SHREEKAR POLYSTER PVT LTD, MUMBAI V. ITO 4 (3)(4), MUMBAI

ITA 273/MUM/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2097 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Assessee Lawyers: B P PUROHIT
• Keywords: Bogus purchase; Validity of assessment
• Section: 143(3); 234B; 274; 22

Judgement Text

, ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 273 / / 2020 (%. .2010-11 ) ITA NO. 273/MUM/2020 (A.Y.2010-11) . 274 / / 2020 (%. .2011-12 ) ITA NO. 274/MUM/2020 (A.Y.2011-12) SHREEKAR POLYSTER PVT. LTD. GR.FLOOR, 147, CAVEL X LANE NO.5, DR.VIEGAS STREET, MUMBAI 400 002 PAN: AADCS 8861P / VS. : / APPELLANT INCOME TAX OFFICER 4(3)(4), ROOM NO.637, 6 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 : / RESPONDENT APPELLANT BY : SHRI B.P.PUROHIT RESPONDENT BY : SHRI SANJAY J. SETHI / DATE OF HEARING : 21/06/2021 / DATE OF PRONOUNCEMENT : 22/06/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-9, MUMBAI [ IN SHORT THE CIT(A) ]FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12, RESPECTIVELY. BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 15/11/2019. SINCE, THE FACTS GERMAN E TO THE GROUNDS RAISED IN BOTH THESE APPEALS ARE IDENTICAL AND THE ASSESSEE HAS RAISED S IMILAR SET OF GROUNDS IN THESE 2 ITA NO. 273/MUM/2020 (A.Y.2010-11) ITA NO. 274/MUM/2020 (A.Y.2011-12) APPEALS, THE APPEALS ARE TAKEN UP TOGETHER FOR ADJ UDICATION AND ARE DISPOSED OF BY THIS COMMON ORDER. ITA NO.273/MUM/2020-A.Y.2010-11 2. SHRI B.P. PUROHIT APPEARING ON BEHALF OF THE ASS ESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN DYEING OF YARN. IN ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS.25,94,587/- IN ASSESSMENT YEAR 2010-11 FROM SUSPICIOUS DEALERS . THE ASSESSEE IN ORDER TO SUBSTANTIATE GENUINENESS OF PURCHASES FURNISHED LED GER ACCOUNTS, PURCHASE INVOICE, BANK STATEMENTS, ETC. HOWEVER, THE ASSESSING OFFIC ER DISBELIEVED THE SAME AND MADE ADDITION OF ENTIRE ALLEGED BOGUS PURCHASES. AGAINS T ASSESSMENT ORDER DATED22/03/2012 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) RECORDE D THAT SALES DECLARED BY THE ASSESSEE HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND HEN CE, ENTIRE PURCHASES CANNOT BE DOUBTED. HOWEVER, THE CIT(A) MERELY ON PRESUMPTIO N THAT THE ASSESSEE HAS FAILED TO PROVE EVIDENCES WITH REGARD TO ACTUAL CONSUMPTION O F GOODS UPHELD THE FINDINGS OF ASSESSING OFFICER IN ENTIRETY. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE ADDITION SHOULD BE DELETE D AS ASSESSEE HAS FURNISHED SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF PURCHASES. THE L D. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DECLARED G .P OF 6.68% IN ASSESSMENT YEAR 2010-11, WITHOUT PREJUDICE TO FIRST CONTENTION, I F AT ALL ADDITION HAS TO BE MADE IT SHOULD BE RESTRICTED TO THE G.P DECLARED BY ASSE SSEE. 3. ON THE OTHER HAND, SHRI SANJAY J. SETHI REPRESEN TING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISS ING APPEAL OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF PURCHASES AND THE DEAL ERS. THE ASSESSEE FAILED TO PRODUCE THE DEALERS FROM WHOM SUSPICIOUS PURCHASES WERE MAD E. SOME OF THE DEALERS FROM WHOM ASSESSEE HAS ABOTAINED BILLS HAVE ADMITTED THA T BILLS WERE ISSUED AGAINST CHEQUE PAYMENTS. CASH WAS WITHDRAWN FROM BANKS AND CASH I S RETURNED THEREAFTER DEDUCTING 3 ITA NO. 273/MUM/2020 (A.Y.2010-11) ITA NO. 274/MUM/2020 (A.Y.2011-12) COMMISSION. THE STATEMENT OF SHRI TARUN SANGHVI, T HE DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED, WHEREIN HE ADMITTED THAT HE CAN PRODU CE CONSUMPTION RECORDS. HOWEVER, NO SUCH RECORDS WERE FURNISHED. FURTHER, THE ASSESSEE FAILED TO PRODUCE DOCUMENTARY EVIDENCE TO SHOW TRANSPORTATION OF GOOD S FROM SUSPICIOUS DEALERS. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY PRAYED FOR S USTAINING THE IMPUGNED ORDER AND DISMISSING APPEAL OF THE ASSESSEE. 4. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. UNDISPUTEDLY, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GE NUINENESS OF PURCHASES AND THE DEALERS FROM WHOM ALLEGED BOGUS PURCHASES WERE MADE . DOCUMENTS VIZ. OCTROI RECEIPTS, STOCK REGISTER, CONSUMPTION RECORDS, ETC. WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW TO SHOW TRAIL OF GOODS . AT THE SAME TIME WE OBSERVE THAT THE ASSESSING OFFICER HAS ACCEPTED THE SALES TURNOV ER AND CLOSING STOCK DECLARED BY THE ASSESSEE. WITHOUT PURCHASES THERE CANNOT BE PROCES SING OF YARN, THEREFORE, ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE DISALLOWED. THE POSSIBILITY IS THAT THE ASSESSEE MADE PURCHASES FROM GREY MARKET AND OBTAINED BOGUS PURCHASE BILLS FROM HAWALA OPERATORS. IT IS ONLY THE PROFIT ELEMENT EMBEDDED I N SUCH TRANSACTIONS THAT HAS TO BE BROUGHT TO TAX.[ REF. PCIT VS. PARAMSHAKHTI DISTRIB UTORS PVT. LTD. IN INCOME TAX APPEAL NO.413 OF 2017 DECIDED ON 15/07/2019 BY HON'BLE BOMBAY HIGH COURT . ]. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE G.P DECLARED BY THE ASSESSEE IN ASSESSMENT YEAR 2010-11 IS 6.68%. HOWE VER, ON PERUSAL OF ASSESSMENT ORDER IT IS OBSERVED THAT THE G.P HAS BEEN WORKE D OUT TO BE 8.12%. THE SAME HAS NOT BEEN DISPUTED BY THE ASSESSEE EITHER BEFORE THE FIR ST APPELLATE AUTHORITY OR THE TRIBUNAL. TAKING INTO CONSIDERATION ENTIRETY OF FAC TS, I AM OF CONSIDERED VIEW THAT TO MEET ENDS OF JUSTICE IT WOULD BE FAIR TO RESTRICT DISALLOWANCE ON UNPROVED PURCHASES TO 10%. THE GROUND NO.1 OF THE APPEAL IS THUS, PARTL Y ALLOWED IN THE AFORESAID TERMS. 5. IN GROUND NO.2 OF THE APPEAL THE ASSESSEE HAS AS SAILED VALIDITY OF ASSESSMENT. SINCE NO ARGUMENTS WERE ADVANCED ON THIS GROUND, TH E SAME IS DISMISSED. 4 ITA NO. 273/MUM/2020 (A.Y.2010-11) ITA NO. 274/MUM/2020 (A.Y.2011-12) 6. IN GROUND NO.3 OF APPEAL, THE ASSESSEE HAS ASS AILED CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. SINCE, CHARGING OF INTEREST IS MANDATORY AND CONSEQUENTIAL THIS GROUND REQUIRES NO SEPARATE ADJU DICATION. 7. THE GROUNDS NO. 4 AND 5 OF APPEAL ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION. 8. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.274/MUM/2020- A.Y. 2011-12: 9. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE FAC TS AND GROUNDS OF APPEAL IN ASSESSMENT YEAR 2011-12 ARE IDENTICAL TO ASSESSMENT YEAR 2010-11. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ADDITION ON ACCOU NT OF BOGUS PURCHASES AMOUNTING TO RS.1,29,835/- HAS BEEN MADE BY THE ASSESSING OFF ICER IN SIMILAR MANNER. AS PER THE ASSESSMENT ORDER THE G.P IN ASSESSMENT YEAR 2011-12 IS 9%. THE CIT(A) HAS UPHELD THE FINDINGS OF ASSESSING OFFICER FOR THE REASONS SIMI LAR TO ASSESSMENT YEAR 2010-11. SINCE, FACTS IN BOTH THE IMPUGNED ASSESSMENT YEARS ARE ID ENTICAL, THE FINDINGS GIVEN WHILE ADJUDICATING THE APPEAL OF ASSESSEE FOR ASSESSMEN T YEAR 2010-11 WOULD MUTATIS MUTANDIS APPLY TO ASSESSMENT YEAR 2011-12. CONSEQ UENTLY, THE APPEAL OF ASSESSEE FOR 2011-12 IS PARTLY ALLOWED FOR PARITY OF REASONS. 10. TO SUM UP APPEAL OF THE ASSESSEE IN ASSESSMENT YEAR 2010-11 AND 2011-12 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY T HE 22 ND DAY OF JUNE, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 22/06/2021 VM , SR. PS(O/S) 5 ITA NO. 273/MUM/2020 (A.Y.2010-11) ITA NO. 274/MUM/2020 (A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI