ITO 1(1)(1), MUMBAI V. BENITE STEELS LTD, MUMBAI

ITA 3161/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0306 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: AMIT JHAVERI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 131; 148

Judgement Text

ITA NO.3161/M/2016 BENITE STEELS LIMITED ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3161/MUM/2016 ( / ASSESSMENT YEARS: 2009-10) INCOME TAX OFFICER 1(1)(1) R.NO.534/579 5 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI - 400 0 20 / VS. BENITE STEELS LIMITED 1&2, JAHANGIR MANSION, GROUND FLOOR, CINEMA LANE, BEHIND METRO THEATRE MUMBAI -400 020 ! ./ ./PAN/GIR NO. AABCB-9301-R ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : AMIT JHAVERI ,LD. AR RE VENUE BY : T.A.KHAN , LD. DR / DATE OF HEARING : 02/08/2017 / DATE OF PRONOUNCEMENT : 04 /08/2017 ITA NO.3161/M/2016 BENITE STEELS LIMITED ASSESSMENT YEAR-2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2 [CIT(A)], MUMBAI DATED 26/02/2016 QUA RELIEF PROVIDED TO ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED, THE ASSESSEE BEING CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING OF IRON & STEEL WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR THE IMPUGNED AY ON 24/03/2014 WHERE THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS. 10,72,49,883/- AS AGAINST RETURNED INCOME OF RS.1,43,838/- E-FILED BY THE ASSESSEE ON 25/09/2009. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) BUT SUBJECTED TO REASSESSMENT PROCEEDINGS PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT THAT THE ASSESSEE STOOD B ENEFICIARY OF CERTAIN BOGUS PURCHASE BILLS. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 14/03/2013 AND REASSESSMENT PROCEED INGS U/S 147 WERE COMPLETED AFTER CERTAIN ADDITION ON ACCOUNT OF BOGUS PURCHASES AND THE SAME ARE THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT, IT WAS NOTICED THAT THE ASSE SSEE MADE AGGREGATE PURCHASES OF RS.10.70 CRORES FROM FOUR SU SPICIOUS DEALERS. IN SUPPORT OF PURCHASES, THE ASSESSEE FURNISHED PURCHA SE DETAILS AND BANK STATEMENT TO ASSERT THAT THE PURCHASES WERE GE NUINE. THE NOTICES U/S 133(6) AS WELL AS SUMMONS U/S 131 ISSUED TO THE ALLEGED BOGUS SUPPLIERS REMAINED UN-SERVED WITH REMARKS NOT KNOWN / NOT CLAIMED ITA NO.3161/M/2016 BENITE STEELS LIMITED ASSESSMENT YEAR-2009-10 3 WHICH LED DISALLOWANCE OF TOTAL PURCHASES IN THE HA NDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT (A) VIDE IMPUGNED ORDER DATED 26/02/ 2016 WHERE THE ASSESSEE RAISED SIMILAR CONTENTIONS AND ASSERTED TH AT WITHOUT PURCHASES THERE COULD NOT BE ANY SALES AND THEREFORE, FULL DI SALLOWANCE WAS NOT JUSTIFIED. THE LD. CIT(A) AFTER APPRECIATING THE VA RIOUS JUDICIAL PRONOUNCEMENTS AND ASSESSEES GP/NP RATE OF THREE YEARS, RESTRICTED THE SAID DISALLOWANCE TO 12.5%. AGGRIEVED, THE REVE NUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUPPORT ED THE STAND TAKEN BY LD. AO AND CONTENDED THAT MERE PAYMENT THR OUGH BANKING CHANNELS WAS NOT SUFFICIENT TO ESTABLISH THE GENUIN ENESS OF THE PURCHASES. MOREOVER, NONE OF THE SUPPLIER WAS FOUND AT THE GIVEN ADDRESS AND THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIE ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THER EFORE, FULL DISALLOWANCE THEREOF WAS JUSTIFIED. 4.1 PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] SUPPORTED THE STAND OF LD. CIT(A) AND DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE WAS A TRADER IN IRON & STEEL AND MAINTAINED QUANTITATIVE DETAILS AND THEREFORE, ENTIRE DISALLOWANCE WAS NOT JUSTIFIED SINCE WITHOUT PURCHASE, THERE COULD BE NO SALES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AS IT COULD NOT PRODUCE SUFFICIENT EVIDEN CES TO SHOW ACTUAL ITA NO.3161/M/2016 BENITE STEELS LIMITED ASSESSMENT YEAR-2009-10 4 DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CON FIRMATORY LETTERS FROM THE ALLEGED BOGUS SUPPLIERS AND THUS FAILED TO SUBS TANTIATE THE PURCHASES. HOWEVER, AT THE SAME TIME, THE ASSESSEE IS A TRADER AND THERE COULD BE NO SALES WITHOUT PURCHASES. THEREFOR E, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, WE FIND THE ADDITION OF 12 .5% OF BOGUS PURCHASES TO BE REASONABLE ONE AND SEE NO REASON TO INTERFERE WITH THE CONCLUSION OF THE LD. CIT(A). 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.08.2017 SR.PS:- THIRUMALESH / 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