ITO 27(1)(4), MUMBAI V. M/S EXCELL TECH SYSTEMS, MUMBAI

ITA 420/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0625 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 30-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . ITA NO.419/MUM/2019(A.Y.2010-11) . ITA NO.420/MUM/2019(A.Y.2011-12) ITO 27(1)(4), ROOM NO.409, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI , NAVI MUMBAI- 400 0703 ...... # / APPELLANT VS. M/S. EXCEL TECH SYSTEMS, BLOCK NO.10, VISHNU NIWAS, LNM ROAD, OPP. UDAY TALKIES, GHATKOPAR(W) MUMBAI 400 086 PAN: AACFE 1051B ..... &'/ RESPONDENT #(/ APPELLANT BY : SHRI R. BHOOPATHI &'(/ RESPONDENT BY : )*/ NONE +' / DATE OF HEARING : 23/01/2020 , +' / DATE OF PRONOUNCEMENT : 13/03/2020 / ORDER THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-24, MUMBAI (IN SHORT CIT(A)) FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12, RESPECTIVELY . BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 26/10/2018. SINCE THE FACTS IN BOTH THE ASSESSMENT 2 . ITA NO.419/MUM/2019(A.Y.2010-11) . ITA NO.420/MUM/2019(A.Y.2011-12) YEARS ARE SIMILAR AND THE GROUNDS RAISED BY THE REV ENUE IN BOTH APPEALS ARE IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF BY THIS COMMON ORDER 2. NOTICE OF APPEALS WAS SENT TO THE ASSESSEE/RESPO NDENT THROUGH RPAD. THE ACKNOWLEDGEMENT AVAILABLE ON RECORD INDICATES THAT THE NOTICE HAS BEEN DULY SERVED. DESPITE SERVICE OF NOTICE, NEITHER AN Y AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS APPEARED NOR ANY LETTER SEEKIN G ADJOURNMENT, ON BEHALF OF THE ASSESSEE HAS BEEN RECEIVED. IT APPEARS THAT TH E ASSESSEE IS NOT KEEN TO CONTEST THE APPEALS. UNDER SUCH CIRCUMSTANCES, WE PROCEED TO DECIDE THE APPEALS WITH THE ASSISTANCE OF LD.DEPARTMENTAL REPR ESENTATIVE AND THE MATERIAL AVAILABLE ON RECORD. ITA NO.419/MUM/2019(A.Y-2010-11): 3. FOR THE SAKE OF CONVENIENCE, THE FACTS ARE EXTRA CTED FROM THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010-11. THE ASSES SEE IS ENGAGED IN MANUFACTURING OF ULTRASONIC CLEANING MACHINES. THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WI NG OF THE DEPARTMENT REOPENED THE ASSESSMENT. AS PER INFORMATION RECEIV ED, THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM VARIOUS HAWALA D EALERS. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE A SSESSEE HAD PROCURED BOGUS PURCHASE BILLS AMOUNTING TO RS.18,84,512/-. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES. AG GRIEVED AGAINST THE ASSESSMENT ORDER DATED 19/01/2016, PASSED UNDER SEC TION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE CIT(A). THE FIRST APPELLATE AUTHORITY AFTER CONSID ERING THE FACTS OF THE CASE AND 3 . ITA NO.419/MUM/2019(A.Y.2010-11) . ITA NO.420/MUM/2019(A.Y.2011-12) THE DECISION IN THE CASE OF SIMIT P. SHETH, 356 I TR 451(GUJ) RESTRICTED THE DISALLOWANCE IN RESPECT OF ALLEGED BOGUS PURCHASES TO 12.5% OF THE TOTAL SUCH PURCHASES I.E. RS.2,35,564/-. AGAINST THE FINDINGS OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI R. BHOOPATHI, REPRESENTING THE DEPARTMENT S UBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE THE VENDORS FROM WHOM THE ASSESSEE HAD ALLEGEDLY PURCHASED RAW MATER IALS USED IN THE MANUFACTURING. THE ASSESSEE COULD NOT PROVE GENU INENESS OF THE PURCHASES MADE, HENCE, THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE BOGUS PURCHASES. 5. I HAVE HEARD THE SUBMISSIONS MADE BY LD.DEPARTME NTAL REPRESENTATIVE AND HAVE EXAMINED THE MATERIAL AVAILABLE ON RECORD. THE ADDITION HAS BEEN MADE BY ASSESSING OFFICER ON THE BASIS OF INFORMATI ON RECEIVED FROM INVESTIGATION WING THAT THE ASSESSEE HAS INDULGED I N OBTAINING BOGUS PURCHASE BILLS. THE SALES DECLARED BY THE ASSESSEE HAVE NOT BEEN DISPUTED BY THE REVENUE. WITHOUT PURCHASES THERE CANNOT BE MANUFA CTURING OF GOODS BY THE ASSESSEE. THUS, ENTIRE ALLEGED BOGUS PURCHASES CA NNOT BE ADDED. IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN UNPROVED PURCHASES THAT CAN BE BROUGHT TO TAX. THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 12.5% OF THE DISPUTED BOGUS PURCHASES IN LINE WITH THE DECISION OF HON'BLE GUJ ARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH(SUPRA). WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE SAME IS UPHE LD AND THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 4 . ITA NO.419/MUM/2019(A.Y.2010-11) . ITA NO.420/MUM/2019(A.Y.2011-12) ITA NO.420/MUM/2019(A.Y.2011-12) 6. I FIND THAT FACTS IN THE ASSESSMENT YEAR 2011- 12 ARE SIMILAR TO FACTS IN ASSESSMENT YEAR 2010-11 EXCEPT FOR THE AMOUNT OF A LLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF ENT IRE ALLEGED BOGUS PURCHASES AGGREGATING TO RS.16,98,823/-. THE REASO NS FOR MAKING OF ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES IN THE ASSESS MENT YEAR 2011-12 IS THE SAME AS WAS IN 2010-11. THE CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE TOTAL ALLEGED BOGUS PURCHASES. THE LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THE FACTS IN BOTH ASSESSMENT YEARS ARE IDENTICAL EXCEPT FOR THE AMOUNT OF ADDITION. THE FINDINGS GIVEN WHILE AD JUDICATING THE APPEAL OF THE REVENUE IN ASSESSMENT YEAR 2010-11 WOULD MUTATIS MUTANDIS APPLY TO ASSESSMENT YEAR 2011-12 AS WELL. THE APPEAL OF TH E REVENUE IS DISMISSED FOR PARITY OF REASONS. 7. IN THE RESULT, BOTH THE APPEAL BY THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY TH E 13 TH DAY OF MARCH, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, ./ DATED 13/03/2020 VM , SR. PS(O/S) 5 . ITA NO.419/MUM/2019(A.Y.2010-11) . ITA NO.420/MUM/2019(A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT , 2. &' / THE RESPONDENT. 3. /' ( )/ THE CIT(A)- 4. /' CIT 5. 23&' , . . . , / DR, ITAT, MUMBAI 6. 34567 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI