SHREYANS METAL (INDIA), MUMBAI V. INCOME TAX OFFICER, WARD-19(3)(3), MUMBAI

ITA 2660/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8352 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL K MODY
• Keywords: Reopening of assessment; Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO. 2660 /MUM/201 8 (A.Y: 2010 - 11) M/S. SHREYANS METAL (INDIA) SHOP NO. 1, MALI BHUVAN, GROUND FLOOR, 8 TH KHETWADI LANE, MUMBAI 400 004 PAN: AANFS 1907 R V. INCOME TAX OFFICER WARD 19(3)(3) 1 ST FLOOR, ROOM NO. 219, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NITESH JOSHI & SHRI VIPUL K. MODY DEPARTMENT BY : SHRI KAILASH KANOJIYA DATE OF HEARING : 11.02.2019 DATE OF PRONOUNCEMENT : 05 .04 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 30, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 15.03.2018 IN ESTIMATING THE PROFIT ELEMENT @6.5% ON THE PURCHASES TREATED AS NON - GENUINE BY THE ASSESSING OFFICER. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE IS INTO TRADING OF METALS . LD. COUNSEL FOR THE ASSESSEE R EFERRING TO PAGE NO. 55 OF THE 2 ITA NO. 2660/MUM/2018 (A.Y: 2010 - 11) M/S. SHREYANS METAL (INDIA) PAPER BOOK SUBMIT TED THAT PURCHASES AND SALES WERE TALLIED, ASSESSEE HAS PRODUCED BANK STATEMENTS , PAYMENTS WERE MADE THROUGH CHEQUES, ASSESSEE HAS PRODUCED PURCHASE INVOICES , STOCK REGISTERS, LEDGER ACCOUNT OF THE PARTIES TO PROVE THE GENUINENESS OF THE PURCHASES . IT IS ALSO SUBMITTED THAT 11 OUT OF 20 SUPPLIERS HAVE CONFIRMED SUPPLY OF GOODS THIS YEAR. IT IS ALSO FURTHER SUBMITTED THAT IN EARLIER YEAR ITAT CONFIRMED 10% OF THE PURCHASES AS DISALLOWANCE. THEREFORE, IT IS SUBMITTED THAT SINCE 11 PARTIES HAVE CONFIRMED SUPPLY OF GOODS TO THAT EXTENT THE PURCHASES CANNOT BE TREATED AS NON - GENUI NE. 3. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT IS FURTHER SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT MATERIALS WERE TRANSPORTED AND DELIVERED TO THE ASSESSEE. IN REPLY LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT T HE MATERIALS WERE TRANSPORTED THROUGH HANDCART FOR WHICH THERE WONT BE ANY EVIDENCES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IDENTICAL ISSUE CAME UP BEFORE THE TRIBUNAL FOR THE A.Y. 2009 - 10 IN ITA.NO. 5517/MUM/2 016 DATED 01.11.2017, WHEREIN THE ASSESSING OFFICER TREATED 25% OF THE PURCHASES AS NON - GENUINE AS THE NOTICES U/S. 133(6) OF THE ACT TO THE SUPPLIERS RETURNED UNSERVED. ASSESSEE ALSO FURNISHED SALES AND PURCHASES INVOICES, STOCK REGISTER, 3 ITA NO. 2660/MUM/2018 (A.Y: 2010 - 11) M/S. SHREYANS METAL (INDIA) BANK STATEMENTS , ETC., TO CONTEND THAT T HE PURCHASES WERE GENUINE . HOWEVER, THE LD.CIT(A) RESTRICTED THE IMPUGNED DISALLOWANCE TO 12.5% AND THE TRIBUNAL RESTRICTED TO 10% OF THE PURCHASES . THIS YEAR THE LD.CIT(A) RESTRICTED THE DISALLOWANCE TO 6.5% OF THE PURCHASES. WE FIND THAT T HE TRIBUNAL FOR THE A.Y. 2009 - 10 ESTIMATED THE PROFIT ELEMENT FROM SUCH PURCHASES @10% OBSERVING AS UNDER: - 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED / DISTURBED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. TH E PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM THE ANY OF THE FIFTEEN SUPPLIERS AND ALL NOTICES ISSUED U/S 133(6) WERE RETURNED BACK, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN S UCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF V AT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THE LD. AR HAS CONTENDED THAT THE ASSESSEE MADE VAT PAYMENT WITH RESPECT TO FIVE PARTIES. THE ASSESSEE DESERVES THE BENEFIT OF THE SAME. HENCE, ON OVERALL FACTS AND CIRCUMSTANCES AND KEEPI NG IN VIEW ASSESSEES NATURE OF BUSINESS, WE REDUCE THE ESTIMATED ADDITION TO 10% OF ALLEGED BOGUS PURCHASES OF RS.2,11,37,383/ - WHICH COMES TO RS.21,13,738/ - . THE ORDER OF LD. CIT(A) STANDS MODIFIED TO THAT EXTENT . 5. FACTS ARE MORE OR LESS IDENTICAL THIS YEAR , T HEREFORE , WE UPHELD THE ORDER OF THE LD.CIT(A) IN ESTIMA TING THE PROFIT ELEMENT ON SUCH PURCHASES @6.5% AND REJECT THE GROUNDS RAISED BY THE ASSESSEE . 6. THOUGH, ASSESSEE HAS RAISED GROUND ON REOPENING OF ASSESSMENT NO ARGUMENTS HAVE BEEN ADVANCED AND T HEREFORE THIS GROUND IS DISMISSED ACCORDINGLY. 4 ITA NO. 2660/MUM/2018 (A.Y: 2010 - 11) M/S. SHREYANS METAL (INDIA) 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 05 TH APRIL , 2019 SD / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 05/ 0 4 / 201 9 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM