ACIT 19(2), MUMBAI V. P.B. METAL CORPORATION, MUMBAI

ITA 4150/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1444 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GORADIASR
• Assessee Lawyers: R S SHARMAAR
• Keywords: Bogus purchase; Peak credit

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -JBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./4150/MUM/2015 , /ASSESSMENT YEAR: 2009-10 ./I.T.A./3670/MUM/2015 , /ASSESSMENT YEAR: 2010-11 ./I.T.A./4151/MUM/2015 , /ASSESSMENT YEAR: 2011-12 THE ACIT-19(2) ROOM NO.207, MATRU MANDIR MUMBAI-400 007. VS. M/S. P.B. METAL CORPORATION 28/30, SHREE JAYA BLDG., CO-OP. HSG. 2 ND CARPENTER STREET, C.P. TANK MUMBAI-400 004. PAN:AAFFP 2440 J ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ARJU GORADIA-SR.DR ASSESSEE BY: SHRI R.S. SHARMA-AR / DATE OF HEARING: 06.04.2017 / DATE OF PRONOUNCEMENT: 06.04.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDERS,DTD.6.4.2015 AND 25.3.15,OF THE CIT(A)-30 MUMBAI THE ASSESSING OFFICERS(AO.S)HAVE FILED THE APPEALS FOR THE ABOVE MENTIONED THREE AY.S.ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF TRADING OF FERROUS A ND NON FERROUS METALS.DETAILS OF FILING OF RETURNS OF INCOME RETURNED INCOMES, ASSESSED INCOME S, ETC, CAN BE SUMMMARISED AS UNDER :- A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DT. AS SESSED INCOME 2009-10 28.11.2011 RS.21,41,270/- 29.03.2014 RS.2.0 6 CRORES 2010-11 9.9.2010 RS.24,52,670/- 22/03/2013 RS.4.88 CRORES 2011-12 24.9.2011 RS.35,78,760/- 29.03.2014 RS.1.27 CRORES ITA/4150/M/2015-AY.2009-10 : 2.EFFECTIVE GROUND OF APPEAL IS ABOUT RESTRICTING THE ADDITION TO 7.71 % OF PURCHASES FROM THE PARTIES THAT WERE NOT PROVED TO BE GENUINE.DURI NG THE ASSESSMENT PROCEEDINGS,THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED PURCHASES F ROM VARIOUS PARTIES WHOSE TIN MATCHED WITH THE INFORMATION RECEIVED FROM SALES TAX DEPART MENT REGARDING BOGUS PARTIES WITH WHOM THE ASSESSEE HAD MADE PURCHASES.HE CALLED FOR EXPL ANATION FROM THE ASSESSEE IN THAT REGARD. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,H E CONCLUDED THAT THE ASSESSEE DID NOT PURCHASE ANY GOODS FROM THE ABOVE PARTIES, THAT ADD ITION IN RESPECT OF PEAK AMOUNT OF INVESTMENT MADE OUT OF UNACCOUNTED MONEY BY THE ASS ESSEE FOR PURCHASE OF MATERIAL FROM THE 4150/M/15 (09-10);3670/M/15 (10-11) AND 4151/M/15 ( 11-12) M/S. P.B. METAL CORPORATION 2 PARTY WAS CONSIDERED WHICH WORKED OUT TO RS.89.13 L AKHS.TREATING THE SAME AS BOGUS PURCHASES THE AO ADDED IT TO THE TOTAL INCOME OF TH E ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE ELABORATE SUBMIS SIONS.IT ALSO RELIED UPON CERTAIN CASE LAWS CONTENDING THAT THE ADDITION MADE BY THE AO WA S NOT AS PER LAW.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDE R,THE FAA HELD THAT THE AO HAD MADE ADDITION WITH REGARD TO PURCHASES MADE FROM THREE E NTITIES,NAMELY M/S. RATAN DEEP IMPEX (RDI), M/S. HARISH METALS (HM) AND M/S.VALIANT STEE L ENGINEERING(VSE) BY TAKING THE PEAK BALANCES,THAT THE NAME OF RDI WAS NEVER IN THE LIST OF SUSPECTED SALES TAX DEALER AS PER THE WEBSITE OF SALES-TAX DEPARTMENT,THAT IT HAD FILED T HE CONFIRMATION LETTER IN RESPONSE TO NOTICE U/S.133(6) OF THE ACT ISSUED BY THE AO,THAT SUBMIS SION MADE BY ASSESSEE WITH REGARD TO PURCHASES MADE FROM RDI HAD TO BE ACCEPTED,THAT THE GENUINENESS OF PURCHASES MADE BY THE ASSESSEE FROM RDI COULD NOT BE DOUBTED. HE REFERRED TO HIS ORDER FOR THE AY 2010-11,DT.25.0 2.15, WHEREIN HE HAD ESTIMATED THE EMBEDDED INCOME AT 12.5% OF TOTAL PURCHASES FROM HM AND VES. IN THAT ORDER,HE FURTHER OBSERVED THAT THE ASSESSEE HAD ALREADY OFFERED AN A VERAGE GROSS PROFIT OF 4.79% DURING THE YEAR,THAT NET ADDITION OF 7.71% (12.5% - 4.79%) WAS TO BE ADDED TO THE INCOME OF THE ASSESSEE. IN HIS SAID ORDER,HE HAD REFERRED TO THE CASES OF BHOLANATH POLYFAB PVT. LTD (355 ITR 290);SANKET STEEL TRADERS (ITA/2801/AHD./2008 D T.20-5-2011) AND VIJAY PROTEINS (58 ITD428).HE FURTHER OBSERVED THAT FACTS OF THE CASE FOR THE AY.2010-11WERE SIMILAR TO THE FACTS OF THE ABOVE MENTIONED CASES,THAT THE AO HAD PROVED THAT SUPPLIERS IN QUESTION WERE NON-EXISTENT, THAT THE AO HAD FOUND THAT GOODS WERE PURCHASED FROM PARTIES OTHER THAN THE TWO PARTIES NAMELY HM AND VS,THAT SALES OF GOODS WE RE NOT IN DOUBT,THAT THE ASSESSEE WAS MAINTAINING QUANTITATIVE DETAILS, THAT GENUINENESS OF SALES WAS NOT IN DOUBT,THAT ADDITION MADE BY AO IN RESPECT OF PEAK OF PURCHASES WAS NOT JUSTI FIABLE.HE FINALLY,UPHELD THE ADDITION OF 7.71% OF THE PURCHASES MADE FOR THE AY.2010-11.FOLL OWING THE ORDER FOR THE SUBSEQUENT AY.,HE CONFIRMED THE ADDITION @7.71% OF THE PURCHAS ES. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPAR TMENTAL REPRESENTATIVE (DR)SUPPORTED THE ORDER OF AO AND STATED THAT THE ASSESSEE HAD NO T PROVED GENUINENESS OF THE PURCHASES,THAT THE NOTICES ISSUED U/S.133(6) OF THE ACT TO HM AND VE WERE RETURNED BACK BY THE POSTAL AUTHORITIES,THAT THE ASSESSEE HAD NOT DISCHARGED T HE ONUS OF PROVING THE GENUINENESS OF THE PURCHASES. THE AUTHORISED REPRESENTATIVE (AR) RELI ED UPON THE ORDER OF THE FAA AND STATED 4150/M/15 (09-10);3670/M/15 (10-11) AND 4151/M/15 ( 11-12) M/S. P.B. METAL CORPORATION 3 THAT THE AO HAD NOT DOUBTED THE SALES,THAT WITHOUT PURCHASES THERE COULD NOT BE ANY SALES,THAT THE NAME OF RDI WAS NOT APPEARING IN THE LIST OF AL LEGED HAWALA DEALERS. HE RELIED UPON THE CASES OF NIKUNJ EXIM(ITAPPEAL NO.5604 OF 2010); BA BULAL C. BORANA (282 ITR251); KILLICK NIXON LTD.(20TAXMANN.COM703). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS BEFORE US.WE FIND THAT THE AO HAD REOPENED THE ASSESSMENT AFTER RECEIVING INFO RMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT.SALES TAX DEPARTMENT (GOVT. OF MAHAR ASHTRA)HAD INFORMED THE INVESTIGATION WING ABOUT THE HAWALA DEALERS WHO WERE ISSUING BOGU S BILLS.THE AO AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE MADE AN ADDITION OF RS .89,13,167/- TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD BOGUS PURCHASES FROM THE HA WALA DEALERS.IN THE APPELLATE PROCEED - INGS,THE FAA RESTRICTED IT TO 7.71% OF THE TOTAL PU RCHASES. IT IS A FACT THAT AO HAD NOT DOUBTED THE SALES MADE BY THE ASSESSEE NOR HAS HE DOUBTED THE QUANTITATIVE DETAILS MAINTAINED BY IT. ONCE THE SALES ARE ACCEPTED AS GENUINE IT HAS TO BE PRESUMED THAT GOODS WERE PURCHASED. CONSIDERING THESE PECULIAR FACTS THE FAA HAD ESTIM ATED THE EMBEDDED INCOME AT 12.5% OF THE TOTAL PURCHASE FROM HM AND VSE.AFTER CONSIDERIN G THE GROSS PROFIT @ 4.79% FOR THE YEAR UNDER CONSIDERATION, HE HAD RESTRICTED THE ADDITION .IN OUR OPINION THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. OUR VIEW IS SU PPORTED BY JUDGMENT DELIVERED IN THE CASE OF NIKUNJ EXIM OF HON'BLE BOMBAY HIGH COURT.THEREFO RE, CONFIRMING THE ORDER OF THE FAA WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO . ITA.S/3670 & 4151/MUM/2015-A.Y. 2010-11,2011-12: FOLLOWING OUR ORDER FOR THE AY.2009-10,WE UPHOLD TH E ORDER OF THE FAA FOR BOTH THE AY.S.EFFECTIVE GROUNDS OF APPEAL ARE DECIDED AGAINS T THE AO FOR THE AY.S.2010-11 AND 2011- 12. AS A RESULT, APPEALS FILED BY AO FOR ALL THE THREE AY.S STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH ,APRIL, 2017. , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI; /DATED :06.04 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 4150/M/15 (09-10);3670/M/15 (10-11) AND 4151/M/15 ( 11-12) M/S. P.B. METAL CORPORATION 4 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR H BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.