AVADHUT WAGH, MUMBAI V. DCIT 22(1), NAVI MUMBAI

ITA 3179/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9197 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 17-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP LD
• Assessee Lawyers: MILIND SAHASRABUDHE LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.3179/MUM/2015 AVADHUT RAMAKANT WAGH ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3179/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) AVADHUT RAMAKANT WAGH B-603, PRESIDENTIAL TOWER LBS MARG OPP. ANACINE CO. GHATKOPAR (WEST) MUMBAI-400 086 / VS. DEPUTY COMMISSIONER OF INCOME TAX RANGE 22(1) VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI-400 703 '# ./ ./ PAN/GIR NO.AABPW-2515-K ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : POOJA SWAROOP, LD. DR ASSESSEE BY : MILIND SAHASRABUDHE, LD. AR / DATE OF HEARING : 26/09/2017 / DATE OF PRONOUNCEMENT : 04 /10/2017 2 ITA NO.3179/MUM/2015 AVADHUT RAMAKANT WAGH ASSESSMENT YEAR 2009-10 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-25 [CIT(A)], MUMBAI, NEW APPEAL NO.CIT(A)25/IT/643-2013-14 DATED 27/02/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSMENT WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-22(1), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 ON 18/12/2013. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS CONTRACTOR & DEALERS IN PUMPS UNDER PROPRIETORSHIP CONCERN NAMELY HI TECH ENGINEERS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 18/12/2013 WHERE THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2,89,76 ,950/- AFTER CERTAIN ADDITIONS U/S ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR RS.31,79,688/-. THE ORIGINAL RETURN WAS FILED ON 30/09/2009 AT RS.2,57,97,260/- WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED I N THE APPEAL IS ADDITION OF CERTAIN BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.31,79,688/- FROM 3 ITA NO.3179/MUM/2015 AVADHUT RAMAKANT WAGH ASSESSMENT YEAR 2009-10 TWO PARTIES. CONSEQUENTLY, NOTICE U/S 148 DATED 21/ 03/2013 WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY STATUTORY NOTICE S U/S 143(2) AND 142(1). 2.3 NOTICES SENT U/S 133(6) TO THESE PARTIES TO CON FIRM THE TRANSACTIONS REMAINED UN-SERVED WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE WAS DIRECTED TO PRODUCE THE SAID PARTIES ALONG WITH SUPPORTING DOCUMENTS. THE ASSESSEE, WHILE EXPRESSING INABILITY TO PRODUCE THE SAID PARTIES, CONTENDED THAT IT PURCHASED PIPES AND ELECTRIC CABL ES FROM THE TWO PARTIES AND THE PURCHASED MATERIAL WAS CONSUMED IN A CERTAI N PROJECT EXECUTED FOR MUNICIPAL CORPORATION AND THEREFORE, THE PURCHASES WERE GENUINE. HOWEVER, LD. AO, NOT CONVINCED, CONCLUDED THAT THE ASSESSEE COULD NOT SUBSTANTIATE DELIVERY OF MATERIAL AND ALSO COULD NO T DISCHARGE ONUS OF PROVING THE PURCHASES TRANSACTIONS AND THEREFORE TR EATING THE SAME AS BOGUS PURCHASES, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/02/2 015 WHERE THE ASSESSEE PRODUCED LEDGER EXTRACTS, INVOICES, DELIVERY CHALLANS, BANK STATEMENT EVIDENCING PAYMENT OF MATERIAL AND PLACED RELIANCE ON CERTAIN JUDICIAL PRONOUNCEMENTS. HOWEVER, NOT CONVINCED, LD . CIT(A) SUSTAINED THE SAME ON THE PREMISES THAT THE ASSESSEE COULD NOT PR OVE ACTUAL UTILIZATION OF MATERIAL FOR THE PROJECT. AGGRIEVED, THE ASSESSE E IS IN FURTHER APPEAL BEFORE US. 4 ITA NO.3179/MUM/2015 AVADHUT RAMAKANT WAGH ASSESSMENT YEAR 2009-10 4. THE LD. COUNSEL FOR ASSESSEE [AR] REITERATED THE SAID CONTENTIONS AND DREW OUR ATTENTION TO THE FACT THAT THE CONTRAC T WORK COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF MATERIAL AND FUR THER, ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS ALONG WITH DELIVERY CHALLANS AND THE PAYMENT OF MATERIAL WAS THROUGH BANKING CHA NNELS AND THEREFORE, FULL ADDITION WAS NOT JUSTIFIED. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED REL IANCE ON THE STAND OF LOWER AUTHORITIES AND CONTENDED THA T THE ASSESSEE FAILED TO PROVE THE UTILIZATION OF MATERIAL FOR THE PROJECT A ND COULD NOT PRODUCE ANY STOCK REGISTER TO SUPPORT THE CONTENTION AND THEREF ORE, FULL DISALLOWANCE WAS JUSTIFIED. 6. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE / CONTRACT RECEIPTS WITHOUT ACTUAL CONSUMPTION OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED AS CONTRACTOR. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND T HE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES AND DELIVERY CHALLANS. AT THE SAME TIME, THE ASSESSEE C OULD NOT PRODUCE ANY CONFIRMATION FROM THE IMPUGNED SUPPLIERS AND ALL NO TICES SENT U/S 133(6) REMAINED UN-SERVED , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGA INST POSSIBLE PURCHASE 5 ITA NO.3179/MUM/2015 AVADHUT RAMAKANT WAGH ASSESSMENT YEAR 2009-10 OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES. THEREFORE, WE ESTIMATE THE SAME @12.5% W HICH COMES TO RS.3,97,461/-. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04 .10.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. &0 , 0 , / DR, ITAT, MUMBAI 6. 12 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI