ALI ISPAT P.LTD, MUMBAI V. DCIT 14(1)(1),

ITA 2699/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8849 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 2699 / MUM/20 17 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. ALI ISPAT LTD., SHOP NO.7, IBRAHIM CHUNAWALA COMPOUND, LBS MARG, OPP. KURLA BUS DEP OT KURLA (W), MUMBAI 400 070 VS. DCIT 14(1)(1), MUMBAI PAN/GIR NO. AAECA7192A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SAMEER DALAL REVENUE BY SHRI V. JUSTIN DATE OF HEARING 16 / 10 /201 7 DATE OF PRONOUNCEME NT 24 / 10 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 22, MUMBAI DATED 30/01/2017 FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT. 2. IN THIS APP EAL, ASSESSEE IS AGGRIEVED FOR UPHOLDING THE ADDITION @12.5% BY CIT(A) IN RESPECT OF BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. THE BRIEF FACTS ARE THAT INFORMATION WAS RECEIVED FROM THE INVESTIGATION REGARDING THE INVOLV EMENT OF THE ASSESSEE IN OBTAINING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS PURCHASES FROM THE FOLLOWING PARTIES: ITA NO. 2699/MUM/2017 M/S. ALI ISPAT PVT. LTD., 2 PARTY AMOUNT A) M/S. SIDDHIVANAYAK STEEL RS. 22,58,701 B) M/S. CHANCHAL TUBE CORPORATION RS. 26,61,795 C) M /S. SURAJ TUBE CORPORATION RS. 30,12,166 D) M/ S. ASIAN STEE L RS. 23,14,286 E) M/S. CENTURY ENTERPRISES RS. 3.49.800 TOTAL RS. 1,08,96.748 5. THE ASSESSEE WAS ALSO ASKED TO SUBMIT COPIES OF PURCH ASE INVOICES OF PURCHAS ES SHOWN TO H AVE BEEN MADE FROM THE ALLEGED HAWALA PARTIES NAMELY M/S, SIDDHIVINAYAK STEEL, CHANCHAL TUBE CORPORATION, ASIAN STEEL, SURAJ TUBE CORPORATION & CENTURY ENTERPRISES AND ALSO OF ONE OF THE LARGEST PURCHASE P ARTIES FOR THE YEAR UNDER CONSIDERATIO N. THOUGH THE ASSESSEE HAD SUBMITTED THE PURCHASE INVOICES OF THE PURCHASES SHOWN TO HAVE BEEN MADE FROM THE ALLEGED HAWALA PARTIES, IT HAD NOT PROVIDED THE COPY OF THE PURCHASE INVOICE OF PURCHASE MADE FROM THE LARGEST PURCHASE PARTY IN THE A.Y.2010 - 11. T HE BILL OF THE LARGEST PURCHASE PARTY WAS CALLED F O R IN ORDER TO COMPARE THE INVOICES OF THE GENUINE PARTY AND THAT OF THE ABOVE HAWALA PARRIES. SINCE THE ASSESSEE KNEW THE INTENT FOR CALLING FOR THE BILLS OF THE LARGEST PURCHASE PARTY IT INTENTIONALLY DID NOT PRODUCE THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE BEING ASKED TO DO SO REPEATEDLY. TH E A.O. FOUND THAT THE INVOICES OF PURCHASES SUBMITTED HAD NO REQUIRED DETAILS AND TELEPHONE NUMBER MENTIONED ON THE INVOICES OF THE ALLEGED HAWALA PARTIES PROVING IT TO BE BOGUS . THE OFFICE HAD ALSO ISSUED SUMMONS U/S.131 OF THE ACT AND NOTICES UNDER ITA NO. 2699/MUM/2017 M/S. ALI ISPAT PVT. LTD., 3 SECTION 133(6) OF THE ACT WAS ALSO ISSUED TO THE HAWALA PARTIES BUT THE SAME HAD BEEN RETURNED BACK UN - SERVED. FIELD VERIFICATION WAS ALSO CARRIED OUT A T THE GIVEN ADDRESS OF THE ALLEGED HAWALA CONCERN IN WHICH IT WAS LEARNT THAT NO SUCH CONCERN BY THE NAME OF M/S. SIDDHIVINAYAK STEEL, CHANCHAL TUBE CORPORATION, ASIAN STEEL, SURAJ TUBE CORPORATION & CENTURY ENTERPRI SES EVER EXISTED AT THE SAID ADD RESS OR IN THE VICINITY. THE A.O. FOUND IT WAS PERTINENT TO MENTION THAT PRAMO D KUMAR SINGH, OUEHYANT SINGH, GURESH SINGH, SHIVANAND SINGH WHO WERE PROPRIETORS OF ASIAN STEEL, SIDDHIVINAYAK STEEL, SURAJ TUBE CORPORATION AND CHANCHAL TUBE CORPORATION IN THEIR STATE MENT GIVEN ON 25 TH MARCH 2011 BEFORE THE SALES TAX AUTHORITIES HAD ADMITTED THAT INSTEAD OF CARRYING OUT BUSINESS OF TRADING IN IRON AND STEEL FOR WHICH THEY GOT REGISTERED UNDER MVAT ACT, 2002, THEY ONLY ISSUED BILLS WITHOUT ANY CORRESPONDING MOVEMENT OF MATERIAL WHICH WAS TO SAY THAT THEY WERE ENGAGED IN ISSUING ACCOMMODATION ENTRY OF BOGUS PURCHASES TO VARIOUS BENEFICIARIES WITHOUT ACTUAL SUPPLY OF MATERIAL. 6. IN VIEW OF THE ABOVE DISCUSSION, AO ADDED ENTIRE AMOUNT OF PURCHASE IN ASSESSEES INCOME. 7. BY THE IMPUGNED ORDER, CIT(A) RESTRICTED ADDITION TO THE EXTENT OF 12.5% BY ESTIMATING PROFIT ON SUCH ALLEGED PURCHASES AFTER OBSERVING THAT CORRESPONDING SALES MADE BY THE ASSESSEE HAS NOT BEEN DECLINED BY THE AO. 8. ASSESSEE IS IN FURTHER APPEAL BEFORE U S AGAINST THE ABOVE ORDER OF CIT(A). ITA NO. 2699/MUM/2017 M/S. ALI ISPAT PVT. LTD., 4 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 10. FROM THE RECORD, WE FOUND THAT ADDITION HAS BEEN MADE BY THE AO ON THE BASIS OF INFORMATION FROM SALES TAX DEP ARTMENT AND FURTHER ENQUIRY MADE BY HIM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD SUBMITTED COPIES OF PURCHASE BILLS, THEIR LEDGER COPI ES, BANK PAYMENT PROOF I.E. ALL T HE DOCUMENTS WHICH WE R E IN THE POSSESSION OF THE ASSESSEE WERE SUBMITTE D. ALL THESE PURCHASES WERE FOR LOCAL PARTIES AND THE GOODS WERE DELIVERED BY THE PARTIES DIRECTLY SO THE TRANSPORT BILLS COULD NOT B E PRODUCE D. THE CIT(A) FOUND THAT ASSESSEE IS IN THE RETAIL BUSINESS OF IRON AND STEEL AND THE CORRESPONDING SALES MADE BY THE ASSESSEE HAS NOT BEEN DECLINED, ACCORDINGLY HE CONFIRMED THE ADDITION BY ESTIMATING COMMERCIAL PROFIT OF 12.5% AS HAVING BEEN EARNED BY THE ASSESSEE. WE FOUND THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD SHOWN GP OF 6.19% WHICH IS BETTER THAN GP EARNED IN THE EARLIER TWO YEARS. 11. AS PER LEARNED AR, CIT(A) WAS NOT JUSTIFIED IN M AKING FURTHER ADDITION OF 12.5% WHEN THE ASSESSEE HIMSELF HAS SHOWN G.P. OF 6.19% . LEARNED AR ALSO PLACED ON RECORD THE DECISION OF CO - ORDINATE BENCH, WHEREIN GP DISC LOSED BY THE ASSESSEE WAS REDUCED FROM THE GP OF 12.5% AS APPLIED BY THE CIT(A) IN THE CASE OF PUSHPABEN R. SHAH IN ITA NO.4463 & 4464/MUM/2015 ORDERDATED 13/04/2017. 12. WE HAD CAREFULLY GONE THROUGH THE ORDERS OF THE TRIBUNAL AS WELL AS MATERIAL PLACED ON RECORD. CONSIDERING THE TOTALITY OF FACTS AND ITA NO. 2699/MUM/2017 M/S. ALI ISPAT PVT. LTD., 5 CIRCUMSTANCES OF THE CASE VIS - - VIS GP SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND ALSO DURING THE EARLIER TWO YEARS, WE MODIFY THE ORDER OF CIT(A) AND DIRECT THE AO TO RESTRICT THE ADDITI ON TO THE EXTENT OF 10% OF THE BOGUS PURCHASE. WE DIRECT ACCORDINGLY. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 10 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R .C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 /10 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, IT AT, MUMBAI 6. GUARD FILE. //TRUE COPY//