ITO-12(2)(1), MUMBAI V. DRISHA IMPEX PVT. LTD., MUMBAI

ITA 2855/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0058 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Assessee Lawyers: NEHA PARANJPE LD ARS
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 147; 148

Judgement Text

ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2855 & 1747/MUM/2016 ( / ASSESSMENT YEARS : 2009-10 & 2010-11) INCOME TAX OFFICER 12(2)(1) ROOM NO. 224, 2 ND FLOOR, AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 / VS. DRISHA IMPEX PRIVATE LIMITED A-1/7, LINK PALACE OFF LINK ROAD MALAD(W) MUMBAI 400 064 '# ./ ./ PAN/GIR NO.AABCD-9928-L ( #% /APPELLANT ) : ( &#% / RESPONDENT ) REVENUE BY : DR. A.K. NAYAK, LD. DR ASSESSEE BY : K. GOPAL & NEHA PARANJPE, LD.ARS / DATE OF HEARING : 08/06/2017 / DATE OF PRONOUNCEMENT : 21 /06/2017 2 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE TWO APPEALS BY REVENUE FOR ASSESSMENT YEARS [AY] 2009-10 & 2010-11 WHICH ASSAILS SEPARATE ORDERS OF LD. COMMIS SIONER OF INCOME TAX (APPEALS)-20 [CIT(A)], MUMBAI DATED 30/12/2015 & 29 /01/2016 QUA RELIEF PROVIDED TO ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. SINCE, THE ISSUE IS COMMON, WE DISPOSE-OFF BOTH THE APPEALS BY WAY OF T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE U P ITA NO. 1747/MUM/2016 FOR AY 2009-10. THE REGISTRY HAS NOTE D THAT THE APPEAL HAS BEEN FILED WITH A DELAY OF 305 DAYS BUT IT IS POINT ED OUT BY THE LD. DR THAT THE DATE MENTIONED ON FORM 36 WAS INCORRECT AND THE APPEAL WAS FILED WITHIN TIME ONLY. WE CONCUR WITH THE SAID OBSERVATI ON AS THE DATE OF IMPUGNED ORDER IS 30/12/2015 AND THE APPEAL HAS BEE N FILED ON 23/03/2016 WHICH IS APPARENTLY WITHIN TIME AFTER CONSIDERING T HE TIME LAG IN COMMUNICATION OF THE IMPUGNED ORDER. FINDING THE AP PEAL IN ORDER, WE PROCEED FURTHER IN THE MATTER. 2. BRIEFLY STATED THE ASSESSEE, BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING OF ELECTRONIC ITEMS, TOYS & FABRICS , WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY WHERE THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.6,26,32,190/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.6,15,71,284/-. THE ORIGINAL RETURN OF INCOME WAS FILED ON 02/07/2009 DECLARING INCOME OF 3 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 RS.10,60,910/- WHICH WAS ASSESSED U/S 143(1). THE C ASE OF THE ASSESSEE WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 01 /04/2013. THE REASONS FOR REOPENING WERE DULY SUPPLIED AND THE AS SESSEE OFFERED SIMILAR RETURN IN RESPONSE TO NOTICE U/S 148. STATUTORY NOT ICES U/S 143(2) / 142(1) WAS ISSUED FROM TIME TO TIME CALLING FOR REQUISITE INFORMATION. THE ONLY DISPUTE INVOLVED IN THE APPEAL IS QUANTUM OF ADDITI ON AGAINST ALLEGED BOGUS PURCHASES. 3. THE FACTS ARE THAT DURING ASSESSMENT PROCEEDINGS , UPON BEING ASKED TO SUBSTANTIATE THE PURCHASES, THE ASSESSEE PRODUCE D PURCHASE & SALE SUMMARY & LEDGER EXTRACT OF VARIOUS SUPPLIERS. THE ASSESSEE WAS ASKED TO PRODUCE THE PARTIES ALONG WITH CONFIRMATORY LETTERS , WHICH THE ASSESSEE FAILED TO DO SO SINCE IT EXPLAINED THAT THE MATERIA L WAS PURCHASED THROUGH AN AGENT. THE ASSESSEE EVEN COULD NO PRODUCE HIS OW N AUDITED BOOKS OF ACCOUNTS FOR VERIFICATION AND ALSO COULD NOT PROVE DELIVERY OF MATERIAL BY PRODUCTION OF TRANSPORT DELIVERY RECEIPTS ETC. NOTI CES ISSUED U/S 133(6) ISSUED AGAINST FEW PARTIES ALSO REMAINED UN-SERVED DUE TO REMARKS LEFT. THE ASSESSEE SUBMITTED LEDGER ACCOUNTS AND ASSERTED THAT THE PAYMENTS WERE THOUGH ACCOUNT PAYEE CHEQUES AND THEREFORE, TH E PURCHASES WERE GENUINE AND IN SUPPORT, PLACED RELIANCE ON MANY JUD ICIAL PRONOUNCEMENTS. THE LD. AO NOTED THAT THE ASSESSEE COULD NOT PRODUC E BOOKS OF ACCOUNTS, QUANTITATIVE DETAILS, PROOF OF DELIVERY OF MATERIAL ETC. FINALLY THE CONDUCT OF THE ASSESSEE AND SURROUNDING CIRCUMSTANCES LED THE AO TO TREAT THE 4 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 PURCHASES AGGREGATING RS.9,12,33,855/- AS UNVERIFIED / BOGUS PURCHASES WITH RESPECT TO FOLLOWING 9 PARTIES:- NO. NAME AMOUNT (RS.) 1. SURACHI MULTITRADE P. LTD. 21,47,852/- 2. APEX STEEL 71,89,160/- 3. AJINKYA MULTITRADE P. LTD. 1,80,62,400/- 4. SHYAM CORPORATION 2,10,45,441/- 5. URVIN GENERAL TRADING P. LTD. 11,98,261/- 6. ROHIT ENTERPRISES 1,84,32,014/- 7. CRESANT TRADE LINK P. LTD. 18,28,796/- 8. KHUSH IMPEX P. LTD. 24,46,616/- 9. SATYANARAYAN & SONS 1,88,83,225/- TOTAL 9,12,33,855/- FINALLY, LD. AO WORKED OUT THE PEAK OF THE ABOVE PU RCHASES WHICH AMOUNTED TO RS.6,15,71,284/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFOR E FIRST APPELLATE AUTHORITY WITH PARTIAL SUCCESS VIDE IMPUGNED ORDER DATED 30/12/2015 WHERE THE ASSESSEE RAISED SIMILAR CONTENTIONS AND ASSERTE D THAT PURCHASES COULD NOT BE DOUBTED MERELY UPON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. THE LD. CIT(A) PLACING RELIAN CE ON VARIOUS JUDICIAL PRONOUNCEMENTS RESTRICTED THE IMPUGNED ADDITIONS TO 1% OF PURCHASES I.E. RS.9,12,339/- AGAINST WHICH THE REVENUE IS IN APPEA L BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE FINDINGS OF LD. AO AND CONTENDED THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES MADE BY HIM IN ANY MANNER AND MERE PR ODUCTION OF DOCUMENTS OR PAYMENT THOUGH BANKING CHANNELS WAS NO T SUFFICIENT TO PROVE THE ACTUAL DELIVERY OF GOODS. THE ASSESSEE FAILED T O PRODUCE THE PARTIES 5 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 BEFORE LD. AO AND ALSO COULD NOT PRODUCE CONFIRMATO RY LETTERS ETC. EVEN OWN AUDITED BOOKS OF ACCOUNTS WERE NEVER PRODUCED A ND THE ASSESSEE DID NOT MAINTAIN ANY QUANTITATIVE DETAILS ETC. AS EVIDE NT FROM TAX AUDIT REPORT AND THEREFORE, FAILED MISERABLY TO SUBSTANTIATE THE PURCHASES IN ANY MANNER. NOTICES ISSUED U/S 133(6) TO THE SUPPLIERS REMAINED UN-SERVED SINCE DEALERS WERE NONEXISTENT. THE COMPLETE ONUS T O PROVE THE PURCHASES SQUARELY LIED ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THEREFORE, RIGHTLY BEEN SADDLED WITH FULL DISALLOWA NCE AND THE LD. CIT(A) ERRED IN GRANTING MAJOR RELIEF TO THE ASSESSEE. 6. PER CONTRA, LD. AR DRAWING OUR ATTENTION TO THE PAPER BOOK, CONTENDED THAT THE ASSESSEE WAS IN POSSESSION OF CO MPLETE PURCHASE INVOICES AND THE PAYMENT TO THE SUPPLIERS WAS THROU GH BANKING CHANNELS AS PER THE LEDGER EXTRACTS PLACED IN THE PAPER BOOK WHICH WERE DULY SUPPORTED BY THE BANK STATEMENTS OF THE ASSESSEE. O UR ATTENTION WAS ALSO DRAWN TO PARTY WISE PURCHASE BILLS AND CORRESPONDIN G SALES MADE BY THE ASSESSEE AND PARTY WISE QUANTITATIVE RECONCILIATION . STATEMENT OF PURCHASES, SALES, GP, NP FROM AY 2008-09 TO 2012-13 HAS BEEN PLACED AT PAGE NO. 204 OF THE PAPER BOOK. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF LD. DR THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS O F PROVING THE PURCHASES AND IT COULD NOT PRODUCE EVIDENCES TO SHOW ACTUAL D ELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS FROM TH E ALLEGED BOGUS 6 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 SUPPLIERS. EVEN THE ASSESSEE FAILED TO PRODUCE OWN BOOKS OF ACCOUNTS AND QUANTITATIVE DETAILS. HOWEVER, WE ALSO FIND THAT TH E ASSESSEE IS IN POSSESSION OF PURCHASES INVOICES AND THE PAYMENTS A RE THROUGH BANKING CHANNELS AS EVIDENT BY LEDGER EXTRACTS OF THE VARIO US SUPPLIERS AND BANK STATEMENTS PLACED IN THE PAPER BOOK. THEREFORE, EVE N IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, WE NOTE THAT SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS ARE THROUGH BANKING CHANNELS. THE TREND OF GP / NP RATE DOES NOT SHOW ABNORMAL VARIATIONS. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. C IT(A) HAS RIGHTLY DONE SO. HOWEVER, WE FIND SOME STRENGTH IN THE ARGUMENTS OF THE LD. DR THAT THE LD. CIT(A) PROVIDED A MAJOR RELIEF ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, AFTER DUE DISCUSSION WITH RESPECTI VE REPRESENTATIVES, WE INCREASE THE SAID DISALLOWANCE TO 3% OF IMPUGNED PU RCHASES OF RS.9,12,33,855/- WHICH COMES TO RS.27,37,015/-. ACC ORDINGLY, THE ASSESSEE SHALL SUFFER THE SAID DISALLOWANCE OF RS.2 7,37,015/- AGAINST THE IMPUGNED PURCHASES. THE REVENUES APPEAL STANDS PAR TLY ALLOWED. 8. THE FACTS IN REVENUES APPEAL ITA NO.2855/MUM/20 16 FOR AY 2010- 2011 ARE SIMILAR WHERE THE ASSESSEE HAS BEEN SADDLE D WITH DISALLOWANCE OF PEAK PURCHASE OF RS.5,69,72,264/- WITH RESPECT T O THREE PARTIES AS AGAINST BOGUS PURCHASES OF RS.6,97,70,029/- IN AN ASSESSMENT U/S 143(3) 7 ITA NO.2855 & 1747/MUM/2016 DRISHA IMPEX PRIVATE LIMITED ASSESSMENT YEARS- 2009-10 & 2010-11 READ WITH SECTION 147. THE SAME HAS BEEN RESTRICTED TO 1% BY LD. CIT(A) WHICH COMES TO RS.6,97,700/-. SINCE THE FACTS ARE I DENTICAL, OUR FINDINGS / OBSERVATIONS APPLY TO THIS APPEAL MUTATIS MUTANDIS AND ACCORDINGLY TAKING THE SAME STAND, WE INCREASE THE IMPUGNED DISALLOWAN CE TO 3% OF TOTAL PURCHASES OF RS.6,97,70,029/- WHICH COMES TO RS.20, 93,100/- WHICH THE ASSESSEE SHALL SUFFER. THE REVENUES APPEAL STANDS PARTLY ALLOWED. 9. IN NUTSHELL, BOTH THE APPEALS FILED BY THE REVEN UE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2017. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :21.06.2017 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. 01 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI