ASST CIT 25(3), MUMBAI V. P.B. CONSTRUCTION COMPNAY, MUMBAI

ITA 3165/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8657 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: A N SHAH
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 3165 /MUM/20 1 7 ( / ASSESSMENT YEAR : 20 1 0 - 11 ) ASSTT.COMMISSIONER OF INCOME TAX - 25( 3 ), ROOM NO.601, C - 1 0 , 6TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. / VS. M/S P B CONSTRUCTION CO., A - 1, MONARCH CASTLE CHS LTD, HANUMAN ROAD, DATTA WADI VILE PARLE EAST, MUMBAI - 400057 ./ PAN : AACFP2842B ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI T A KHAN / ASSESSEE BY : SHRI A N SHAH / DATE OF HEARING : 6.9 .2017 / DATE OF PRONOUNCEMENT : 13. 1 1 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER DATED 20.2.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (A) - 3 7 , MUMBAI FOR THE ASSESSMENT YEAR 2 01 0 - 11 . 2. THE ONLY GROUND RAISED B Y THE REVENUE IS AGAINST THE PAR T LY ALLOWING THE APPEAL OF THE ASSESSEE BY THE LD. CIT(A) DIRECTING THE AO TO MAKE ADDITION AT THE R ATE OF 12.5% OF THE BOGUS PURCHASES AS AGAINST THE 100% OF THE 2 I.T.A. NO. 3165 /MUM/2017 DISALLOWANCE OF THE SAID PURCHASE BY THE AO TO THE TUNE OF R.95,48,660/ - BY TREATING THE SAID PURCHASES AS NON - GENUINE. THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AO WHILE GOING THROUGH THE LIST OF THE PUR CHASES OBSERVED THAT MANY OF THEM WE RE THE SAME PARTIES AS BLACKLISTED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND EVEN TOOK ACTION ON ALL THE HAWALA SA LES DEALERS BY CANCELL ING THEIR TIN NUMBERS. THE AO ALSO ISSUED NOTICES TO THE PARTIES U/S 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF PURCHASES BUT THE SAME WERE RETURNED UNSERVED AND THEREAFTER VIDE LETTER DATED 23.1.2013 , THE ASSESSEE WAS ASKED TO PRODUCE THE SUPPLIERS WITH RELEVANT DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASE S . HOWEVER, THE ASSESSEE FAILED TO DO SO AND FINALLY, THE AO TREATED THE SAID PURCHASES AS BOGUS PURCHASES FROM FOUR PARTIES AS BOGUS PURCHASES AGGREGATING TO RS.95,48,660/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY FRAM ING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ASSESSING THE TOTAL INCOME AT RS.2,54,88,760/ - VIDE ORDER DATED 25.3.2013. 3. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE , PARTLY ALLOWED THE A PPEAL OF ASSESSEE RESTRICT ING THE ADDITION TO THE TUNE OF 12.5% OF THE ALLEGED PURCHASES BY FOLLOWING THE DECISION RENDERED BY THE HONBLE GUJARAT HIGH 3 I.T.A. NO. 3165 /MUM/2017 COURT IN THE CASE OF SIMIT P SETH, 2013(356 ITR 451). AGGRIEVED BY THE ORDER OF THE FAA, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS OF AUTHORITIES BELOW. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A BENEFICIARY OF BOGUS PURCHASES TO THE TUNE OF RS.95,48,660/ - WHICH COULD NOT BE PROVED BY THE ASSESSEE AND EVEN NOTICES SENT TO THE PARTIES U/S 133(6) BY THE AO COULD NOT BE SERVED AND THEREFORE ENTIRE AMOUNT OF BOGUS PURCHASES ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN THE APPELLAT E PROCEEDINGS, THE LD.CIT(A) DIRECTED THE AO TO SUSTAINED THE ADDITION AT THE RATE OF 12.5% BY FOLLOWING THE DECISION IN THE CASE OF SIMIT P SETH (SUPRA) BY OBSERVING THAT ONLY PROFIT EARNED BY THE ASSESSEE HAS TO BE T AXED ON REASONABLE BASIS. CONSIDE RING THE CIRCUMSTANCES IN TOTALITY , WE ARE OF THE VIEW TH A T THE ORDER OF THE LD.CIT(A) DOES NOT SUFFER FROM ANY ILLEGALITY OR INFIRMITY AS THE FAA HAS TAKEN A VERY REASONABLE VIEW IN SUSTAINING THE PURCHASES AT THE RATE OF 12.5%. THE ITAT IN A NUMBER OF CASES ON IDENTICAL FACTS AND CIRCUMSTANCES, HAVE TAKEN A CONSISTENT VIEW THAT SOME PERCENTAGE ADDITION RANGING FROM 5% TO 12.50% OR A REASONABLE PERCENTAGE OF THE BOGUS PURCHASE HAS TO BE MADE TO TAX THE SAVINGS BY THE ASSESSEE BY PURCHASING THE MATERIAL FROM GRAY MARKET THEREBY SAVING VAT AN D OTHER INCIDENTAL TAXES. THE AO HAS NOT DISPUTED SALES CORRESPONDING TO THE BOGUS PURCHASES . ON THESE E FACTS ON RECORD, WE FIND 4 I.T.A. NO. 3165 /MUM/2017 THAT THE LD.CIT(A) HAS TAKEN A REASONED VIEW AND THERE IS NO NECESSITY TO INTERFERE IN THE APPELLATE ORDER. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER PRONOUNCED ON 13 . 11.2017. SD SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 13 . 1 1 .2017 SR.PS:SRL: / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI