INVENTUM ENGINEERING CO.PVT.LTD., MUMBAI V. ITO 10(1)(2), MUMBAI

ITA 4138/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4929 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 05-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKIYAN
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 4138/MUM/2017 (ASSESSMENT YEAR: 2010-11) M/S. INVENTUM ENGINEERING CO. PVT. LTD. 201, KUBER COMPLEX NEW LINK ROD, ANDHERI (W) MUMBAI 400053 VS. INCOME TAX OFFICER - 10(1)(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020, PAN AAAC1576R APPELLANT RESPONDENT APPELLANT BY: SHRI SASHANK DUNDU RESPONDENT BY: SHRI ABI RAMA KARTIKIYAN DATE OF HEARING: 15.10.2018 DATE OF PRONOUNCEMENT: 16.10.2018 O R D E R PER SANDEEP GOSAIN, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-17, MUMBAI DATED 17.03.2017 AND IT RELATES T O A.Y. 2010-11. 2. AT THE VERY OUTSET OF HEARING THE LEARNED A.R. SUBM ITTED THAT IDENTICAL ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR A.Y. 2011-12 WHEREIN THE ADDITIONS WERE RESTRICTED TO 12.5% OF T HE ALLEGED BOGUS PURCHASE. THE OPERATIVE PORTION OF THE COORDINATE B ENCHS ORDER IS EXTRACTED FOR READY REFERENCE: - 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDER ED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITIES. T HE MATERIAL ON RECORD REVEALS THAT THE ASSESSEE HAS PURCHASED INTE GRATED CIRCUITS CHIPS [IC] FROM THE SUPPLIERS. THE WEIGHT OF EACH C HIP WAS VERY LOW IN THE RANGE OF 1 TO 1.3 GRAMS PER CHIPS AND THEREFORE , THE SAME DID NOT REQUIRE ANY HEAVY TRANSPORTATION. THE SAID RAW MATE RIAL WAS ITA NO. 4138/MUM/2017 M/S. INVENTUM ENGINEERING CO. PVT. LTD. 2 ESSENTIAL TO MANUFACTURE HEATERS, WHICH WAS THE LIN E OF ASSESSEES BUSINESS. THE ASSESSEE HAS ALSO FURNISHED QUANTITAT IVE DETAILS OF CONSUMPTION OF THESE CHIPS. FURTHER, THE SALES TURN OVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE A ND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT CONCLUSIVELY SUBSTANTIATE THE PURCHASES MADE BY HIM AND FAILED TO PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACT IONS. NOTICES ISSUED U/S 133(6) ELICITED NO SATISFACTORY RESPONSES. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SU CH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR P ROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL I N THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHAS ES. HENCE, THE ADDITION ON GROSS BASIS AGAINST THE SAME WAS NOT JU STIFIED. WE ESTIMATE THE SAME @12.5% OF ALLEGED BOGUS PURCHASES OF RS.1,91,007/. CONSEQUENTLY, THE ADDITION TO THE EXT ENT OF RS.23,876/- STAND CONFIRMED AND BALANCE ADDITION STAND DELETED. 3. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE C OORDINATE BENCH IN ASSESSEE'S OWN CASE FOR A.Y. 2011-12 WE ALLOW THE A PPEAL OF THE ASSESSEE IN TERMS OF THE ABOVE DECISION. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2018. SD/ - SD/ - (G. MANJUNATHA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16 TH OCTOBER, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -17, MUMBAI 4. THE PR.CIT - 10, MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.