ITO 21(2)(1), MUMBAI V. M/s Kinjal Construction Co & Chirag Construction Co (Joint Venture), MUMBAI

ITA 2721/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3415 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 02-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 133(6); 143(1); 13; 22; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER ITA NO. 2721 /MUM/201 9 ( A.Y. 2011 - 12 ) INCOME TAX OFFICER - 2 1( 2 ) (1) ROOM N O. 110 , 1 ST FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI 400 012 V. M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. (JOINT VENTURE) OFFICE NO. 101, 1 ST FLOOR PRATHMESH APARTMENTS OLD COLLEGE ROAD, DADAR MUMBAI 400028 PAN: AHTPS2919Q ( A PPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY AMRITA SINGH DATE OF HEARING : 22 .10.2020 DATE OF PRONOUNCEMENT : 13 .11 .2020 O R D E R PER C. N. PRASAD (JM) 1. TH IS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 33 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 01.02.2019 FOR THE A.Y. 2011 - 12 IN RESTRICTING THE DISALLOWANCE TO 30% OF PURCHASES AS AGAINST THE ENTIRE PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSE SSING OFFICER. 2 ITA NO. 2721/MUM/2019 (A.Y.2011 - 12) M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR, FILED RETURN OF INCOME ON 29.09.2011 FOR THE A.Y.2011 - 12 DECLARING INCOME OF . 19,39,660 / - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT (INV. ,) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT S WERE REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.) MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM M/S. KARAN ENTERPRISES WHO IS SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANS PORTATION OF A NY GOODS. IN THE RE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM VARIOUS PARTIES REFERRED IN ASSESSMENT ORDER. ASSESSEE HAS FURNISHED LEDGER COPIES OF PURCHASE PARTIES AND SUBMITTED THAT THE PURCHAS ES MADE ARE GENUINE . ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES A S SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE. HOWEVER, PARTIES WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER AND NO EXPLANATION WAS OFFERED. 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION 3 ITA NO. 2721/MUM/2019 (A.Y.2011 - 12) M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSES SEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER THAT THE ASSESSEE DID NOT PRODUCE THE PARTY AND FAILED TO FURNISH CONFIRMATION OF PURCHASE FROM THE PARTY . ASSESSING OFFICER OBSERVED THAT THE NOTICE ISSUED U/S. 133 (6) OF THE ACT TO THE PARTY WAS RETURNED BACK AS UNSERVED AS THE PARTY FOUND TO BE NON - EXISTING AND THE ASSESSEE DID NOT PRODUCED THE PARTIES BEFORE THE ASSESSING OFFICER. THEREFORE, ASSESSING OFFICER TREATED ENTIRE PURCHASES OF . 16,05,493 / - AS NON - G ENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES AND VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO 30 % OF THE NON - GENUINE PURCHASES. 4. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSEE. THEREFORE, I PROCEED TO DISPOSE OFF THIS APPEAL ON HEARING LD. DR ON MERITS. 5. LD. DR VEHEMENTLY SUPPORTED THE O RDERS OF THE ASSESSING OFFICER . 6. HEARD LD. DR , PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), I FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF 4 ITA NO. 2721/MUM/2019 (A.Y.2011 - 12) M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. THE ASSESSEE AND THE AVERM ENTS IN THE ASSESSMENT ORDER AND RESTRICTED THE DISALLOWANCE @30% OF THE NON - GENUINE PURCHASES. WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - DECISION: 8. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT, IMPUGNED ASSESSMENT ORDER ON THIS ISSUE AND THE MATERIAL AVAILABLE ON RECORD. MY OBSERVATIONS AND FINDINGS ARE AS UNDER - 8.1 THERE IS NO DISPUTE THAT THE NAME OF THE ALLEGED SUPPLIER KARAN ENTERPRISES WAS APPEARING IN THE LIST OF SUSPICIOUS DEALERS IDENTIFIED BY THE SALES TAX DEPARTMENT AN D THE INFORMATION AGAINST THAT PARTY ALONG WITH THEIR STATEMENT AND AFFIDAVITS WERE RECEIVED BY THE AO. 8.2 DURING THE COURSE OF ASSESSMENT, NOTICE ISSUED U/S 133(6) ALSO RETURNED UNSERVED. THE INSPECTOR COULD NOT LOCATE THE SAID PARTY. THE APPELLANT ALSO FAILED TO PRODUCE THE PARTY OR CONFIRMATION FROM THE SAID PARTY. 8.3 DURING THE COURSE OF SURVEY AND POST SURVEY, STATEMENTS RECORDED FROM THE PERSONS CONNECTED WITH ONE OF THE VENTURERS CANNOT BE STATED TO BE IRRELEVANT AS THEY HAVE ALSO STAKE IN THE JOIN T VENTURE. 8.4 TO CONCLUDE, THE EVIDENCES SUGGEST THAT THE PARTY KARAN ENTERPRISES HAVE PROVIDED ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE N.P. RATIO IN AY 2011 - 12 HAS COME DOWN AT 4.37 % AS AGAINST 6.07 % IN AY 2010 - 11. HOWEVER, AS THE WOR K DONE WAS IN RESPECT OF GOVT. CONTRACT, IT IS CONCLUDED THAT SOME MATERIALS MUST HAVE BEEN UTILISED FOR THE SAID WORK. THEREFORE, THE ISSUE COMES TO ESTIMATION OF PROFITS EARNED BY THE APPELLANT BY OBTAINING BILLS FROM THE ALLEGED SUPPLIER AND ACTUALLY PU RCHASING MATERIAL FROM SOMEWHERE ELSE. IN OTHER WORDS, A PORTION OF PURCHASE NEEDS TO BE DISALLOWED SINCE THE RATE AND QUANTITY OF MATERIALS PURCHASED COULD NOT BE VERIFIED. 8.5 CONSIDERING THE TOTALI TY OF FACTS, THE DISALLOWANCE @ 30% OF R S. 16,05,493/ - = RS.4,81,648/ - IS HEREBY SUSTAINED AND BALANCE 70% BEING RS. 11,23,845/ - IS DELETED. THE GROUND IS PARTLY ALLOWED. 9. IN RESULT, THE APPEAL OF THE APPELLANT IS PARTLY ALLOWED. 5 ITA NO. 2721/MUM/2019 (A.Y.2011 - 12) M/S. KINJAL CONSTRUCTION CO. & CHIRAG CONSTRUCTION CO. 7. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE ADDITI ON/DISALLOWANCE TO 30 % OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 13 . 11 .2020 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. S D / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 13 / 11 / 2020 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 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