ITO 32(3)(4), MUMBAI V. SHAITANSINGH M. RATHOD, MUMBAI

ITA 28/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0325 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Assessee Lawyers: B G SAKARIA LD
• Keywords: Bogus purchase; Onus to prove
• Section: 69C; 143(3); 133(6)

Judgement Text

ITA NO. 28/MUM/2015 SHAITANSINGH M. RATHOD ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.28/MUM/2015 ( / ASSESSMENT YEAR:2010-11) INCOME TAX OFFICER 32(3)(4) ROOM NO. 103, 1 ST FLOOR, BUILDING NO. C-11, PRATYAKSHKAR BHAVAN, BKC BANDRA (E) MUMBAI-400 025 / VS. SHAITANSINGH M. RATHOD E/81 SHREE MAHAVIR APARTMENT, RATNAN NAGAR DAHISAR(E) MUMBAI 400 068 ! ./ ./ PAN/GIR NO. AGJPR-3582-K ( !# /APPELLANT ) : ( $!# / RESPONDENT ) !# / APPELLANT BY : DR. A.K. NAYAK, LD. DR $!# / RESPONDENT BY : B.G. SAKARIA, LD. AR / DATE OF HEARING : 06/06/2017 / DATE OF PRONOUNCEMENT : 07/06/2017 2 ITA NO. 28/MUM/2015 SHAITANSINGH M. RATHOD ASSESSMENT YEAR 2010-11 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. BY WAY OF CAPTIONED APPEAL FOR ASSESSMENT YEAR [ AY] 2010-11, THE REVENUE HAS CONTESTED THE RELIEF PROVIDED TO ASSESS EE QUA BOGUS PURCHASES BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-35 [CIT (A)], MUMBAI VIDE ORDER DATED 14/10/2014. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL, HAS BEEN ASSESSED U/S 143(3) FOR IMPUGNED AY AT RS.66,01,390 /- AFTER DISALLOWANCE OF CERTAIN BOGUS PURCHASES U/S 69C FOR RS.58,53,495 /- AS AGAINST RETURNED INCOME OF RS.7,47,900/- FILED BY THE ASSESSEE ON 27 /09/2010. THE ASSESSEE WAS ENGAGED AS CIVIL CONTRACTOR UNDER THE PROPRIETORSHIP CONCERN NAMELY S.M.DEVELOPERS AND ACHIEVED TURNOVER OF RS.301.35 LACS. PURSUANT TO RECEIPT OF INFORMATION FROM SALES TAX DEPARTMENT, THE ASSESSEE WAS FOUND TO HAVE MADE PURCHASES FROM FOLL OWING BOGUS / SUSPICIOUS DEALERS:- S.NO. NAME OF THE PARTY AMOUNT (RS.) 1. SIDDHI VINAYAK STEEL 1,87,200/- 2. AAYUSHI ENTERPRISES 8,76,151/- 3 . AJAY STONE 1,63,471/- 4. ARCO ENTERPRISES 1,01,017/- 5. ARIHANT TRADERS 1,84,691/- 6. ARYEN SALES CORPORATION 1,82,655/- 7. MAHALAXMI CORPORATION 7,11,047/- 8. MANIBHADRA TRADING CO. 5,64,423/- 9. NIRMAL TRADING CO. 2,44,527/- 10. RAHUL TRADERS 4,67,469/- 11. RAJ TRADERS 10,91,000/- 12. SHAKTI TRADING CO. 2,28,842/- 13. VINAYAK TRADING CO. 8,51,002/- TOTAL 58,53,495/- 3 ITA NO. 28/MUM/2015 SHAITANSINGH M. RATHOD ASSESSMENT YEAR 2010-11 TO CONFIRM THE TRANSACTIONS, NOTICES U/S 133(6) WER E ISSUED TO THE ABOVE PARTIES BUT THE SAME WERE RETURNED BACK UN-SERVED IN MOST OF THE CASES WITH THE REMARKS LEFT OR NOT KNOWN. THE SAME WERE CONFRONTED TO THE ASSESSEE BUT SINCE NO SATISFACTORY REPLY WAS RECEIV ED FROM HIM, AO TREATED THE SAME AS BOGUS PURCHASE AND ADDED THE SAME TO TH E INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH P ARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/10/2 014 WHERE THE LD. CIT(A) APPRECIATED THE PURCHASE INVOICES, LEDGER EX TRACTS AND BANK STATEMENT OF THE ASSESSEE PRODUCED IN SUPPORT OF PU RCHASES AND CAME TO CONCLUSION THAT SINCE SALES HAS BEEN ACCEPTED BY TH E REVENUE, ENTIRE ADDITION OF BOGUS PURCHASES WAS NOT WARRANTED BUT A DDITION OF RS.4,68,280/- BEING 8% OF BOGUS PURCHASES OF RS.58 .53 LACS WOULD MEET THE END OF JUSTICE. AGGRIEVED, THE REVENUE IS IN AP PEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE ORDER OF LD. AO TO CONTEND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES MADE BY HIM IN ANY MANNER AND MERE PRODUC TION OF DOCUMENTS WAS NOT SUFFICIENT TO PROVE THE ACTUAL DELIVERY OF GOODS. THE ASSESSEE FAILED TO PRODUCE THE PARTIES BEFORE LD. AO AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS. NOTICES ISSUED U/S 133(6) REM AINED UN-SERVED AND COMPLETE ONUS TO PROVE THE PURCHASES SQUARELY LIED ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THEREFORE, RIG HTLY BEEN SADDLED WITH FULL DISALLOWANCE AND THE LD. CIT(A) ERRED IN GRANT ING RELIEF TO THE ASSESSEE. 4 ITA NO. 28/MUM/2015 SHAITANSINGH M. RATHOD ASSESSMENT YEAR 2010-11 5. PER CONTRA, LD. AR PLACING RELIANCE ON THE DECISION OF LD. CIT( A) DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE WAS A G OVERNMENT CONTRACTOR WHERE THE WORK DONE BY THE ASSESSEE WAS THOROUGHLY INSPECTED BY THE GOVERNMENT AGENCY AND WITHOUT PURCHASE OF MATERIAL, THE SAID WORK COULD NOT HAVE BEEN UNDERTAKEN BY THE ASSESSEE. FURTHER, THE REVENUE HAS NOT DOUBTED THE SALES TURNOVER OF THE ASSESSEE AND THE ASSESSEE ACCEPTING THE SHORTCOMING IN HIS PURCHASE DOCUMENTS ACCEPTED THE ESTIMATED ADDITION MADE BY LD. CIT(A) AND DID NOT FILE ANY FURTHER APP EAL. 6. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUMENTS OF LD. DR THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASES AND IT COULD NOT PRODUCE EVIDENCES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS FROM THE ALL EGED BOGUS SUPPLIERS. HOWEVER, EVEN IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, WE FIND THAT SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE AND MOREOVER, THE ASSESSEE IS IN POSSESSION OF PRIMARY PURCHASE DOCUM ENTS AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED. THE PAYMEN TS ARE THROUGH BANKING CHANNELS.THEREFORE, IN SUCH A SITUATION, TH E ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURC HASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE SO. THEREFORE, THE ORDER OF LD. CIT(A) BEING, FAIR 5 ITA NO. 28/MUM/2015 SHAITANSINGH M. RATHOD ASSESSMENT YEAR 2010-11 AND REASONABLE, REQUIRE NO INTERFERENCE ON OUR PART AND THE SAME IS HEREBY CONFIRMED. 7. THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JUNE, 2017. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07.06.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. '. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI