ITO WD 2(2), MUMBAI V. SANJAY SATYANARAYAN AGRAWAL, THANE

ITA 3854/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7739 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 22-06-2015
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTTAM KUMAR SR
• Assessee Lawyers: DR K SHIVARAM RAHUL HAKANI
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D.T. GARASIA, J.M. AND SHRI RAJESH KUMAR , A.M I.T.A. NO. 3854 /MUM/2015 ASSESSMENT YEAR: 2010 - 011 ITO WD 2(2) R.NO. 26, 6 TH FLOOR, ASHAR IT PARK WAGLE INDL ESTATE RD. NO. 16Z, THANE(W) MUMBAI - 421301 VS. SANJAY SATYANARAYAN AGRAWAL PROP M/S AGRAWAL ASSOCIATES, 4/68 NEAR RAM MANDIR ROAD, BHAYANDER WEST THANE MUMBAI - 401101 PAN: A BBPA01 29Q (APPELLANT) : (RESPONDENT) CROSS OBJECTION NO. 42/MUM/2017 ASSESSMENT YEAR: 2010 - 11 SANJAY SATYANARAYAN AGRAWAL 401 4 TH FLOOR, KASTURI ANGAN PHATAK ROAD, NEAR NAGAR BHAVAN, BHAYANDER WEST THANE MUMBAI - 401101 VS. ITO WD 2(2) R.NO. 26, 6 TH FLOOR, ASHAR IT PARK WAGLE INDL ESTATE RD. NO. 16Z, THANE(W) MUMBAI - 421301 PAN: ABBPA0129Q (APPELLANT) : (RESPONDENT) APPELLANT BY : - SHRI PURUSHOTTAM KUMAR (SR. AR) RESPONDENT BY : - SHRI DR. K. SHIVARAM RAHUL HAKANI DATE OF HEARING : - 27 /02/2017 DATE OF PRONOUNCEMENT : - 29 /03 /2017 2 SANJAY SATTAYANARAYAN ITA NO. 3854/M/2015 & C.O. NO. 42/M/2017 O R D E R PER D. T. GARASIA, JM : THE DEPARTMENT HAS FILED THE APPEAL WHICH READS AS UNDER EFFECT TWO GROUNDS : 1.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HONBLE CIT(A) ERRED IN NOT CONFIRMING ADDITION OF RS.28,93,231/ - ON ACCOUNT OF BOGUS PURCHASES WHICH THE ASSESSEE HAD ADMITTED BEFORE THE ASSESSING OFFICER. 2.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE HONBLE CIT(A) ERRED IN NOT CONFIRMING ADDITION ON ACCOUNT OF BALANCE PURCHASES AND RS.88,96,541/ - WHICH REMAINED UNVERIFIED DURING THE ASSESSMENT PROCEEDINGS DESPITE AMPLE OPP ORTUNITIES GIVEN. 1. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE ASSESSMENT WAS U/S 143(3) OF THE INCOME TAX ACT 1961. THE A.O. DISALLOWED RS.1,27,01,540/ - OF TOTAL PURCHASES. THE A.O. TRIED TO VERIFY THE ASSESSING OFFICER H AS DOUBTED THE PURCHASE FR OM FIVE PARTIES AND THE ASSESSEE HAS ISSUED THE NOTICE U/S 133(6) TO ABOVE FIVE PARTIES. IN CASE OF FIVE PARTIES WHICH WAS SEND NOTICE U/S 133(6) OF THE ACT SEND BY SPEED POST FOR CONFIRMATION OF THE LEDGER WERE RETURNED BACK BY THE POSTAL AUTHORITY. THIS ACCOUNT WAS OUTSTANDING AS SUNDRY CREDITORS IN BALANCE SHEET OF THE ASSESSEE ON 31 ST MARCH 2010. THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVIDING IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTION IN RESPECT OF THIS PARTY. THESE PARTIES HAVE DECL ARED AS HAWALA PARTIES/ ISSUING BOGUS BILLS AND NOT SUPPLYING ANY ACTUAL GOODS TO THE ORDER OF SALES TAX DEPARTMENT MUMBAI. AS PER REVISED HAWALA LIST OF JANUARY 2013. UNDER THESE CIRCUMSTANCES THE STATEMENT OF CONFESSION THAT THESE ARE BOGUS PARTIES AND OFFERED UNDISCLOSED INCOME OF RS.28,93,231/ - ON ACCOUNT OF 3 SANJAY SATTAYANARAYAN ITA NO. 3854/M/2015 & C.O. NO. 42/M/2017 PURCHASES SHOWN FROM ABOVE PARTIES HIS OWN UNNECESSARY VALUES HENCE RS.28,93,231/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF BOGUS PURCHASES SHOWN BY FIVE PARTIES. 2. THE ASSESSI NG OFFICER HAS ALSO DOUBTED ABOVE THE TRANSACTION WITH 14 PARTIES WHICH MENTION IN THE ASSESSMENT WHICH READS AS UNDER - SR. NO. NAME OF THE SUNDRY CREDITORS PURCHASES OUTSTANDING / BALANCE AS ON 31/03/2013 1. ABHISHEK ENTERPRISES 6,86,138 7,90,970 2. MAKWELL TRADERS 5,81,724 17,83,651 3. GURUDEV ENTERPRISES 29,05,629 29,05,629 4. SHIV ENTERPRISES NIL 24,15,023 5. BHAKTI TRADING CO. 1,93,674 1,93,674 6. J.D. SAND NIL 3,52,976 7. MAC ENTERPRISES 9,73,635 9,73,635 8. M.K. SALES AGENCY NIL 5,03,230 9. ASHOK ENTERPRISES 13,08,814 13,08,814 10. FORAM TRADERS 3,22,920 3,22,920 11. JINAL ENTERPRISES 6,52,920 6,52,728 12. SIMPLEX ENTERPRISES 7,94,170 9,94,170 13. BHARAT TRADERS 8,32,971 11,20,531 14. NEEPA ENTERPRISES NIL 2,22,080 4 SANJAY SATTAYANARAYAN ITA NO. 3854/M/2015 & C.O. NO. 42/M/2017 THE NOTICE U/S 133(6) HAVE BEEN ISSUED TO THIS PARTY FOR PURPOSE OF CONFIRMATION ON ACCOUNT OF CURRENT POSTAL ADDRESS BUT ALL POSTAL ENVELOPES WERE RETURNED BACK UN SERVED. IN VIEW OF THIS THE ASSESSING OFFICER HAS MADE THE ABOVE OF RS.88,96,541/ - AS UNEX PLAINED, SUNDRY CREDITORS REPRESENT FOR CORRESPONDING PURCHASE. 3. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS DELETED THE ADDITION AND CONFIRM THE ADDITION @ 12.5% BY OBSERVING AS UNDER : IN VIEW OF THE ABOVE DETAILS, IT IS CRYSTAL CLEAR THAT THE ENTIRE ADDITION OF RS.1,16,78,494/ - ( RS,27,81,953 + RS. 88,96,541/ - ), IS RELATE TO PURCHASES OF CURRENT YEAR I.E. RS. 1,14,86,372/ - + AN ADDITION OF RS. 1,99,808/ - , WHICH IS OPENING BALANCE OF JIN AL ENTERPRISES. THUS, THE AO HAD DISALLOWED 100% PURCHASES OF THE CURRENT YEAR, WHICH IS QUITE ABSURD, THAT TOO WHEN SALES HAVE BEEN TREATED AS GENUINE. CONSIDERING THE FACTS OF THE CASE, NATURE OF THE BUSINESS (TRADERS IN THE BUILDING MATERIAL), AND VARIO US CASE LAWS RELIED BY THE LD. AR, ETC., IN MY CONSIDERED OPINION, THE ESTIMATION OF NP @ 12:5% WILL BE REASONABLE IN THIS CASE. THE NP @ 12.5% IS WORKED OUT AT RS. 14,64,504/ AS AGAINST NP OF RS.1,86,393/ - DECLARED BY THE APPELLANT. ACCORDINGLY, THE ADDITION ON ACCOUNT OF DISPUTED PURCHASES IS RESTRICTED TO RS.12,78,110/ - (RS.14,64,503 - 1,86,393/ - ). THE APPELLANT WILL GET RELIEF AND RS.1,04,00,384/ - AND ADDITION TO THE EXTENT OF RS. 12,78,110/ - , IS HEREBY CONFIRMED. BOTH THE GROUNDS OF APPEAL, THEREFORE, DECIDED ACCORDINGLY . DURING THE COURSE OF HEARING THE LD. DR SUBMITTED THAT IN RESPECT OF HAWALA ENTRIES THE 100% ADDITION SHOULD BE MADE BUT IN RESPECT OF SUNDRY CREDITORS ABOVE 14 PARTIES. THE NOTICES WERE SERVED TO ALL 14 PARTIES U/S 133(6) AND 5 SANJAY SATTAYANARAYAN ITA NO. 3854/M/2015 & C.O. NO. 42/M/2017 THEY DID NOT ATTEND THE NOTICES. THEREFORE, THIS IS A SUNDRY CREDITORS. THEREFORE, CIT(A) SHOULD NOT TREATED OUTSTANDING BALANCE AS PURCHASE AMOUNT. BUT IT SHOULD BE TREATED AS SUNDRY CREDITORS AND IF IT IS SUNDRY CREDITORS THE AMOUNT IT CAN NOT BE TREATED BOGUS PURCHASES. THE ASSESSEE HAS SHOWN THIS AMOUNT HAD UNEXPLAINED SUNDRY CREDITORS THEREFORE, IT CANNOT BE TREATED AS BOGUS PURCHASE. THEREFORE, THE ACTION OF CIT(A) IS NOT JUSTIFIED. 4. DURING THE COURSE OF HEARING THE LD. AR FAIRLY SUBMI TTED THAT IF THE DEPARTMENTAL APPEAL IS DISMISSED THEN HE WILL NOT PRESS FOR HIS C.O. MOREOVER, THE LD. AR HAS DRAWN OUR ATTENTION TO THE CONFIRMATION FROM DEBTORS WHICH WAS FILED ALONG WITH PAGE NO. 377 TO 404 IN THE PAPER BOOK WHICH CONFIRMS THAT THEY HA VE MADE PURCHASES FROM THE ABOVE PARTIE S AND THEY CONFIRM THE ACCOUNTS IF THEY CONFIRM THE ACCOUNT WHICH CANNOT SAID THAT FAILED TO PRODUCE THE CONFIRMATION. MOREOVER, THE ASSESSEE HAS NOT TAKEN ANY BOGUS BILL ALL THE PURCHASES ARE GENUINE PURCHASE IN RESP ECT OF WHICH THE MATERIAL HAS BEEN RECEIVED AND SOLD TO 3 RD PARTY. THE SALES ARE NOT DISPUTED BY THE A.O. ALL THE PURCHASES WERE SUPPORTED BY BILLS OF CONCERNED PARTIES AND PAYMENTS TO WHOM HAVE BEEN AFFECTED TO BANKING CHANNEL. MOREOVER, TAX INVOICES FROM DISPUTED PARTIES BANK STATEMENT OF THE ASSESSEE AND COMPU TERIZE DOC RECORD GIVING THE QUANTITY - WISE ANALYSIS IN RESPECT OF EACH ITEM OF PURCHASE AND SALE BUILDING MATERIAL. THEREFORE, CIT(A) SHOULD HAVE ALLOW THE APPEAL AND NO ADDITION SHOULD HAVE BEEN MADE. HE RELIED UPON THE FOLLOWING DECISION: 5. WE HAVE HEAR D THE RIVAL CONTENTION OF BOTH THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE ASSESSEE HAS MADE PURCHASE FROM FIVE PARTIES TOTAL INCOME OF RS.28,93,231/ - THE A.O. HAS DOUBTED THE PURCHASE FROM ABOVE PARTIES AS THEY WERE L ISTED AS DEFAULTER ON SALES TAX WEB SITE. THE A.O. FURTHER DOUBTED THE PURCHASE OF RS.88,96,541/ - FROM FOUR PARTIES AS THE NOTICE U/S 133(6) WERE RETURNED BACK . THE CIT(A) HAS 6 SANJAY SATTAYANARAYAN ITA NO. 3854/M/2015 & C.O. NO. 42/M/2017 ESTIMATED NET PROFIT @ 12.5%. THAT IS RS.14,64,541. THE ASSESSEE HAS SUBMITTED SALES BILL CONFIRMATION OF DEBTOR AND CHART SHOWING OPENING BALANCE CREDITOR, PURCHASES, PAYMENT AND CLOSING BALANCE. THEREFORE, QUANTITATIVELY HAS BEEN MADE THE SALES ARE NOT DOUBTED BUT ADDITION OF PURCHASE MAKES NEGATIVE. THEREFORE, RELYING UPON THE DEC ISION OF GUJARAT HIGH COURT CIT VS. M.K. BROTHERS, 163 ITR 249 (GUJ). THEREFORE, OUR INTERFERENCE IS NOT REQUIRED. WE ALSO FIND THAT THE ASSESSEE IS CLAIMING PAYMENT HAVE BEEN MADE THROUGH BANKING CHANNEL AND DEPARTMENT HAS NO EVIDENCE TO PROVE THAT BENEFI CIARY HAS RECEIVED BACK CASH AFTER DEDUCTING SOME COMMISSION. THEREFORE, WE CONFIRM THE ACTION OF CIT(A) IN SUPPORT OF C.O. THE LD. A.R. HAS NOT PRESS ED THIS C.O. THEREFORE, C.O. IS DISMISSED. JUDGMENT PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH 2017. SD/ - SD/ - ( RAJESH KUMAR ) ACCOUNTANT MEMBER (D.T.GARASIA) JUDICIAL MEMBER MUMBAI, DATE: 29 /03 / 2017 *RAHUL SHARMA* COPY TO: 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, D BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI