ITO WARD 12(3)(3), Mumbai V. M/S SPARR TEST SYSTEM & CHEMICALS PVT LTD., Mumbai

ITA 3993/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1469 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Assessee Lawyers: PRATIMA RATI
• Keywords: Bogus purchase; Tax effect; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3993 / / 2019 (%. .2010-11 ) ITA NO. 3993/MUM/2019 (A.Y.2010-11) INCOME TAX OFFICER, WARD -12(3)(3), 147A, 1 ST FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020. / VS. : / APPELLANT M/S. SPARR TEST SYSTEM & CHEMICALS PVT. LTD. 304, SURESH PARK, POKARAN ROAD, NO.1, JEKE GRAM POST, THANE(W) 400 606 PAN: AAFCM 0652G : / RESPONDENT ASSESSEE BY : MS.PRATIMA RATI REVENUE BY : SHRI SANJAY J. SETHI / DATE OF HEARING : 02/12/2020 / DATE OF PRONOUNCEMENT : 07/12/2020 / ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI ( I N SHORT THE CIT(A)) DATED 28/03/2019 FOR THE ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM R ECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF TESTING MACHINES USED FOR TESTING STRENGTH OF 2 ITA NO. 3866/MUM/2019 (A.Y.2010-11) CORRUGATED BOXES. ON THE BASIS OF INFORMATION RECE IVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA BY DGIT(INVES TIGATION), MUMBAI THE ASSESSMENT FOR ASSESSMENT YEAR 2010-11 IN THE CASE OF ASSESSEE WAS REOPENED. AS PER THE INFORMATION RECEIVED, THE ASS ESSEE HAD BOGUS PURCHASE TRANSACTIONS WITH M/S. AMAR TRADING CORPORATION AMO UNTING TO RS.17,24,006/-. THE NAME OF THE AFORESAID TRADER APPEARED IN THE LI ST OF HAWALA OPERATORS DRAWN BY SALES TAX DEPARTMENT, GOVERNMENT OF MAHARA SHTRA. THE ASSESSEE IN REASSESSMENT PROCEEDINGS COULD NOT PRODUCE DELIVER Y CHALLANS, TRANSPORT RECEIPTS, GOODS INWARD REGISTER, ETC. TO SUBSTANTIA TE TRAIL OF GOODS. THE ASSESSING OFFICER HELD THAT THE PURCHASE BILLS OBTA INED BY THE ASSESSEE FROM M/S. AMAR TRADING CORPORATION ARE BOGUS. THE ASSES SING OFFICER DISALLOWED THE ENTIRE BOGUS PURCHASES. AGGRIEVED BY THE ASSES SMENT ORDER DATED 13/03/2015 PASSED UNDER SECTION 143(3) R.W.S. 147 O F THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), THE ASSESSEE FILED APPE AL BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE FACTS, RESTRICTED THE DI SALLOWANCE TO 12.5%. AGAINST THE FINDINGS OF CIT(A), THE REVENUE IS IN APPEAL. 3. SHRI SANJAY J. SETHI, REPRESENTING THE DEPARTMEN T SUBMITTED THAT THOUGH THE TAX EFFECT INVOLVED IN THE APPEAL IS LESS THAN THE MONETARY LIMIT SPECIFIED VIDE CBDT CIRCULAR NO. 17/2019, DATED 08-08-201 9 BUT THE CASE OF ASSESSEE FALLS UNDER EXCEPTION SPECIFIED IN PARA 10(E) OF CIRCULAR NO. 03 OF 2018 DATED 11/07/2018 AND AMENDED ON 20/08/2018 . THE LD.DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF THE PURCHASES, THEREFORE, THE ASSESS ING OFFICER MADE ADDITION OF THE ENTIRE SUCH BOGUS PURCHASES. THE LD.DEPARTM ENTAL REPRESENTATIVE PRAYED FOR REVERSING THE FINDING OF CIT(A) AND REST ORING THE FINDING OF ASSESSING 3 ITA NO. 3866/MUM/2019 (A.Y.2010-11) OFFICER. THE LD.DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF N.K. PROTEINS LTD. VS. DCIT IN INCOME TAX APPEAL NO.769 OF 2017 DECIDED ON 16/01/2 017. 4. PER CONTRACT, MS.PRATIMA RATI, APPEARING ON BEHA LF OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF CIT(A) IN RESTRICT ING THE DISALLOWANCE ON ALLEGED BOGUS PURCHASES TO 12.5%. THE LD.AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SALES MADE BY THE ASSESSEE HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER, THEREFORE, THE ENTIRE ALL EGED BOGUS PURCHASES CANNOT BE ADDED. WITHOUT PURCHASES THERE CANNOT BE SALES. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRAYED FOR CONFIRMIN G THE FINDINGS OF CIT(A) AND DISMISSING THE APPEAL OF REVENUE. 5. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE ASSESSING OFFICER IN THE ABSENCE OF SUPPORTING DOCUMENTS TO P ROVE GENUINENESS OF PURCHASES HAS TREATED THE PURCHASES MADE BY ASSESSE E FROM M/S. AMAR TRADING CORPORATION AMOUNTING TO RS.17,24,006/- AS BOGUS. UNDISPUTEDLY, THE SALES DECLARED BY THE ASSESSEE HAVE BY THE ASSESS ING OFFICER. SINCE, THE SALES HAVE BEEN ACCEPTED, THE SAME WOULD NOT HAVE BEEN PO SSIBLE WITHOUT PURCHASES. IN SUCH LIKE TRANSACTIONS IT IS ONLY TH E PROFIT ELEMENT EMBEDDED IN BOGUS PURCHASE BILLS THAT HAS TO BE BROUGHT TO TAX. THE ENTIRE PURCHASES CANNOT BE ADDED. THE CIT(A) HAS DISALLOWED 12.5% OF THE B OGUS PURCHASES, THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE. I FIND NO INFI RMITY IN THE ORDER OF CIT(A, HENCE, CALLS FOR NO INTERFERENCE. 4 ITA NO. 3866/MUM/2019 (A.Y.2010-11) 6. IN THE RESULT, IMPUGNED ORDER IS UPHELD AND TH E APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON MONDAY THE 7 TH DAY OF DECEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 07/12/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI