ANIL POPATLAL UDESHI, MUMBAI V. ITO 19(1)(1), MUMBAI

ITA 40/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8821 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.40/M/2017 ASSESSMENT YEAR: 2009-10 SHRI ANIL POPATLAL UDESHI, BIRLA MANSION NO.2, DR. DD SATHE MARG, PRATHANA SAMAJ, MUMBAI 400 004 PAN: AAAPU1762D VS. INCOME TAX OFFICER 19(1)(1), 2 ND FLOOR, MATRU MANDIR, MUMBAI - 07 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI SAURABH DESHPANDE, D.R. DATE OF HEARING : 21.08.2017 DATE OF PRONOUNCEMENT : 31.10.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 20.09.2016 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF RESELLER OF XEROX MACHIN E, COPIER SPARE PARTS AND XEROX MACHINE PARTS. DURING THE YEAR THE ASSESSING ITA NO.40/M/2017 SHRI ANIL POPATLAL UDESHI 2 OFFICER (HEREINAFTER REFERRED TO AS THE AO) FOUND T HAT ASSESSEE HAD MADE BOGUS PURCHASES FROM FOLLOWING PARTIES: SR. NO. NAME OF THE PARTY BILL AMOUNT (RS) 1. SAILEELA TRADING PVT. LTD. 3,00,560/- 2. STHAPNA TRADE IMPEX PVT. LTD. 6,63,000/- 3. MANAV IMPEX 1,02,69,633/- 4. RIDDHI ENTERPRISES 2,97,000/- 5. KC ENTERPRISES 3,93,750/- 6. PUSHPHAR ELECTRICALS & ENGINEERS PVT. LTD. 11,17,125/- 7. KAMESHWAR TRADING PVT. LTD. 19,94,200/- 8. TAKSHIL TRADING PVT. LTD. 2,34,520/- 9. PAKSHAL TRADELINKS PRIVATE LTD. 4,25,250/- 10. TRICHIPURAM TRADING PVT. LTD. 8,84,000/- 11. RAMEX TRADE IMPEX PVT. LTD. 23,39,745/- 12. JUPITER MULTITRADE PVT. LTD. 4,50,000/- TOTAL 1,93,68,783/- 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.1,93,68,783/- 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 7.12 THE FACTS OF THE APPELLANT'S CASE ARE EXACTLY SIMILAR TO THE ABOVE CASE. RESPECTFULLY FOLLOWING THE ABOVE CI TED DECISION, AND ALSO TAKING INTO CONSIDERATION THAT THE LINE OF BUSINESS THE APPELLANT IS I.E. RESELLER OF XEROX MACHINES AND CO PIER SPARE PARTS & XEROX MACHINE PARTS WHERE THE VAT LEVIED ON THE G OODS ITA NO.40/M/2017 SHRI ANIL POPATLAL UDESHI 3 PURCHASED ITSELF IS 12.5% WHICH IS THE BENEFIT THE APPELLANT IS GETTING BY OBTAINING THE BOGUS BILLS AND THE APPELL ANT ALREADY OFFERED CERTAIN PERCENTAGE OF PROFIT ON SUCH PURCHA SES AND ALSO CONSIDERING THE FACT THAT THE AO ADOPTED THE S AME PERCENTAGE OF PROFIT ON THE TOTAL PURCHASES WHERE T HE GUJARAT HIGH COURT SUPPORTED THE ESTIMATION MADE IN SIMITH SETH CASE I.E. 12.5%, THE ADDITION OF RS.24,21,098/- MADE FOR THIS ASSESSMENT YEAR BY THE AO, @12.5% ON THE TOTAL PURC HASES OF RS.1,93,68,783/-, IS CONFIRMED AND APPEAL ON THI S GROUND IS 'DISMISSED . 5. NO ONE HAS APPEARED ON BEHALF OF THE ASSESSEE. A CCORDINGLY, WE HAVE HEARD THE LD. D.R. AND THE LD. D.R. RELIED UPON THE DECISION OF THE TRIBUNAL, AHMEDABAD BENCH IN THE CASES OF SH WETAMBAR STEELS VS. ITO AHMEDABAD AND GANESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRESENT CASE SHOW THAT ASSE SSEE COULD NOT PRODUCE THE PARTIES FROM WHOM GOODS ARE STATED TO H AVE BEEN PURCHASED. THE SUPPLIERS WERE FOUND TO BE ENGAGED I N PROVIDING BOGUS BILL WITHOUT ACTUAL DEALING OF GOODS. IN THIS REGARD, THE ASSESSEE HAS STATED THAT THEY HAD SUBMITTED QUANTIT ATIVE DETAILS OF STOCK WITH RESPECT OF THE SALES WITH PURCHASES FROM THE PARTIES DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SUBMIT TED THE DETAIL OF CORRESPONDING SALES IN RESPECT OF THE PURCHASE FROM THE SAID PARTIES. AS MENTIONED ABOVE THE AO HAS NEVER DISPUTED OR EXA MINED THE ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY T HE ASSESSEE WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED T HE SALES RECEIPTS OF THE ASSESSEE AS IT IS, THEREFORE, THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE ASSESSEE AND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE IS THE PURCHASES FROM T HE PARTIES FROM WHOM BILLS HAVE BEEN TAKEN AND CHEQUES HAVE BEEN IS SUED TO THEM. ITA NO.40/M/2017 SHRI ANIL POPATLAL UDESHI 4 PURCHASES ARE NOT IN DISPUTE BUT THE PARTIES FROM W HOM PURCHASE ARE SHOWN TO HAVE BEEN MADE ARE DISPUTED AND SUSPICIOUS . THE AO HAD MADE THE ADDITION AS SOME OF THE SUPPLIERS WERE DEC LARED HAWALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD R EASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAK E ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSESSMENT O N SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECORD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE, IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE A ND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS A NY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED. THERE WAS NO DETAILED INVESTIGAT ION MADE BY THE AO HIMSELF. IT IS ALSO FOUND THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY REFLECTED IN TH E BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BACK FROM THE SUPPLIERS. MERELY BECAU SE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION L ETTERS WERE NOT FURNISHED, ONE CANNOT CONCLUDE THAT THE PURCHASES W ERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISIO N OF NIKUNJ EXIMP ENTERPRISES VS. CIT 216 TAXMAN 171 (BOM). TO THIS E XTENT, WE ARE OF THE VIEW THAT IF THE ASSESSEE HAS FULFILLED ITS ONUS OF MAKING THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT CANNOT BE PRESUMED THAT SUPPLIER WERE BOGUS SIMP LY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADDRESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN THE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF ITA NO.40/M/2017 SHRI ANIL POPATLAL UDESHI 5 SCRUTINY PROCEEDINGS. THE AO HAS NOT BROUGHT ANY MA TERIAL ON RECORD TO SHOW THAT THERE IS SUPPRESSION OF SALES. IT IS B ASIC RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PUR CHASE FROM SALES. ESTIMATION OF PROFIT RANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S SIMIT P SHETH 356 ITR 451 (GUJ.). HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY WE HAVE NO ALTERNATIVE E XCEPT TO ENDORSE THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.10.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.