SIROYA DEVELOPERS, MUMBAI V. ITO 17(3)(3), MUMBAI

ITA 411/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0323 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUMAR SANJAY
• Assessee Lawyers: B V JHAVERI
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN , ACCOUNTANT MEMBER ITA NO.411/MUM./2017 (ASSESSMENT YEAR: 2010 11) SIROYA DEVELOPERS 101 KINGSTON TOWERS, G.D. AMBEDKAR MARG, PAREL TANK RD. PAREL (E), MUMBAI 400033 PAN AANFS1544G . APPELLANT V/S ITO 17(3)(3), PREVIOUSLY ASSESSED WITH ACIT 31(3), MUMBAI . RESPONDENT ASSESSEE BY : SHRI. B.V. JHAVERI REVENUE BY : SHRI. KUMAR SANJAY DATE OF HEARING 07.06.2017 DATE OF ORDER - 14 .06.2017 O R D E R PER: B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22.11.2016 PASSED BY LD CIT(A) - 28, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2010 - 11. AT THE TIME OF HEARING, THE LD A.R DID NOT PRESS GROUND NO.3 RELATING TO THE DEDUCTION CLAIMED U/S SIROYA DEVELOPERS ITA NO.411/MUM./2017 2 80IB(10) OF THE ACT. ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. THE REMAINING GROUNDS RELATE TO THE ADDITION OF RS.17,35,459/ - MADE BY THE AO U/S 69C OF THE ACT. 2. THE ASSESSEE IS EN GAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE AO, IN ORDER TO EXAMINE THE CLAIM OF PURCHASE OF MATERIALS AND LABOUR, ISSUED NOTICES U/S 133(6) OF THE ACT TO CERTAIN PARTIES AND THEY WERE RETURNED BACK UN - SERVED. LATER THE AO RECEIVED INFORMATION THAT THE SALES TAX DEPARTMENT HAD IDENTIFIED CERTAIN DEALERS WHO WERE INDULGING IN PROVIDING ONLY ACCOMMODATION ENTRIES WITHOUT ACTUALLY SUPPLYING THE MATERIALS. THE AO NOTICED THAT THE ASSESSEE HAS PURCHASED MATERIALS FROM SEVEN SUCH PARTIES AGGREGATING TO RS.17,35,459/ - . EVEN THOUGH THE ASSESSEE FURNISHED COPIES OF INVOICES SUPPORTING THE PURCHASES AND ALSO PAYMENT DETAILS, YET THE AO TOOK THE VIEW THAT THE SAME WERE NOT SUFFICIENT, PARTICULARLY IN VIEW OF THE FACT THAT THE SUPPLIERS HAVE NOT CONFIRMED THE TRANSACTIONS AND THEIR NAME HAS BEEN FOUND IN THE LIST OF HAWALA DEALERS. ACCORDINGLY HE DISALLOWED THE SUM OF RS.17,35,459/ - TREATING THE SAME AS BOGUS PURCHASES. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE COPIES OF INVOICES, DELIVERY CHALLANS, BANK STATEMENTS IN ORDER TO SIROYA DEVELOPERS ITA NO.411/MUM./2017 3 PROVE THE GENUINENESS OF PURCHASES. HE SUBMITTED THAT THE AO DID NOT BRING ANY OTHER MATERIAL ON RECORD TO DISPROVE THE CLAIM OF T HE ASSESSEE. HE SUBMITTED THAT THE ADDITIONS MADE ON IDENTICAL SET OF FACTS IN THE CASE OF HEERALAL MEGHRAJ DOSHI VS. ACIT (ITA NO.3015/MUM/2015 DATED 15 - 02 - 2017) HAS BEEN DELETED BY THE TRIBUNAL. THE LD A.R ALSO RELIED UPON THE DECISIONS RENDERED BY THE TRIBUNAL IN THE CASE OF SHREE SWASTIK DEVELOPERS (ITA NO.2559/MUM/2014 DATED 01 - 05 - 2017) AND M/S RAMESH KUMAR & CO. (ITA NO.2959/MUM/2014 DATED 28.11.2014). THE LD A.R SUBMITTED THAT THE ASSESSEE HAS DECLARED NET PROFIT @ 8% AND THE SAME IS REASONABLE. ACCORDINGLY HE SUBMITTED THAT THE IMPUGNED ADDITION HAS BEEN MADE ONLY ON SURMISES AND SUSPICIONS AND HENCE THE SAME IS LIABLE TO BE DELETED. 4. ON THE CONTRARY, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER PASSED BY LD CIT(A). 5. I HEARD THE PARTIES AND PERUSED THE RECORD. EVEN THOUGH THE ASSESSEE HAS RELIED UPON CERTAIN CASE LAWS, IN MY VIEW, THEY CANNOT BE TAKEN SUPPORT OF SINCE THE ISSUES REVOLVE AROUND THE FACTS RELATING TO EACH CASE. THE UNDISPUTED FACT REMAINS THAT THE NOTICES ISSUED BY THE AO TO THE IMPUGNED SUPPLIERS U/S 133(6) OF THE ACT HAVE BEEN RETURNED BACK UN - SERVED. I ALSO NOTICE THAT THE ASSESSEE SIROYA DEVELOPERS ITA NO.411/MUM./2017 4 HAS NOT FILED ANY CONFIRMATION LETTERS TO SUBSTANTIATE THE GENUINENESS OF PURCHASES. SINCE THE IMPUGNED SUPPLIERS HAVE BEEN IDENTIFIED AS HAWA LA DEALERS BY THE SALES TAX DEPARTMENT, IN MY VIEW, THE ASSESSEE SHOULD NOT HAVE PLACED FULL RELIANCE ON THE INVOICES AND PAYMENT DETAILS. THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF TRANSPORTATION OF MATERIALS AND ALSO THE DETAILS OF CONSUMPTION OF MAT ERIALS. HENCE, IN MY VIEW, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCLUSIVELY PROVED THE PURCHASES. AT THE SAME TIME, IT IS ALSO A FACT THAT THE ASSESSING OFFICER HAS ALSO NOT BROUGHT ON RECORD ANY MATERIAL TO DISPROVE THE CLAIM OF THE ASSESSEE, I.E., HE HAS MERELY PLACED RELIANCE ON THE REPORT GIVEN BY THE SALES TAX DEPARTMENT. HENCE IT CANNOT ALSO BE SAID THAT THE ASSESSEE DID NOT RECEIVE MATERIALS AT ALL. HENCE THE DISALLOWANCE OF ENTIRE AMOUNT OF PURCHASES IS NOT JUSTIFIED. IN ANY CASE, THE ADDIT ION OF RS.4,821/ - RELATING TO M/S RIVER GOLD ELEVATORS CANNOT BE SUSTAINED, SINCE THE AO HIMSELF HAS ACCEPTED THAT THE ASSESSEE DID NOT MAKE THE SAID PURCHASE. ACCORDINGLY I DIRECT THE AO TO DELETE THE ADDITION OF RS.4,821/ - , REFERRED ABOVE. 6. WITH REGARD TO THE REMAINING PURCHASES, THE POSSIBILITY COULD BE THAT THE ASSESSEE MIGHT HAVE RECEIVED MATERIALS FROM DIFFERENT SOURCES AND TO COVER UP THOSE MATERIALS, IT COULD HAVE OBTAINED BILLS. IN THESE TRANSACTIONS, THE ASSESSEE COULD HAVE MADE PROFIT B Y SIROYA DEVELOPERS ITA NO.411/MUM./2017 5 WAY OF LOWER RATE OF MATERIALS AND SAVINGS OF TAXES. HENCE, IN ORDER TO COVER UP THE REVENUE LEAKAGE, IF ANY, I AM OF THE VIEW THAT THE ADDITION MAY BE RESTRICTED TO 15% OF THE IMPUGNED PURCHASES, WHICH WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO RESTRICT THE ADDITION TO 15% OF THE REMAINING PURCHASES. I ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 .06.2017 SD/ - B.R.B ASKARAN ACCOUNTANT MEMBER MUMBAI, DATED: 14 .06.2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. SIROYA DEVELOPERS ITA NO.411/MUM./2017 6 TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI SIROYA DEVELOPERS ITA NO.411/MUM./2017 7