JAI MAHALAXMI ISPAT (I) P. LTD, THANE V. ITO WD 1(4), THANE

ITA 4265/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8813 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Bogus purchase
• Section: 133A; 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 4265 /MUM/20 1 6 (ASSESSMENT YEAR 20 1 0 - 11 ) M/S. JAI MAHALAXMI ISPAT (I) PVT. LIMITED SHOP NO. 2, SACHINAM CHS , MAJIWADA THANE WEST - 400 601. PAN : AABCJ2965M VS. ITO WARD 1(4) ROOM 11, B WING ASHAR I.T. PARK ROAD NO. 16 - Z WAGLE INDL. ESTATE THANE - 400 604. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY MS. POOJA SWAROOP DATE OF HEARING 0 1 . 1 1 . 201 7 DATE OF PRO NOUNCEMENT 01 . 1 1 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15.3.2016 PASSED BY THE LEARNED CIT(A) - THANE, AND IT RELATES TO A.Y. 2010 - 11. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH NOTICE OF HEARING WAS SENT BY REGISTERED POST ON MORE THAN ONE OCCASION. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX - PARTE, WITHOUT PRESENCE OF THE ASSESSEE. 3. IN THIS APPEAL THE ASSESSEE IS CONTESTING THE DECISION RENDERED BY THE LEARNED CIT(A) ON THE FOLLOWING ISSUES : - (A) DISALLOWANCE OF BOGUS PURCHASES : ` 194.25 LAKHS (B) DISALLOWANCE OF EXPENSES AT 15% THEREOF. 4 . WE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFAC TURING OF TMT BARS AND TRADING IN IRON AND STEEL PRODUCTS. INCOME TAX DEPARTMENT RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE - HEREIN IS ONE OF THE BENEFICIARIES OF THE TRANSACTION OF HAWALA DEALERS, WHO HAVE PROVIDED ONLY M/S. JAI MAHALAXMI ISPAT (I) PVT. LIMITED 2 ACCOMMODAT ION BILLS, WITHOUT SUPPLYING THE MATERIAL. IT WAS NOTICED THAT THE ASSESSEE HAS PURCHASED GOODS FROM SEVEN OF SUCH CONCERNS AGGREGATING TO ` 175.65 LAKHS. HENCE, THE REVENUE CARRIED OUT SURVEY ACTION U/S. 133A OF THE ACT ON 20.2.2013. DURING THE COURSE OF SURVEY, THE ASSESSEE ACCEPTED THAT THE PURCHASES AGGREGATING TO ` 175.65 LAKHS MADE FROM SEVEN PARTIES WERE BOGUS AND AGREED TO OFFER THE SAME AS UNEXPLAINED EXPENSES. ACCORDINGLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSIDERATI ON BY ISSUING NOTICE U/S. 148 OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE FILED RETURN OF INCOME BUT DID NOT OFFER ADDITIONAL INCOME OF ` 175.65 LAKHS. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF THE ACT TO THE SUPPLIERS BUT ALL OF THEM WERE RETUR NED UN - SERVED WITH THE REMARK NOT KNOWN. THE ASSESSEE ALSO FAILED TO PRODUCE PARTIES BEFORE THE ASSESSING OFFICER AND HE DID NOT FILE ANY DOCUMENTARY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE PURCHASES. BEFORE THE ASSESSING OFFICER ASSESSEE FILED DETA IL ED REPLY , WHEREIN IT WAS CONTENDED THAT IT IS MAINTAINING STOCK REGISTER AND THE PURCHASES AND CORRESPONDING SALE/CONSUMPTION HAS BEEN DULY PROVED. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY ADDED A SUM OF ` 175.65 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE . 5. BEFORE THE LEARNED CIT(A) ASSESSEE CONTENDED THAT THE STATEMENT GIVEN DURING THE SURVEY OPERATION CANNOT BE TREATED AS AN EVIDENCE AND IN THIS REGARD , IT PLACED RELIANCE ON THE DECISION RENDERE D BY HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KHADER KHAN (300 ITR 157) AND DECISION RENDERED BY HON'BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEWS & SONS VS. CIT (129 TAXMAN 416). HOWEVER, THE LEARNED CIT(A) BY PLACING RELIANCE ON THE DECISI ON RENDERED BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BACHITTAR SINGH VS. CIT (328 ITR 400), WHEREIN IT WAS HELD THAT THE STATEMENT GIVEN U/S. 133A OF THE ACT CANNOT BE HELD TO BE IRRELEVANT MATERIAL SO AS TO BE RULE OUT OF CONSIDERATION IN TO TALITY OF FACTS. ACCORDINGLY, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF BOGUS PURCHASES. M/S. JAI MAHALAXMI ISPAT (I) PVT. LIMITED 3 6. WE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSEE HAS FURNISHED STOCK REGISTER BEFORE THE ASSESSING OFFIC ER IN ORDER TO PROVE THE RECEIPT OF MATERIAL AND SALE/CONSUMPTION OF MATERIAL . WE NOTICED THAT THE LEARNED CIT(A) HAS NOT TAKEN INTO ACCOUNT THIS IMPORTANT FACT BECAUSE ANY GOODS CANNOT BE SOLD WITHOUT PURCHASING IT AND IN THAT CASE PURCHASE VALUE RELATED TO SALE SHOULD BE ALLOWED AS DEDUCTION AND ONLY PROFIT ELEMENT COULD BE ASSESSED TO TAX. SINCE THIS IMPORTANT ASPECT HAS NOT BEEN CONSIDERED BY THE LEARNED CIT(A), WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH CONSIDERATION AT HIS END. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE LEARNED CIT(A) FOR ADJUDICATING IT AFRESH. 7. NEXT ISSUE RELATES TO ADHOC DISALLOWANCE MADE OUT OF EXPENSES. SINCE THE ASSESSEE DID NOT FUR NISH EVIDENCE TO PROVE THE EXPENSES CLAIMED BY IT, THE ASSESSING OFFICER DISALLOWED 15% OF THE EXPENSES . BEFORE THE L EARNED CIT(A) ALSO ASSESSEE D ID NOT FURNISH ANY EVIDENCE AND HENCE HE CONFIRMED THE SAID DISALLOWANCE. BEFORE US THE ASSESSEE DID NOT FURN ISH ANY MATERIAL TO PROVE THE GENUINENESS OF THE EXPENSES. UNDER THESE CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO CONFIRM THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 01 . 1 1 .201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 01 / 11 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT M/S. JAI MAHALAXMI ISPAT (I) PVT. LIMITED 4 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI