SAI MAHAVIR DEVLOPERS, NAVI MUMBAI V. DEPUTY COMMISSION OF INCOME TAX, CENTRAL CIRCLE-1, THANE

ITA 4333/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1626 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.4061/M/2017 ASSESSMENT YEAR: 2011-12 ACIT, CENTRAL CIRCLE-1, ROOM NO.10, A WING, 6 TH FLOOR, ASHAR IT PARK, ROAD NO.16-Z, WAGLE INDUSTRIAL ESTATE, THANE (W) VS. M/S. SAI MAHAVIR DEVELOPERS, 66-67 MAHAVIR CENTRE, PLOT NO.77, SEC-17, VASHI, NAVI MUMBAI 400 703 PAN: ABIFS4577P (APPELLANT) (RESPONDENT) ITA NO.4333/M/2017 ASSESSMENT YEAR: 2011-12 M/S. SAI MAHAVIR DEVELOPERS, 66-67 MAHAVIR CENTRE, PLOT NO.77, SEC-17, VASHI, THANE 400 703 PAN: ABIFS4577P VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, ROOM NO.10, A WING, 6 TH FLOOR, ASHAR IT PARK, ROAD NO.16-Z, WAGLE INDUSTRIAL ESTATE, THANE (W) (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PRATEEK JAIN, C.A REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH, D.R . DATE OF HEARING : 18.07.2019 DATE OF PRONOUNCEMENT : 22.08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE CROSS APPEALS ONE BY THE REVENUE AND THE OTHER BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED 27.03.2017 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) ITA NO.4061/M/2017 & ITA NO.4333/M/2017 M/S. SAI MAHAVIR DEVELOPERS 2 [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. ITA NO.4333/M/2017 (ASSESSEES APPEAL) 2. AT THE TIME OF HEARING THE ASSESSEE DID NOT PRES S GROUND NO.1 & 2 AND THEREFORE THEY ARE DISMISSED AS NOT PR ESSED. 3. THE ISSUE IN GROUND NO.3 IS AGAINST THE PART CON FIRMATION OF ADDITION EQUAL TO 25% OF THE BOGUS PURCHASES BY LD. CIT(A) AS AGAINST THE 100% ADDED BY THE AO. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS F RAMED IN THIS CASE UNDER SECTION 143(3) READ WITH SECTION 15 3B(1)(B) OF THE ACT VIDE ORDER DATED 25.03.2013 ASSESSING THE I NCOME OF RS.6,58,32,890/- BY MAKING ADDITION OF RS.95,76,355 /- ON ACCOUNT OF BOGUS PURCHASES. THE AO ADDED THE SAID PURCHASES FOLLOWING AN INFORMATION RECEIVED FROM DGIT INVESTI GATION WING, MUMBAI THAT ASSESSEE IS BENEFICIARY OF HAWALA PURCH ASE ENTRIES FROM 3 PARTIES NAMELY M/S. AKSHATA ENTERPRISES RS.3 ,40,220/-, M/S. PRAVEEN STEEL TRADERS RS.14,66,382/-, M/S. TOP BRICKS AND SAND SUPPLIERS RS.77,69,753/-. THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND TREATED THE ENTIRE PURCH ASES AS NON GENUINE ON THE BASIS OF DGIT INFORMATION AS THE ASS ESSEE COULD NOT SATISFACTORILY EXPLAINED THE PURCHASES FROM THE SE PARTIES. 5. THE LD. CIT(A) PARTLY CONFIRMED THE ADDITION AT 25% OF THE TOTAL BOGUS PURCHASES ON THE BASIS THAT ASSESSEE HA S SHOWN OVERALL PROFITS OF 25% AND ACCORDINGLY THE PROFIT E LEMENT EMBEDDED IN THE SAID ALLEGED PURCHASES WERE DIRECTE D TO BE ASSESSED AT 25% OF SUCH PURCHASES. ITA NO.4061/M/2017 & ITA NO.4333/M/2017 M/S. SAI MAHAVIR DEVELOPERS 3 6. THE LD. A.R., AT THE OUTSET, SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF CO- ORDINATE BENCH OF THE TRIBUNAL IN THE SISTER CONCERN CASES I N ITA NO.4349/M/2017 A.Y. 2012-13 AND 4348/M/2017 A.Y. 20 11-12 VIDE ORDER DATED 28.11.2018 WHEREIN UNDER SIMILAR F ACTS THE ADDITION WHICH WAS SUSTAINED BY THE LD. CIT(A) AT 2 5% WAS REDUCED TO 3%. THE LD. A.R. SUBMITTED THAT THE SAM E DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL MAY KINDLY BE FOLLOWED AND THE ADDITION MAY KINDLY BE REDUCED TO 3%. 7. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE AO BY SUBMITTING THAT THE ASSESSEE WAS FOUND TO BE BENEFICIARY OF HAWALA PURCHASE ENTRIES WHICH WAS UNEARTHED DURI NG THE COURSE OF INVESTIGATION BY THE SALES TAX DEPARTMENT AND FOUND THAT THE SUPPLIERS WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES WITHOUT SUPPLYING ANY MATERIA L AND THEREFORE THE ORDER OF AO MAY KINDLY BE AFFIRMED. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE IDENTICAL ISSUE HAS BEE N DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES SISTER CONCERN CASE IN ITA NO.4349/M/2017 A.Y. 2012-13 AND 4348/M/2017 A.Y. 2011-12 VIDE ORDER DATED 28.11.201 8 WHEREIN THE ADDITION WAS REDUCED TO 3% ON ACCOUNT O F ALLEGED BOGUS PURCHASES AS AGAINST THE 25% SUSTAINED BY THE LD. CIT(A). THE OPERATIVE PART IS REPRODUCED AS UNDER: 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS AVAILED BOGUS BI LLS IN RESPECT OF PURCHASES FROM THE SAID PARTIES TO THE TUNE OF RS.28,81,637 FOR A. Y. 2011-12 AND RS.5,24,948/- FOR A.Y. 2012-13. WE FIND THAT THE AO HAS NOT DISPUTED THE CONSUMPTION OF MATERIAL IN THE DEVELOPMENT OF PROPERTY MEANING THEREBY THAT AS SESSEE MIGHT HAVE PURCHASED THE GOODS FROM THE GREY MARKET AND UNDER THESE CIRC UMSTANCES IT IS ONLY THE PERCENTAGE OF THE TOTAL SUCH PURCHASES HAS TO BE BR OUGHT TO TAX. THE LD. CIT(A) ITA NO.4061/M/2017 & ITA NO.4333/M/2017 M/S. SAI MAHAVIR DEVELOPERS 4 SUSTAINED THE ADDITION AT 25% WHICH IS QUITE UNREA SONABLE AND ON THE HIGHER SIDE. MOREOVER, WE FIND FROM THE PERUSAL OF THE ORDERS OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ADESHWER ENTERPRISE VS. DCI T IN ITA NO.4335 TO 4338/M/2017 A.Y. 2008-09 TO 2011-12 AND ACIT, CENTR AL CIRCLE-1 VS. M/S. ABHINANDAN BUILDTECH PVT. LTD. VS. DCIT IN ITA NO.4 065, 4066 & 4067/M/2017 A.Y. 2008-09, 2011-12 & 2012-13 THAT THE TRIBUNAL IN GRO UP CONCERNS RESTRICTED THE ADDITION TO 3% OF THE TOTAL SUCH PURCHASES. WE, TH EREFORE, RESPECTFULLY FOLLOWING THE SAID ORDERS OF THE CO-ORDINATE BENCH OF THE TRI BUNAL DIRECT THE AO TO MAKE THE ADDITION AT THE RATE OF 3% OF SUCH BOGUS PURCHASES. 9. SINCE THE FACTS OF THE CASE BEFORE US ARE MATERI ALLY SAME TO THE CASE AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL ABOVE, WE ARE THEREFORE INCLINED TO SET ASIDE THE O RDER OF LD. CIT(A) AND DIRECT THE AO TO MAKE THE ADDITION @ 3% OF THE ALLEGED BOGUS PURCHASES. APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO.4061/M/2017 (REVENUES APPEAL) 10. SINCE WE HAVE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE IN ITA NO.4333/M/2017, THE APPEAL OF THE REVENUE IN IT A NO.4061/M/2017 BECOMES INFRUCTUOUS AND IS DISMISSED . 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.08.2019. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.08.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH ITA NO.4061/M/2017 & ITA NO.4333/M/2017 M/S. SAI MAHAVIR DEVELOPERS 5 //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.