ITO WD 33(3)(3), MUMBAI V. SANDIP MASALIA, MUMBAI

ITA 3196/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0413 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: RAJESH KOTHARI LD
• Keywords: Bogus purchase; Opportunity of cross examination; Third party statement
• Section: 69C; 143(3)

Judgement Text

ITA NO. 3196/M/2016 SANDIP MASALIA ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3196/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER WARD-33(3)(3) ROOM NO.603,C-12 PRATYAKSH KAR BHAWAN BANDRA KURLA COMPLEX MUMBAI - 400 0 51 / VS. SANDIP MASALIA C-109, SHATRUNJAYGIRI ASHOK CHAKRAVARTI ROAD KANDIVALI(E) MUMBAI - 400 067 ! ./ ./PAN/GIR NO. AFJPM-3310-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : RAJESH KOTHARI ,LD. AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 02/08/2017 / DATE OF PRONOUNCEMENT : 11 /08/2017 ITA NO. 3196/M/2016 SANDIP MASALIA ASSESSMENT YEAR-2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2011- 12 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-45 [CIT(A)], MUMBAI DATED 22/02/2016 QUA RELIEF PROVIDED TO ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN STEEL ALLOYS UNDER PROPRIETORSHIP CONCERN NAMELY SEEMA STEEL CORPORATION WAS ASSESSED U/S 143(3) FOR THE IMPUGNED AY ON 10/03/2014 AT RS.2,22,44,980/- AFTER CERTAIN DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.9,36 ,201/- E-FILED BY THE ASSESSEE ON 27/09/2011. THE ASSESSEE SUFFERED DISAL LOWANCE OF RS.2,12,57,494/- U/S 69C ON ACCOUNT OF CERTAIN BOGUS PURCHASES AND THE SAME IS THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE MADE PURCHASES OF RS.2,12,57,494/- FROM FIVE PARTIE S WHO WERE LISTED AS SUSPICIOUS DEALERS INDULGING IN ACCOMMODATION BILLS AS PER OFFICIAL WEBSITE OF SALES TAX DEPARTMENT, MAHARASHTRA . THE PERSONAL VISIT OF INSPECTOR AT THE SIGHT OF ALLEGED BOGUS SUPPLIERS REVEALED THAT MOST OF THESE PARTIES WERE NOT IN EXISTENCE AT THE GIVEN AD DRESSES. CONSEQUENTLY, THE ASSESSEE WAS ASKED TO PRODUCE THE SAID PARTIES ALONG WITH DOCUMENTARY EVIDENCES TO PROVE THE PURCH ASE TRANSACTIONS. HOWEVER, THE ASSESSEE CONTENDED THAT THE PAYMENTS W ERE THROUGH BANKING CHANNELS AND WITHOUT PURCHASE THERE COULD B E NO SALES. THE ITA NO. 3196/M/2016 SANDIP MASALIA ASSESSMENT YEAR-2011-12 3 AFFIDAVIT OF FEW PARTIES CONFIRMING THE TRANSACTION S WAS ALSO PRODUCED IN SUPPORT OF PURCHASE TRANSACTIONS. HOWEVER, NOT CONV INCED, LD. AO TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE S AME TO THE INCOME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 22/02/2 016 AND CONTENDED THAT THE ADDITION COULD NOT BE SUSTAINED MERELY ON THE BASIS OF THIRD PARTY STATEMENT MADE BEFORE SALES TAX DEPARTMENT PARTICULARLY WHEN THE SAME WERE NOT CONFRONTED TO THE ASSESSEE. THE LD. C IT(A) NOTED THAT THE ASSESSEE WAS IN POSSESSION OF PURCHASE DOCUMENT S AND THE PAYMENTS WERE THROUGH BANKING CHANNELS BUT THE SAME , IN ITSELF, WAS NOT CONCLUSIVE TO PROVE THE GENUINENESS OF THE PURC HASES. AT THE SAME TIME, IT WAS NOTED THAT THE TURNOVER WAS NOT DISPUT ED BY THE LD. AO AND THE ASSESSEE PRODUCED AFFIDAVITS OF THE ALLEGED BOGUS SUPPLIERS IN SUPPORT OF THE PURCHASES. FINALLY, FOLLOWING QUANTU M OF ADDITION IN SUBSEQUENT YEARS, THE ADDITION WAS RESTRICTED TO 4. 08% OF THE ALLEGED BOGUS PURCHASES OF RS.2,12,57,494/-, AGAINST WHICH THE REVENUE 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. ITA NO. 3196/M/2016 SANDIP MASALIA ASSESSMENT YEAR-2011-12 4 4.1 PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTENTION T O THE FACT THAT THE ASSESSEE PRODUCED AFFIDAVIT FROM THE ALLEGED BOGUS SUPPLIERS CONFIRMING THE TRANSACTIONS BEFORE LD. AO AND HENCE THE PURCHASES TRANSACTIONS WERE GENUINE. NEVERTHELESS, TO MAKE UP FOR THE SHORTCOMINGS AND TO AVOID FURTHER LITIGATION, THE V ERDICT OF LD. CIT(A) HAS BEEN ACCEPTED BY THE ASSESSEE AND THE SAME WAS FAIR AND REASONABLE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS TR ADING IN STEEL ALLOYS AND ACCOUNTS OF THE ASSESSEE WERE SUBJECTED TO TAX AUDIT WHERE QUANTITATIVE DETAILS ARE PROVIDED. THERE COULD BE N O SALE WITHOUT PURCHASES AND MOREOVER, THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE LD. AO. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR P ROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E PROFIT EARNED BY ASSESSEE AGAINST PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD.CI T(A) HAS RIGHTLY DONE. THE REVENUE HAS ALREADY ACCEPTED THE ADDITION OF 4.08% IN OTHER YEARS AND THEREFORE, WE FIND THE ORDER OF LD. CIT(A ) TO BE QUITE FAIR AND REASONABLE AND HENCE, FIND NO REASON TO INTERFERE W ITH THE SAME. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NO. 3196/M/2016 SANDIP MASALIA ASSESSMENT YEAR-2011-12 5 MUMBAI; DATED : 11 .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