ACIT 28(3), MUMBAI V. SHRI SALIM AHMED ALIMAHMED, MUMBAI

ITA 3867/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0678 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 143(1)

Judgement Text

ITA NO.3867/MUM/2019 A.Y. 2009 - 10 ACIT - 2 8(3) VS. SHRI SALIM AHMED ALIMAHMED 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.3867 /MUM/2019 (ASSESSMENT YEAR: 2009 - 10 ) ACIT - 2 8(3), ROOM NO. 313, 3 RD FLOOR, 6 TH TOWER, VASHI RAILWAY STATION, COMPLEX VASHI - 400701 VS. SHRI SALIM AHMED ALIMAHMED M/S SA CH LIM ENGINEERS, R - 901, MIDC, TTC INDUSTRIAL AREA, THANE BELAPUR ROAD, RABALE, NAVIM MUMBAI 400701 PAN NO. ABHPS2185N ( REVENUE ) ( ASSESSEE ) REVENUE : SHRI T.S. KHALSA , D .R ASSESSEE BY : SHRI KETAN VAJANI , A .R DATE OF HEARING : 11 /02/2021 DATE OF PRONOUNCEMENT : 15 /02/2021 ORDER PER RAVISH SOOD, J.M: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 26, MUMBAI, DATED 20.03.2019 WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 13.03.2015 FOR A.Y. 2009 - 10. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: (1). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF BOG US PURCHASES TO 12.5% AS AGAI NST 30.46% ADDITION MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT PARTIES FROM WHOM THESE PURCHASES WERE MADE PROVEN ACCOMMODATION ENTRY PROVIDERS AS CONDUCTED BY THE SALES TAX AUTHORITIES PURSUANT TO THE INVE STIGATION CARRIED OUT BY THE M ? ITA NO.3867/MUM/2019 A.Y. 2009 - 10 ACIT - 2 8(3) VS. SHRI SALIM AHMED ALIMAHMED 2 (2 ). WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N.K. PRO TEINS LTD VS DCIT (769 OF 2017) , WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES'? . (3). THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. (4) THE APPELLANT CRAVES LEAVE TO AMEN D OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF FABRICATION HAD FILED HIS RETURN OF INCOME FOR A.Y. 2009 - 10 ON 16.09.2009, DECLARING A TOTAL INCOME OF RS.38,61,820/ - . TH E RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF DGIT(INV.), MUMBAI THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATION ENTRIES FOR PURCHASE S OF RS.79,91,100/ - , HIS CASE WAS REOPENED UNDER SEC. 147 OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A . O THAT THE ASSESSEE HA D CLAIMED TO HAVE MADE PURCHASE OF RS.79,91,100/ - FROM M/S SWASTIK IMPEX, A PART Y WHICH AS PER THE INFORMATION SHARED BY THE S ALES TAX DEPARTMENT WAS A CONCERN THAT WAS BLACK LISTED FOR ALLEGEDLY PROVIDING ACCOMMODATION BILLS. ON BEING CALLED UPON TO SUBSTANTIATE THE AUTHENTICITY OF THE AFORESAID PURCHASE TRANSACTION THE ASSESSEE PLAC ED ON RECORD THE COPIES OF THE PURCHASE BILLS ALONG WITH A STATEMENT OF RECONCILIATION OF SALES CORRESPONDING THERETO. FURTHER, THE ASSESSEE IN ORDER TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE AFORESAID PURCHASE TRANSACTION TOOK SUPPORT OF THE FAC T THAT THE PAYMENTS OF THE PURCHASE CONSIDERATION WAS MADE TO THE AFOREMENTIONED PARTY THROUGH CHEQUES. HOWEVER, NO DELIVERY CHALLANS OR TRANSPORTATION DETAILS WERE SUBMITTED BY THE ASSESSEE. ALSO, AS IS DISCERNIBLE FROM THE RECORDS THE ASSESSEE DESPITE SP ECIFIC DIRECTION FAILED TO PRODUCE THE AFORESAID SUPPLIER PARTY FOR EXAMINATION BEFORE THE A.O. IN THE BACKDROP OF THE AFORESAID FACTS, THE A . O HELD A CONVICTION THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE PURCHASES THA T ITA NO.3867/MUM/2019 A.Y. 2009 - 10 ACIT - 2 8(3) VS. SHRI SALIM AHMED ALIMAHMED 3 WERE CLAIMED TO HAVE BEEN MADE FROM THE AFOREMENTIONED PARTY. AT THE SAME TIME, TAKING COGNIZANCE OF THE FACT THAT THE ASSESSEE HAD ACCOUNTED FOR THE CORRESPONDING SALES PERTAINING TO THE IMPUGNED PURCHASES, THE A.O WAS OF THE VIEW THAT THE ASSESSEE HAD PROCURED THE GOODS UNDER CONSIDERATION NOT FROM THE A FOREMENTIONED PARTY BUT FROM CERTAIN UNDISCLOSED PARTIES OPERATING IN THE OPEN/GREY MARKET. BACKED BY HIS SAID CONVICTION, THE A.O AFTER CONSIDERING THE GP RATE OF 23.3% THAT WAS OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME THEREIN APPLIED THE SAME TO THE IMPUGNED PURCHASES AND WORKED OUT THE DISALLOWANCE AT RS.24,34,089/ - . AFTER MAKING THE AFORESAID ADDITION/DISALLOWANCE THE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.62,95,910/ - BY THE A.O VIDE HIS ORD ER PASSED UNDER SEC. 143(3) R.W.S 147, DATED 13.03.2015. 4. AGGRIEVED, THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A). AFTER DELIBERATING ON THE FACTS OF THE CASE, THOUGH THE CIT(A) CONCURRED WITH THE VIEW TAKEN BY THE A.O THAT THE ASSESSEE H AD FAILED TO SUBSTANTIATE THE AUTHENTICITY OF THE IMPUGNED PURCHASE TRANSACTIONS, BUT AT THE SAME TIME HE SCALED DOWN THE ADDITION/DISALLOWANCE TOWARDS THE PROFIT WHICH THE ASSESSEE WOULD HAD MADE BY PROCURING THE GOODS IN QUESTION AT A DISCOUNTED VALUE FR OM THE OPEN/GREY MARKET TO 12.5% OF THE AGGREGATE VALUE OF THE ALLEGED BOGUS PURCHASES. 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. ADMITTEDLY, IT IS A MATTER OF FACT BORNE FROM THE RECORDS THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE IMPUGNED PURCHASES UNDER CONSIDERATION. AT THE SAME TIME, THE LOWER AUTHORITIES NOT BEING OBLIVIOUS OF THE FACT THAT THE ASSESSEE HAD D ULLY ACCOUNTED FOR THE SALES CORRESPOND ING TO THE IMPUGNED PU RCHASES IN HIS BOOKS OF ACCOUNT HAD THUS CONCLUDED THAT ASSESSEE HAD PURCHASED THE GOODS NOT FROM THE AFORESAID SUPPLIER PARTY BUT FROM THE SUPPLIERS OPERATING IN THE OPEN/GREY MARKET. ACCORDINGLY, FOR QUANTIFYING THE PROFIT INVOLVED IN MAKING OF THE IMPUGNED PURCHASES BY THE ASSESSEE AT A DISCOUNTED PRICE AS AGAINST ITA NO.3867/MUM/2019 A.Y. 2009 - 10 ACIT - 2 8(3) VS. SHRI SALIM AHMED ALIMAHMED 4 THAT BOOKED BY IT IN ITS BOOKS OF ACCOUNTS, WE FIND, THAT THE A.O HAD WORKED OUT THE SAME @ 30.46% OF THE IMPUGNED PURCHASES. ALTHOUGH, THE CIT(A) CONCURRED WITH THE VIEW TAKEN BY THE A.O THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AUTHENTICI TY OF THE PURCHASE TRANSACTIONS BUT THEN, IN ALL FAIRNESS AFTER DRAWING SUPPORT FROM THE ORDER OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. SIMIT P. SHETH, 356 ITR 4 51 (GUJ) HE HAD THEREIN RESTRICTED THE ADDITION TO 12.5% OF THE IMPUGNED PURCHASES. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ISSUE BEFORE US, AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE CLAIM OF THE REVENUE THAT THE CIT(A) HAD ERRED IN RESTRICTING THE ADDITION/DISALLOWANCE TO 12.5% OF THE AGGREGATE VALUE OF THE IMPUGNED PURCHASES. BEING OF THE VIEW THAT THE QUANTIFICATION OF THE ESTIMATED ADDITION/DISALLOWANCE OF THE IMPUGNED PURCHASES HAD FAIRLY BEEN RESTRICTED BY THE CIT(A) TO 12.5% OF THE AGGREGATE VALUE OF THE IMPUGNED PURCHASES, WE, THUS, FINDING NO INFIRMITY IN HIS ORDER UPHOLD THE SAME. 6. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 15 .02.2021 SD/ - SD/ - MANOJ KUMAR AGGARWAL RAVISH SOOD (ACCOUNT ANT MEMBER) ( JUDICIAL MEMBER) MUMBAI, DATE: 15 .02.2021 PS: ROHIT COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR K BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI