DCIT 13(3)(1), MUMBAI V. REMI ELECTROTECHNIK LTD, MUMBAI

ITA 2808/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9697 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: BHAGIRATH SINGH
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.2808/M/2017 & CO. 184/MUM/2017 REMI ELECTROTECHNIK LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2808/MUM/2017 & CO. NO. 184/M/2017 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX 13(3)(1) R.NO.229, 2 ND FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 / VS. REMI ELECTROTECHNIK LIMITED PLOT NO.11 CAMA INDUSTRIAL ESTATE WALBHAT ROAD GOREGAON(E) MUMBAI -400 063 ./ ./PAN/GIR NO. AAACR-2578-P ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : BHAGIRATH SINGH RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 05/09/2017 / DATE OF PRONOUNCEMENT : 08/09/2017 ITA NO.2808/M/2017 & CO. 184/MUM/2017 REMI ELECTROTECHNIK LIMITED ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-18 [CIT(A)], MUMBAI DATED 02/01/2017 QUA RESTRICTING ADDITION ON ACCOUNT OF CERTAIN BOGUS PURCHASES TO 12.5%. THE ASSESSEE BY HIS CROSS- OBJECTIONS SUPPORTS THE ORDERS OF LD. FIRST APPELLA TE AUTHORITY. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN MANUFACTURING OF ELECTRIC MOTORS AND LABORATORY EQUIPMENTS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 13/01/2015 AT RS.1,56,59,840 /- AFTER CERTAIN ADDITION OF BOGUS PURCHASES FOR RS.49,20,896/-. THE ORIGINAL RETURN WAS E-FILED ON 30/09/2009 AT RS.1,06,25,020/- WHICH WAS ASSESSED AT RS.1,07,38,940/- U/S 143(3). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.49,20,896/- FROM THIRTEEN PARTIES. CONSEQUENTLY, NOTICE U/S 148 DATED 14/03/2014 WAS ISSUED TO THE ASSESSEE WHICH WAS FOL LOWED BY REQUISITE STATUTORY NOTICES U/S 143(2) & 142(1). 2.3 THE ASSESSEE, IN SUPPORT OF PURCHASE TRANSACTIO NS, PRODUCED LEDGER EXTRACTS, COPY OF INVOICES ETC. AND CONTENDED THAT THE PURCHASES WERE GENUINE. HOWEVER, NOTICES U/S 133(6) SENT TO C ONFIRM THE ITA NO.2808/M/2017 & CO. 184/MUM/2017 REMI ELECTROTECHNIK LIMITED ASSESSMENT YEAR 2009-10 3 TRANSACTIONS WERE EITHER NOT SERVED OR NO REPLY WAS RECEIVED AGAINST THE SAME. THE DISCREPANCIES WERE NOTED IN FEW REPLIES R ECEIVED AGAINST THE SAME. FINALLY, NOT CONVINCED, LD. AO TREATED THE SA ME AS NON-GENUINE PURCHASES AND ADDED THE SAME TO THE INCOME OF THE A SSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 02/01/2 017 WHERE THE ASSESSEE PLACED RELIANCE ON SEVERAL JUDICIAL PRONOU NCEMENTS AND SUBMITTED THAT THE PURCHASES WERE DULY SUPPORTED BY THE DOCUMENTARY EVIDENCES AND THE PAYMENTS WERE THROUGH BANKING CHA NNELS. THE LD. CIT(A) AFTER APPRECIATING THE SAME NOTED THAT THE C ONSUMPTION OF MATERIAL AND TURNOVER ACHIEVED BY THE ASSESSEE WAS NOT DISPUTED BY THE LD. AO. FINALLY, PLACING RELIANCE ON SEVERAL JUDICI AL PRONOUNCEMENTS, LD. CIT(A) RESTRICTED THE ADDITIONS TO 12.5% TO ACCOUNT FOR SUPPRESSED PROFIT ELEMENT EMBEDDED IN THE ALLEGED BOGUS TRANSACTIONS. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US WHEREAS THE ASSESSEE, IN HIS CROSS-OBJECTIONS HAS SUPPORTED THE STAND TAKEN BY L D. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT MOST OF THE NOTICES SENT U/S 133(6) T O CONFIRM THE TRANSACTIONS WERE EITHER RETURNED BACK UN-SERVED OR NO REPLY WAS RECEIVED AGAINST THE SAME WHEREAS FEW PARTIES DENIE D HAVING ENTERED INTO SALE TRANSACTION WITH THE ASSESSEE. FURTHER, T HE ASSESSEE COULD NOT PRODUCE A SINGLE PARTY TO CONFIRM THE PURCHASE TRAN SACTION AND THEREFORE, THE WHOLE ADDITION WAS JUSTIFIED. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTENTION TO THE FACT THAT T HE TURNOVER WAS NEVER DISPUTED BY THE REVENUE, ALL PAYMENTS WERE THROUGH BANKING CHANNELS, PURCHASES WERE BACKED BY INVOICES AND QUANTITATIVE DETAILS WERE ITA NO.2808/M/2017 & CO. 184/MUM/2017 REMI ELECTROTECHNIK LIMITED ASSESSMENT YEAR 2009-10 4 AVAILABLE ON RECORDS AND LD. CIT(A) AFTER DUE APPLI CATION OF MIND, RIGHTLY RESTRICTED THE ADDITIONS TO 12.5% AND THE SAME WAS FAIR & REASONABLE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASE / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS WHICH WAS MATERIAL IN TENSIVE AND COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF MATERIAL. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES AND OTHER EVIDENCES & QUANTITATIVE DETA ILS WERE AVAILABLE ON RECORD. AT THE SAME TIME, MOST OF THE NOTICES ISSUE D U/S 133(6) EITHER REMAINED UN-SERVED OR NO REPLY WAS RECEIVED AGAINST THE SAME AND THE ASSESSEE COULD NOT PRODUCE ANY OF THE PARTY FOR CON FIRMATION OF THE TRANSACTIONS, WHICH CAST SERIOUS DOUBT ON ASSESSEE S CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE M ADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANS ACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSI BLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THERE FORE, FINDING THE SAME QUITE FAIR AND REASONABLE, WE SEE NO REASON TO INTERFERE WITH THE SAME. RESULTANTLY, THE REVENUES APPEAL STANDS DISM ISSED WHEREAS ASSESSEES CROSS-OBJECTIONS WHICH SUPPORTS THE ORDE R OF LD. CIT(A) BECOMES INFRUCTOUS. 6. RESULTANTLY THE REVENUES APPEAL STANDS DISMISSE D WHEREAS THE ASSESSEES CROSS OBJECTIONS STANDS ALLOWED, BEING INFRUCTUOUS. ITA NO.2808/M/2017 & CO. 184/MUM/2017 REMI ELECTROTECHNIK LIMITED ASSESSMENT YEAR 2009-10 5 ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08 . 09.2017 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. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI