DCIT CEN CIR 8(4), MUMBAI V. OFFBEAT DEVELOPERS P.LTD, MUMBAI

ITA 3723/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0988 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Next Hearing Date: 06-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2016
• Court: TRIBUNAL
• Department Lawyers: MRS BEENA SANTOSH
• Keywords: Bogus purchase; Notional interest
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.3723/M/2016 (AY 2009 - 2010) DCIT - CC - 8(4), 6 TH FLOOR, R.NO. 658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S. OFFBEAT DEVELOPERS PVT LTD., PHOENIX MILLS PREMISES 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI 400 013. ./ PAN : AAACO5140L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MRS. BEENA SANTOSH, DR / RESPONDENT BY : MS. SHLOKA SHAH / DATE OF HEARING : 24.04.2017 / DATE OF PRONOUNCEMENT : 24.04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)DATED 29.2.2016 FOR THE AY 2009 - 10. IN THE GRO UNDS, REVENUE RAISED THE ISSUE RELATING TO THE RELIEF GRANTED BY THE CIT(A) ON ACCOUNT OF THE NOTIONAL INTEREST AND THE COMMISSION PAYMENTS INCURRED BY THE ASSESSEE IN CONNECTION WITH THE BOGUS PURCHASES OFFERED BY THE ASSESSEE DURING THE SURVEY PROCEEDINGS. 2. NARRATING THE FACTS, LD COUNSELS FOR THE ASSESSEE AND TH E REVENUE SUBMITTED THAT THERE WAS SURVEY AC TION ON 5.7.12 ON THE ASSESSEE AND DISCOVERED THE FACT OF SUSPICIOUS PURCHASE OF MATERIAL FROM THE SUPPLIERS. ASSESSEE OFFERED THE SAME TO THE REVENUE AND THERE IS NO ISSUE RELATING TO THE BOGUS PURCHASES AMOUNTING RS 5.91 CR FROM 4 SUPPLIERS. IN THE RE - ASSESSMENT U/S 147 R W S 143(3) OF THE ACT, THE AO MADE ADDITION ON ACCOUNTS OF THE INTEREST EXPENDITURE RELATABLE TO THE SAID INVESTMENT IN THE SAID PURCHASES AND ALSO THE ESTIMATED COMMISSION EXP ENDITURE OF RS 11,81,832/ - 2% OF THE SAID RS 5.51 CR RELATING TO THE SAME. THE CIT(A) GRANTED RELIEF IN THIS REGARD. AGGRIEVED WITH THE ABOVE, TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS RELATING TO THE SAID COMMISSION AND INTEREST. 2 3. BEFORE THE TRIBUNAL , LD DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO. HOWEVER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH ADDITION S WERE MADE BASED ON EITHER ESTIMATIONS AND SURMISES. REFERRING TO THE RELIEF OF RS 41,48,231/ - REFERRED TO I N THE GROUND 1, LD AR SUBMITTED THAT THE TOTAL PURCHASES OF THE ASSESSEE IS ONLY RS 4,13,88,841/ - AND THE SAID SUM ONLY SHOULD BE REDUCED FROM THE CWIP AND NOT THE OTHER FIGURE OF RS 5.91 CR. CONNECTED TO THE SAME ISSUE, CIT(A) DISCUSSED THE ISSUE OF DISAL LOWANCE OF INTEREST EXPENDITURE OF RS 41,14,923/ - BEING INTEREST RELATABLE TO THE INVESTMENT IN THE SAID BOGUS PURCHASE OF RS 5.91 CR. T HE FACT OF AVAILABILITY OF ASSESSEES OWN INTEREST FUNDS WAS IGNORED BY THE AO. CIT(A) RELIED ON THE BINDING JUDGMENT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD IN THE PROCESS OF GRANTING RELIEF. NOTHING AD VERSE JUDGMENT IS BROUGHT TO MY NOTICE BY THE LD DR DURING THE PROCEEDINGS BEFORE THE TRIBUNAL . I N MY VIEW, THE FINDING OF THE CIT(A) GIVEN IN PARA 5.9 AND 6.1 TO 6 .4 OF HIS ORDER ARE FAIR AND REASONABLE. THEREFORE, THE SAID DECISION OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, RELEVANT GROUND 1 (MISTAKENLY TYPED 3) IS DISMISSED. 4. REGARDING THE OTHER ADHOC ADDITION OF RS 11,81,832/ - I E 2% OF TH E SAID RS 5.51 CR, I FIND , THE AO DISALLOWED THE SAME ON ESTIMATION BASIS TOWARDS THE COMMISSION ASSESSEE MIGHT HAVE INCURRED IN CONNECTION WITH THE PURCHASE OF BOGUS MATERIALS/SUPPLIES. AS SUCH , THERE IS NO EVIDENCE TO SUPPORT THE SAID ADDITION. THE CONTE NTS OF PARA 7.1 TO 7.5 (SIC) OF THE CIT (A)S ORDER ARE RELEVANT. CIT (A) HELD IT IS A CASE OF MERE ESTIMATION AND SURMISES. I AGREE WITH THE SAME. ACCORDINGLY, THE RELEVANT GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED FOR WANT OF INSUFFICIENT EVIDENCE AND UNSUSTAINABLE ADDITION. ACCORDINGLY, GROUND 2 (NUMBERED AS 4) IS DISMISSED, 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 2 4 T H APRIL, 2017. S D / - (D. KAR UNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 24.04.2017 . . ./ OKK , SR. PS 3 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI