ACIT-1, KALYAN V. BHAVE ENGINEERING PRIVATE LIMITED, MUMBAI

ITA 3886/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7394 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDI
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries
• Section: 133(6); 143(1); 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO. 3886 / MUM . /201 8 ( ASSESSMENT YEAR : 20 11 12 ) ASSTT . COMMISSIONER OF INCOME TAX CIRCLE 1 , KALYAN . APPELLANT V/S BHAVE ENGINEERING PVT. LTD. SHED NO.16, OPP. MIDC OFFICE AREA BADLAPUR, THANE 421 503 PAN AAACB7065K . RESPONDENT REVENUE BY : SHRI SAMATHA MULLAMUDI ASSESSEE BY : NONE DATE OF HEARING 30 .0 9 .2019 DATE OF ORDER 25.10 . 20 19 O R D E R PER SAKTIJIT DEY. J.M. AFORESAID APPEAL BY THE REVENUE IS AGAINST ORDER DATED 20 TH MARCH 2018, PASSED BY THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) 3 , NASHIK, FOR THE ASSESSMENT YEAR 201 1 12 . 2. THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE BEING AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES. 2 BHAVE ENGINEERING PVT. LTD. 3. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. ACCORDINGLY, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINE SS OF MANUFACTURING AND TRADING OF STEEL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2011, DECLARING NIL INCOME. INITIALLY, THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, INDICATING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY THREE PARTIES BY WAY OF BOGUS PURCHASE BILLS AMOUNTI NG TO ` 1,57,63,178, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE AFORESAID PURCHASES THROUGH SUPPORTING EVIDENCES LIKE STO CK REGISTER, MODE OF PAYMENT FOR THE GOODS PURCHASED, TRANSPORTATION BILLS AND OCTROI CHALLAN, DELIVERY CHALLAN, ETC. FURTHER, TO INDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT W HICH , AS ALLEGED BY THE ASSESSING OFFICER , RETURNED BACK UN SERVED. 3 BHAVE ENGINEERING PVT. LTD. FURTHER, THE ASSESSING OFFICER AFTER VERIFYING THE EVIDENCES FURNISHED BY THE ASSESSEE, WAS OF THE OPINION THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES THROUGH PROPER DOCUMENTARY EVIDENCES. ACCORDINGLY, HE TREATED THE PURCHASES OF ` 1,57,63,178, AS NON GENUINE ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 5. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF CERTAIN JUDICIAL PRECEDENTS CITED BEFORE HIM, RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, PRIMARILY RELYING UPON THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THE ASSESSING OFFICER HAS TREATED THE DISPUTED PURCHASES AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, IT IS A FACT ON RECORD THAT THE ASSESSEE HAS FURNISHED THE PURCHASE BILLS , DETAILS OF PAYMENT MADE THROUGH BANKING CHANNEL ETC . FURTHER, CONSUMPTION OF GOODS AND SALE OF FINISHED PRODUCTS SHOWN BY THE ASSESSEE HAS N OT BEEN DISPUTED BY THE ASSESSING OFFICER. THAT BEING THE CASE, IT WOULD BE LOGICAL TO CONCLUDE THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GREY 4 BHAVE ENGINEERING PVT. LTD. MARKET TO AVOID PAYMENT OF VAT AND TO RE GULARIZE SUCH PURCHASES HAS OBTAINED ACCOMMODATION BILLS. UND ER THESE CIRCUMSTANCES, THE ENTIRE PURCHASES CANNOT BE ADDED BACK TO THE INCOME OF THE ASSESSEE BUT ONLY THE PROFIT ELEMENT EMBEDDED THEREIN CAN BE CONSIDERED FOR ADDITION. THEREFORE, THE APPROACH OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALL OWANCE TO 12.5% OF THE NON GENUINE PURCHASES IS NOT ONLY JUST AND PROPER BUT ALSO IN CONSONANCE WITH THE VIEW EXPRESSED BY THE TRIBUNAL AND THE HONBLE HIGH COURT IN SIMILAR NATURE OF CASES. FOR THE AFORESAID REASONS, WE UPHOLD THE DECISION OF LEARNED COMM ISSIONER (APPEALS) ON THE ISSUE. GROUNDS ARE DISMISSED. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 25.10.2019 SD/ - MANOJ KUMAR AG GARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.10.2019 5 BHAVE ENGINEERING PVT. LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI