INCOME TAX OFFICER 19(3)(4), MUMBAI V. M/S.SUPER TECH INDUSTRIES, MUMBAI

ITA 3880/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5201 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH LD
• Keywords: Bogus purchase; Onus to prove; Reassessment proceedings; Set aside
• Section: 147; 148; 144

Judgement Text

1 ITA NO.3880/MUM/2018 M/S. SUPER TECH INDUSTRIES ASSESSMENT YEAR :2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3880/MUM/2018 ( / ASSESSMENT YEAR: 2011-12) INCOME TAX OFFICER - 19(3)(4) ROOM NO.210, 2 ND FLOOR MATRU MANDIR, TARDEO ROAD MUMBAI-400 037. / VS. M/S. SUPER TECH INDUSTRIES ROOM NO.12, 1 ST FLOOR 3 RD KUMBHARWADA LANE 164, DR. M.G. MAHIMTURA MARG MUMBAI-400 004. ! ./ ./PAN/GIR NO. ABIFS-7886-N ( !# /APPELLANT ) : ( $!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : CHAUDHARY ARUN KUMAR SINGH - LD.DR / DATE OF HEARING : 19/08/2019 / DATE OF PRONOUNCEMENT : 19/08/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX 2 ITA NO.3880/MUM/2018 M/S. SUPER TECH INDUSTRIES ASSESSMENT YEAR :2011-12 (APPEALS)-29, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO. CIT(A)- 29/IT-482/19(3)(4)/16-17 DATED 16/03/2018 ON FOLLOWING GROUND OF APPEAL :- 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO RESTRICT THE ES TIMATION OF THE PROFIT @12.5% INSTEAD OF 100% OF THE TOTAL NON-GENUINE PURCHASES WITHOUT CON SIDERING THAT THE ASSESSEE DID NOT DISCHARGE HIS INITIAL BURDEN TO PROVE THAT THE PURC HASES MADE FROM THE BOGUS PARTIES WERE GENUINE AND DID NOT PRODUCE ANY DELIVERY CHALL ANS, TRANSPORT RECEIPTS, GOODS INWARD REGISTER MAINTAINED AT GODOWN ETC..' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.. CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF HON'BLE SUPRE ME COURT IN THE CASE OF N K PROTEIN LTD, DT. 16.01.2017, WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND WH EN THE LD. CIT(A) PASSED THE ORDER ON 16.03.2018.' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN NOT APPRECIATING THE FACT THAT DURING THE INVESTIGATION MADE BY SALES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT, DIRECTORS/PRO P./PARTNERS OF SUCH PARTIES HAVE ACCEPTED ON OATH THAT THEY ARE PROVIDING ONLY ACCOM MODATION ENTRIES AND NOT DOING ANY REAL BUSINESS, THE TREATMENT OF SUCH PURCHASES AS B EING GENUINE DOES NOT HOLD GROUND?.' 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNE D CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJO URNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE P ROCEED TO DISPOSE-OFF THE APPEAL AFTER HEARING LEARNED DEPARTMENTAL REPRESENT ATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN TRADING OF METALS WAS ASSES SED FOR IMPUGNED AY U/S 144 READ WITH SECTION 147 ON 19/02/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.105.34 LACS AFTER CER TAIN ADDITIONS OF RS.105.05 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.0.28 LACS FILED BY THE ASSESSEE ON 27/ 09/2011. 3 ITA NO.3880/MUM/2018 M/S. SUPER TECH INDUSTRIES ASSESSMENT YEAR :2011-12 3.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED PURS UANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION), MUMB AI / SALES TAX DEPARTMENT, MAHARASHTRA THAT THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS.105.05 LACS FROM 4 SUSPICIOUS ENT ITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN PARA-2 OF QUAN TUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCE SS OF LAW BY ISSUANCE OF NOTICE U/S 148 ON 06/02/2015 WHEREIN THE ASSESSE E WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. HOWEVER, IN THE ABSENCE OF ANY RESPONSE FROM ASSESSEE, LD. AO PROCEEDED TO COMPLET E THE ASSESSMENT ON BEST JUDGMENT BASIS IN TERMS OF SECTION 144 OF THE INCOME TAX ACT, 1961. ULTIMATELY, FINDING THE STATED PURCHASES UNVE RIFIABLE, THE BOOKS OF ACCOUNTS WERE REJECTED U/S 145(3) AND THE ASSESSEE WAS SADDLED WITH ADDITION OF RS.105.05 LACS, BEING SUSPICIOUS PURCHA SES. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL AGAINST THE SAME BEFORE LEARNED FIRST APPELLATE AUTHORITY WITH PARTIAL SUCC ESS VIDE IMPUGNED ORDER DATED 16/03/2018 WHEREIN THE ASSESSEE, INTER-ALIA, PLEADED FOR RESTRICTING THE ADDITION TO SOME REASONABLE ESTIMATES. AFTER CO NSIDERING THE SAME, LEARNED FIRST APPELLATE AUTHORITY, INTER-ALIA, RELYING UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT V/S SIMIT P. SHETH [356 ITR 451] RESTRICTED THE ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. WHILE DOING SO, IT WAS NOTED THAT CORRESPONDING SALES COULD NOT BE ACHIEVED WITHOUT MAKING THE PURCHASES AND LD. AO HAD NOT DOUBTED THE SALES TURNOVER. FURTHER, THE PAYMENT TO SUPPLIERS WAS THROUGH BANKI NG CHANNELS AND DULY REFLECTED IN ASSESSEES BANK ACCOUNT. IT WAS ALSO O BSERVED THAT LD. AO 4 ITA NO.3880/MUM/2018 M/S. SUPER TECH INDUSTRIES ASSESSMENT YEAR :2011-12 FAILED TO MAKE ANY FURTHER INVESTIGATION AND COMPLE TED THE ASSESSMENT ON MERE SUSPICION. AGGRIEVED BY THE AFORESAID ADJUDICA TION, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. AFTER CAREFUL CONSIDERATION, THE UNDISPUTED POSI TION THAT EMERGES ARE THE FACTS THAT THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES AND SALES TURNOVER WAS ACCEPTED BY LD. AO. THE PAYMENT TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. NO EFFECTIVE INVESTIGATIO N WAS CARRIED OUT BY LD. AO WHILE MAKING THE IMPUGNED ADDITIONS AND THE ASSE SSMENT WAS FRAMED ON MERE SUSPICION. THEREFORE, THE ACTION OF LEARNED FIRST APPELLATE AUTHORITY IN RESTRICTING THE ADDITIONS TO 12.5% OF ALLEGED BO GUS PURCHASES COULD NOT BE FAULTED WITH. BY CONFIRMING THE SAME, WE DISMISS THE APPEAL. 6. IN THE RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST, 2019. SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 19/08/2019 SR.PS:-JAISY VARGHESE 01 21 / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 5 ITA NO.3880/MUM/2018 M/S. SUPER TECH INDUSTRIES ASSESSMENT YEAR :2011-12 2. $!# / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./ & 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.