ITO 33(3)(4), MUMBAI V. SYNERGY INFRASTRUCTURES, MUMBAI

ITA 4103/MUM/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3439 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Department
• Bench Allotted: E
• Next Hearing Date: 01-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2016
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO.4103/M/2016 (ASSESSMENT YEAR: 2011 - 2012 ) ITO - 33(3)(4), R.NO.604, C - 12, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. / VS. SYNERGY INFRASTRUCTURES, 01, BHARAT VILLA, BHOGILAL FADIA ROAD, KANDIVALI (W), MUMBAI 400 067. ./ PAN : ABJFS3371A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VISHWAS MUNDHE, DR / RESPONDENT BY : NONE / DATE OF HEARING : 01.03 .2017 / DATE OF PRONOUNCEMENT : 17 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 15.6.2016 IS AGAINST THE ORDER OF THE CIT (A) - 45, MUMBAI DATED 11.3.2016 FOR THE ASSESSMENT YEAR 2011 - 2012. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - (I) . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT (A) HAS ERRED IN RESTRICTING THE ADDITION OF RS. 1,27,15,912/ - MADE IN RESPECT OF BOGUS PURCHASES TO RS. 15,89,489/ - ESPECIALLY WHEN CIT () HAS CLEARLY FOUND THAT THE ASSESSEE DID NOT FULLY SUBS TANTIATE THE CLAIM OF GENUINE PURCHASES. (II). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT MAKING INQUIRY OR DIRECTING THE AO TO CONDUCT INQUIRIES TO ESTABLISH THE CORRECT FACTS IN THIS CASE, WHEN IT IS NOT ICED THAT THE ASSESSEE HAD COMPLETELY FAILED TO ESTABLISH THE GENUINENESS OF PURCHASE. (III). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DETERMINING THE PROFIT PERCENTAGE AT THE RATE OF 12.5% OF BOGUS PURCHASE S WHILE THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES CLAIMED. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO THE RELIEF GRANTED BY THE CIT (A) IN RESPECT OF THE ADDITION OF ENTIRE BOGUS PURCHASES. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDING AND LAND DEVELOPMENT. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL AND CLAIMED RS. 56,63,33,688/ - AS CLOSING WORK - IN - PROGRESS . THE 2 AS SESSMENT WAS COMPLETED U/S 143(3) OF THE ACT WHEREIN THE AO REDUCED THE SAID CLAIM TO RS.56,36,17,776/ - AND TREATED THE DIFFERENCE AMOUNT OF RS. 1,27,15,912/ - AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. FURTHER, DURING THE ASSESSMENT PROCEEDINGS, AO OB SERVED THAT DURING THE YEAR ASSESSEE MADE PURCHASES FROM CERTAIN PARTIES [VIZ AMAR TRADING CORPORTION; (II) JAINEX TRADERS PVT LTD; (III) MAA CHAMUNDA SALES PVT LTD; (IV) SOMNATH INTERNATIONAL AND (V) TIRUPATI ENTERPRISES], WHOSE NAMES ARE APPEARING IN THE WHOSE NAMES ARE LISTED BY THE SALES TAX DEPARTMENT IN THEIR WEBSITE IE WWW.MAHAVAT.GOV.IN AS SALES TAX DEFAULTERS. ALL SUCH PURCHASES INVOLVING THE SUPPLIERS ENLISTED THE SAID SALES TAX DEPARTMENT WEBSITE WERE ADDE D BY THE AO U/S 69C OF THE ACT. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3 . DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ EXIMP ENTERPR ISES PVT LTD VS. ACIT VIDE WRIT PETITION NO. 2860 OF 2012, DATED 18 TH JUNE, 2014 AND DISPROVED THE ADDITION MADE BY THE AO U/S 69C OF THE ACT. FURTHER, RELYING ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH , ITA NO. 553 OF 2012, DATED 16.1.2013, CIT (A) RESTRICTED THE ADDITION TO RS. 1,58,949/ - IE 12.5% OF SUCH ALLEGED BOGUS PURCHASES OF RS. 1,27,15,912/ - . AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE GROUNDS. 4 . DURING THE PROCEEDINGS BEFORE US, NONE APPEARED TO REPRESENT THE ASSESSEES CASE. CONSIDERING THE COVERED NATURE OF THE ISSUES, WE PROCEED TO ADJUDICATE THIS APPEAL ON MERITS WITH THE HELP OF THE LD DR FOR THE REVENUE. 5 . ON THE OT HER HAND, LD DR FOR THE REVENUE DUTIFULLY RELIED ON THE ORDER OF THE AO AND THE VIEW TAKEN BY HIM. 6 . ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 7 OF THE CIT (A)S ORDER IN PARTIC ULAR, WE FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION FROM THE SAID PARA IS EXTRACTED AS UNDER: - 7............ 3 ............... HENCE, I AM OF THE CON SIDERED VIEW THAT MATERIALS HAVE BEEN PURCHASED WHETHER FROM THESE PARTIES OR NOT IS DOUBTFUL. MOREOVER, THOUGH PURCHASES WERE NOT MADE FROM THESE PARTIES, THERE IS QUANTITATIVE TALLY OF MATERIALS PURCHASED AND SOLD. FOLLOWING THE JUDICIAL PRONOUNCEMENT S ON THIS ISSUE, I FIND THAT THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. SINCE, THE APPELLANT IS A BUILDER AND BILLS HAVE BEEN PROCURED FOR MATERIALS, 12.5% OF PROFITS EMBEDDED IN SUCH PURCHASES IE 12.5% OF RS. 1,27,15,912/ - AMOUNTING TO RS. 1,58,949/ - IS CONFIRMED. 7 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE BEFORE GRANTING RELIEF TO THE ASSESSEE, CIT (A) RIGHTLY FOLLOWED THE PRECEDENTS ON THE ISSUE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INT ERFERENCE. ACCORDINGL Y, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 17 TH MARCH, 201 7 . SD/ - SD/ - ( SANDEEP GOSAIN ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17 .03 .201 7 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI