VIKAS SALES CORPORATON, THANE V. ITO WD 3(4), THANE

ITA 2765/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9936 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 17-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHANAN
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 133(6)

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2762/MUM/2017 : ASST.YEAR 2009-2010 ITA NO.2765/MUM/2017 : ASST. YEAR 2011-2012 M/S. VIKAS SALES CORPORATION FLAT NO.2003, 20 TH FLOOR BUILDING NO.3, STEPPES, VASANT LAWNS NEAR JIPITER HOSPITAL, MAJIWADA THANE (WEST). PAN : AAHFV0783C. / VS. THE INCOME TAX OFFICER WARD 3(4) THANE. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : --- NONE --- /RESPONDENT BY : SHRI V.JANARDHANAN / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT : 01.09.2017 / O R D E R THESE ARE APPEALS BY THE ASSESSEE WHEREIN THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) WHEREIN 12.5% DISALLOWANCES ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS.22,85,200 FOR ASSESSMENT YEAR 2009- 2010 AND RS.3,39,035 FOR ASSESSMENT YEAR 2011-2012, ARE CONFIRMED. . 2. IN THIS CASE, THE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASES. THE ASSESSING OFFICERS OBSERVATIONS REGARDING THE ENQUIRIES MADE AND THE FINDING THAT THE PURCHASES ARE BOGUS READ AS UNDER:- 8. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED DETAILS OF PURCHASES WITH WHOM THE ASSESSEE HAD PURCHASED MATERIALS. AS PER THE INFORMATION PROVIDED BY THE SALES TAX DEPARTMENT, IT IS LEARNT THAT THIS ASSESSEE IS BENEFICIARY OF THE 'HAWALA TRANSACTIONS' FROM THE PARTIES MENTIONED ABOVE. FROM THE ITA NOS.2762 & 2765/MUM/2017. M/S.VIKAS SALES CORPORATION. 2 AFFIDAVIT/STATEMENT FILED BY THE ABOVE MENTIONED PARTIES BEFORE THE SALES TAX DEPARTMENT, IT IS CLEAR THAT SUCH PARTIES ARE INDULGED INTO PROVIDING ONLY ACCOMMODATION BILLS, AND ALSO THEY HAVE NOT ENTERED ANY PROCESS OF SALE/PURCHASE/TRANSFERRING OF ANY GOODS/MATERIAL. 9. IN THE COURSE OF SCRUTINY PROCEEDINGS, TO PROVE THE GENUINENESS OF THE TRANSACTION MADE BY THE ASSESSEE. NOTICES U/S 133(6) OF THE I.T. ACT, 1961 WAS ISSUED TO THE ABOVE MENTIONED PARTIES FROM WHOM THE PURCHASES WERE CLAIMED TO BE MADE BY THE ASSESSEE AND INSPECTOR OF HIS OFFICE WAS DEPUTED TO SERVE IT. VIDE INSPECTOR REPORT DATED 02/03/2015, INSPECTOR HAD REPORTED THAT THE ABOVE PARTIES WERE NOT AVAILABLE AT THE CONCERNED PLACE AND ALSO HE WAS UNABLE TO TRACE THE WHEREABOUTS OF THE CONCERNED PARTIES. 9.1 IN VIEW OF THE FACTS AND CIRCUMSTANCES, VIDE THIS OFFICE LETTER DT. 04/03/2015, ASSESSEE WAS GIVEN SHOW-CAUSE NOTICE AS TO WHY THE TRANSACTION OF AMOUNT RS.L,82,81,598/- SHOULD NOT BE TREATED AS NON- GENUINE AND ADDED TO HIS INCOME. ASSESSEE WAS ALSO ASKED TO PRODUCE COPY OT TRANSPORT RECEIPT, DETAILS OF PAYMENTS AND COPY OF OCTROI RECEIPTS/DELIVERY CHALLANS ETC. IN SUPPORT OF HIS REPLY. 9.2 IN REPLY, THE ASSESSEE ATTENDED AND STATED THAT THE PURCHASES MADE FROM THE ABOVE PARTIES ARE GENUINE AND CLAIMED THAT THE PAYMENTS TO THE ABOVE PARTIES ARE MADE THROUGH CHEQUES AND SUBMITTED COPIES OF INVOICE BILLS AND SOME OCTROI RECEIPTS TO SUBSTANTIATE ITS PURCHASES. 9.3 THE EXPLANATION OFFERED BY THE ASSESSEE IS CAREFULLY CONSIDERED AND PERUSED. HOWEVER, THE ASSESSEE'S EXPLANATION IS NOT ACCEPTABLE. IT IS SEEN FROM DETAILS ON RECORD THAT BARRING THE LEDGER ACCOUNT AND CHEQUE PAYMENTS, NO OTHER DOCUMENTS SUCH AS DELIVERY CHALLANS, LORRY RECEIPTS, TRANSPORTATION DETAILS ETC. MOREOVER, THE FACT REMAINS THAT THE PARTIES FROM WHOM THE PURCHASES ARE CLAIMED TO BE MADE BY THE ASSESSEE HAVE ADMITTED BEFORE THE DEPARTMENT OF SALES TAX THAT THEY HAVE NOT MADE ANY SALES OR PURCHASE TRANSACTION. THIS PROVES THAT THE PURCHASES SHOWN TO HAVE BEEN MADE BY THE ASSESSEE FROM THESE FIRMS ARE BOGUS. SINCE THE ASSESSEE HAS RECEIVED ONLY BOOK ENTRIES OF THE SAID PURCHASE AND NOT MADE ACTUAL PURCHASES, THE ONLY INEVITABLE CONCLUSION TO BE DRAWN IS THAT THE ASSESSEE MUST HAVE MADE THESE PURCHASES FROM OPEN MARKETS FROM SOME PARTIES BEST KNOWN TO HIM. 9.4 CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND COMPARATIVE POSITION OF TRADING RESULTS, THE ONLY FAIR CONCLUSION THAT CAN BE REACHED IS THAT THE ASSESSEE WAS A BENEFICIARY OF THE ACCOMMODATION BILLS ISSUED BY THE PARTY MENTIONED ABOVE AND THERE WASN'T ANY ACTUAL DELIVERY / PHYSICAL ITA NOS.2762 & 2765/MUM/2017. M/S.VIKAS SALES CORPORATION. 3 DELIVERY OF THE GOODS. AN ACCOMMODATION BILL IS OBTAINED FOR INTRODUCING UNACCOUNTED GOODS INTO THE ACCOUNTED STREAM. SINCE THE SALES ARE CLAIMED TO BE GENUINE BY THE ASSESSEE, IT IS PROVED THAT THE ASSESSEE WAS ACTUALLY IN POSSESSION OF GOODS. THIS IS BASED ON THE FOOTING THAT THERE CANNOT BE ANY SALES WITHOUT PURCHASE. AT THE SAME TIME, IT DID PURCHASE GOODS FROM OTHER SUPPLIERS, MAY BE WITHOUT BILLS, WHICH IS COMMONLY KNOWN AS GREY MARKET AND THIS IS SO, THE ASSESSEE HAS BEEN BENEFITED BY PROVIDING MARGIN OF GREY MARKET. 3. UPON ASSESSEES APPEAL, LEARNED CIT(A) CONFIRMED THE SAME. 4. AGAINST THIS ORDER, ASSESSEE HAS FILED APPEAL BEFORE THE ITAT. 5. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. DESPITE NOTICE NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. THE NOTICE OF HEARING HAS RETURNED UNSERVED. IT IS NOTED THAT THE ISSUE RELATES TO BOGUS PURCHASES WHICH HAS ALREADY BEEN DEALT BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. HENCE I PROCEED TO ADJUDICATE THE ISSUE BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. 6. UPON CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, I FIND THAT OVERWHELMING EVIDENCES HAVE BEEN REFERRED BY THE AUTHORITIES BELOW THAT THE IMPUGNED PURCHASES ARE BOGUS. THERE IS NO EVIDENCE OF THE ACTUAL MOVEMENT OF THE GOODS UNDER DISPUTE. IN THESE CIRCUMSTANCES, LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO.240 OF 2003 IN THE CASE OF N.K.INDUSTRIES V. DCIT, ORDER DATED 20.06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. THE ITA NOS.2762 & 2765/MUM/2017. M/S.VIKAS SALES CORPORATION. 4 SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.01.2017. 7. HOWEVER, I FIND THAT THESE ARE NOT AN APPEAL BY THE REVENUE. IN SUCH CIRCUMSTANCES IT WILL NOT BE APPROPRIATE TO TAKE AWAY THE RELIEF ALREADY GRANTED BY THE LEARNED CIT(A). ACCORDINGLY, I UPHOLD THE ORDER OF LEARNED CIT(A) WHEREIN HE HAS SUSTAINED 12.5% AS DISALLOWANCE OUT OF THE BOGUS PURCHASE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF SEPTEMBER, 2017. SD/- ( SHAMIM YAHYA ) ACCOUNTANT MEMBER MUMBAI; DATED : 01 ST SEPTEMBER, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.