MILI STEEL PVT. LTD., MUMBAI V. ACIT 5 (2)(2), MUMBAI

ITA 3517/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3504 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Depreciation; Set aside
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS.3516, 3517 & 3518/M/2018 ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 M/S. MILI STEELS PVT. LTD., D-48, SARVODAYA NAGAR, MUMBAI 400 004 PAN: AAACM5722A VS. CIT 16(2), MUMBAI (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SNEHAL SHAH, A.R. REVENUE BY : SHRI BHARAT ANDHALE, D.R. DATE OF HEARING : 11.01.2021 DATE OF PRONOUNCEMENT : 06.04.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE ORDERS EVEN DATED 20.02.2018 O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2009-10, 2 010-11 & 2011-12. 2. THE ISSUES INVOLVED IN ALL THE APPEALS ARE COMMO N AND RELATE TO THE SAME ASSESSEE AND THEREFORE THESE APP EALS ARE BEING DISPOSED OF TOGETHER FOR THE SAKE OF BREVITY AND CONVENIENCE. 3. FIRST WE ARE TAKING UP ITA NO.3516/M/2018 A.Y. 2 009-10. THE GROUNDS TAKEN BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. THE APPELLANT STRONGLY OBJECTS TO THE NOTICE IS SUED U/S 148 OF THE INCOME-TAX ACT, 1961 DATED 13/03/2015 AS THE SAME IS DEPENDENT ON SEVERAL FACTORS LIKE SATISFACTION NOTE, APPROVAL SOUGHT, EVIDENCE RELIED UPON BY THE LEARNED ASSESSING ITA NOS.3516, 3517 & 3518/M/2018 M/S. MILI STEELS PVT. LTD. 2 OFFICER BEFORE RECORDING THE REASONS THAT PROMPTED REOPENING OF THE ASSESSMENT AND ULTIMATELY BASED MERELY ON ASSUMPTIONS WITHOUT ANY CORROBORATIVE EVIDENCE TO SUPPORT THE SAME. 2. THE LEARNED CIT(A) GROSSLY ERRED IN DISALLOWING 12.5% OF THE ALLEGED PURCHASES WHICH IS ARBITRARY AND HAS NO BASIS, EVEN WHEN THE EVIDENCES AND THE RECORDS SUBMITTED BY THE APPELLANT AS WELL AS THE CORRESPON DING SALES TO THE ALLEGED PURCHASES WERE NOT DISPUTED AND WERE DULY ACCEPTED BY BOTH THE ASSESSING OFFICER AND THE LEARNED CIT(A). 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISAL LOWING THE DEPRECIATION CLAIMED RS. 1,16,100/- ON MACHINERY PURCHASED FROM M/S ACCU RE IMPEX PVT LTD WITHOUT APPRECIATING THE FACTS OF THE CASE IN THE RIGHT PER SPECTIVE. 4. THE GROUND NO.1 IS NOT PRESSED AT THE TIME OF HE ARING AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 5. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE O RDER OF LD. CIT(A) CONFIRMING THE BOGUS PURCHASE AT 12.5% BY UP HOLDING THE ORDER OF AO. THE ASSESSEE HAS CHALLENGED BY WAY OF GROUND NO. 3 THE CONFIRMATION OF AOS ORDER ON THE ISSUE O F DISALLOWANCE OF DEPRECIATION OF RS. 1,16,100/- CLAIMED ON THE PU RCHASE OF PLANT & MACHINERY. 6. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 30.09.2009 DECLARING AN INCOME OF RS.96,3 5,010/-. THE ASSESSMENT WAS COMPLETED ON 30.12.2011 DETERMIN ING THE TOTAL INCOME AT RS.97,34,510/-. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 148 AND NOTICE ISSUED ON 13.03.2015 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D THAT ASSESSEE HAS MADE FOLLOWING BOGUS PURCHASES. S.N. NAME OF THE PARTY BASIC PURCHASE AMOUNT VAT AMOUNT OF PURCHASE PAN 1 ARIHANT ENTERPRISE 7500 300 7,800 AAEHP2489Q 2 ACCURE IMPEX PVT. LTD. 1548000 193500 17,41,500 AAGCA4611C TOTAL 15,55,500 1,93,800 17,49,300 ITA NOS.3516, 3517 & 3518/M/2018 M/S. MILI STEELS PVT. LTD. 3 7. THE ASSESSEE FILED NECESSARY EVIDENCES OF PURCHA SES FROM ARIHANT ENTERPRISE AND ALSO ACCURE IMPEX PVT. LTD. BEFORE THE AO SUBMITTING BILLS, VOUCHERS, PAYMENTS ETC. ALONG WITH NAMES AND ADDRESSES OF THE SUPPLIERS. THE AO SIMPLY GAVE AN OBSERVATION THAT ASSESSEE HAS FAILED TO PRODUCE THE PARTIES FOR CROSS VERIFICATION AND EVEN THE PARTIES DID NOT EXI ST AT THOSE ADDRESSES AND NO CHANGED ADDRESSES WERE FURNISHED B Y THE ASSESSEE. FINALLY, THE AO MADE ADDITION @ 12.5% OF BOGUS PURCHASES OF RS.7,500/- THE AMOUNT OF PURCHASE FROM ARIHANT ENTERPRISE THEREBY MAKING AN ADDITION OF RS.938/- A S UNEXPLAINED EXPENDITURE. SIMILARLY, THE AO DOUBTED THE PURCHASES MADE FROM ACCURE IMPEX PVT. LTD. TO THE T UNE OF RS.15,48,000/- + VAT RS.1,93,500/-. THE SAID PURCHA SES WERE MADE ON CAPITAL ACCOUNT AND CAPITALIZED UNDER THE H EAD PLANT & MACHINERY. THE ASSESSEE CLAIMED THE SET OFF OF VAT O F RS.1,93,500/- AGAINST THE VAT LIABILITY. THE AO DOUB TED THE SAID PURCHASES ALSO DESPITE ASSESSEE HAVING FILED ALL TH E NECESSARY EVIDENCES BEFORE THE AO AND REJECTED THE CLAIM OF T HE ASSESSEE OF DEPRECIATION ON THE SAD PLANT & MACHINERY WHICH WAS STATED TO BE MADE FROM THE BOGUS SUPPLIERS THEREBY DISALLOWIN G RS.1,16,100/- BY FRAMING ASSESSMENT UNDER SECTION 1 43(3) READ WITH SECTION 147 OF THE ACT DATED 19.02.2016. 8. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AFF IRMED THE ORDER OF AO BY OBSERVING THAT THESE PURCHASES ARE M ADE FROM THE BOGUS SUPPLIERS AS PER THE LIST OF SALES TAX DE PARTMENT, GOVERNMENT OF MAHARASHTRA AND THUS CONFIRMED THE AD DITIONS MADE BY THE AO. ITA NOS.3516, 3517 & 3518/M/2018 M/S. MILI STEELS PVT. LTD. 4 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM TH E EVIDENCES FILED BEFORE US THAT INITIALLY THE VAT CREDIT WAS D ENIED TO THE ASSESSEE, HOWEVER, LATER ON THE APPELLATE AUTHORITY HAS ALLOWED THE VAT PAID BY THE ASSESSEE AND ALSO THE PENALTY IM POSED THEREON WAS DELETED. WE OBSERVE THAT ASSESSEE FILE D ALL THE EVIDENCES BEFORE THE AUTHORITIES BELOW AND BOTH THE AUTHORITIES HAVE FAILED TO CARRY OUT ANY FURTHER VERIFICATION. WE NOTE THAT EVEN THE INFORMATION OBTAINED BY THE ASSESSEE FROM THE SALES TAX DEPARTMENT THROUGH RTI CLEARLY STATES THAT THE SALES TAX IS NOT HAVING NECESSARY RECORDS TO PROVE THAT THE SUPP LIERS OF THE ASSESSEE WERE BOGUS HAWALA DEALERS. FINALLY, WE WO ULD LIKE TO MENTION THAT ASSESSEE HAS DECLARED A NET INCOME OF RS.96,35,010/- IN THE RETURN FILED ON 30.09.2009. CONSIDERING THIS INCOME LEVEL, HOW CAN AN ASSESSEE WHO HAS INCO ME OF THIS MUCH AMOUNT WILL MAKE BOGUS PURCHASE OF RS.7,500/- FROM ARIHANT ENTERPRISES WHICH WAS CLAIMED IN THE PROFIT & LOSS ACCOUNT AND RS.15,48,000/- FROM ACCURE IMPEX PVT. L TD. WHICH WAS FOR PURCHASE OF PLANT & MACHINERY AND CLAIMED DEPRECIATION ONLY TO THE TUNE OF RS.1,16,100/-. UN DER THESE CIRCUMSTANCES, WE ARE NOT IN A POSITION TO SUSTAIN THE ORDER OF LD. CIT(A) WHEREBY THE ORDER OF AO HAS BEEN UPHELD. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO DELETE THE DISALLOWANCES. ACCORDINGLY GROUND NO. 2 AND 3 ARE ALLOWED. 10. APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.3516, 3517 & 3518/M/2018 M/S. MILI STEELS PVT. LTD. 5 ITA NO.3617 & 3518/M/2018 A.Y. 2010-11 & 2011-12 11. THE ISSUES INVOLVED IN BOTH THE APPEALS ARE I DENTICAL TO THE ONE AS DECIDED BY US ABOVE IN ITA NO.3616/M/20 18 FOR A.Y. 2009-10. THEREFORE, OUR FINDING IN ITA NO.3616/M/2 018 FOR A.Y. 2009-10 WILL, MUTATIS MUTANDIS, APPLY TO THESE APPEALS AS WELL. ACCORDINGLY THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED. 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.04.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 06 .04.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.