ACIT 21(2), MUMBAI V. PRAVIN U JAIN, MUMBAI

ITA 3971/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0308 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: LALIT KUMAR CHHAJEDLD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO. 3971/M/2016 PRAVIN U JAIN ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3971/MUM/2016 ( / ASSESSMENT YEARS: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX 21(2) ROOM NO.115, 1 ST FLOOR PIRAMAL CHAMBERS PAREL MUMBAI -400 012 / VS. PRAVIN U . JAIN PROP. M/S. UNIQUE INDUSTRIAL CORPORATION FLAT NO.10 DSK TRILOK CHS LTD.,469 K.W.CHITLE MARG DADAR(W) MUMBAI -400 028 ! ./ ./PAN/GIR NO. AACPJ-8270-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : LALIT KUMAR CHHAJED,LD. AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 03/08/2017 / DATE OF PRONOUNCEMENT : 04 /08/2017 ITA NO. 3971/M/2016 PRAVIN U JAIN ASSESSMENT YEAR-2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-33 [CIT(A)], MUMBAI DATED 14/03/2016 QUA RELIEF PROVIDED TO ASSESSEE AGAINST CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF KITCHEN HOME PRODUCTS ETC. UNDER PROPRIETORSHIP CONCERN NAMELY UNIQUE INDUSTRIAL CORP. WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR THE IMPUGNED AY ON 11/03/2014 WHERE THE INCOME OF THE A SSESSEE WAS DETERMINED AT RS.2,83,71,753/- AS AGAINST RETURNED INCOME OF RS.31,71,413/- FILED BY THE ASSESSEE ON 17/09/2009. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) BUT SUBJECTED TO REA SSESSMENT PROCEEDINGS PURSUANT TO RECEIPT OF CERTAIN INFORMAT ION FROM SALES TAX DEPARTMENT THAT THE ASSESSEE STOOD BENEFICIARY OF C ERTAIN BOGUS PURCHASE BILLS. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED TO TH E ASSESSEE ON 20/03/2013 AND REASSESSMENT PROCEEDINGS U/S 147 WERE COMPLETED AFTER CERTAIN ADDITION ON ACCOUNT OF BOGUS PURCHASES AND THE SAME ARE THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT, IT WAS NOTICED THAT THE ASSE SSEE MADE AGGREGATE PURCHASES OF RAW MATERIAL FOR RS.2,52,00, 340/- FROM FOUR SUSPICIOUS DEALERS. THE NOTICES U/S 133(6) WAS ISSU ED TO THESE PARTIES ITA NO. 3971/M/2016 PRAVIN U JAIN ASSESSMENT YEAR-2009-10 3 BUT THE SAME WERE RETURNED BACK UNDELIVERED. THE AS SESSEE CONTENDED THAT RAW MATERIAL WAS CONSUMED IN PRODUCING FINISHE D GOODS WHICH WAS SOLD TO REPUTED PARTIES AND THERE COULD BE NO SALES WITHOUT ANY PURCHASES. THE ASSESSEE FURNISHED PURCHASES DETAILS AND DETAILS OF PAYMENT MADE TO THE ALLEGED BOGUS SUPPLIERS. HOWEVE R, NOT CONVINCED, LD. AO NOTED THAT THE ASSESSEE COULD NOT SUBSTANTIA TE ACTUAL DELIVERY OF GOODS AND THE DETAILS PROVIDED WERE NOT SUFFICIENT. FINALLY, THESE PURCHASES WERE TREATED AS BOGUS PURCHASES AND ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT (A) VIDE IMPUGNED ORDER DATED 14/03/ 2016 WHERE THE ASSESSEE RAISED SIMILAR CONTENTIONS AND ASSERTED TH AT REFLECTED GP RATE IN THE IMPUGNED AY WAS IN TUNE WITH EARLIER YEARS A ND HENCE, DISALLOWANCE WAS NOT JUSTIFIED. RELIANCE WAS ALSO P LACED ON MANY JUDICIAL PRONOUNCEMENTS TO SUPPORT VARIOUS CONTENTI ONS. HOWEVER, LD. CIT(A) NOTED THAT THE ASSESSEE SUFFERED SIMILAR DIS ALLOWANCE IN AY 2010-11 WHERE THE FIRST APPELLATE AUTHORITY RESTRIC TED THE IMPUGNED ADDITIONS TO THE EXTENT OF 10%. FOLLOWING THE SAME, THE ADDITION WAS, THUS, RESTRICTED TO 10% OF BOGUS PURCHASES . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUPPORT ED THE STAND TAKEN BY LD. AO AND CONTENDED THAT MERE PAYMENT THR OUGH BANKING CHANNELS WAS NOT SUFFICIENT TO ESTABLISH THE GENUIN ENESS OF THE PURCHASES. MOREOVER, NONE OF THE SUPPLIER WAS FOUND AT THE GIVEN ADDRESS AND THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIE ON THE ITA NO. 3971/M/2016 PRAVIN U JAIN ASSESSMENT YEAR-2009-10 4 ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THER EFORE, FULL DISALLOWANCE THEREOF WAS JUSTIFIED. 4.1 PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTENTION T O THE FACT THAT THE ASSESSEE CONTESTED THE ORDER OF L D. CIT(A) FOR AY 2010- 11 BEFORE THIS TRIBUNAL VIDE ITA NO. 6342/MUM/2014 ORDER DATED 05/04/2017 WHERE THE ADDITION HAS BEEN ESTIMATED @7 % BY THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD INCLUDING DECISION OF TRIBUNAL I N ASSESSEES OWN CASE FOR AY 2010-2011. WE ARE CONVINCED WITH THE ARGUMEN TS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AS IT COULD NOT PRODUCE SUFFICIENT EVIDEN CES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CON FIRMATORY LETTERS FROM THE ALLEGED BOGUS SUPPLIERS AND THUS FAILED TO SUBS TANTIATE THE PURCHASES. HOWEVER, AT THE SAME TIME, THE ASSESSEE IS A MANUFACTURER & TRADER AND THERE COULD BE NO SALES WITHOUT PURCHA SE OF RAW MATERIAL. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. 6. THE ASSESSEE HAS CONTENDED THAT THE ADDITION BE RESTRICTED TO 7% OF BOGUS PURCHASES FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSE ES OWN CASE FOR AY 2010-2011. HOWEVER, WE FIND THAT TH IS IS REVENUES APPEAL AND THEREFORE, NO FURTHER RELIEF COULD BE GR ANTED TO ASSESSEE IN ITA NO. 3971/M/2016 PRAVIN U JAIN ASSESSMENT YEAR-2009-10 5 THIS APPEAL. DURING PROCEEDINGS, THE RESPECTIVE REP RESENTATIVES DID NOT POINT OUT ANY CROSS APPEAL / CROSS OBJECTION BY THE ASSESSEE FOR IMPUGNED AY. THEREFORE, WE FIND THE DECISION OF LD. CIT(A) TO BE FAIR AND REASONABLE AND HENCE, CONFIRM THE SAME. 7. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.08.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI