ESSEL MARKETING & PROMOTIONS P.LTD, MUMBAI V. ASST CIT 9(2)(2), MUMBAI

ITA 3455/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0193 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3455 /MUM/2016 ASSESSMENT YEAR: 2009 - 10 M/S ESSEL MARKETING & PROMOTIONS PVT. LTD., C - 4109, OBERAI GARDEN ESTATE, CHANDIVALI, SAKINAKA, ANDHERI (EAST), MUMBAI - 400072 PAN: AABCE6463B VS. THE ACIT, WARD 9(2)(2), AAYKAR BHAWAN, MUMBAI - 400021 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAM TIWARI ( SR. D R) DATE OF HE ARING: 04 /01 /201 8 DATE OF PRONOUNCEMENT: 21 / 02 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 28.03.2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 16 , MUM BAI , FOR THE A S S ESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CA SE ARE THAT THE ASSESSEE A REGISTERED PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS AND TRADING AND MANUFACTURING OF PROMOTIONAL ADVERTISING ITEMS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 6 5,43,680/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, STATE OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM HAWALA DEALERS, THE ASSESSMENT WAS REOPENED U/S 147. IN RESPONSE TO NOTICE 2 ITA N O. 3455 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 U/S 148, THE ASSESSEE FILED RETURN OF INCOME. DURING THE COURSE OF REASSESSMENT PROCEEDINGS NOTICE S U/S 143 (2) AND 142 (1) WERE SERVED UPON THE ASSESSEE. AFTER HEARING THE ASSESSEE IN THE LIGHT OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE HAD OBTAINED BOGUS BILLS FOR RS. 75,75,636/ - FROM 7 HAWALA DEALERS WITHOUT PURCHASING ANY MATERIAL FROM THE SAI D PARTIES. ACCORDINGLY, THE AO MADE ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. AGGRIE VED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A) RELYING ON THE VARIOUS DECISIONS OF THE JUDGMENTS RENDERED BY THE TRIBUNALS, HIGH COURTS AND THE HONBLE SUPREME COURT RESTRICTED THE ADDITION TO 12.5%. 3 . STILL A GGRIEVED , THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUND S : - ASSUMPTION OF VALID JURISDICTION 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN REJE CTING THE CONTENTION OF THE APPELLANT THAT A.O. HAS FAILED TO ASSUME A VALID AND LEGAL JURISDICTION TO ISSUE NOTICE UNDER SECTION 147 OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN MENTIONING THAT NO SPECIF IC ARGUMENTS WERE ADVANCED/RAISED DURING THE COURSE OF APPELLATE PROCEEDINGS AGAINST ASSUMPTION OF LEGAL AND VALID JURISDICTION BY THE A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN HOLDING THE LEGALITITY /VALIDITY OF THE ASSESSMENT ORDER IN SPITE OF THE FACT THAT NO NOTICE U/S 143 (2) WAS ISSUED AS REQUIRED UNDER THE LAW. ADDITION ON ACCOUNT OF GROSS PROFIT 3 ITA N O. 3455 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN INCREASING THE RATE OF GROSS PRO FIT BY 12.5% ON THE PURCHASE OF RS. 75,75,636/ - TERMED BOGUS PURCHASES. 4. THIS APPEAL WAS FIXED FOR HEARING ON 04.01.2018. ON THE SAID DATE, WHEN THE CASE WAS CALLED FOR HEARING , NONE APPEARED ON BEHALF OF THE ASSESSEE . FURTHER, NO APPLICATION FOR ADJO URNMENT WAS RECEIVED . SINCE, THE ASSESSEE DID NOT APPEAR DESPITE SERVICE OF NOTICE, WE DECIDED TO DISPOSE OF THE APPEAL ON THE BASIS OF THE MATERIAL ON RECORD AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE (DR). 5. BEFORE US, THE LD. DR RELYING ON THE ORDE R PASSED BY THE LD. CIT (A), SUBMITTED THAT SINCE THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF PURCHASES IN QUESTION DURING THE ASSESSMENT PROCEEDINGS, AS WELL AS DURING THE APPELLATE PROCEEDINGS, THE LD. CIT (A) HAS RIGHTLY SUSTAINED THE ADDITION T O 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES DETERMINED BY THE AO. LD. DR FURTHER SUBMITTED THAT SINCE THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE, THE SAME IS LIABLE TO BE DISMISSED. 6. WE HAVE CAREFULLY GONE THROUGH THE ORDERS PASSED BY THE AUTHO RITIES BELOW AND THE CASES RELIED UPON BY THE AO AS WELL AS THE LD. CIT (A). GROUND NO. 1TO 3 OF THE APPEAL ARE GENERAL IN NATURE, THEREFORE, WE DO NOT CONSIDERED IT NECESSARY TO ADJUDICATE THE SAID GROUNDS. VIDE GROUND NO. 4 THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT (A) IN SUSTAINING ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES DETERMINED BY THE AO. THE EVIDENCE ON RECORD SUGGEST THAT THE ASSESSEE HAD NOT PURCHASED THE GOODS IN QUESTION FROM THE PARTIES MENTIONED IN ITS BOOKS OF AC COUNT. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ALSO NOT DISPUTED THE SALE. THE SAID FACT S FURTHER GIVE RISE TO THE 4 ITA N O. 3455 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 CONCLUSION THAT THE ASSESSEE HAD MADE THE PURCHASES IN QUESTION FROM GREY MARKET EVADING VAT AND OTHER TAXES APPLICA BLE DURING THE RELEVANT PERIOD . 7. T HE HONBLE BOMBAY HIGH COURT W HILE UPHOLDING THE DECISION OF MUMBAI TRIBUNAL IN CIT VS. NIKUNJ EXIMP ENTERPRISES PVT. LTD. 372 ITR 619 (BOM), ) HAS HELD THAT MERELY BECAUSE THE SUPPLIERS HAD NOT APPEARED BEFORE THE ASSE SSING OFFICER OR THE CIT (A) ONE COULD NOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT/ASSESSEE. THE HONBLE GUJ A RAT HIGH COURT IN CIT VS. SIMIT P. SETH 356 ITR 451(GUJ) HAS UPHELD THE DECISION OF THE TRIBUNAL AND SUSTAINED THE ADDITION 12. 5% OF THE TOTAL BOGUS PURCHASES HOLDING THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO INCOME OF THE ASSESSEE. I N OUR CONSIDERED VIEW, THE ORDER PASSED BY THE LD. CIT(A) IS BASED ON THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE HONBL E BOMBAY AND GUJARAT HIGH COURT DISCUSSED ABOVE. WE, T HEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) TO INTERFERE WITH. HENCE, WE UPHOLD THE ORDER OF THE LD. CIT (A) AND DISMISS ALL THE GROUND S OF THE APPEAL FILED BY THE ASSESSEE . I N THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2009 - 20 10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY , 2018 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 21 / 02 / 201 8 ALINDRA, PS 5 ITA N O. 3455 / MUM/2016 ASSESSMENT YEAR: 2009 - 10 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT( A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI