CONCORDE DESIGNS P.LTD, MUMBAI V. DCIT 5(1), MUMBAI

ITA 392/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2044 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Peak credit
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, MU MBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.392/MUM/2015 FOR ASSESSMENT YEAR: 2010- 11 CONCORDE DESIGNS PVT. LTD. 101-102, PRATHAMESH BUILDING, PLOT 132, KHAREGHAT ROAD, HINDU COLONY, DADAR (E), MUMBAI -400014 PAN: AABCC8160D VS. DCIT-5(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH S. ACHARYA (AR) REVENUE BY : SHRI D.V. SINGH (DR) DATE OF HEARING : 25.08.2016 DATE OF PRONOUNCEMENT : 02.11.2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL U/S 253 OF THE INCOME-TAX ACT ( ACT) IS DIRECTED BY ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)-9, MUMBAI [FOR SHORT CIT(A)] DATED 01.10.2014 FOR AS SESSMENT YEAR (AY)- 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMIN G THE ORDER OF THE DEPUTY COMMISSIONER BY TREATING THE PURCHASES FROM CERTAIN PARTIES AGGREGATING TO RS. 29,44,125 AS BOGUS WHEN THE APPELLANT HAD IN FA CT PLACED THE ASSESSMENT REQUIREMENTS OF COPIES OF INVOICES, LEDGER ACCOUNTS AND BANK STATEMENTS BEFORE THE DEPUTY COMMISSIONER WHICH WERE SOUGHT BY HIM DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND ALSO FIND MENTION IN THE TEXT OF HIS ASSESSMENT ORDER. 2. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN CONTEXT OF THE ADDITION OF RS. 29,44,125 THE COMMISSIONER OF INCOM E TAX (APPEALS) WAS WRONG IN TOTALLY IGNORING THE FACTS THAT, FIRSTLY, THE APPELLANT'S REQUEST FOR SHARING THE INFORMATION (IF ANY) WAS NOT CONSIDERED AND SECONDLY, THE REPLIES ITA NO.392/M/015, CONCORDE DESIGNS PVT. LTD. 2 UNDER THE R.T.I. ACT FROM THE VARIOUS SALES TAX DEP ARTMENT OFFICERS WAS NOT CONSIDERED AT ALL AND FINALLY THE PEAK CREDIT / G.P . WORKING STATEMENTS WERE ALSO NOT CONSIDERED IN THE APPELLATE ORDER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 30.09.2010 DECLARING TOTA L INCOME AT RS. 88,77,261/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT BESIDES T HE OTHER ADDITION DISALLOWED A SUM OF RS. 29,44,125/- ON ACCOUNT OF B OGUS PURCHASES AND MADE THE ADDITION U/.S 69C OF THE ACT. THE ASSESSEE FILE D APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ADDITION WAS SUSTAINED, THUS, FU RTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRE SENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD REPRESENTATIVES OF THE PARTIES AND GONE THROUGH THE RECORD OF THE CASE. THE LD. AUTHORISED REPRESENTATI VE (AR) OF THE ASSESSEE ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO DOUBTED ABOUT THE GENUINENESS OF CERTAIN PURCHASES. THE AO ASKED TO E XPLAIN THE DETAILS OF PURCHASES FROM (I) ENTECH ENTERPRISES (II) G.M. INT ERNATIONAL (III) GREAT INTERNATIONAL & (IV) SHAH INDUSTRIES. THE ASSESSEE FILED ITS REPLY, VIDE REPLY DATED 20.01.2013 AND CONTENDED THAT THE ASSESSEE MA DE THE PURCHASES FROM THOSE PARTIES AND PAYMENTS WERE MADE THROUGH CHEQUE . THE COPY OF PURCHASE BILL, BANK STATEMENT AND PAN NUMBER OF TWO PARTIES WERE FURNISHED. IT WAS FURTHER CONTENDED THAT OUT OF THE TOTAL FOUR PARTIE S, TWO PARTIES ARE REGULARLY FILING THEIR TAX RETURN. THE ASSESSEE PRAYED THAT N O ADDITION IN RESPECT OF THOSE TWO PARTIES BE MADE. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY AO. THE AO HOLD THAT AS PER THE DETAILS, THE ASSESSEE M ADE TRANSACTIONS FROM THE PARTIES WHO WERE INVOLVED IN HAWALA TRANSACTION AS PER THE RECORD OF SALES TAX DEPARTMENT OF GOV OF MAHARASHTRA, THUS, THE ENT IRE PURCHASES FROM ALL FOUR PARTIES WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. IT WAS FURTHER ARGUED THAT THE LD. CIT(A) HAS NOT GIVEN A NY DIFFERENT FINDING EXCEPT OF CONFIRMING THE ADDITION MADE BY AO. THE ASSESSE E FURNISHED THE DETAILS OF PURCHASES ALONG WITH DOCUMENTARY EVIDENCE. THE L D. CIT (A) DESPITE ITA NO.392/M/015, CONCORDE DESIGNS PVT. LTD. 3 GIVING THE DETAILS OF THE SALE AND PURCHASE TRANSAC TION DID NOT SEEK ANY REMAND REPORT FROM THE AO IN RESPECT OF GENUINENESS OF PURCHASES. THE REPORT OF SALES TAX DEPARTMENT OR THE STATEMENT WAS NOT SUPPLIED TO THE ASSESSEE. THE LD AR FOR ASSESSEE THAT THE FIRST APP ELLATE AUTHORITY EVEN NOT CONSIDERED THE PEAK CREDIT / G.P. WORKING STATEMENT S. THE LD AR FOR THE ASSESSEE FURTHER RELIED ON THE FOLLOWING DECISIONS: (A) CIT VS NIKUNJ EXIMP ENTERPRISES LTD. (BOMBAY HIGH C OURT) ITANO.5604/2010. DATED 17.12.2012. (B) H.R. MEHTA VS ACIT (BOMBAY HIGH COURT) ITANO.58/200 1. DATED 30.06.2016. (C) GANPAT A SANGHVI VS ACIT, ITA NO 2826/M/2013. (D) RAMESH KUMAR &CO VS ACIT, ITA NO.2959/M/2014. (E) ACIT VS RAMILA PRAVIN SHAH; ITA NO. 5246/M/2013 (F) ITO VS DEEPAK POPATLAL GALA, ITA NO. 5929/M/2013. (G) DCIT VS ASPEE AGRO EQUIPMENT PVT LTD.ITA NO.4065/M/ 2014 (H) JAGIR VINAYCHANDRA SHAH VS ITO, ITA NO 1223/M/ 2014 . (I) ACIT VS TARLA R SHAH , ITA NO.5295/M/2013. (J) DCIT VS RAJEEV KALATHIL ,ITA NO. 5312/M/2013. (K) MOHAMMAD TAUFIQ NAVALAKIYA VS ITO, ITA NO1231/M/201 2 (L) PARAS ORGANICS VS DCIT, ITA NO.2369/M/2014. (M) ACIT VS RONAK GEMS, ITA NO.4443T04445/M/2012. (N) ITO VS SANJAY V DHRUV, ITA NO.5089/M/2014. (O) ITO VS TAKHTMAL BHURALAL ITA NO.4526 TO 4528/M/2014 . (P) MPIL STEEL STRUCTURE VS DCIT ITA NO. 6602/M/2014. THE LD DR FOR THE REVENUE SUPPORTED THE ORDER OF AU THORITIES BELOW AND PRAYED THAT THE TRIBUNAL WHILE CONSIDERING THE CASE OF THE ASSESSEE 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW AND THE DECISIONS RELIED BY LD AR FOR THE ASSESSEE. THE AO WHILE MAKING THE DISALLOWANCE CONCLUDED THAT THE ASSESSEE HAS INFLATED ITS BOGUS PURCHASES TO THE TUNE OF RS. 29, 44,125/- FROM THE DEALERS WHO WERE INVOLVED IN THE HAWALA TRANSACTION AND THA T THE ASSESSEE IS BENEFICIARY OF SUCH TRANSACTION. THE LD CIT(A) WHIL E CONSIDERING THIS GROUND ITA NO.392/M/015, CONCORDE DESIGNS PVT. LTD. 4 CONCLUDED THAT DURING THE ASSESSMENT PROCEEDINGS TH E ASSESSEE NOT PROVIDED ANY DOCUMENTARY EVIDENCE OF ACTUAL DELIVERY OF THE ALLEGED MATERIAL PURCHASED FROM THE SAID PARTIES. IT WAS FURTHER CON CLUDED THAT EVEN DURING THE APPELLATE STAGE THE ASSESSEE NOT FILED ANY DOCUMENT ARY EVIDENCE. WE HAVE SEEN THAT BEFORE US THE ASSESSEE HAS PLACED ON RECO RD SEVEN NUMBER OF COPIES OF INVOICES OF M/S ENTECH ENTERPRISES AND TWO INVOI CES OF M/S G.M. INTERNATIONAL. NO INVOICES IN RESPECT OF PURCHASES FROM M/S GREAT INTERNATIONAL AND M/S SHAH INDUSTRY ARE FILED ON RE CORD. NO DELIVERY WITH RECEIPT, TRANSPORT RECEIPT OR THE COPY OF STOCK REG ISTER WITH REGARD TO THE DISPUTED PURCHASED ARE IS PLACED ON RECORD BEFORE U S. THE ASSESSEE HAS RELIED ON AS MANY AS ON SIXTEEN DECISIONS FACTS OF WHICH A RE NOT EXACTLY SAME AS IN THE CASE OF ASSESSEE. THE ASSESSEE HAS NOT GIVEN EVEN A SINGLE DOCUMENT IN RESPECT OF PURCHASE OF MATERIAL FROM M/S GREAT INTE RNATIONAL AND M/S SHAH INDUSTRY. FROM M/S GREAT INTERNATIONAL AND M/S SH AH INDUSTRY THE ASSESSEE HAS ALLEGEDLY PURCHASED MATERIAL OF RS. 3,27,226/- AND RS. 2,57,712/- RESPECTIVELY. UNDER THE INCOME-TAX ACT ONLY REAL IN COME IS TAXABLE. IN THE PRESENT CASE THE ASSESSEE HAS NOT PROVED THE TRANSA CTION WITH REGARD TO M/S GREAT INTERNATIONAL AND M/S SHAH INDUSTRY. MOREOVER , IN CASE OF OTHER TWO PARTIES I.E. M/S ENTECH ENTERPRISES AND G.M. INTERN ATIONAL THE ASSESSEE HAS NOT PROVED THE DELIVERY AND STOCK REGARDING THE MAT ERIAL PURCHASED. THE AO OR THE LD. CIT(A) HAS NOT EXAMINED THE STATEMENT O F BANK ACCOUNTS OF M/S ENTECH ENTERPRISES AND G.M. INTERNATIONAL WHOSE PAR TICULARS WERE SUPPLIED BY THE ASSESSEE. AND THE ASPECT REGARDING IF THE PA YMENT MADE BY ASSESSEE WAS IMMEDIATELY SIPHONED OR NOT. IN SUCH A SITUATIO N, IF WE ASSUME THAT THE ASSESSEE WOULD HAVE PURCHASED THE GOODS BY INVESTIN G UNACCOUNTED CASH BY MAKING PURCHASE FROM GRAY MARKET AND AVAILED THE AC COMMODATION BILL, THE ADDITION OF ENTIRE PURCHASE AMOUNT FROM M/S ENTECH ENTERPRISES AND G.M. INTERNATIONAL CANNOT BE MADE. WE THINK THAT CAUSE O F JUSTICE WOULD BE MET BY MAKING ADDITION OF REASONABLE PERCENTAGE OF SUCH PU RCHASES IN ORDER TO FILL ITA NO.392/M/015, CONCORDE DESIGNS PVT. LTD. 5 THE GAP OF REVENUE LEAKAGE. THUS, IN THE PRESENT CI RCUMSTANCES, WE FIND THAT THE ADDITION TO THE EXTENT OF 5% FROM THE IMPUGNED PURCHASES FROM M/S ENTECH ENTERPRISES AND G.M. INTERNATIONAL AND THE A DDITION TO THE EXTENT OF 25% FROM M/S GREAT INTERNATIONAL AND M/S SHAH INDUS TRY WOULD MEET THE ENDS OF JUSTICE. WITH THESE OBSERVATIONS, THE APPEA L OF THE ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND NOVEMBER, 2016 SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 02/11/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/