DCIT 15(1)(1), MUMBAI V. ALALN ELECTRONICS SYSTEMS P.LTD, MUMBAI

ITA 3309/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8853 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: ADITYA R AJGAONKARLD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA.NO.3309/MUM/2016 ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3309/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX 15(1)(1) ROOM NO.483A,4 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 / VS. ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED A,34,2 ND FLOOR CRESCENT INDUSTRIAL ESTATE KANJURMARG (EAST) MUMBAI - 400 042 ! ./ ./PAN/GIR NO. AABCA-9296-N ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : ADITYA R AJGAONKAR,LD.AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 01/11/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010- 11 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 24 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-22/DCIT-10(3)/IT-176/14-15 ITA.NO.3309/MUM/2016 ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR-2010-11 2 DATED 05/02/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-10(3), MUMBAI [AO ] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 30/06/2014. THE REVENUE IS AGGRIEVED BY RELIEF PROVIDED TO ASSESSEE BY LD. CIT(A) ON ACCOUNT OF CERTAIN BOGUS PURCHASES. THE EFFECTIVE GROUNDS READ AS FOLLOWS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASES, TH E LD.CIT(A) ERRED IN ESTIMATING THE PROFIT TO THE EXTENT OF 12.5% OF THE PURCHASES OF RS.81,23,346/- AS THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES IN ADDITION TO T HE REGULAR PROFIT WITHOUT GIVING ANY FINDINGS AS TO HOW 12.5% GP CAN BE TAKEN SINCE THE CORRESPONDING EXPENDITURES HAVE ALREADY BEEN CLAIMED IN THE P&L A CCOUNT AND FURTHER ERRED IN IGNORING THE ASSESSEES OBJECT FAILURE TO PROVE THE PURCHASES WHEN THE ONUS WAS CAST UPON HIM BY THE STATUTE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASES, TH E LD. CIT(A) ERRED IN DIRECTING TO RESTRICT THE ADDITION OF RS.81,23,346/- OF BOGUS PURCHASES ON THE GROUND THAT THE A.O. HAD NOT DOUBTED THE CONSUMPTION/SALES OF T HE PURCHASE CLAIMED TO HAVE BEEN MADE FROM THE ALLEGED PARTIES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASES, TH E LD. CIT(A) ERRED ON NOT APPRECIATING THE FACT THAT THE ASSESSE HAD NOT PROD UCED EVIDENCES IN THE SHAPE OF STOCK REGISTER DURING THE COURSE OF RE-ASSESSMEN T PROCEEDINGS TO SUBSTANTIATE ITS CLAIM THAT THE GOODS CLAIMED TO HA VE BEEN PURCHASED FROM ALLEGED PARTIES WERE ACTUALLY CONSUMED/SOLD. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASES, TH E LD. CIT(A) HAS DECIDED THE ISSUE BY RELYING UPON THE RATIO OF CASE LAWS M/S.SI MIT P.SHETH (2013) 18 TAXMANN.COM 385(GUJ) AND M/S.BHOLANATH POLYFAB PVT. LTD.335 ITR 290 (GUJ.) AND M/S.SANKET STEEL TRADERS WITHOUT APPRECIATING T HE FACT THAT IN ALL THE AFORESAID CASES THE ASSESSEE HAD MAINTAINED THE QUA NTITATIVE RECORDS CONTRARY TO THIS IN THE INSTANT CASE NO SUCH RECORDS WERE P RODUCED BEFORE THE A.O. FOR EXAMINATION. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE MANUFACTURING OF ELECTRONIC EQUIPMENTS, PARTS & ACCESSORIES THEREOF WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SEC. 147 FOR IMPUGNED AY ON 30/06/2014 WHERE THE INCOME OF T HE ASSESSEE WAS DETERMINED AT RS.1,77,67,180/- UNDER N ORMAL PROVISIONS AFTER ADDITION OF RS.81,23,246/- ON ACCOUNT OF CERT AIN BOGUS PURCHASES. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSE SSEE ON 30/09/2010 ITA.NO.3309/MUM/2016 ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR-2010-11 3 DECLARING TOTAL INCOME OF RS.95,43,140/- WHICH WAS ASSESSED U/S 143(3) ON 19/12/2012 AT RS.96,43,930/-. 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.81,23,246/- FROM TWENTY SUCH PARTIES. CONSEQUENT LY, NOTICE U/S 148 DATED 28/03/2014 WAS ISSUED WHICH WAS FOLLOWED BY S TATUTORY NOTICES U/S 142(1)/143(2). 2.3 THE ASSESSEE SUBMITTED INVOICES AND BANK STATEM ENT EVIDENCING PAYMENT TO THE ALLEGED BOGUS SUPPLIERS AND CONTENDED THAT THE PURCHASES WERE GENUINE AND THE MATERIAL WAS CONSUME D IN THE MANUFACTURING PROCESS. HOWEVER, LD. AO NOTED THAT T HE ASSESSEE COULD NOT PROVE DELIVERY OF MATERIAL AND CONSUMPTION THER EOF AND THEREFORE, THE PURCHASES WERE NOT GENUINE AND HENCE, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/02/2 016 WHERE LD. CIT(A) JUSTIFYING THE REOPENING PLACED RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS AND RESTRICTED THE IMPUGNED ADDITION S TO 12.5% OF ALLEGED BOGUS PURCHASES, BEING ESTIMATED SUPPRESSED GROSS PROFIT . AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. REPRESENTATIVE FOR ASSESSEE [AR], AT THE OUTSET, DREW OUR ATTENTION TO THE FACT THAT THE ORDER OF LD. CIT(A) WAS COMBINED ORDER FOR AY 2009-10, 2010-11 & 2011-12 SINCE SIMILAR ISSUE O F BOGUS PURCHASES AROSE IN ALL THESE YEARS AND LD. CIT(A) IN ALL THE THREE YEARS HAD ITA.NO.3309/MUM/2016 ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR-2010-11 4 RESTRICTED THE IMPUGNED ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES . FURTHER, THE REVENUE CONTESTED THE MATTER FOR AY 20 09-10 & 2011-12 BEFORE THIS TRIBUNAL VIDE ITA NO.3310 & 3311/M/2016 ORDER DATED 15/09/2017 WHERE THE STAND OF LD. CIT(A) HAS BEEN U PHELD AND THE REVENUES APPEAL HAS BEEN DISMISSED AND THEREFORE, THE SAME VIEW MAY BE TAKEN IN THE PRESENT CASE. THE LD. DR FAIRLY CON CEDED THE SAME. THE COPY OF TRIBUNALS ORDER HAS BEEN PLACED BEFORE US. 5. HEARD AND PERUSED THE CITED ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR AY 2009-10 & 2011-12. WE FIND THAT THE IMPUGNED ORDER IS COMMON ORDER FOR AY 2009-10, 2010-11 & 2011-12 AND LD. CIT(A) HAS ESTIMATED THE ADDITIONS @ 12.5%. THE STAND OF LD. C IT(A) FOR AY 2009- 10 & 2011-12 HAS BEEN UPHELD BY THE TRIBUNAL. HENCE , RESPECTFULLY FOLLOWING THE BINDING PRECEDENT, WE ALSO CONFIRM TH E STAND OF LD. CIT(A) AND DISMISS REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.011 .2017 SR.PS:- THIRUMALESH ITA.NO.3309/MUM/2016 ALAN ELECTRONIC SYSTEMS PRIVATE LIMITED ASSESSMENT YEAR-2010-11 5 ! / 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