B.E. BILLIMORIA & CO. LTD, MUMBAI V. DCIT (OSD) 1(2), MUMBAI

ITA 3396/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9846 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 04-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 3396 / MUM/20 1 5 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. B.E.BILLIMORIA & CO. LTD., SHIV SAGAR ESTATE A BLOCK, 2 ND FLOOR, DR. A.B. ROAD, W ORLI MUMBAI 400 018 VS. DCIT (OSD) 1(2), R.NO.330A, 3 RD FLOOR AAYAKAR BHAVAN MUMBAI 400 020 PAN/GIR NO. AAACB1542P APPELLANT ) .. RESPONDENT ) ITA NO. 3397/ MUM/20 15 ( ASSESSMENT YEAR : 201 1 - 12) M/S. B.E.BILLIMORIA & CO. LTD., SHI V SAGAR ESTATE A BLOCK, 2 ND FLOOR, DR. A.B. ROAD, WORLI MUMBAI 400 018 VS. ADDL CIT 1(1) R.NO.579, 5 TH FLOOR AAYAKAR BHAVAN, M.K.MARG, MUMBAI 400 020 PAN/GIR NO. AAACB1542P APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SATISH R M ODY REVENUE BY SHRI M.C.OMI NINGSHEN DATE OF HEARING 07 / 0 7 /201 7 DATE OF PRONOUNCEME NT 23 / 08 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 2, MUMBAI DATED 12/02/2015 FOR A.Y.2010 - 11 & 2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. THE FOLLOWING GROUND HAS BEEN TAKEN BY THE ASSESSEE IN A.Y.2010 - 11 : - THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 2, MUMBAI, HAS ERRED IN DISALLOWING THE PURCHASES MADE BY THE ITA NO. 3396/MUM/2015 & 3397/MUM/2015 M/S. B.E.BILLIMORIA & CO. LTD., 2 APPELLANT FROM DHANSHREE ENTERPRISES, SIDDHI ENTERPRISES, PRAVEEN STEEL TRADERS / ANURADHA, TOP BRICKS & SAND SUPPLIERS AND SIDDHIVINAYAK TRADING COMPANY TOTALLING TO RS.13,54,571/ - BY TREATING AS BOGUS PURCHASES INSPITE OF THE FACT THAT LEDGER A/C, INVOICES AND BANK STATEMENT OF THE ABOVE PARTIES WERE GIVEN AND FULLY EXPLAINED. 3. RIVAL CONTENTIONS HAVE BEE N HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO FOUND THAT ASSESSEE HAS MADE PURCHASES FROM THE PARTIES WHICH HAVE BEEN DECLARED BOGUS BY THE SAL ES TAX DEPARTMENT. TO VERIFY THE GENUINENESS OF ACTUAL PURCHASES MADE , AO ISSUED NOTICES TO ALL THESE PARTIES U/S.133(6). HOWEVER, NOTICE COULD NOT BE SERVED AT THE GIVEN ADDRESS AND RETURNED BACK BY SPEED POST. THEREAFTER, ASSESSEE COMPANY WAS REQUESTED B Y AO TO PRODUCE ALL THESE PARTIES TO ESTABLISH THE GENUINENESS OF THIS PURCHASE. BUT THE ASSESSEE COULD NOT PRODUCE THE SAME. HOWEVER, ASSESSEE HAS FURNISHED THE DETAILS OF BILLS / INVOICES AND DETAILS OF PAYMENTS MADE TO THEM. ACCORDINGLY, AO CONCLUDED TH AT PURCHASES MADE FROM THESE PARTIES WERE NOT GENUINE. THEREFORE, ADDED THE ENTIRE AMOUNT OF PURCHASES IN ASSESSEES INCOME. 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. 6. IT WAS CONTENDED BY LEARN ED AR THAT T HE A SSESSEE TO SUBSTANTIAT E THE GENUINENESS OF THE PURCHASES MADE FROM THE SAID PARTIES HAS FURNISHED FOLLOWING DETAILS DURING THE COURSE OF ASSESSMENT ITA NO. 3396/MUM/2015 & 3397/MUM/2015 M/S. B.E.BILLIMORIA & CO. LTD., 3 PROCEEDINGS, APPELLATE PROCEEDINGS AND ALSO BEFORE THE HON'BLE APPELLATE TRIBUNAL. I. COPY OF PURCHASE BILLS ALONG WITH CORRESPOND ING DELIVERY CHALLANS AND DETAILS OF BANKS STATEMENT SHOWING THAT THE PAYMENT AGAINST THE SAID PURCHASES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES IN RESPECT TO THE PARTIES. THE ASSESSEE HAS ALSO SUBMITTED THE PAN NUMBER OF ALL THE PARTIES. II . THE ASS ESSEE HAS FURTHER SUBMITTED THE DETAILS OF THE PROJECT WHEREIN THE SAID MATERIAL WAS USED. THE ASSESSEE ALSO MAINTAINS DETAILED STOCK REGISTER WHEREIN THE QUANTITATIVE DETAILS SUCH AS OPENING STOCK, PURCHASES, CONSUMPTION, CLOSING STOCK OF EACH MATERIAL US ED AS EITHER CONSUMABLE OR SPARES . 7 . LEARNED AR SUBMIT TED THAT ALL THE ABOVE DOCUMENTS SHOW THAT THE PURCHASES MADE BY THE ASSESSEE ARE GENUINE. THE LD. A.O. MERELY RELYING ON THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT ADDED A SUM OF RS.13,54,571/ - IN THE A.Y.2010 - 11 AND 1,24,50,827/ - IN THE A.Y. 2011 - 12 RESPECTIVELY TREATING THE PURCHASES AS BOGUS. IT IS PERTINENT TO NOTE THAT THE INFORMATION RECEIVED AND STATEMENTS RECORDED AT THE BACK OF ASSESSEE HAD NEVER BEEN PROVIDED FOR CROSS EXAMINATION. TH E LD. A.O. SIMPLY RELIED ON THE INFORMATION RECEIVED FROM THIRD PARTIES WITHOUT MAKING ANY FURTHER INDEPENDENT ENQUIRY IN RESPECT TO THE SAME. FURTHER, THE ASSESSEE SUBMITS THAT THE LD. A.O. HAS ACCEPTED BOOKS OF ACCOUNTS AND ALL OTHER DOCUMENTS PRODUCED B EFORE HIM WITHOUT POINTING OUT ANY DEFECT ITA NO. 3396/MUM/2015 & 3397/MUM/2015 M/S. B.E.BILLIMORIA & CO. LTD., 4 IN THE SAME. THUS, THE ADDITION MADE BY THE LD. A.O. IS ARBITRARY IN NATURE. 8 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT ENTIRE PURCHASES SHOULD BE ADDED IN ASSE SSEES INCOME. 9 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE SUPPLIERS OF THE GOODS WERE NOT FOUND GENUINE BY THE LOWER AUTHORITIES. HOWEVER, THE SALES MADE BY ASSESSEE AGAINST THE SE PURCHASES WERE NOT DENIED BY THE AO OR CIT(A). IT MEANS ASSESSEE HAS PURCHASED THESE GOODS BUT NOT FROM THE VERY SAME SUPPLIERS AS ENTERED IN THE BOOKS OF ACCOUNTS. UNDER THESE FACTS, ASSESSEE MIGHT HAVE ESCAPED THE PAYMENT OF VAT AND OTHER TAXES DUE OF SUCH PURCHASES SINCE THE PURCHASES WERE MADE FROM PARTIES WHICH COULD NOT BE PRODUCED BEFORE THE LOWER AUTHORITIES. KEEPING IN VIEW NATURE OF BUSINESS CARRIED ON BY ASSESSEE VIS - - VIS, THE NET PROFIT SHOWN BY THE ASSESSEE IN RESPE CT OF ITS CONSTRUCTION BU SINESS AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, WE UP HOLD ADDITION TO THE EXTENT OF 12.5% IN RESPECT OF SUCH BOGUS PURCHASES. 10. FACTS ARE SIMILAR IN THE A.Y.2011 - 12, FOLLOWING THE REASONING GIVEN ABOVE , WE CONFIRM THE ADDIT ION TO THE EXTENT OF 12.5% OF BOGUS PURCHASE. ITA NO. 3396/MUM/2015 & 3397/MUM/2015 M/S. B.E.BILLIMORIA & CO. LTD., 5 11. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 08 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDIC IAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 08 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//