ACIT 25(1), MUMBAI V. VASANT SHRIKANT KALMUNKAR, MUMBAI

ITA 3131/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0527 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 147; 148; 37

Judgement Text

ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 3131/MUM/2016 (ASSESSMENT YEAR- 2009-10) ACIT -25 (1 ), 402,C ,- 10 , PRATYAKSHKAR BHAVAN, BANDRA(E), MUMBAI-400051 PAN: AAGPK2844N VS. MS VASANTI SRIKANT KALMUNKAR, 701-702, MADHU INDUSTRIAL ESTATE, MOGRA CROSS ROAD, ANDHERI (E) MUMBAI -400069 (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY : NONE REVENUE REPRESENTED BY : SH. V. JUSTINE SR -DR DATE OF HEARING : 02.08.2017 DATE OF ORDER : 02.08.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME- TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS )- 37, MUMBAI DATED 25.02.2015 FOR ASSESSMENT YEAR 2009- 10. THOUGH, TH E REVENUE HAS RAISED AS MANY AS 10 GROUNDS OF APPEAL. HOWEVER, AS PER OU R CONSIDERED VIEW THE ONLY SUBSTANTIAL GROUND OF APPEAL IS WHETHER L EARNED COMMISSIONER (APPEALS) ERRED IN FACTS AND IN LAW IN ESTIMATING T HE PROFIT @ 12.5% OF THE ALLEGED BOGUS PURCHASES OF RS.63,00,179/-. (T HE FIGURE IS WRONGLY MENTIONED AS RS 55,12,657/-, WHICH IS IN FACT SUBJE CT MATTER OF ITA NO.3132/M/2016 FILE BY SAME AO). REST OF THE GROUND S OF APPEAL ARE EITHER NARRATION OF FACTS OR ARGUMENTATIVE IN NATUR E. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF DIAGNOSTIC KITS, CHEMICALS ANALYSER USED IN BOAR D TESTING, FILED HER ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 2 RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 29 SEPTEMBER 2009 DECLARING TOTAL INCOME OF RS.44,82,800/-. THE RETUR N WAS PROCESSED UNDER SECTION 143(3). SUBSEQUENTLY, THE ASSESSMENT WAS RE OPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 148 DATED 11 FE B 2014. THE ASSESSMENT WAS REOPENED BY ASSESSING OFFICER ON THE BASIS OF RECEIPT OF INFORMATION FROM SALES TAX DEPARTMENT THAT THE ASSE SSEE MAD PURCHASED FROM TWO BOGUS DEALERS. IN RESPONSE TO THE NOTICE THE ASSESSEE FILED ITS REPLY. IN THE REPLY THE ASSESSEE CONTENDED THAT THE ORIGINAL RETURN FILED EARLIER MAY BE TREATED AS RETURN OF INCOME IN RESPO NSE TO THE NOTICE UNDER SECTION 148. THE ASSESSING OFFICER THEREAFTER PROCE EDED FOR REASSESSMENT PROCEEDING. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER MADE THE ADDITION OF RS. 63,00,179/- BY MAKE DISALL OWANCE UNDER SECTION 37 OF THE ACT. THE ADDITION WAS MADE BY ASSESSING O FFICER HOLDING THAT ASSESSEE ACCOUNTED THIS AMOUNT IN ITS BOOKS OF ACCO UNT THROUGH FICTITIOUS INVOICES IN THE NAME OF BOGUS PARTIES NAMELY M/S MI TAL ENTERPRISES AND M/S RAKESH ENTERPRISES FOR RS.30,81,599/- AND RS.32 ,18,590/- RESPECTIVELY. ON APPEAL BEFORE COMMISSIONER (APPEAL S) THE ADDITION WAS RESTRICTED TO 12.5% OF THE IMPUGNED/ BOGUS PURCHASE S. BEING, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE REVENUE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LEARNED DR FOR THE REVENUE AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED DR FOR THE REVENUE ARGUED THAT ASSESSING ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 3 OFFICER MADE THE ADDITION IN THE REOPENING ASSESSME NT ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. AS PER INFORMATION THE ASSESSEE HAS ENT ERED INTO A CONTRACT N WITH HAWALA TRADERS FOR PURCHASING THE MATERIAL. TH E ASSESSEE PURCHASED MATERIAL FROM TWO SUCH PARTIES, THOSE NAMES APPEARE D IN THE LIST OF HAWALA TRADERS NAMELY M/S MITAL ENTERPRISES AND M/S RAKESH ENTERPRISES FOR RS.30,81,599/- AND RS.32,18,590/- RESPECTIVELY. THE ASSESSING OFFICER ISSUED NOTICE TO BOTH THE PARTIES UNDER SECTION 133 (6) OF THE ACT THROUGH REGISTERED POST. NONE OF THE PARTIES APPEARED IN RE SPONSE TO THE NOTICE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTAN TIATE ITS CLAIM AND TO PRODUCE THE DOCUMENTS RELATED PAYMENT AND DELIVERY RECEIPTS OF THE MATERIAL. THE ASSESSEE COULD NOT PRODUCE THE DELIVE RY PROOF. THUS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND MADE THE ADDITION BY DISALLOWING THE EXPENSES UNDER SECTION 37 OF THE AC T. THE LEARNED COMMISSIONER (APPEALS) WITHOUT APPRECIATING THE FAC T OF THE CASE RESTRICTED THE DISALLOWANCE /ADDITION @ 12.5%. THE LEARNED DR OF THE ASSESSEE ARGUED THAT ORDER OF ASSESSING OFFICER MAY BE RESTORED BY REVERSING THE ORDER OF COMMISSIONER (APPEALS). 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED D R FOR THE REVENUE AND PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAV E SEEN THAT THE CASE OF ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION R ECEIVED FROM SALES TAX AUTHORITIES, MUMBAI. THE REOPENING WAS MADE WIT H THE REASONS THAT ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 4 ASSESSEE OBTAINED BOGUS BILL FROM TWO PARTIES NAMEL Y M/S MITAL ENTERPRISES AND M/S RAKESH ENTERPRISES, WITHOUT SUP PLY OF THE GOODS. BEFORE THE ASSESSING OFFICER THE ASSESSEE CONTENDED THAT SHE IS MAINTAINING REGULAR BOOKS OF ACCOUNT. THE BOOKS ARE AUDITED UNDER THE PROVISIONS OF SECTION 44BB OF THE INCOME-TAX ACT. T HE AUDITOR OF THE ASSESSEE HAS FILED AUDIT REPORT BEFORE THE DUE DATE AND SAME WAS ACCEPTED BY THE DEPARTMENT. THE CONTENTION OF THE ASSESSEE B EFORE THE ASSESSING OFFICER WAS THAT ALL THE DOCUMENTS RELATED WITH THE PURCHASE OF MATERIAL WAS PLACED BEFORE HIM. THE BOOKS OF ACCOUNT DULY AC CEPTED IN THE ORIGINAL ASSESSMENT. WE HAVE NOTED THAT THE BOOKS O F ACCOUNT WERE REJECTED BY ASSESSING OFFICER. THE ASSESSING OFFICE R HAS NOT SPECIFIED THE REASONS/ GROUNDS FOR REJECTING BOOKS OF ACCOUNT. IN OUR CONSIDERED VIEW THE MECHANICAL REJECTION OF STATEMENT OF ACCOUNT IS NO REJECTION IN THE EYES OF LAW. EVERY ORDER WHICH MAY BE SUBJECT MATTE R OF APPEAL, BY HIGHER AUTHORITY MUST CONTAIN THE REASONS OF SUCH R EJECTION. WE HAVE SEEN THAT THE ASSESSEE IN THE FIRST APPELLATE PROCE EDING MADE THE SIMILAR CONTENTION BEFORE THE COMMISSIONER (APPEALS). AFTER CONSIDERING THE CONTENTION OF ASSESSEE AND CONSIDERING THE DOCUMENT S THE LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THE ADDITION M ADE BY THE ASSESSING OFFICER IS EXCESSIVE. AND AFTER CONSIDERI NG THE ENTIRE FACT AND THE EVIDENCE BEFORE HIM THE LEARNED COMMISSIONER (A PPEALS) ESTIMATED THE PROFIT @ 12.5% AND DIRECTED THE ASSESSING OFFIC ER TO RESTRICT THE ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 5 DISALLOWANCE AT THE RATE OF 12.5%. WE ARE ALSO OF T HE CONSIDERED VIEW THAT UNDER INCOME -TAX ACT, ONLY REAL INCOME CAN BE TAXE D BY THE REVENUE. WE MAY FURTHER CONCLUDE THAT EVEN IF THE TRANSACTIO N IS NOT VERIFIABLE, BECAUSE OF ANY REASONS, THE ONLY TAXABLE IS THE TAX ABLE INCOME COMPONENT AND NOT THE ENTIRE TRANSACTION. AND AFTER CONSIDERI NG THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS OF THE PARTIES WE ARE ALS O OF THE OPINION THAT IN ORDER TO FULFIL THE GAP OF REVENUE LEAKAGE THE DISA LLOWANCE OF REASONABLE PERCENTAGE OF SUCH PURCHASES WOULD MEET THE END OF JUSTICE AND HENCE, THE ADDITION WHICH RESTRICTED TO 12.5% OF THE TOTAL IMPUGNED (DISPUTED) PURCHASES BY LEARNED COMMISSIONER (APPEALS) NEEDS N O INTERFERENCE AT OUR END. THE HONBLE BOMBAY HIGH COURT IN CIT VS HARIRAM BHAMBHANI IN ITA NO. 313 OF 2013 DECIDED ON 04.2.2015 HELD THAT REVENUE IS NOT ENTITLED TO BRING THE ENTIRE SALES C ONSIDERATION TO TAX, BUT ONLY THE PROFIT ATTRIBUTABLE ON THE TOTAL UNRECORDE D SALES CONSIDERATION ALONE CAN BE SUBJECT TO INCOME TAX. THUS, WE DO NOT FIND ANY REASONS FOR INTERFERENCE IN THE ORDER OF LEARNED COMMISSIONER ( APPEALS). HENCE THE GROUND OF APPEAL RAISED BY REVENUE IS DISMISSED 5. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 02ND DAY OF AUGUST 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 02/8/2017 S.K.PS ITA NO.3131/M/ 2011 MS VASANTI SRIKANT 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, M UMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/