GOEL PACKAGING, MUMBAI V. ACIR- 31(1), MUMBAI

ITA 3038/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5503 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Assessee Lawyers: BHUPENDRA SHAH LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 131

Judgement Text

ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3039/MUM/2018 ( / ASSESSMENT YEAR: 2007-08) & ./ I.T.A. NO.3038/MUM/2018 ( / ASSESSMENT YEAR: 2008-09) & ./ I.T.A. NO.3040/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.3041/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) M/S GOEL PACKAGING SWAPAN LOK, 187 SHER-E-PUNJAB COLONY GURU GOBIND SINGH MARG, MUMBAI 400 093 / VS. ASSISTA NT COMMISSIONER OF INCOME TAX- 31(1) C-11, 7 TH , FLOOR, R.NO. 710, PRATYAKSH KAR BHAVAN, BANDRA(E), MUMBAI-400 051. ./ ./PAN/GIR NO. AAAFG-1284-A ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SH. BHUPENDRA SHAH - LD. AR REVENUE BY : CH. ARUN KUMAR SINGH - LD. DR ! '# / DATE OF HEARING : 29/01/2019 ! '# / DATE OF PRONOUNCEMENT : 05/02/2019 ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE BUNCH OF AFORESAID APPEALS BY ASSESSEE FOR A SSESSMENT YEARS [AY] 2007-08, 2008-09, 2009-10 & 2011-12 CONTEST CO MMON ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-42, MUMBAI [CI T(A)] QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE IMPUGNED ORDER IS COMMON ORDER FOR AYS 2007-08 TO 2011-12, HOWEVER, IT HAS BEEN SUBMITTED THAT THE ASSESSEE HA S NOT PREFERRED ANY APPEAL FOR AY 2010-11. IN THE ABOVE BACKDROP, WE PR OCEED TO DISPOSE- OFF THESE APPEALS AS ARGUED BEFORE US. 2.1 FACTS AS EMERGING FROM ASSESSMENT ORDER FOR AY 2007-08 ARE THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF CORRUGATED BOXES AND SHEETS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 147 ON 05/03/2015 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX 31(1), MUMBAI [AO] . THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8 .54 LACS AFTER SOLE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR RS.8.46 LACS AS AGAINST RETURNED INCOME OF RS.7,234 /- FILED BY THE ASSESSEE ON 10/08/2007 WHICH WAS PROCESSED U/S 143( 1). THE ASSESSEE REFLECTED GROSS PROFIT & NET P ROFIT OF RS.5.41 LACS & RS.0.07 LACS RESPECTIVELY AGAINST TURNOVER OF RS.32.07 LACS. THE PURCHASES WERE REFLECTED AS RS.25.60 LACS. 2.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED PURS UANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION) & SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE STOOD BENEFICIARY OF ACCOMMODATION ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 3 PURCHASE BILLS AGGREGATING TO RS.8.46 LACS FROM TWO ENTITIES NAMEL Y BIGWIN PAPER DISTRIBUTORS PVT. LTD. & ARUN PAPER & IRON TRADERS, WHOSE DIRECTOR AND PROPRIETOR RESPECTIVELY WAS STATED TO BE A COMMON PERSON NAMELY ARUN AGARWAL. 2.3 TO CONFIRM THE TRANSACTIONS, NOTICE U/S 133(6) WAS SENT TO BOTH THE SUPPLIERS, AGAINST WHICH THE COPIES OF LEDGER ACCOUNTS AND SALES INVOICES WERE SUPPLIED TO LD. AO. THE ASSESSEE WAS ASKED TO PRODUCE THE SUPPLIERS WITH THEIR BOOKS OF ACCOUNTS, PURCHAS E/SALES BILLS & EVIDENCE OF DELIVERY OF MATERIAL. THE STATEMENT OF MR. ARUN AGARWAL U/S 131 WAS ALSO RECORDED, THE SUMMARY OF WHICH HAS ALR EADY BEEN EXTRACTED IN THE QUANTUM ORDER ON PAGE NUMBERS 4 TO 6 . IT TRANSPIRED THAT BOTH THE ENTITIES, DURING SURVEY PROCEEDINGS IN THE IR OWN CASE, ADMITTED TO HAVE MADE PURCHASES FROM CERTAIN HAWALA DEALERS. THE COPIES OF STATEMENT OF SH. ARUN AGARWAL RECORDED DURING SURVEY PROCEEDINGS AS WELL AS DURING ASSESSMENT PROCEEDINGS WERE CONFRONT ED TO THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND AN OP PORTUNITY TO CROSS- EXAMINATION WAS ALSO PROVIDED ON 24/02/2015. IT ALS O EMERGED THAT THE SALES MADE BY THE TWO ENTITIES TO THE ASSESSEE WERE SOURCED BY THESE TWO ENTITIES FROM TWO CONCERNS NAMELY M/S V.S.K. ENTERPRISES & M/S FORAM TRADERS WHICH WERE ENGAGED IN HAWALA ACTIVITIES. THE ASSESSEE FAILED TO FURNISH ITEM-WISE PURCHASE AND CONSUMPTION REGISTER ON DAY TO DAY BASIS. FINALLY, THE TOTALITY OF FACTUAL MATRIX LED THE LD. AO TO TREAT THESE PURCHASES AS BOGUS / NON-GENUINE PURCHASES AND THEREFORE, THE SAME WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITHOU T ANY SUCCESS BEFORE FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORDE R DATED 28/02/2018 ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 4 WHEREIN THE STAND OF LD. AO WAS CONFIRMED, INTER-ALIA, BY OBSERVING THAT THE ASSESSEE FAILED TO PRODUCE DAY-TO-DAY ITEM-WISE STOCK REGISTER ALONG WITH SUPPORTING DOCUMENTS LIKE TRANSPORT BILLS, OCTROI BILLS, STORES REGISTER, STOCK MOVEMENT REGISTER ETC. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI BHUPENDRA SHAH, DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN TH E PAPER-BOOK INCLUDING GP RATE OFFERED BY THE ASSESSEE DURING IMPUGNED AY AGITATED THE ADDITIONS AS CONFIRMED BY FIRST APP ELLATE AUTHORITY. OUR ATTENTION IS ALSO DRAWN TO THE FAVORABLE ORDER OF T HIS TRIBUNAL RENDERED IN ONE OF THE SUSPECTED ENTITIES I.E. BIGWIN PAPER DISTRIBUTORS PVT. LTD. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR], CH. ARUN KUMAR SINGH SUBMITTED THAT THE ASSESSEE MISERABLY FAILED TO PRO VE THE PURCHASE TRANSACTIONS AND THEREFORE THE ADDITIONS WERE JUSTI FIED. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER- BOOK AND JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALES WIT HOUT PURCHASE OF MATERIAL. THE SALES TURNOVER REFLECTED BY THE ASSES SEE HAS BEEN ACCEPTED BY THE REVENUE. THE PAYMENTS OF THE SUPPLI ES HAVE BEEN MADE BY THE ASSESSEE THROUGH BANKING CHANNELS. FURTHER, THE ASSESSEE HAS REFLECTED PURCHASES OF RS.25.60 LACS DURING IMPUGNE D AY, OUT OF WHICH PURCHASES TO THE EXTENT OF RS.8.46 LACS HAS BEEN DI SALLOWED WHICH IS MORE THAN 33% OF TOTAL PURCHASES. IT ALSO EMERGES T HAT THE ASSESSEE HAS REFLECTED GP RATE OF 16.8% DURING IMPUGNED AY. HOWEVER, AT THE SAME TIME, THE DELIVERY OF MATERIAL COULD NOT BE SU BSTANTIATED BY ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 5 FURNISHING TRANSPORTATION DETAILS ETC. ADEQUATE STO CK RECORDS WERE NOT BEING MAINTAINED BY THE ASSESSEE SO AS TO SUBSTANTI ATE THE CONSUMPTION OF MATERIAL. UNDER THE GIVEN FACTUAL MATRIX, WE ARE OF THE CONSIDERED OPINION THAT FULL DISALLOWANCE OF PURCHASES WAS NOT WARRANTED RATHER ONLY A SMALL PORTION OF THE SAME DESERVE TO BE DISALLOWE D SO AS TO PLUG THE REVENUE LEAKAGE ON ACCOUNT OF POSSIBLE PURCHASE OF THE MATERIAL FROM THE GREY MARKET AND PROFIT ELEMENT EMBEDDED IN THES E TRANSACTIONS. ACCORDINGLY, WE ESTIMATE THE ADDITIONS @5% OF ALLEGED BOGUS PURCHASES OF RS.8,46,911/- WHICH COMES TO RS.42,345/-. THE BA LANCE ADDITION STAND DELETED. THE APPEAL STANDS PARTLY ALLOWED. ITA NOS.3038, 3040-41/MUM/2018 AY 2008-09, 2009-10 & 2011-12 6. THE FACTS AND CIRCUMSTANCE IN THESE AYS ARE PARI-MATERIA THE SAME. THE IMPUGNED ORDER IS COMMON ORDER FOR FIVE A YS. THEREFORE, APPLYING THE SAME REASONING / LOGIC, WE RESTRICT TH E IMPUGNED ADDITIONS TO 5% OF ALLEGED BOGUS PURCHASES . FOR AY 2008-09, THE ADDITION WORKS OUT TO RS.44,153/-, BEING 5% OF RS.8,83,069/-. FOR AY 2009-10, THE ADDITION WORKS OUT TO RS.50,240/-, BEING 5% OF RS.1 0,04,809/-. FOR AY 2010-11, THE ADDITION WORKS OUT TO RS.15,990/-, BEI NG 5% OF RS.3,19,816/-. CONCLUSION 7. ALL THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2019. ITA NOS. 3038-41/MUM/2018 GOEL PACKAGING 6 SD/- SD/ - (PAWAN SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05.02.2019 SR.PS, JAISY VARGHESE / 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.