ITO 5(2)(2), MUMBAI V. KAMDHENU VALVES P.LTD, MUMBAI

ITA 3774/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7742 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: HEMLATA BHUNGARE
• Keywords: Bogus purchase; Depreciation; Unabsorbed depreciation
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 3774/M/2016 (AY 2009 - 2010) ITO - 5(2)(2), 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. M/S. KAMDHENU VALVES PVT LTD., SHOP NO.9, JAIN BHAVAN, DR. BHAJEKAR STREET, MUMBAI - 400004. ./ PAN : A AACK3257G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. BEENA SANTOSH, DR / RESPONDENT BY : MS. HEMLATA BHUNGARE / DATE OF HEARING : 22 .03.2017 / DATE OF PRONOUNCEMENT : 29 .03 .2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 1.6.2016 IS AGAINST THE ORDER OF THE CIT (A) - 10, MUMBAI DATED 22.2.2016 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED TWO MAIN GROUNDS AND THEY REVOLVE AROUND THE CORE ISSUE RELATING TO THE ADDITION ON ACCOUNT OF BOGUS PURCHASES FROM THE SUPPLIERS WHOSE NAMES ARE APPEARING IN THE OFFICIAL WEBSITE OF THE SALES TAX DEPARTMENT. THIS IS THE CASE WHERE THE ASSESSING OFFICER MADE ADDITION OF SUCH ENTIRE BOGUS PURCHASES. AGGRIEVED WITH THE SAID DECISION OF THE AO ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 . DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ E XIMP ENTERPRISES PVT LTD VS. ACIT VIDE WRIT PETITION NO. 2860 OF 2012, DATED 18 TH JUNE, 2014 AND DISPROVED THE ADDITION MADE BY THE AO U/S 69C OF THE ACT. FURTHER, RELYING ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIM IT P. SHETH [2013] 356 ITR 451 , CIT (A) RESTRICTED THE ADDITION TO 12.50 % OF SUCH ALLEGED BOGUS PURCHASES. AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE GROUNDS. 2 4 . DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 5 . ON THE OTHER HAND, LD DR FOR THE REVENUE DUTIFULLY RELIED ON THE ORDER OF THE AO AND THE VIEW TAKEN BY HIM. 6 . ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 4.2.1 OF THE CIT (A)S ORDER IN PARTICULAR, WHEREIN THE CIT (A) HELD THAT RESPECTFULLY FOLLOWING THIS DECISION (SIMIT P SETH ( SUPRA)), I HEREBY DIRECT THE AO TO WORK OUT 12.5% OF THE SO - CALLED BOGUS PURCHASES FROM THE SAID THREE PARTIES....... 7 . CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE BEFORE GRANTING RELIEF TO THE ASSESSEE, CIT (A) RIGHTLY FOLLOWED THE PRECEDENTS ON THE ISSUE. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INT ERFERENCE. ACCORDINGLY, GROUND NO.1 , ALONG WITH ITS SUB - GROUNDS, RAISED BY THE REVENUE IS DISMISSED. 8. THE SECOND ISSUE RAISED IN THIS APPEAL RELATES TO THE MERGER OF THE BROUGHT FORWARD LOSSES IN THE CURRENT YEAR FOR THE BENEFIT OF CARRY FORWARD OF THE UNABSORBED DEPRECIATION BEYOND EIGHT YEARS. CIT (A) EXAMINED THE SAME AND CONS IDERED THE AMENDED PROVISIONS B Y T H E FINANCE ACT , 2001. ACCORDINGLY, CIT (A) GRANTED RELIEF TO THE ASSESSEE VIDE PARA 7.2 OF HIS ORDER. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE R EVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 7.2 OF THE CIT (A)S ORDER, I AM OF THE OPINION, THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THIS ISSUE (GROUND NO.2 AND ITS SUB - GR OUNDS) RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 2 9 T H MARCH, 2017. S D / - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 29.03.2017 . . ./ 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