DINESH SHAH, MUMBAI V. DCIT 20(2), MUMBAI

ITA 3528/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7933 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: SHASHANK DUNDULD
• Keywords: Bogus purchase; Additional evidence; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 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.3528-29/MUM/2016 ( / ASSESSMENT YEARS: 2010-11 & 2011-12) DINESH R . SHAH E-71,BINA APARTMENTS SIR M.V.ROAD, ANDHERI(EAST) MUMBAI-400 069 / VS. DEPUTY COMMISSIONER OF INCOME TAX 20(2) MUMBAI ! ./ ./PAN/GIR NO. AFXPS-5556-F ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & ./I.T.A. NO.3989-90/MUM/2016 ( / ASSESSMENT YEARS: 2010-11 & 2011-12) ASSISTANT COMMISSIONER OF INCOME TAX 24(1) ROOM NO.402, PIRAMAL CHAMBERS,6 TH FLOOR, PAREL MUMBAI-400 012 / VS. DINESH R . SHAH E-71,BINA APARTMENTS SIR M.V.ROAD, ANDHERI(EAST) MUMBAI-400 069 ! ./ ./PAN/GIR NO. AFXPS-5556-F ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHASHANK DUNDU,LD.AR REVENUE BY : SUMAN KUMAR, LD. SR. DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 13/12 /2017 ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEALS BY REVENUE AS WELL AS ASS ESSEE FOR ASSESSMENT YEARS [AY] 2010-11 & 2011-12 ASSAILS THE COMMON ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-36 [CIT(A) ], MUMBAI, APPEAL NOS.CIT(A)-31/IT-204/DCIT-20(2)/14-15 & CIT( A)-31/IT- 205/ADD. CIT-20(2)/14-15 DATED 17/03/2016 QUA ADDITION ON ACCOUNT OF CERTAIN ALLEGED BOGUS PURCHASES. SINCE COMMON ISSUES ARE INVOLVED, WE PROCEED TO DISPOSE-OFF THE SAME BY WAY OF THIS COMM ON ORDER FOR THE SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP CR OSS APPEALS FOR AY 2010-11. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF PIPES, TUBES, IRON & STEEL, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 28/03/2014 AT RS.1,85,26,950/- A FTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.1,08,51,371/-. THE ORIGINAL RETURN WAS FILED ON 14/10/2010 AT RS.75,62,760/- WHICH WAS PROCESSE D U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITI ON ON ACCOUNT OF BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.1,08,51,371/- FROM TWO SUCH PARTIES. CONSEQUENTL Y, NOTICE U/S 148 ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 3 DATED 28/03/2013 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). THE ASSESS EE REFLECTED GROSS PURCHASES OF RS.18.98 CRORES. 2.3 NOTICE U/S 133(6) ISSUED TO ALLEGED BOGUS SUPPLIERS TO CONFIRM THE PURCHASE TRANSACTIONS REMAINED UN-SERVED BY POSTAL AUTHORITIES WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE, IN SU PPORT, SUBMITTED INVOICES, BANK STATEMENTS, LEDGER EXTRACTS ETC. TO SUBSTANTIATE THE SAME AND CONTENDED THAT THE PURCHASES WERE GENUINE. HOWE VER, LD. AO APPRECIATED THE STATEMENTS OF THE IMPUGNED SUPPLIER S AS RECORDED BY THE SALES TAX DEPARTMENT AND ALSO PERUSED THE BANK STATEMENT OF THE ALLEGED BOGUS SUPPLIERS WHERE HUGE CASH WITHDRAWALS WERE NOTED IMMEDIATELY AFTER RECEIPT OF CHEQUES. THE LD. AO AL SO NOTED THAT THE ASSESSEE FAILED TO PRODUCE NEXUS BETWEEN ALLEGED BO GUS PURCHASES AND CORRESPONDING SALES. IT WAS FURTHER NOTED THAT CASH WAS WITHDRAWN FROM THE BANK IMMEDIATELY UPON RECEIPT OF PAYMENT F ROM THE ASSESSEE. THE PHYSICAL INSPECTION BY THE INSPECTOR REVEALED T HAT NONE OF THE PARTIES EXISTED AT THE GIVEN ADDRESSES. FINALLY, NO T CONVINCED, LD. AO DISALLOWED THE IMPUGNED PURCHASES AND ADDED THE SAM E TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 17/03/2 016 WHERE THE LD. CIT(A) AFTER APPRECIATING THE FACTUAL MATRIX AND BY PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS RESTRICTED THE IMPU GNED ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE AS WELL AS THE ASSESSEE IS IN FURTHER APPEALS BEFORE US. ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 4 4. THE LD. COUNSEL FOR ASSESSEE [AR] SUBMITTED THAT SUFFICIENT DOCUMENTARY EVIDENCES IN THE SHAPE OF INVOICES, BANK STATEMENT, GODOWN ARRIVAL REPORT, DELIVERY CHALLANS, WEIGHMENT NOTE, STORAGE INTIMATION SLIP OF WAREHOUSING AGENCY, UNLOADING CH ARGES PAID TO LABOR BOARD, TRANSPORTATION BILL ETC. WERE SUBMITTED BY THE ASSESSEE AND THEREFORE, THE ADDITIONS WERE NOT JUSTIFIED. THE LD . AR, IN THE ALTERNATIVE, PLEADED FOR A REASONABLE ESTIMATION OF THE SAME KEE PING IN VIEW THE ASSESSEES NATURE OF BUSINESS. RELIANCE HAS BEEN PL ACED ON SEVERAL JUDICIAL PRONOUNCEMENT OF THIS TRIBUNAL FOR VARIOUS CONTENTIONS, THE COPIES OF WHICH ARE PLACED ON RECORD. 5. PER CONTRA, LD. DR POINTED OUT THAT THE ASSESSEE MISERABLY FAIL ED TO PROVE THE PURCHASES SINCE NO TRANSPORTATION BILL S COULD BE SUBMITTED BY HIM AND NONE OF THE SUPPLIER EXISTED AT THE GIVE N ADDRESSEES. FURTHER, MERE POSSESSION OF INVOICES AND PAYMENT TH ROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SAID TRANS ACTIONS. IT WAS FURTHER POINTED OUT THAT THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCES DURING APPELLATE PROCEEDINGS WHICH WERE NEVER CONFRONTED T O THE LD. AO. 6. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL SINCE ASSESSEE WAS ENGAGED IN TRADING OPER ATIONS. THE TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. THE ASSESSEE, TO SOME EXTENT, PRODUCED DETAILS OF PURCH ASE AND CORRESPONDING SALES BEFORE LD. CIT(A). AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIERS BEFORE LOWER AUTHORITIES AND THE PHYSICAL INSPECTION AT THE GIVEN ADDRESSES REVEALED THAT NONE OF THE ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 5 PARTY EXISTED THERE WHICH CAST A SERIOUS DOUBT ON A SSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGA INST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW OVERALL FACTS AND CIRCUMST ANCES, ON FACTUAL MATRIX AND IN VIEW OF ASSESSEES NATURE OF BUSINESS , PRODUCTS DEALT WITH BY HIM AND DOCUMENTARY EVIDENCES ADDUCED BY HIM, WE FIND THE SAME TO BE ON HIGHER SIDE. THEREFORE, WE RESTRICT THE SA ME TO 5% OF ALLEGED BOGUS PURCHASES OF RS.1,08,51,371/- WHICH COMES TO RS.5,42,568/-. THE ORDER OF LD. CIT(A) STAND MODIFIED TO THAT EXTENT. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISSED WHEREAS ASSESSEE S APPEAL STANDS PARTLY ALLOWED. 7. THE ASSESSEE IN AY 2001-12, UNDER SIMILAR CIRCUM STANCES, HAS BEEN SADDLED WITH ADDITIONS OF RS.4,40,24,846/- IN THE QUANTUM ASSESSMENT WHICH HAS BEEN REDUCED TO 12.5% BY LD. C IT(A). THE ORDER OF LD. CIT(A) IS COMMON FOR AY 2010-11 & 2011-12. H ENCE, TAKING THE SAME VIEW, WE RESTRICT THE IMPUGNED ADDITIONS TO 5% OF ALLEGED BOGUS PURCHASES WHICH COMES TO RS.22,01,242/-. RESULTANTL Y, THE REVENUES APPEAL STANDS DISMISSED WHEREAS ASSESSEES APPEAL S TANDS PARTLY ALLOWED. 8. FINALLY ITA NOS. 3989-90/MUM/2016 STANDS DISMISS ED WHEREAS ITA NOS.3528-29/MUM/2016 STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2017. ITA.NO.3528-29, 3989-90/MUM/2016 DINESH R. SHAH ASSESSMENT YEARS-2010-11 & 2011-12 6 SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.12 .2017 SR.PS:- THIRUMALESH ! / 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