DCIT 27(2), NAVI MUMBAI V. POONAM ENTERPRISES, MUMBAI

ITA 3138/MUM/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8480 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY SHAH
• Keywords: Bogus purchase
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , C BENCH MUMBAI BEFORE : SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI RAVISH SOOD , J UDICIAL M EMBER ITA NO. 3138 /MUM/ 20 17 ( ASSESSMENT YEAR : 2011 - 12 ) THE DY. COMMISSIONER OF INCOME TAX - 27(2), ROOM NO.420, 4 TH FLOOR TOWER NO.6, VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400 703 VS. M/S. POONAM ENTERPRISES CHANDRIKA PRASAD PLOT NO.61, HOUSE NO.C - 72A STATION AVENUE ROAD CHEMBUR, MUMBAI - 400071 PAN/GIR NO. AAEFP5113H (APPELL ANT ) .. (RESPONDENT ) ITA NO. 7215 /MUM/ 2018 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. POONAM ENTERPRISES CHANDRIKA PRASAD PLOT NO.61, HOUSE NO.C - 72A STATION AVENUE ROAD CHEMBUR, MUMBAI - 400071 VS. THE DY. COMMISSIONER OF INCOME TAX - 27(2), ROOM NO.420, 4 TH FLOOR TOW ER NO.6, VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400 703 PAN/GIR NO. AAEFP5113H (APPELLANT ) .. (RESPONDENT ) REVENUE BY MS. SHREEKALA PARDESHI ASSESSEE BY SHRI SANJAY SHAH DATE OF HEARING 04 / 03 /202 1 DATE OF PRONOUNCEMENT 24 / 03 /202 1 ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 2 / O R D E R PER M. BALAGANESH (A.M) : THESE CROSS APPEAL S IN ITA NO. 3138/MUM/2017 & ITA NO.7215/MUM/2018 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 25, MUMBAI IN APPEAL NO. CIT(A) - 25 /IT - 363/14 - 15 DATED 13/02/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 29/03/2014 BY THE LD. JT. COMMISSIONER OF INCOME TAX, RANGE 22(2), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.3138/MUM/2017 2. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. W E FIND THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN CIVIL CONTRACTING BUSINESS. THE RETURN OF INCOME FOR THE A.Y.2011 - 12 WAS FILED ON 29/09/2011 DECLARING TOTAL INCOME OF RS.1 , 11,74,693/ - . IT IS NOT IN DISPUTE THAT ASSESSEE HAD MADE PURCHASES FROM FOUR P ARTIES LISTED IN PAGE 2 OF THE ASSESSMENT ORDER WHOSE NAME S APPEAR TO BE TAINTED DEALERS AS PER THE WEBSITE OF SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE TOTAL PURCHASES MADE BY THE ASSESSEE FROM THOSE FOUR PARTIES AMOUNTED TO RS.62,81,676/ - . T HE LD. AO BASED ON THE INFORMATION GATHERED FROM SALES TAX DEPARTMENT AND WHICH WAS EVENTUALLY PASSED ON TO HIM THROUGH THE OFFICE OF DGIT INVESTIGATION, MUMBAI , REJECTED ALL THE ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 3 CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE AND PROCEEDED TO DISALLOW THE EN TIRE PURCHASES OF RS.62,81,676/ - U/S.37(1) OF THE ACT. THE LD. AO HOWEVER, DID NOT DISPUTE THE SALES MADE OUT OF SUCH TAINTED PURCHASES. THE MAIN REASON FOR THE DISALLOWANCE WAS THAT THOUGH THE ASSESSEE HAD PRODUCED ALL THE RELEVANT DOCUMENTS BEFORE HIM, T HE LD. AO OBSERVED THAT ASSESSEE COULD NOT PRODUCE THE ABOVE PARTIES PHYSICALLY BEFORE HIM FOR EXAMINATION. THE LD. CIT(A) HOWEVER, OBSERVED THAT ASSESSEE PRODUCED THE LEDGER EXTRACTS OF ALL THE PARTIES THEREBY STATING THAT ALL THE PAYMENTS TO THESE PARTIE S WERE MADE THROUGH ACCOUNT PAYEE CHEQUES. THE LD. CIT(A) ALSO OBSERVED THAT RELEVANT BILLS WERE ALSO FILED BY THE ASSESSEE. THE LD. CIT(A) OBSERVED THAT THE ENTIRE DISALLOWANCE WAS MADE MERELY BASED ON THE INFORMATION RECEIVED FROM SALES TAX AUTHORITIES W ITHOUT CARRYING ON FURTHER INDEPENDENT INVESTIGATION. HE HELD THAT THE ENTIRE PURCHASES CANNOT BE HELD TO BE BOGUS IN THE INSTANT CASE. SINCE, THE SALES MADE OUT OF CORRESPONDING PURCHASES HAS NOT BEEN DISPUTED BY THE LD. AO BY PLACING RELIANCE ON THE DECI SION OF THE GUJARAT HIGH COURT IN THE CASE OF SIMIT P SHETH REPORTED IN 356 ITR 451, HE RESORTED TO ESTIMATE THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES @25% AND GAVE PARTIAL RELIEF TO THE ASSESSEE. 4 . AGGRIEVED BY THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US FOR DELETION OF 25% ADDITION CONFIRMED BY THE LD. CIT(A) AND THE REVENUE IS IN APPEAL FOR DELETION OF 75% OF THE ADDITION BY THE LD. CIT(A) . 5. AT THE OUTSET, WE FIND THAT THERE IS A DELAY OF 609 DAYS IN FILING OF APPEAL BY THE ASSESSEE. ON GOIN G THOUGH THE AFFIDAVIT FILED BY THE PARTNER OF THE ASSESSEE FIRM AND ON HEARING THE LD. COUNSEL FOR THE ASSESSEE AS WELL AS THE ASSESSEE PARTNER WHO WAS ALSO PRESENT AT THE TIME OF HEARING, WE ARE NOT CONVINCED WITH THE REASONING GIVEN IN THE AFFIDAVIT BY THE ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 4 PARTNER OF THE FIRM. THE AFFIDAVIT IS REPRODUCED FOR THE SAKE OF CONVENIENCE. ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 5 5.1. FROM THE READING OF THE AFORESAID AFFIDAVIT, WE FIND THAT ADMITTEDLY THE ASSESSEE HAD REPOSED FAITH ON MR BHALEKAR , ERSTWHILE CONSULTANT OF ASSESSEE, WHO HAD ADVISED ASSESSEE NOT TO PREFER FURTHER APPEAL. BUT IN THAT SCENARIO, AN AFFIDAVIT FROM MR BHALEKAR SHOULD HAVE BEEN BROUGHT ON ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 6 RECORD. WHEN THIS WAS PUT TO ASSESSEES COUNSEL AND THE PARTNER OF THE FIRM, THEY EXPRESSED THEIR INABILITY TO FURNISH THE SAME . IN THESE CIRCUMSTANCES AND FOR THE REASONS STATED IN THE AFFIDAVIT , WE ARE NOT INCLINED TO CONDONE THE DELAY OF 609 DAYS IN FILING OF APPEAL OF THE ASSESSEE AND ACCORDINGLY, WE HOLD THAT APPEAL OF THE ASSESSEE IS DISMISSED AS UNADMITTED AND NOT MAINTAIN ABLE. ITA NO.7215/MUM/2018 6. THE ONLY ISSUE INVOLVED IN REVENUE APPEAL IS RELIEF GRANTED BY THE LD. CIT(A) TO THE EXTENT OF 75% TO THE VALUE OF TOTAL PURCHASES. WE FIND THAT THE SALES IS NOT DISPUTED BY THE LD. AO. THE BREAK - UP OF SALES IS GIVEN IN PA GE 7 OF THE PAPER BOOK. WE FIND THAT THE GROSS PROFIT DECLARED BY THE ASSESSEE IS 13.98%. THE WORKINGS OF WHICH ARE ENCLOSED IN PAGE 13 OF THE PAPER BOOK. HENCE, WE FIND THAT ASSESSEE HAD MADE PURCHASES FROM THE GREY MARKET IN ORDER TO HAVE SAVING IN INDIR ECT TAXES AND INCIDENTAL PROFIT ELEMENT THEREON TOGETHER WITH CASH DISCOUNTS. THE LD. CIT(A) HAD ESTIMATED THE SAID PROFIT ELEMENT TO BE AT 25%. SINCE ASSESSEE APPEAL HAS ALREADY BEEN DISMISSED AS NOT MAINTAINABLE, THOUGH WE FIND THAT PROFIT PERCENTAGE EST IMATED BY THE LD. CIT(A) AT 25% TO BE EXCESSIVE, WE ARE NOT INCLINED TO INTERFERE IN THE SAID ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO . 3138/MUM/2017 & 7215/MUM/2018 M/S. POONAM ENTERPRISES 7 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED AND APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON 24 / 03 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( RAVISH SOOD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24 / 03 / 20 21 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//