ATHENE CONSTRUCTION P. LTD, NAVI MUMBAI V. ACIT 10(3), MUMBAI

ITA 3620/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5501 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVLD
• Assessee Lawyers: PIYUSH CHHAJED LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

ITA NO.3620/MUM/2012 ATHENE CONSTRUCTION LLP ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3620/MUM/2013 ( / ASSESSMENT YEAR:2009-10) ATHENE CONSTRUCTION LLP [FORMERLY KNOWN AS M/S ATHENE CONSTRUCTION PVT.LTD] 203, RAIKAR BHAVAN, SECTOR-17 VASHI, MUMBAI-400 705 / VS. ASSISTANT COMMISSIONER OF INCOME TAX -10(3) AAYKAR BHAVAN MUMBAI-400 020 !' ./ ./ PAN/GIR NO.AAFCA-7068-N ( '$ /APPELLANT ) : ( %'$ / RESPONDENT ) REVENUE BY : RAJESH KUMAR YADAV, LD.DR ASSESSEE BY : PIYUSH CHHAJED, LD.AR / DATE OF HEARING : 09/07/2018 / DATE OF PRONOUNCEMENT : 13/07/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [A Y] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 22, MUMBAI [CIT(A)] DATED 12/03/2013 QUA CONFIRMATION OF CERTAIN ADDITION OF RS.2,50,75,380/- ON ACCOUNT OF ALLEGED BOGUS / UNPROVED PURCHASES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER 2 ITA NO.3620/MUM/2012 ATHENE CONSTRUCTION LLP ASSESSMENT YEAR-2009-10 OF INCOME TAX-10(3), MUMBAI U/S 143(3) OF THE INCOM E TAX ACT, 1961 ON 25/12/2011 WHEREIN THE INCOME OF THE ASSESSEE HAS B EEN ASSESSED AT RS.322.89 LACS UNDER NORMAL PROVISION AFTER CERTAIN ADDITIONS AND DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.72.1 3 LACS E-FILED BY THE ASSESSEE ON 29/09/2009. 2. THE NAME OF THE ASSESSEE HAS SUBSEQUENTLY BEEN C HANGED FROM ATHENE CONSTRUCTION PRIVATE LIMITED TO ATHENE CONSTRUCTION LLP WHICH IS EVIDENT FROM FORM NO. 16 DATED 26/02/2014 ISSUED BY MINISTRY OF CORPORATE AFFAIRS , A COPY OF WHICH HAS BEEN PLACED ON RECORD. THE AS SESSEE HAS ALREADY FILED REVISED FORM NO. 36 REFLECTING SUCH C HANGE. FINDING THE SAME IN ORDER, WE PROCEED TO DISPOSE-OFF THE ASSESSEES APPEAL. 3. THE ASSESSEE, BEING RESIDENT CORPORATE ASSESSEE DURING IMPUGNED AY WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF PROPERTY. IT REFLECTED NET PROFIT OF RS.65.19 LACS AGAINST TU RNOVER OF RS.527.76 LACS. THE CONSTRUCTION EXPENSES WERE SHOW N AT RS.4.17 CRORES. THE ASSESSEE UNDERTOOK A PROJECT AT NAVI MUMBAI IN JOINT VENTURE AND REFLECTED PURCHASE OF STEEL FOR RS.250.75 LACS FROM FOLLOWING TWO ENTITIES:- NO. NAME AMOUNT (RS.) 1. ANSHU MERCANTILE PVT. LTD. 1,25,38,912/- 2. DHIREN MERCANTILE PVT. LTD. 1,25,36,468/- TOTAL 2,50,75,380/- TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICES U/S 1 33(6) WERE ISSUED TO THE ABOVE ENTITIES, HOWEVER, THE SAME WERE RETURNED UN-SERVED BY POSTAL AUTHORITIES WITH REMARKS NOT KNOWN . CONSEQUENTLY, THE ASSESSEE WAS 3 ITA NO.3620/MUM/2012 ATHENE CONSTRUCTION LLP ASSESSMENT YEAR-2009-10 DIRECTED TO SUBSTANTIATE THE PURCHASES MADE BY HIM. THE ASSESSEE DEFENDED BY THE PURCHASES MADE BY HIM BY SUBMITTING COPIES OF INVOICES, DELIVERY CHALLANS AND ARCHITECTS CERTIFICATE TO SU PPORT THE STAND THAT THE PURCHASED MATERIAL WAS USED IN THE CONSTRUCTION ACT IVITIES. HOWEVER, NOT CONVINCED, LD. AO, AFTER CONSIDERING THE FACTUAL MA TRIX, DISALLOWED THE SAME AND ADDED THE SAME TO THE INCOME OF THE ASSESS EE. 4. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 12/03/2 013 WHEREIN THE MATTER WAS CONCLUDED AGAINST THE ASSESSEE IN THE FO LLOWING MANNER: 6.5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE SUBMISSION MADE BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING . THE ISSUE OF BOGUS PURCHASES HAS BEEN TAKEN BY THE A.O. PROPERLY DURING THE COURSE O F ASSESSMENT PROCEEDING. THE OBJECTIONS RAISED BY THE A.O. HAVE NOT BEEN SATISFA CTORILY MET BY THE ASSESSEE. EVEN DURING THE COURSE OF APPEAL PROCEEDING, THE APPELLA NT COULD NOT SUBSTANTIATE THIS. HOWEVER, FROM THE DETAILS SUBMITTED BY THE APPELLAN T IT IS SEEN THAT RS.89,31,312/- HAS BEEN PAID ON DIFFERENT DATES VIDE ICICI BANK BUT TH E PAYMENT DATES PERTAIN TO F.Y.2009- 10 WHEREAS, ASSESSMENT IS BEING MADE FOR THE F.Y.20 08-09. SINCE DURING THE F.Y.2008- 09, THE PURCHASES COULD NOT BE PROVED SATISFACTORIL Y BY THE APPELLANT, NOR THE PAYMENTS TOOK PLACE, THE SAME CANNOT BE CONSIDERED IN THE PR ESENT APPEAL AND THE ADDITIONS MADE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS. 2,50,75,380/- IS CONFIRMED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. THE LD. COUNSEL FOR ASSESSEE [AR], SHRI PIYUSH CHHAJED CONTESTING THE STAND OF LOWER AUTHORITIES, POINTED OUT THAT TH E ASSESSEE PURCHASED STEEL DURING THE IMPUGNED AY WHICH WAS USED IN CONSTRUCT ION ACTIVITIES AS CERTIFIED BY THE ARCHITECT. IT WAS FURTHER SUBMITTED THAT THE IMPUGNED DISALLOWANCE TRANSLATES INTO EXORBITANT GROSS PROFIT RATE OF MORE THAN 60% IN THE HANDS OF THE ASSESSEE, WHICH WAS NOT, AT ALL JUSTIFIED, IN THE 4 ITA NO.3620/MUM/2012 ATHENE CONSTRUCTION LLP ASSESSMENT YEAR-2009-10 ASSESSEES LINE OF BUSINESS. THE SAME WAS CONTROVER TED BY LD. DEPARTMENTAL REPRESENTATIVE [DR], SHRI RAJESH KUMAR YADAV, BY SUBMITTING THAT THE ASSESSEE MISERABLY FAILED TO PR OVE THE TRANSACTIONS, WHICH JUSTIFIES THE STAND OF LOWER AUTHORITIES IN M AKING FULL DISALLOWANCE. 6. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THE ASSESSEE WAS ENGAGED IN CONSTRUCTION ACTIVITIES DURING THE YEAR WHICH COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF STEEL . THE AFORESAID FACT IS UNDISPUTED AND DULY SUPPORTED BY THE ARCHITECTS CERTIFICATE. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS. FURTHER, THE SAID DISALLOWANCE HAS RESULTED INTO SHOOTING OF GROSS PROFIT RATE TO SUCH A LEVEL WHICH IS UNCONCEIVABLE IN ASSESSEES LINE OF BUSINE SS. HOWEVER, AT THE SAME TIME, THE ASSESSEE IS UNABLE TO PROVE THE PURC HASE TRANSACTIONS CARRIED OUT BY HIM BY PRODUCING ANY OF THE TWO SUPP LIERS UNDER DISPUTE. THERE WAS A LONG DELAY IN MAKING PAYMENT TO THE SUP PLIERS AND BOTH SUPPLIERS WERE NEW ENTITIES. THE NOTICES ISSUED U/S 133(6) ELICITED NO SATISFACTORY RESPONSE. THE ASSESSEE IS ALSO UNABLE TO CONTROVERT THE ARGUMENT THAT MAJORITY OF THE WORK WAS COMPLETED IN EARLIER YEARS. ALL THESE FACTORS CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE REFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHA SES. 5 ITA NO.3620/MUM/2012 ATHENE CONSTRUCTION LLP ASSESSMENT YEAR-2009-10 THEREFORE, KEEPING IN VIEW THE OVERALL FACTUAL MATR IX, WE ESTIMATE THE ADDITIONS @8% OF ALLEGED BOGUS PURCHASES OF RS.2,50,75,380/-. IN OTHER WORDS, THE IMPUGNED DISALLOWANCE SHALL BE RESTRICTE D TO RS.20,06,030/- WHEREAS THE BALANCE DISALLOWANCE SHALL STAND DELETE D. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSESSEE I N TERMS OF OUR ABOVE DIRECTIONS. 7. RESULTANTLY, THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY,2018 SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.07.2018 SR.PS:-THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. )*+,-. / THE APPELLANT 2. 234-. / THE RESPONDE NT 3. 74874 9: ) )*+, ( / THE CIT(A) 4. 74874 9: / CIT CONCERNED 5. CDEF+42G:GHI , 748)*+,K4)HI8L , / DR, ITAT, MUMBAI 6. FNOP, / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) ./01 , / ITAT, MUMBAI