ACIT 25(1), MUMBAI V. SANGEETA MATHUR, MUMBAI

ITA 3132/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0531 (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: 2011-2012
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN SR
• Assessee Lawyers: SANJUKTHA CHOWDHURY
• Keywords: Bogus purchase; Rejection of books of accounts; Unexplained expenditure; Accommodation entries

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI P. K. BANSAL, HONBLE VICE PRESIDENT AN D SHRI PAWAN SINGH, JUDICIAL MEMBER ./ I.T.A. NO.3132/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) THE ACIT-25(1), 402, C-10, PRATYAKSHKAR BHAVAN, BANDRA (E), MUMBAI-400 051 / VS. SMT. SANGEETA MATHUR, 410, EVEREST APARTMENT, JPN ROAD, VERSOVA ANDHERI (W), MUMBAI-400 061 ./ ./PAN/GIR NO. ALHPM 9885 H ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V. JUSTIN, SR. AR / RESPONDENT BY : SHRI SANJUKTHA CHOWDHURY / DATE OF HEARING : 02.08.2017 !'# / DATE OF PRONOUNCEMENT : 02.08.2017 / O R D E R PER PAWAN SINGH, JM: THIS APPEAL BY THE REVENUE UNDER SECTION 253 OF THE INCOME-TAX ACT (ACT) IS FILED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX (APPEALS)-37 [CIT(A)], MUMBAI DATED 04.02.2016 FOR THE ASSESSMEN T YEAR (AY) 2011-12. THOUGH THE REVENUE HAS RAISED AS MANY AS TEN GROUND S OF APPEAL, HOWEVER AS PER 2 ITA NO. 3132/MUM/2016 (A.Y. 2011-12) ACIT VS. SMT. SANGEETA MATHUR OUR VIEW THE SOLE GROUND OF APPEAL IS WHETHER THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT @ 12.5% OF ALLEGED BOGUS PURCHASES FROM HAWALA DEALERS. REST, OF THE GROUNDS OF APPEALS ARE NARRATION OF FACTS OR ARGUME NTATIVE IN NATURE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CA RRYING BUSINESS IN THE NAME OF M/S. SHRUSHTI MAHILA UDYOG, DERIVING INCOME BY SUPP LY OF FOOD ITEMS IN PRIVATE AND GOVERNMENT OFFICES, FILED HER RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 30.09.2011 DECLARING TOTAL INCOME OF RS.19, 15,180/-. THE ASSESSMENT WAS COMPLETED ON 28.08.2012 U/S.143(3). THE A.O. WHILE PASSING THE ASSESSMENT ORDER DISALLOWED THE UNEXPLAINED EXPENSES OF RS.99,64,988 /-, HOLDING THAT THE ASSESSEE HAD MADE PURCHASES FROM THE PARTIES WHOSE NAMES AP PEARED IN THE LIST OF HAWALA DEALERS APPEARED ON THE WEBSITE OF SALES TAX DEPART MENT OF MAHARASHTRA GOVERNMENT. ON APPEAL BEFORE THE LD. CIT(A), THE DI SALLOWANCE/ADDITION WAS RESTRICTED TO 12.5% OF THE ALLEGED BOGUS PURCHASE. HENCE, AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS FILED PRESENT APPEA L BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE LD. DR FOR THE REVENUE AND LD. AR FOR THE ASSESSEE AND PERUSED THE MATERIAL PLACED ON RECORD. THE LD. DR F OR THE REVENUE SUPPORTED THE ORDER OF THE A.O. THE LD. DR FURTHER ARGUED THAT T HE ENQUIRIES CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT REV EALS THAT THE NAME OF THE PARTIES FROM WHOM THE ASSESSEE HAS MADE PURCHASES W AS INVOLVED IN PROVIDING THE 3 ITA NO. 3132/MUM/2016 (A.Y. 2011-12) ACIT VS. SMT. SANGEETA MATHUR ACCOMMODATION BILLS ONLY. NO MATERIAL WAS SOLD BY T HOSE HAWALA DEALERS. THE ASSESSEE PURCHASED THE MATERIAL BY SHOWING THE EXPE NDITURE FROM M/S. HANS ENTERPRISES, M/S. KHUSHAL MERCANTILE P. LTD. AND M/ S. KUMAR ENTERPRISES, WHOSE NAME APPEARED IN THE LIST OF HAWALA DEALERS. THE SA LES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT HAVE CONDUCTED INDEPENDENT ENQUIRIES WHICH HAVE CONCLUSIVELY PROVED THAT THESE PARTIES WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. THE A.O. MADE ADDITION ON THE BASIS OF FUL L PROOF AND EVIDENCE AGAINST THE ASSESSEE, AS NO DETAILS OF TRANSPORTATION OF GOODS AND THE MEANS OF TRANSPORTATION WAS PROVIDED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS THE A.O. SEND THE NOTICES TO THE PARTIES U/S. 133(6), HOWEVER, NO NOTICE COULD BE SERVED ON THOSE PARTIES. THE PARTIES WERE NOT AVAILABLE AT THEIR G IVEN ADDRESSES. THE ONUS WAS UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHA SES. THE ASSESSEE FAILED TO PROVE THE GENUINENESS, THUS, THE A.O. WAS JUSTIFIED IN MAKING 100% DISALLOWANCE OF UNEXPLAINED EXPENDITURE. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE MADE THE PURCHASES THROUGH NORMAL BANKING CHANNELS AGAINST PROPER INVOICES. DURING THE COURSE OF ASSESSMENT PR OCEEDING, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT, WHICH WERE NOT REJEC TED BY THE A.O. THUS, THERE IS NO QUESTION OF DOUBT ON ACCOUNT OF DOCUMENTS OF THE FIRM BEING RUN BY THE ASSESSEE. THE A.O. FAILED TO APPRECIATE THAT THE NA ME AND ADDRESS OF EACH OF THE PARTIES WAS SUBMITTED DURING THE COURSE OF ASSESSME NT PROCEEDING. ALL THE RELEVANT 4 ITA NO. 3132/MUM/2016 (A.Y. 2011-12) ACIT VS. SMT. SANGEETA MATHUR DETAILS WERE SUBMITTED LIKE PURCHASE INVOICE, DELIV ERY CHALLAN, RELEVANT EXTRACT OF STOCK REGISTER ALONG WITH THE QUANTITY RECONCILIATI ON OF SALE OF THESE PRODUCTS. THE SALE OF THE ASSESSEE WAS NOT DISPUTED BY THE A.O. T HE A.O. HAS NEITHER APPRECIATED THE DOCUMENT FURNISHED BY THE ASSESSEE NOR GAVE ANY SUFFICIENT OPPORTUNITY AND IGNORED THE RELEVANT DOCUMENTS FILED. HOWEVER, THE LD. CIT(A) AFTER CONSIDERING THE SIMILAR SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE @ 12.5% OF THE PURCHASES 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE DOCUMENT PLACED BEFORE US. WE HAVE NOTED THE A.O. RELIED UPON THE DETAILS AVAILAB LE ON THE WEBSITE OF SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT AND THE REPORT OF INVESTIGATION WING OF INCOME TAX DEPARTMENT. THE A.O. HAS NOT MADE ANY I NDEPENDENT ENQUIRY. THE A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. FURTHER, THE A.O. HAS NOT DISPUTED THE SALES OF THE ASSESSEE. THE A.O. ON THE BASIS OF THE REPORT OF SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT CONCLUDED THAT THE PARTIES FROM WHOM THE ASSESSEE HAS PURCHASED MATERIAL ARE HAWALA DEALERS. THE A.O. MADE THE DISALLOWANCE OF RS.89,64,985/- OUT OF THE TOTAL PUR CHASE OF RS.99,64,988/-. THE LD. CIT(A) OBSERVED THAT FROM THE RECORD AVAILABLE ON W EBSITE OF SALES TAX DEPARTMENT WAS THE POINT OF GENESIS OF ENQUIRY RELA TE TO THE POSSIBLE BOGUS PURCHASES IN A NUMBER OF CASES. IT WAS OBSERVED B Y LD CIT(A) THAT WHEN PURCHASE 5 ITA NO. 3132/MUM/2016 (A.Y. 2011-12) ACIT VS. SMT. SANGEETA MATHUR IS HELD AS BOGUS, THEN THE CORRESPONDING SALE MUST ALSO BE HELD AS BOGUS, BEING WITHOUT THE MATERIAL PURCHASED, PRODUCTION/SALE IS NOT POSSIBLE. IT WAS FURTHER OBSERVED THAT UNLESS THE MATERIALS WERE NOT USED IN THE CORRESPONDING SALE, PURCHASE CANNOT BE HELD AS BOGUS. THE LD. CIT(A) ON THE BASIS OF THE ABOVE OBSERVATION HELD THAT A.O. HAS NOT MADE FURTHER INV ESTIGATION TO BROUGHT ON RECORD ABOUT THE DETAILS OF THE PAYMENTS MADE BY THE ASSES SEE BY ACCOUNT PAYEE CHEQUE. IT WAS INCUMBENT ON THE A.O. TO VERIFY IF THE CASH WER E IMMEDIATELY WITHDRAWN FROM THE BANK OF THE ASSESSEE AND THAT OF BANK OF SUPPLI ER. NO SUCH EXERCISE HAVE BEEN DONE OR RECORDED BY THE A.O. THERE IS NO EVIDENCE T O SHOW THAT THE ASSESSEE HAS RECEIVED CASH BAG FROM THE SUPPLIER. THE A.O. HAS N OT BROUGHT ON RECORD ANY MATERIAL ON RECORD TO SHOW THAT THERE IS ANY SUPPRE SSION OF SALE. MOREOVER, IN THE SUBSEQUENT ASSESSMENT YEAR, I.E., A.Y. 2012-13, THE A.O. MADE AN ADDITION @ 12.5% OF THE ALLEGED BOGUS PURCHASES. THUS, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE @ 12.5% OF THE 18 PURCHASES. WE ARE OF THE CONSIDERED OPINION THAT UNDER INCOME TAX ACT, THE REVENUE IS ENTITLED TO TA X THE ONLY REAL INCOME. ONE MAY FURTHER CONCLUDE THAT EVEN IF THE TRANSACTION I S NOT VERIFIABLE, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRANSACTION. AFTER CONSIDERING THE FACTS AND THE RIVAL SUBMISSIONS OF THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT IN ORDER TO FILL UP THE GAP OF REVENUE, THE DI SALLOWANCE OF REASONABLE PERCENTAGE OF IMPUGNED PURCHASES WOULD MEET THE END OF JUSTICE, WHICH THE LD. 6 ITA NO. 3132/MUM/2016 (A.Y. 2011-12) ACIT VS. SMT. SANGEETA MATHUR CIT(A) HAS ALREADY CONSIDERED AND RESTRICTED THE DI SALLOWANCE @ 12.5%. IN OUR VIEW, THE FINDING OF THE LD. CIT(A) DOES NOT REQUIR E ANY FURTHER INTERFERENCE AT OUR END. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 2 ND , 2017 SD/- SD/- (P. K. BANSAL) (PAWAN SINGH) &'( / VICE PRESIDENT )* / JUDICIAL MEMBER MUMBAI; - DATED : 02.08.2017 .*../ ROSHANI , SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT - CONCERNED 5. 123 **45 , 45# , / DR, ITAT, MUMBAI 6. 378 9 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI