JCIT (OSD) -CENTTRAL CIRCLE (4), MUMBAI V. SHRI KAMLESH MANOHAR KANUNGO (PROP. TRISON IMPLEX), MUMBAI

ITA 3087/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4565 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Keywords: Bogus purchase; Search and seizure
• Section: 143(3); 153C

Judgement Text

P A G E | 1 ITA NOS.3087 & 3088/MUM2016 A.YS. 2007 - 08 AND 2008 - 09 JCIT (OSD) CC - 1(4) VS. SHRI KAMLESH MANOHAR KANUNGO IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NOS. 3087 & 3088/MUM/2016 (ASSESSMENT YEARS:2007 - 08 & 2008 - 09 ) JCIT (OSD) CENTRAL CIRCLE 1(4) R. NO. 902, 9 TH FLOOR, OLD CGO BULD. M.K. ROAD, CHURCH GATE, MUMBAI 400 020 VS. SHRI KAMLESH MA N OHAR KANUNGO (PROP. TRISON IMPEX) 2 ND FLOOR, APSARA CINEMA BLDG. DR. D.B. MARG, GRANT ROAD (E), MUMBAI 400007 PAN ABBPK9675R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.C. TIWARI, CIT D.R RESPONDENT BY: SHRI RAJKUMAR SINGH, A .R DATE OF HEARING: 19.02 .2020 DATE OF PRONOUNCEMENT: 2 0 .02.2020 O R D E R PER RAVISH SOOD, JM THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 47, MUMBAI, DATED 26.02.2016, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S . 153C OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 27.03.2014. INITIALLY, THE AFORESAID APPEALS WERE DISPOSED OFF BY THE TRIBUNAL VIDE ITS CONSOLIDATED ORDER PASSED IN JOINT COMMISSIONER OF INCOME TAX (OSD) VS. SHRI KAMLESH MANOHAR KANUNGO, ITA NO S. 3087 & 3088/MUM/2016, DATED 26.10.2017 . HOWEVER, THE TRIBUNAL AT THE TIME OF DISPOSING OFF THE AFORESAID APPEALS OF THE REVENUE HAD LOST SIGHT OF THE FACT THAT THE CROSS - APPEALS OF THE ASSESSEE FOR BOTH OF THE AFORESAID YEARS WERE ALREADY DISPOSED OFF , VIDE ITS CONSOLIDATED ORDER PASSED IN S HRI KAMLESH MANOHAR KANUNGO VS. DY. CIT (ITA NOS. 3242 & 3243/MUM/2016, DATED 28.02.2017 . AS THE SUBSEQUENT ORDER PASSED BY THE TRIBUNAL WHILE DISPOSING OFF THE APPEALS OF THE REVENUE WAS FOUND TO BE INCONSISTENT WITH THE VIEW THAT WAS EARLIER TAKEN BY IT WHILE DISPOSING OFF THE APPEALS OF THE ASSESSEE FOR THE SAID YEARS , P A G E | 2 ITA NOS.3087 & 3088/MUM2016 A.YS. 2007 - 08 AND 2008 - 09 JCIT (OSD) CC - 1(4) VS. SHRI KAMLESH MANOHAR KANUNGO THEREFORE, THE ASSESSEE PREFERRED MISCELLANEOUS APPLICATIONS VIZ. M. A. NOS. 321 & 323/MUM/2018 (ARISING OUT OF REVENUES APPEALS) FOR THE AFOREMENTIONED YEARS VIZ. A.Y 2007 - 08 BAND A.Y 2008 - 09 WITH THE TRIBUNAL. ON THE BASIS OF ITS CONSOLIDATED ORDER PASSED IN M.A. NOS. 321 & 322/MUM/2018, DATED 20.08.2019 R.W M.A. NO. 524 & 525/MUM/2019, DATED 25.11.2019, THE TRIBUNAL HAD RECALLED I TS CONSOLIDATED ORDER THAT WAS PASSED BY IT WHILE DISPOSING OFF THE APPEALS OF THE REVENUE FOR THE CAPTIONED YEARS VIZ. A.Y. 2007 - 08 & A.Y. 2008 - 09. 2. AS COMMON ISSUES ARE INVOLVED IN THE CAPTIONED APPEALS OF THE REVENUE , THEREFORE, THE SAME ARE BEING TAK EN UP AND DISPOSED OFF BY WAY OF A COMMON ORDER . SEARCH AND SEIZURE PROCEEDINGS WERE CONDUCTED ON 29.04.2011 IN THE CASE OF TIRUPATI G ROUP OF C OMPANIES WHICH WAS INVOLVED IN THE BUSINESS OF TRADING IN S TEEL P IPES, J OINTS, RSJ P OLES, A NGLES, CHANNELS & TMT BARS ETC. ON THE BASIS OF INCRIMINATING MATERIAL THAT WAS UNEARTHED DURING THE COURSE OF THE SEARCH PROCEEDINGS, IT WAS GATHERED THAT THE PROPRIETARY CONCERN OF THE ASSESSEE VIZ. M/S TRISON IMPEX , AS WELL AS A CONCERN IN WHICH HE WAS A DIRECTOR I.E M/S SIK KIM FERRO ALLOYS HAD ISSUED BOGUS BILLS IN THE NAME OF M/S MAX TECH OIL & GAS SERVICES PVT. LTD. S URVEY PROCEEDINGS WERE CONDUCTED AT THE PREMISES OF THE ASSESSEE, WHICH THEREIN REVEALED THAT HE HAD CARRIED OUT BOGUS PURCHASES FROM M/S AAKAASH FERROMET PVT . LTD., M/S ADHUNIK STEEL CORPORATION AND M/S ARIHANT TRADING COMPANY OVER DIFFERENT YEARS. ON A PERUSAL OF THE RECORDS , IT WAS GATHERED THAT THE AFORESAID PARTIES WERE ALSO BLACKLISTED BY THE SALES TAX DEPARTMENT AS HAWALA TRADERS. AFTER CONSIDERING THE FACTS ON RECORD AND THE EXPLANATION OF THE ASSESSEE, THE A.O COMPLETED THE ASSESSMENT FOR A.Y 2007 - 08 AND MADE A DISALLOWANCE OF RS.1,65,33,581/ - AND AN ADDITION OF COMMISSION EXPENSES OF RS.1,90,335/ - . FOR A.Y. 2008 - 09 THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES WAS RS.1,60,43,273/ - AND THE ADDITION TOWARDS COMMISSION EXPENSES WAS ESTIMATED AT RS.6,85,749/ - . 3 . AGGRIEVED, THE ASSESSEE ASSAILED THE RESPECTIVE ASSESSMENTS BEFORE THE CIT(A). ON A PERUSAL OF THE RECORDS, IT WAS OBSERVED BY THE CIT( A) THAT THE A.O HAD ACCEPTED THE SALES MADE BY THE ASSESSEE. FURTHER , THE CIT(A) OBSERVED THAT THE PURCHASE AND SALE CORRELATION WAS ALSO NOT CONTROVERTED BY THE A.O. IT WAS ALSO NOTICED BY THE CIT(A) THAT THE PAYMENTS FOR THE PURCHASE CONSIDERATION WERE R OUTED THROUGH BANKING CHANNELS. APART FROM THAT, IT WAS OBSERVED BY THE CIT(A) THAT THE DELIVERY CHALLANS PERTAINING TO THE IMPUGNED PURCHASE TRANSACTIONS WERE ALSO PRODUCED BY THE ASSESSEE. I N THE BACKDROP OF THE AFORESAID FACTS , IT WAS P A G E | 3 ITA NOS.3087 & 3088/MUM2016 A.YS. 2007 - 08 AND 2008 - 09 JCIT (OSD) CC - 1(4) VS. SHRI KAMLESH MANOHAR KANUNGO OBSERVED BY THE CI T(A) THAT THE IMPUGNED PURCHASES UNDER CONSIDERATION COULD NOT BE HELD TO BE BOGUS. AT THE SAME TIME, THE CIT(A) WAS OF THE VIEW THAT THE PRIMARY IMPETUS BEHIND AVAILING OF SUCH BOGUS BILLS BY THE ASSESSEE WAS TO SUPPRESS ITS GROSS PROFIT . ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE CIT(A) WORKED OUT THE AVERAGE G.P. RATE OF THE ASSESSEE AFTER CONSIDERING THOSE FOR THE IMMEDIATELY TWO PRECEDING YEARS AND THAT FOR THE YEAR UNDER CONSIDERATION , AS UNDER : ASSESSMENT YEAR AVERAGE G.P. RATE A.Y. 2007 - 08 4.25% A.Y. 2008 - 09 3.28% OBSERVING, THAT THE ASSESSEE WOULD HAD BENEFITED AS REGARDS THE IMPUGNED PURCHASE TRANSACTIONS TO THE EXTENT OF THE RESPECT IVE G.P. RATE S VIZ. A.Y. 2007 - 08: 4.25% AND A.Y. 2008 - 09: 3.28% ON THE AGGREGATE VALUE OF THE IMPUGNED PU RCHASES UNDER CONSIDERATION FOR THE SAID RESPECTIVE YEARS, THE CIT(A) WORKED OUT THE DISALLOWANCE OF THE IMPUGNED PURCHASES TO THE SAID EXTENT. ACCORDINGLY, ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE CIT(A) SCALED DOWN THE ADDITION WHICH WAS MADE BY TH E A . O IN THE AFOREMENTIONED YEARS, AND RESTRICTED THE SAME TO THE EXTENT OF THE RESPECTIVE G.P. RATE (AVERAGE) ON THE IMPUGNED PURCHASE TRANSACTIONS FOR THE AFORESAID YEAR S UNDER CONSIDERATION. AS REGARDS THE ADDITION OF COMMISSION EXPENSES THAT WAS MADE BY THE A.O, THE SAME WAS DELETED BY THE CIT(A). 4 . AGGRIEVED, BOTH THE ASSESSEE AND THE REVENUE FILED CROSS APPEALS BEFORE THE TRIBUNAL. ADVERTING TO THE APPEAL OF THE REVEN UE OF WHICH WE ARE SEIZED AS ON DATE, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED , THAT THE TRIBUNAL HAD WHILE DISPOSING OFF THE APPEALS OF THE ASSESSEE FOR THE CAPTIONED YE ARS, HAD VIDE ITS ORDER PASSED IN ITA NOS. 3242 & 3243/ MUM/2016 FOR A.Y. 2007 - 08 AND A.Y. 2008 - 09 , DATED 28.02.2017 RESTRICTED THE IMPUGNED ADDITION TO 2% OF THE AMOUNT OF THE BOGUS PURCHASES. ACCORDINGLY, IT WAS SUBMITTED BY THE LD. A.R THAT IN THE BACKD ROP OF THE ORDER THAT WAS PASSED BY THE TRIBUNAL WHILE DISPOSING OFF THE APPEALS OF THE ASSESSEE FOR CAPTIONED YEARS, THE PRESENT APPEALS OF THE REVENUE WERE LIABLE TO BE DISMISSED. 5 . PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) DID NOT CONTROVERT THE AFORESAID FACTUAL POSITION. P A G E | 4 ITA NOS.3087 & 3088/MUM2016 A.YS. 2007 - 08 AND 2008 - 09 JCIT (OSD) CC - 1(4) VS. SHRI KAMLESH MANOHAR KANUNGO 6 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE TRIBUNAL VIDE ITS ORDER PASSED WHILE DISP OSING OFF THE CROSS - APPEALS OF THE ASSESSEE FOR THE CAPTIONED YEARS VIZ. A.Y. 2007 - 08 AND A.Y. 2008 09 IN ITA NOS. 3242 & 3243/MUM/2016 , DATED 28.02.2017 , HAD RESTRICTED THE ADDITION IN RESPECT OF THE IMPUGNED BOGUS PURCHASES TO 2% OF THE AGGREGATE VALUE OF THE IMPUGNED PURCHASES. RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: WE FIND THAT THE LD. CIT(A) HAS CONSIDERED THE RATIO LAID DOWN IN THE VARIOUS DECISIONS AS PRAYED BY THE LD. A.R BEFORE FAA AND SUSTAINED THE ADDITION TO THE EXTEN T OF 3.28% OF THE ALLEGED BOGUS PURCHASE. HOWEVER, IN THE PRESENT CASE, WE FEEL THAT THE RATE APPLIED BY THE FAA ON GP PEAK PURCHASES IS ON HIGHER SIDE AND THE SAME IS REDUCED TO 2% OF THE BOGUS PURCHASES. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE TRIBUNAL WHILE DISPOSING OFF THE APPEALS OF THE ASSESSEE FOR A.Y. 2007 - 08 AND A.Y. 2008 - 09 HAD RESTRICTED THE ADDITION TO 2% OF THE AGGREGATE VALUE OF THE BOGUS PURCHASE, THEREFORE, THE PRESENT APPEALS OF TH E REVENUE ASSAILING THE ORDER OF THE CIT(A) DOES NOT MERIT ACCEPTANCE AND ARE LIABLE TO BE DISMISSED. 7 . RESULTANTLY, THE APPEAL OF THE REVENUE FOR A.Y. 2007 - 08 AND A.Y. 2008 - 09 ARE DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 2 0 .02.2020 S D / - S D / - (M. BALAGANESH) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 2 0 /02/2020 ROHIT, P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) P A G E | 5 ITA NOS.3087 & 3088/MUM2016 A.YS. 2007 - 08 AND 2008 - 09 JCIT (OSD) CC - 1(4) VS. SHRI KAMLESH MANOHAR KANUNGO ITAT, MUMBAI