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS PARTLY ALLOWED THE SAME. 5. DURING THE COURSE OF HEARING, THE ASSESSEE DID N OT REMAIN PRESENT. THEREFORE, MATTER IS DECIDED ON THE EVIDENCE ON REC ORD. I FIND THAT THE LD. CIT(A) HAS PASSED THE ORDER CONSIDERING ALL THE DOC UMENTS AND ALL THE FACTS WHICH HE NARRATED IN PARAS 5 & 5.1 IN HIS ORDER WHI CH READ AS UNDER: ITA NO.2569/M/2017 SMT. PUSHPA NARESHKUMAR DHANANIA 3 5. THE SECOND ADDITION IS WHERE THE AO HAS NOT ADDE D THE WHOLE PURCHASES BUT HAS RATHER WORKED OUT SUPPRESSED PROFITS AT THE RATE OF 12.5%; IN THIS CASE THE ADDITION IS BASED ON THE FACT THAT THE ASSESSEE HAS NOT MADE AVAILABLE, THE DETAILS OF TRANSPORTATION OF THE MATERIAL PURPORTED TO HAVE BEEN PURCHASED FROM THE AFORESAID HAWALA DEALERS, LEDGER ACCOUNT CONFORMATI ONS HAVE NOT BEEN FURNISHED, HOW THESE PRODUCTS WERE UTILISED/CONSUME D IN THE PROCESS OF BUSINESS HAS NOT BEEN TOLD. THE AUDIT REPORT ITSELF SAYS THAT NO STOCK RECORDS HAVE BEEN MAINTAINED. FURTHER VERIFICATORY ENQUIRY BY THE AO IN RESPECT OF 15 ALLEGED HAWALA PARTIES HAS RESULTED I N THE FACT THAT NOTICES IN 12 CASES WERE RETURNED BACK. THEREAFTER, RELYING ON A PLETHORA OF CASE AUTHORITIES REGARDING . ONUS OF PROOF AND THE ASPECT OF PREPONDERANCE OF PROBABILITY. THE AO HAS PROCEEDED TO MAKE THESE ADD ITIONS. 5.1 THE APPELLANT HAS SUBSTANTIALLY MADE THE SAME A RGUMENT WHICH IT IS MADE IN RESPECT OF THE BOGUS PURCHASES WHICH HAVE BEEN D ISCUSSED AS ABOVE IN THIS ADDITION. THE APPELLANT HAS RATHER ARGUED THAT IF T HE SALES WERE TO BE ENHANCED BY THESE AMOUNTS THE GP RATE WOULD BE IN S UCH REALM WHICH IS IMPOSSIBLE IN THIS LINE OF TRADE. WHILE AG REEING WITH WHAT THE APPELLANT HAS SAID IT CAN ALSO NOT BE DENIED THAT I N THIS CASE SUBSTANTIAL INVESTIGATION HAS BEEN CARRIED OUT AND THE APPELLAN T SHOULD HAVE COME FORWARD WITH A MORE CONVINCING AND CONTROVERTING AR GUMENT SUPPORTING WITH EVIDENCE. IN A LONG LINE OF JUDGEMENTS, WHICH ARE CONTRARY TO THE ASSESSEE IT HAS BEEN HELD THAT IN SUCH CASES, THE P ROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASES SHOULD BE BROUGHT TO TAX. ONE S UCH CASE, IN LINE IS THAT OF SHIMIT P SHETH IN WHICH 12.5% OF PROFIT RATE APPLIC ATION ON SUCH LIKE BOGUS PURCHASES HAS BEEN DEEMED TO BE CORRECT. FOLLOWING THE SAME LINE OF REASONING, IT IS HELD THAT IN THIS INSTANT CASE THE ADDITION HAS BEEN CORRECTLY MADE BY THE APPELLANT FOR FAILURE ON PART OF THE APPELLA NT TO DULY PRODUCE THE RELEVANT THIRD-PARTY EVIDENCE AND VERIFICATION WHICH WAS DES IRED BY THE ASSESSING OFFICER. ACCORDINGLY THE ADDITION MADE IS CONFIRMED AND THE GROUND IS DISMISSED. 6. I DO NOT FIND ANY REASON TO INTERFERE WITH THE O RDER OF THE LD. CIT(A), AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 21.06.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT ITA NO.2569/M/2017 SMT. PUSHPA NARESHKUMAR DHANANIA 4 THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.