JT. CIT (OSD)-6(2)(1), MUMBAI V. CARGO GEAR SERVICES PVT. LTD., MUMBAI

ITA 2677/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9352 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Business income; Accommodation entries
• Section: 69C; 147; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 2677 / MUM/ 20 16 ( / ASSESSMENT YEAR: 20 11 - 12 ) JT. CIT (OSD) - 6(2)(1) ROOM NO. 563, 5 TH FLOOR, AAYAKAR B HAVAN, M.K. ROAD, MUMBAI PIN:400 020 / VS. CARGO GEAR SERVICES PV T. LTD. PLOT NO. 10, OPP SANT J ANABEN MUNCIPAL MARKET , GODAPDEV CROSS RD NO. 1, OFF R EAY ROAD PIN:4000 11 ./ ./ PAN/GIR NO. : AABCC 4330 K ( / APPELLANT ) . . ( / RESPONDENT ) / DATE OF HEARING : 19.09 .2017 / DATE OF PRONOUNCEMENT : 27 .09 .2017 / O R D E R PER A MARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 19 .0 1 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2011 - 12 . 2 . THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS: - 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.35,08,658/ - BEING PEAK OF SHAM PURCHASES MADE U/S 69C OF THE ACT, BY HOLDING THAT IT IS ADDITION OF BOGUS PURCHA SES U/S 68 OF THE ACT, ASSESSEE BY : NONE REVENUE BY: SHRI V. JENARDHANAN ITA NO. 2677/M/2016 A.Y. 2011 - 12 2 THUS, NOT, APPRECIATING THAT PROVISION OF 69C IS SEPARATE FROM THE PROVISIONS, GOVERNING BUSINESS INCOME AND BEING A DEEMING PROVISION SECTION 69C IS APPLICABLE IRRESPECTIVE OF THE ADDITION/ ESTIMATED UNDER THE PROVISION OF BUSINESS INCOME. 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4. THE APPE LLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . NO BODY APPEARED O N THE BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF NOTICE NOR ANY ADJOURNMENT PET IT ION WAS FILED THEREFORE THE BENCH DECIDED TO DISPOSE T HE APPEAL AFTER HEARING LD. DEPARTMENTAL AND CONSIDERING THE MATERIAL PLACED ON RECORD . 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2005 - 06 ON 28 . 09 .20 11 DECLARING TOTAL INCOME TO THE TUNE OF RS.1,52,86,860/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT ON 20.01.2012 RAISING A DEMAND OF RS.6,590/ - . THE ASSESSING OFFICER RECEIVED A LETTER FROM DGIT(INV.), MUMBAI IN WHICH IT WAS STATED THAT THE ASSES SEE WAS ENGAGED IN THE BOGUS PURCHASE ACTIVITY I.E. TAKI NG THE ACCOMMODATION ENTRIES FROM HAWALA OPERATORS. ACCORDING TO THIS INFORMATION THE ASSESSEE HAS BOGUS PURCHASES BILL FROM THE 3 PARTIES IN THE A.Y. 2011 - 12. THE CLAIM OF THE 3 PARTIES ARE HEREBY MENTIONED BELOW.: - SR. NO. NAME OF THE ASSESSEE PAN AMOU NT OF BOGUS PURCHASE ITA NO. 2677/M/2016 A.Y. 2011 - 12 3 1 BHAGWATI TRADING CO. AABCC4430K1 RS.33,58,21 2 PRAYAN TRADING CO. AAISP6755D RS.8,12,276 3 VITARAG TRADING CO. AAFFV2004C RS.7,24,282 4 TOTAL RS.48,94,769 5 . THEREAFTER, THE STATEMENT OF THE SAID PARTIES WERE RECORDED ON OATH ONLY THEIR ADMITTED THAT THEY WERE PROCEEDING THE BILLS WHEREAS NO ACTUAL TRANSACTION TOOK PLACE. THEREAFTER, THE CASE WAS REOPENED U/S 147 OF THE ACT WAS GIVEN TO THE ASSESSEE. AFTER GETTING THE REPLY THE CREDIT PURCHASE OF THE SAID PARTIES TO THE TUNE O F RS.35,08,658/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 69C OF THE I.T. ACT. THEREAFTER, G.P. ADDITION WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE THE TOTAL INCOME OF THE ASSESSEE TO BE ASSESSED TO THE TUNE OF RS. 1,86,93,410/ - . THEREAF TER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE , THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US . ISSUE NO.1: - 6 . WE HAVE HEARD ARGUMENT ADVANCED BY THE LD . REPRESENTATIVE OF THE DEPARTMENT AND PERUS ED THE RECORD. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE ADDITION U/S 69C OF THE ACT HAS DULY BEEN PROVED , THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY ADDED THE SAID AMOUNT IN THE INCOME OF THE ASSESSEE AND ALSO ASSESSED THE PROFIT @ OF ITA NO. 2677/M/2016 A.Y. 2011 - 12 4 2% UPON THE SAID BOGUS PURCHASE BILLS BUT THE CIT(A) HAS WRONGLY DELETED THE SAME THEREFORE, IN THE SAID CIRCUMSTANCES THE FINDING OF THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. IN VIEW OF THE ARGUMENT ADVANCED BY THE LD. REPRESE NT ATIVE OF THE DEAPARTMENT AND PERUSING THE RECORD , W E NOTICED THAT THE CASE WAS REOPENED ON THE BASIS OF THE INFORMATION RECEIVED FROM DGIT(INV.), MUMBAI IN WHICH IT WAS CONVEYED THAT THE ASSESSEE WAS ENGAGED IN THE BOGUS PURCHASE ACTIVITY FROM 3 PARTIES WHOSE NAME ARE HEREBY MENTIONED BELOW.: - SR.NO. NAME OF THE ASSESSEE PAN AMOUNT OF BOGUS PURCHASE 1 BHAGWATI TRADING CO. AABCC4430K1 RS.33,58,21 2 PRAYAN TRADING CO. AAISP6755D RS.8,12,276 3 VITARAG TRADING CO. AAFFV2004C RS.7,24,282 4 TOTAL RS.48 ,94,769 7 . THEREAFTER , THE STATEMENT S OF THE SAID PARTIES WERE RECORDED ON OATH IN WHICH THEY ADMITTED THAT THEY WERE ONLY ISSUING THE BILLS WHEREAS NO ACTUAL TRANSACTION TOOK PLACE BETWEEN THEM. THEREAF TER THE NOTICE WAS GIVEN TO THE ASSESSEE AND FINDIN G NO JUSTIFIABLE REPLY THE AO DISALLOWED THE BOGUS PURCHASE TO THE TUNE OF RS. 35,08,658/ - AND THE SAID AMOUNT ADDED TO THE INCOME OF THE ASSESSEE. IT IS NOT A CASE ITA NO. 2677/M/2016 A.Y. 2011 - 12 5 WHERE TH E CASE HAS NOT BEEN PROVED AND THE MATTER OF CONTROVERSY HAS BEEN DECIDED WITHOUT C OGENT AND CONVINCING EVIDENCE ON RECORD. THE LAW RELIED BY THE CIT(A) SPEAKS THAT WHEN THE PROFIT WAS ESTIMATED THEN ALL THE EXPENSES SHOULD BE ALLOWED. IN THE INSTANT CASE THE PURCHASE OF THE ASSESSEE WAS FOUND BOGUS AND THEREAFTER THE PROFIT WAS ESTIMA TED ON BOGUS PURCHASE. FACTS ARE DISTINGUISHABLE. I N THE SAID CIRCUMSTANCES , WE ARE OF THE VIEW THAT INTEREST OF JUSTICE WOULD BE ACHIEVED IF THE GP ADDITION BE RESTRICTED @ 10% OF THE BOGUS PURCHASE . W E ORDER ED ACCORDINGLY AND ALLOWED THE APPEAL OF THE R EVENUE . ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE. I SSUE NO. 2 & 3 : - 8 . ISSUE NO. 2 & 3 ARE GENERALLY IN NATURE WHICH NOWHERE REQUIRED ANY ADJUDICATION. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS HEREBY ORDERED T O BE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .09 .2017 . SD/ - SD/ - ( R.C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27 .09 .2017 V.P.SINGH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 2677/M/2016 A.Y. 2011 - 12 6 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //T RUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI