KAILASH BROTHERS, MUMBAI V. ASST CIT 19(2), MUMBAI

ITA 3793/MUM/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0910 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR SINGH LD
• Assessee Lawyers: BHARAT P SHAH LD
• Keywords: Bogus purchase; Accommodation entries; Onus to prove; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

ITA.NO.3793/MUM/2017 KAILASH BROTHERS ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI MANOJ KUMAR AGGARWAL, AM AND SHRI RAVISH SOOD, JM ./I.T.A. NO.3793/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) KAILASH BROTHERS 103, SHREEJI DARSHAN TATA ROAD. 1 & 2 OPERA HOUSE MUMBAI-400 004 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-19(2) AAYKAR BHAVAN, M.K. ROAD NEW MARINE LINES MUMBAI-400 020 ./ ./PAN/GIR NO. AAAFK-6781-F ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : BHARAT P.SHAH, LD. AR REVENUE BY : MANOJ KUMAR SINGH, LD. SR. DR / DATE OF HEARING : 18/09/2018 / DATE OF PRONOUNCEMENT : 05/10/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-30/19(2)/857/15-16 DATED 21/03/2017. THE ASSESSEE HAS RAISED THREE GROUNDS, OUT OF WHIC H ITA.NO.3793/MUM/2017 KAILASH BROTHERS ASSESSMENT YEAR-2009-10 2 GROUND NO. 1 HAS NOT BEEN PRESSED BEFORE US. THE GR OUNDS AS AGITATED BEFORE US READ AS UNDER:- 2. WHETHER COMMISSIONER OF INCOME TAX (APPEALS) IS CORRECT IN LAW AND IN FACT IN UPHOLDING ASSESSING OFFICER DECISION OF PURCHASES M ADE BY ASSESSEE FROM CERTAIN PARTIES AS BOGUS PURCHASES WITHOUT INDEPENDENT VERI FICATION U/S 133(6)/131. 3. WHETHER COMMISSIONER OF INCOME-TAX (APPEAL) IS C ORRECT IN LAW IN AND FACT IN UPHOLDING THE ADDITIONAL PROFIT MARGIN OF RS.15,18, 490/- ON PURCHASES OF RS.5,06,16,362/-. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY ASSISTANT COMMISSIONER OF INCOME TAX 19(2), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 27/03/2015 WHERE IN THE ASSESSEE HAS BEEN SADDLED WITH ESTIMATED ADDITIONS OF RS.40.49 LACS AGAINST CERTAIN ALLEGED BOGUS PURCHASES OF RS.506.16 LACS COMPUTED @8%. THE ASSESSEE WAS A RESIDENT FIRM AND STATED TO BE ENGAGED AS TRADER & MANUFACTURER OF DIAMOND DURING IMPUGNED AY. 2.1 THE REASSESSMENT PROCEEDINGS WERE INITIATED PUR SUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION) THAT THE ASSESSEE TOOK ACCOMMODATION ENTRIES OF PURCHASES AGGREGATING TO R S.506.16 LACS FROM 7 PARTIES, THE DETAILS OF WHICH HAVE ALREADY B EEN EXTRACTED AT PARA- 4 OF THE QUANTUM ASSESSMENT ORDER. THE SAID INFORMATI ON SPRUNG OUT OF SEARCH & SURVEY ACTION IN THE CASE OF SHRI BHANWARLAL JAIN GROUP ON 03/10/2013 WHEREIN IT TRANSPIRED THAT THE SAID GROU P, THROUGH WEB OF NUMEROUS ENTITIES WAS ENGAGED IN PROVIDING ACCOMMOD ATION ENTRIES OF VARIED NATURE. THE PARTNERS / DIRECTORS / PROPRIETO RS OF THESE CONCERNS WERE MERE NAME-SAKE AND WELL ACQUAINTED WITH THE SAID GROUP AND THE GROUP WAS ACTUALLY CONTROLLING ALL THESE CONCERNS. 2.2 ACCORDINGLY, THE ASSESSEE WAS REQUIRED TO SUBST ANTIATE THE PURCHASE TRANSACTIONS STATED TO BE CARRIED OUT WITH 7 ENTITIES. THE ITA.NO.3793/MUM/2017 KAILASH BROTHERS ASSESSMENT YEAR-2009-10 3 ASSESSEE DEFENDED THE SAME BY SUBMITTING THAT THE P URCHASES WERE GENUINE AND ENTERED IN STOCK REGISTER AND THE PAYME NTS WERE THROUGH BANKING CHANNELS. AT THE SAME TIME, THE ASSESSEE FA ILED TO PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF TRANSACTIONS AND A LSO FAILED TO SUBSTANTIATE THE DELIVERY OF GOODS. THEREFORE, TAKI NG A CONTRARY VIEW, LD. AO OPINED THAT THE PURCHASES AS STATED TO BE MADE F ROM THESE PARTIES WERE BOGUS WHEREAS ACTUAL PURCHASES WERE MADE FROM THE OPEN MARKET. THE LD. AO ALSO OPINED THAT THE GENUINENESS OF THE PURCHASE PARTIES WAS UNDER DOUBT BUT THE GENUINENESS OF PURC HASE ON A WHOLE COULD NOT BE DOUBTED SINCE THE PURCHASES WERE ENTER ED IN THE STOCK REGISTER. FINALLY, THE ADDITIONS AGAINST THE SAME W ERE ESTIMATED @8% WHICH RESULTED INTO IMPUGNED ADDITIONS OF RS.40.49 LACS IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH P ARTIAL SUCCESS BEFORE FIRST APPELLATE AUTHORITY. THE LD. CIT(A), A FTER DUE CONSIDERATION OF FACTUAL MATRIX AND SEVERAL JUDICIAL PRONOUNCEMENTS ON THE SUBJECT, PRIMARILY AGREED WITH THE APPROACH & CONCLUSION OF LD. AO. HOWEVER, FINDING THE ESTIMATION OF 8% ON THE HIGHER SIDE, TH E SAME WAS REDUCED TO 3% OF ALLEGED BOGUS PURCHASES WHICH RESTRICTED THE IMPUGNED ADDITIONS TO RS.15.18 LACS. AGGRIEVED, THE ASSESSEE IS IN FUR THER APPEAL BEFORE US. 4. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI BHARAT P.SHAH, AGITATED THE ESTIMATION BY REITERATING THE CONTENTI ONS AS RAISED BEFORE LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE CONFIRMATION OF THE SUPPLIERS WAS ON RECORD AND THEREFORE, THE ADDITION S WERE NOT JUSTIFIED. PER CONTRA, LD. DR SUBMITTED THAT NO FURTHER RELIEF COULD BE GR ANTED TO THE ASSESSEE SINCE THE PURCHASE TRANSACTIONS WERE U NDER GRAVE DOUBT. ITA.NO.3793/MUM/2017 KAILASH BROTHERS ASSESSMENT YEAR-2009-10 4 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING JUDICIAL PRONOUNCEMENT S AS CITED BEFORE US. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD B E NO SALE WITHOUT ACTUAL PURCHASE OF GOODS KEEPING IN VIEW THE ASSESS EES NATURE OF BUSINESS. THE QUANTITATIVE DETAILS WERE AVAILABLE O N RECORD AND THE SALE TURNOVER HAS BEEN ACCEPTED BY THE REVENUE. THE ASSE SSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS WERE THROUGH BANKING CHANNELS. HOWEVER, THE STATED PURCH ASES WERE UNDER GRAVE DOUBT SINCE THE ASSESSEE COULD NOT PRODUCE EV EN A SINGLE PARTY OUT OF SEVEN PARTIES TO CONFIRM THE TRANSACTIONS DE SPITE SUBMITTING THEIR CONFIRMATIONS & AFFIDAVITS AND THEREFORE, THE AUTHE NTICITY OF THESE DOCUMENTS COULD NOT BE ACCEPTED ON THE FACE OF THES E DOCUMENTS. THE COMPLETE ONUS TO PROVE THE PURCHASES BEYOND DOUBT W AS ON ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE. IT IS WORTH NOTIN G THAT THE ASSESSEE REFLECTED PURCHASES FROM AS MANY AS 7 ENTITIES, ALL OF WHICH WERE BEING CONTROLLED BY SHRI BAHNWARLAL JAIN GROUP. THE SEARCH / SURVEY ACTION ON THE SAID GROUP ON 03/10/2013 BY DGIT (INV.) REVEALE D THAT THE SAID GROUP CONSISTING OF NUMEROUS BUSINESS ENTITIES WAS ENGAGE D IN PROVIDING ACCOMMODATION BILLS OF VARIED NATURE. IT WAS ALSO F OUND OUT THAT THE EMPLOYEES / RELATIVES ETC. OF THE SAID GROUP WERE M ERELY NAME LENDING DIRECTORS / PARTNERS / PROPRIETORS OF THESE NUMEROU S CONCERNS WHICH WERE OPERATING UNDER THE CONTROL OF SAID GROUP. THE STAT EMENTS OF CONCERNED PERSONS REVEALED THAT THE FIRMS WERE INDULGING IN A CCOMMODATION BILLS WITHOUT DOING ANY ACTUAL BUSINESS AND THOSE PERSONS HAD NO KNOWLEDGE ABOUT THE BUSINESS BEING CARRIED OUT BY THE SAID CO NCERNS. IN SUCH A SCENARIO, THE ACTION OF LD. CIT(A) IN ESTIMATING TH E IMPUGNED ADDITIONS ITA.NO.3793/MUM/2017 KAILASH BROTHERS ASSESSMENT YEAR-2009-10 5 @3% WAS QUITE JUSTIFIED KEEPING IN VIEW OVERALL FAC TS AND CIRCUMSTANCES AND THEREFORE, DO NOT CALL FOR ANY INTERFERENCE FRO M OUR SIDE IN ANY MANNER. SO FAR AS THE RELIANCE OF LD. AR ON CERTAIN JUDICIAL PRONOUNCEMENTS IS CONCERNED, WE FIND THAT THE SAME HAVE BEEN RENDERED ON PECULIAR FACTS OF EACH CASE AND THEREFO RE, COULD NOT BE RELIED UPON BLINDLY WITHOUT CONSIDERING THE FACTUAL MATRIX OF EACH CASE. 6. THE APPEAL STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH OCTOBER, 2018. SD/- SD/- (RAVISH SOOD) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED 05.10.2018 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