DCIT CIRCLE-9(1)(2), Mumbai V. M/S ATLANTA LIMITED , Mumbai

ITA 3233/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5984 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 15-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MIACHEL JERALD
• Keywords: Bogus purchase
• Section: 143(3); 133A; 201; 147; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBERAND SHR I N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3233 /MUM. /201 9 ( ASSESSMENT YEAR : 20 1 5 - 1 6 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 9(1)(2), MUMBAI . APPELLANT V/S ATLANTA LIMITED 101, SHREE AMBASHANTI CHAMBERS OPP. HOTEL LEELA, ANDHERI (EAST) MUMBAI 400 059 PAN AAACA8865E . RESPONDENT ASSESSEE BY : NONE REVENUE BY : S HRI MIACHEL JERALD DATE OF HEARING 08.09.2020 DATE OF ORDER 17.09.2020 O R D E R PER SAKTIJIT DEY. J.M. TH E AFORESAID APPEAL HAS BEEN FILED BY T H E REVENUE CHALLENGING THE ORDER DATED 28 TH FEBRUARY 201 9 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 16 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 15 - 16. 2. THE GRIEVANCE OF THE REVENUE IS WITH REGARD TO THE PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE ON ACCOUNT OF NON - GENUINE PURCHASES. 2 ATLANTA LIMITED 3. WHEN THE APPEAL WAS CALLED FOR HEARING IN VIRTUAL COURT , NO ONE WAS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER . CONSIDERING THE NATURE OF DISPUTE , WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HE ARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE , A RESIDENT COMPANY , IS ENGAGED IN CIVIL CONSTRUCTION, ROAD CONSTRUCTION, ETC. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSE E FILED ITS RETURN OF INCOME ON 30 TH NOVEMBER 2015, DECLARING TOTAL INCOME OF ` 59,08,84,430. ORIGINALLY, THE ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 4 TH MAY 2017, DETERMINING THE TOTAL INCOME AT ` 61,04,76,490. SUBSEQUENTLY, ON 16 TH NOVEMBER 2017, A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE. IN THE COURSE OF SUCH SURVEY ACTION, IT WAS FOUND THAT THE ASSESSEE HAD ENTERED INTO BOGUS PURCHASE TRANSACT ION S WITH THREE PARTIES VIZ. GAURAV ENTERPRISES, JAI MAA BHAWANI BUSINESS GROUP, ABDUL HAFIZ. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDE R SECTION 147 OF THE ACT. IN COURSE OF RE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CONFRONTED TO THE ASSESSEE THE REPORT RECEIVED FROM DDIT (INV.), MUMBAI, INDICATING THAT THE AFORESAID THREE PARTIES FROM WHOM THE ASSESSEE 3 ATLANTA LIMITED CLAIMED TO HAVE EFFECTED PURCHASES DURING THE YEAR HAVE BEEN IDENTIFIED AS HAWALA DEALERS BY THE SALES TAX DEPART MENT AS PER INFORMATION APPEARING IN THE WEBSITE OF THE SALES TAX DEPARTMENT AND THEIR REGISTRATION HAVE EITHER BEEN CANCELLED OR KEPT PENDING. HE FURTHER OBSERVED , THE SUMMONS ISSUED UNDER SECTION 1 31 OF THE ACT TO THE CONCERNED PARTIES EITHER REMAINED UNDELIVERED OR WAS NOT RESPONDED TO. THEREFORE, HE CALLED UPON THE ASSESSEE TO FURNISH VARIOUS DOCUMENTARY EVIDENCES SUCH AS BILLS, INVOICES, OCTROI RECEIPTS, DELIVERY CHALLANS, BANK STATEMENT, LEDGER ACCOUNT COPIES, ETC., TO PROVE THE GENUINENESS OF THE TRANSACTION. FURTHER, HE DIRECTED THE ASSESSEE TO PRODUCE THE CONCERNED PARTIES BEFORE HIM. IN RESPONSE TO THE QUERY MADE BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED ALL DOCUMENTARY EVIDENCES CALLE D FOR , SUCH AS , LEDGER ACCOUNT CON FIRMATION OF THE PARTIES, SAMPLE PURCHASE/ SERVI CE INVOICE, GOODS RECEIVED NOTE/ DELIVERY CHALLANS, STORE RECEIPTS, VOUCHERS, PURCHASE WORK ORDER ISSUED TO THE SUPPLIER, BANK STATEMENT, SHOWING PAYMENT TO THE PARTIES, STOCK STATEMENT DEALING WITH THE MATERIAL CONSUMPTION AT THE WORK SITE, LETTER OF CREDIT AND BILL OF EXCHANGE ISSUED IN FAVOUR OF ONE OF THE PARTIES, GAURAV ENTERPRISE. FURTHER, THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE ENTERED INTO TRANSACTION S WITH THE CON CERNED PARTIES, THEY WERE CARRYIN G ON REGULAR ACTIVITIES AND HAVING VALID REGISTRATION WITH THE SALES TAX DEPARTMENT. HOWEVER, THE ASSESSEE WAS UNABLE TO PRODUCE THE CONCERNED PARTIES BEFORE THE ASSESSING 4 ATLANTA LIMITED OFFICER. NOT BEING CONVINCED WITH THE SUBMISSIONS M ADE BY THE ASSESSEE, THE ASSESSING OFFICER ULTIMATELY PROCEEDED TO DISALLOW THE ENTIRE PURCHASE OF ` 7,49,33,848, SHOWN TO HAVE BEEN MADE FROM THE AFORESAID THREE PARTIES AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLE NGED THE AFORESAID D ISALLOWANCE/ ADDITION BEFORE THE FIRST APPELLATE AUTHORITY . 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIAL ON RECORD AND RELYING UPON CERTAIN JUDICIAL PRECEDENTS, LEARNED COMMISSIONER (APPEALS) , THOUGH , AGREED WI TH THE ASSESSING OFFICER THAT THE ASSESSEE COULD NOT PROVE THE SOURCE OF PURCHASE S , HOWEVER, HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE CONSUMPTION/ SALES OF THE MATERIAL PURCHASED. THUS, HE WAS OF THE VIEW THAT THE ASSESSEE MUST HAVE OBTAIN ED BOGUS BILLS TO INFLATE THE PURCHASE PRICE SO AS TO SUPPRESS PROFIT RATE. ACCORDINGLY, HE PROCEEDED TO ESTIMATE THE SUPPRESS ED PROFIT AT 12.5% OF THE ALLEGED NON GENUINE PURCHASES AND RESTRICTED THE DISALLOWANCE TO THAT AMOUNT. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED THAT WHEN THE ASSESSEE HAS FAILED TO PROVE THE PURCHASES , THE ENTIRE PURCHASES HAVE TO BE TREATED AS BOGUS, HENCE , SHOULD BE DISALLOWED. 5 ATLANTA LIMITED 7. WE HAVE CONSIDERED THE SUBMIS SIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THOUGH , THE ASSESSING OFFICER HAD INFORMATION AVAILABLE WITH HIM TO INDICATE THAT THREE PARTIES MENTIONED ABOVE FROM WHOM THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED THE GOODS WORTH ` 7,49,33,848, WERE IDENTIFIED AS HAWALA DEALERS AND THEIR R EGISTRATION HAVE BEEN CANCELLED, I T IS ALSO EVIDENT THAT IN COURSE OF ASSESSMENT PROCEEDINGS , IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER TO PROVE THE PURCHASES, THE ASSESSEE HAD FURNISHED ALL THE DOCUMENTARY EVIDENCES CALLED FOR AS ENUMERATED ELSEWHERE IN THE ORDER. IT IS FURTHER EVIDENT FROM THE FACTS ON RECORD THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION OF BUSINESS AND THE MATERIAL REPRESENTING ALLEGED BOGUS PURCHASE COMPRISES OF STEEL, TMT BARS, CONSUMABLES , SPARES WHICH ARE REQUIRED FOR EXECUTING THE WORK AND WERE DELIVERED AT THE WORK SITE. IT IS SEEN FROM RECORD THAT IN RES PECT OF GAURAV ENTERPRISES FROM WHOM THE ASSESSEE HAD PURCHASED GOODS WORTH ` 7,42,88,000, THE ASSESSEE HAS OPENED AN LETTER OF CREDIT WITH A NATIONALISED B ANK AFTER OBTAINING CREDITWOR THINESS OF THE CONCERNED PARTY FROM A CREDIT RATING AGENCY. ON THE BASI S OF SUCH CREDIT RATING , THE BANKER HAS OPEN ED THE LETTER OF CREDIT IN FAVOUR OF THE SUPPLIERS. IT IS ALSO A FACT ON RECORD THAT WHEN THE ASSESSEE ENTERED INTO PURCHASE TRANSACTION S WITH THESE PARTIES, ALL OF THEM HAD VALID SALES TAX REGISTRATION. IN FACT, THE ASSESSEE HAD FURNISHED ALL DOCUMENTARY 6 ATLANTA LIMITED EVIDENCES FOR PROVING THE GENUINENESS OF PURCHASES INCLUDING GOODS RECEIVED NOTE/DELIVERY CHALLANS/STORE RECEIPT, VOUCHERS AND ALSO THE BANK STATEMENT SHOWING PAYMENT MADE TO THE PARTIES. IN FACT, THE ASSESSING O FFICER HAS CLEARLY ACCEPTED THE AFORESAID FACTUAL POSITION IN PARA 7.7 OF THE ASSESSMENT ORDER. THE ONLY REASON FOR WHICH HE DOUBTED THE GENUINENESS OF TRANSACTION WAS , THE ASSESSEE COULD NOT PRODUCE THE CONCERN ED PARTIES. INABILITY TO PRODUCE THE PARTIES COULD BE FOR VARIOUS FACTORS , INCLUDING , THEIR NON COOPERATION WITH THE ASSESSEE. BUT , THAT BY ITSELF CANNOT BE A REASON TO DISALLOW THE ENTIRE PURCHASE BY TREATING THEM AS NON GENUINE. 8. BE THAT AS IT MAY, THE ASSESSEE HAS FURNISHED ALL DOCUMENTARY EVIDENC ES INCLUDING STOCK STATEMENT SHOWING THE CONSUMPTION OF MATERIAL AT SITE WHICH WERE ALSO SUBMITTED TO BANK FROM WHERE THE ASSESSEE IS AVAILING CASH CREDIT FACILITY. THE AFORESAID FACT CLEARLY PROVE S THAT THE ASSESSEE , INDEED , HAD PURCHASED THE GOODS AND TH E GOODS HAVE ENTE RED ITS STOCK AND WERE UTILIZED/CONSUMED IN THE WORK. THE DOUBT, IF ANY, IS ONLY WITH REGARD TO THE SOURCE OF PURCHASES. IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASE S OF ` 7,49,33,848, CANNOT DISALLOWED. AS RIGHTLY OBSERVED BY LEARNED COMMIS SIONER (APPEALS), ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR DISALLOWANCE. CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE, IN OUR CONSIDERED OPINION, DISALLOWANCE @ 12.5% OF THE ALLEGED NON GENUINE P URCHASES IS FAIR AND REASONABLE. H ENCE, NEEDS TO 7 ATLANTA LIMITED BE UPHELD. AS REGARDS THE RELIANCE OF THE REVENUE ON THE DECISION OF THE HON'BLE SUPREME COURT IN N.K. PROTEIN V/S DCIT, SLPNO.769/2017, DATED 16 TH JANUARY 2017, ON CAREFUL EXAMINATION, WE FIND THAT THE FACTS INVOLVED T HEREIN ARE COMPLETELY DIFFERENT FROM THE FACTS OF ASSESSEES CASE. THEREFORE, THE SAID DECISION WOULD BE OF NO HELP TO THE REVENUE. ACCORDINGLY, GROUNDS RAISED ARE DISMISSED. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 , ON 17.09.2020 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 17.09.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI