ITO WD 2(3), THANE V. JAYESH JAMNADAS FIFADRA, THANE

ITA 4216/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8107 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase
• Section: 148

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 4216/MUM/2017 ( / ASSESSMENT YEAR: 2010 - 11 ) ITO, WARD 2 (3), 6 TH FLOOR, B WING, ROOM NO. 13, ASHAR I. T. PARK, ROAD NO. 16Z, NR. AMBIKA NAGAR, WAGLE INDUSTRIAL ESTATE, THANE (W) - 400 604 / VS. JAYESH JAMNADAS FIFADRA, PROP. OF BHAVIK TRADERS B - 404, KRISHNA APARTMEN T, SHANTI PARK, MIRA ROAD (E), THANE - 401 107 ./ ./ PAN/GIR NO. AAGPF 9872 R ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. N. HEMALATHA / RESPONDENT BY : NONE / DATE OF HEARING : 10.10.2017 / DATE OF PRONOUNCEMENT : 14.12 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - 3, THANE DATED 29.3.2017 AND PERTA IN S TO THE ASSESSMENT YEAR 2010 - 11. 2 ITA NO. 4216/MUM/2017 (A.Y. 2010 - 11) ITO VS. JAYESH JAMNADAS FIFADRA 2. T HE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN SUSTAINING DISALLOWANCE OF ONLY 12.5% OF BOGUS PURCHASE. 3. IN THIS CASE , T HE IS ENGAGED IN THE TRAD ING OF MS AND SS, WIRE, TMT BAR IN THE NAME AND STYLE OF M /S. BHAVIK TRADERS, THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS A BENEFICIARY OF HAWALA ENTRY OPERATORS. THE ASSESSEE HAD SHOWN PUR CHASES AMOUNTING TO RS.2,15,55,520 / - FROM VARIOUS PARTIES (PARA 3.1 OF AO ORDER), WHO WERE LISTED BY THE SALES TAX AUTHORITIES AS HAWALA OPERATORS I.E. ONLY PROVIDING BILLS WITHOUT THERE BEING ANY ACTUAL TRANSACTION OF PURCHASES OR SALES. THEREFORE, THE ASS ESSING OFFICER ISSUED NOTICE U/S. 148 OF THE IT. ACT, TO THE ASSESSEE AND RE - OPENED THE ASSESSMENT PROCEEDINGS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE PURCHASES SHOWN FR OM ALL SUCH PARTIES. DURING ENQUIRIES U / S 133(6), THE ASSESSING OFFICER FOUND THAT NONE OF THESE PARTIES EXISTED AT THE ADDRESSES GIVEN BY THE ASSESSEE AND NO BUSINESS ACTIVITY WAS BEING CARRIED OUT THERE. THE ASSESSEE WAS GIVEN VARIOUS OPPORTUNITIES TO JU STIFY THE GENUINENESS OF THESE PURCHASES. THE ASSESSEE DID NOT FILE ANY INFORMATION. THE ASSESSING OFFICER GAVE SHOW CAUSE NOTICE VIDE LETTER DATED 10.112014 THAT ASSESSMENT WOULD BE MADE EX - PARTE, IN CASE OF NON - COMPLIANCE BY THE ASSESSEE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD (PARA 5.1 OF ORDER). WHEN THE ASSESSEE DID NOT COMPLY, 3 ITA NO. 4216/MUM/2017 (A.Y. 2010 - 11) ITO VS. JAYESH JAMNADAS FIFADRA THE ASSESSI NG OFFICER MADE ADDITION OF RS. 2 ,15,55,520/ - ON ACCOUNT OF BOGUS PURCHASES. 4. A GAINST THE ABOVE ORDER , THE ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS). THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCHASE. 5 . AGAINST THE ABOVE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE THE ITAT. 6 . I HAVE HEARD B OTH THE COUNSEL AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 7. I FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WE RE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS. THE ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CR EDIBILITY OF INFORMATION RELATING TO REOPENING REMAINS UN - ASSAILED. IN SUCH FACTUAL SCENARIO, THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CON FIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO 4 ITA NO. 4216/MUM/2017 (A.Y. 2010 - 11) ITO VS. JAYESH JAMNADAS FIFADRA NOT ON RECORD. IN THIS FACTUAL SCENARIO, IT IS AMPLY CLEAR THAT THE ASSESSEE HAS OBTAINED BO GUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS IS BOGUS AND NON - EXISTENT. 8 . THE SALES TAX DEPARTMENT IN ITS ENQUIRY HAS FOUND THE PARTIES TO BE PROVIDING BOGUS ACC OMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NEITHER THE ASSESSEE HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES. IN SUCH CIRCUMSTANCES, THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. I FIND IT FURTHER STRANGE THAT ASSESSEE WANTS THE REVENUE TO PRODUCE ASSESSEES OWN VENDORS, WHOM THE ASSESSEE COULD NOT PRODUCE. THE PURCHASE BILLS FROM THESE NON - EXISTENT/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES. IN LIGHT OF THE OVERWHELMING EVIDENCE, THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS D ULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC). IN THE PRESENT CASE, THE ASSESSEE WANTS THAT THE UNASSAILABLE FACT THAT THE SUPPLIERS ARE NON - EXI STENT AND, THUS, BOGUS SHOULD BE IGNORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF HONBLE APEX COURT DECISIONS. 5 ITA NO. 4216/MUM/2017 (A.Y. 2010 - 11) ITO VS. JAYESH JAMNADAS FIFADRA 9 . HOWEVER, I FURTHER FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE FACTS OF THAT CASE WERE A LITTLE DIFFERENT AS T HE SALES IN THAT CASE WERE BASICALLY TO GOVERNMENT DEPARTMENTS. HENCE, THE RATIO FROM THIS DECISION IS NOT APPLICABLE ON THE FACTS OF THE CASE. 10 . HOWEVER, THE FACTS OF THE CASE INDICATE THAT THOUGH THE SALES ARE NOT DOUBTED, THE ASSESSEE HAS ENGAGED INTO MAKING PU RCHASES FROM THE GREY MARKET. MAKING PURCHASES IN THE GREY MARKET GIVES THE ASSESSEE SAVINGS AT THE EXPENSE OF THE EXCHEQUER. IN THESE CIRCUMSTANCES A DISALLOWANCE OF 12.5 % OF THE BOGUS PURCHASES MEETS THE END OF JUSTICE. ACCORDINGLY, I DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THIS DRAWS SUPPORT FROM THE HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT VS SIMIT P. SHETH [2013] 356 ITR 451 (GUJ.). ACCORDINGLY, I UPHOLD THE SAME. 1 1 . IN THE RESULT, TH IS AP PEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 14.12.2017 . . ./ ROSHANI , SR. PS 6 ITA NO. 4216/MUM/2017 (A.Y. 2010 - 11) ITO VS. JAYESH JAMNADAS FIFADRA / COPY OF THE ORDER FORWARDED T O : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI