MAHAARIR UNIVERSAL HOMES PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, THANE

ITA 4349/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1287 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNITA BILLA
• Keywords: Bogus purchase
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4349/M/2017 ASSESSMENT YEAR: 2012-13 ITA NO.4348/M/2017 ASSESSMENT YEAR: 2011-12 M/S. MAHAAVIR UNIVERSAL HOMES PVT. LTD., 66/67, MAHAAVIR ENTERPRISE, PLOT NO.77, SECTOR-17, MUMBAI 400 703 PAN: AAFCM2072C VS. DCIT 2(1)(2), CENTRAL CIRCLE-01, THANE ASHAR I.T. PARK, PIN 400 604 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANI JAIN, A.R. REVENUE BY : MS. SUNITA BILLA, D.R. DATE OF HEARING : 05.11.2018 DATE OF PRONOUNCEMENT : 28.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.03.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ISSUE INVOLVED IN BOTH THE APPEALS IS AGAINS T THE CONFIRMATION OF ADDITION BY LD. CIT(A) TO THE TUNE OF 25% OF THE TOTAL BOGUS PURCHASES AS AGAINST THE 100% DISALLOWA NCE MADE BY THE AO IN THE ASSESSMENT PROCEEDINGS. ITA NO.4349 & 4348/M/2017 M/S. MAHAAVIR UNIVERSAL HOMES PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND WAS FOLLOWING PROJECT COMPLETION METHOD TO RETURN THE INCOME FROM THE PRO JECT. A SEARCH WAS CONDUCTED UNDER SECTION 132 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A DETAILED QUESTIO NNAIRE WAS ISSUED BY THE AO TO THE ASSESSEE. DURING THE COURS E OF ASSESSMENT PROCEEDINGS THE AO ON THE BASIS OF INFOR MATION FURNISHED BY THE ASSESSEE OBSERVED THAT ASSESSEE HA S DEBITED PURCHASES FROM SEVERAL PARTIES WHICH WERE LISTED AS BOGUS DEALERS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. ACCORDINGLY, ASSESSEE WAS CALLED UPON TO FURNISH THE DETAILS IN RESPECT OF M/S. AKSHATA ENTERPRISES, M/S. REAL TRADERS, M/S. SHAKTI TRADING CO. & M/S. TOP BRICKS AND SAND SUPPLIERS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS NOT PURCHASED ANY MATERI AL FROM THE SAID PARTIES AND ONLY AVAILED ACCOMMODATION BILLS. THE AO ALSO REJECTED THE CONTENTIONS OF THE ASSESSEE THAT THE I NCOME ACCRUING FROM THE SAID PURCHASES FROM THE SAID PAR TIES SHOULD BE ALLOWED TO BE SET OFF AGAINST THE INCOME DISCLO SED IN THE VARIOUS ENTITIES DURING THE COURSE OF SEARCH AND SE IZURE UNDER SECTION 132. FINALLY, THE ASSESSMENT WAS FRAMED UN DER SECTION 143(3) READ WITH SECTION 153B(1)(B) VIDE ORDER DATE D 18.10.10 MAKING AN ADDITION OF RS.28,81,637 FOR A.Y. 2011-12 AND RS.5,24,948/- FOR A.Y. 2012-13. 4. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) PART LY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON TO THE TUNE OF 25% OF THE TOTAL BOGUS PURCHASES. ITA NO.4349 & 4348/M/2017 M/S. MAHAAVIR UNIVERSAL HOMES PVT. LTD. 3 5. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE HAS PURCHASED THE GOODS FROM THESE DEALERS AND DULY ENTERED THE SAME IN THE BOOKS OF ACCOUNTS WHICH WER E USED IN THE CONSTRUCTION OF BUILDINGS AND DEVELOPMENT OF PR OPERTIES AND THUS THE AO HAS NOT DISPUTED THE CONSUMPTION OF MAT ERIAL AT ALL. THE LD. A.R. SUBMITTED THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE FILED NECESSARY EVIDENCES SUCH AS BILLS, VOUCHERS, TRANSPORTATION DETAILS, VEHICLE NU MBERS, DELIVERY CHALLAN ETC. BEFORE THE AO. THE LD. A.R. SUBMITTED THAT IN THE CASE OF GROUP COMPANY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ADESHWER ENTERPRISE VS. DCIT 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.4065, 4066 & 4067/M/2017 A.Y. 2008-09, 2011-12 & 2012- 13 HAS DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO 3% OF SAID ALLEGED PURCHASES. THE LD. A.R. FINALLY PRAYED THA T THE ADDITION MAY KINDLY BE SUSTAINED TO THE EXTENT OF 3% ONLY BY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF LD. CIT(A) AND SUBMITTED THAT UNDOUBTEDLY THE ASSESSEE HAS AVAILED THE BOGUS BILLS FROM THE PARTIES AS STATED IN THE A SSESSMENT ORDER AND THEREFORE LD. CIT(A) HAS RIGHTLY SUSTAINE D THE ADDITION TO THE TUNE OF 25%. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS AVAILED BOGUS BILLS IN RESPECT OF PURCHASES FROM THE SAID P ARTIES TO THE TUNE OF RS.28,81,637 FOR A.Y. 2011-12 AND RS.5,24,9 48/- FOR A.Y. 2012-13. WE FIND THAT THE AO HAS NOT DISPUTED THE ITA NO.4349 & 4348/M/2017 M/S. MAHAAVIR UNIVERSAL HOMES PVT. LTD. 4 CONSUMPTION OF MATERIAL IN THE DEVELOPMENT OF PROPE RTY MEANING THEREBY THAT ASSESSEE MIGHT HAVE PURCHASED THE GOOD S FROM THE GREY MARKET AND UNDER THESE CIRCUMSTANCES IT IS ONL Y THE PERCENTAGE OF THE TOTAL SUCH PURCHASES HAS TO BE BR OUGHT TO TAX. THE LD. CIT(A) SUSTAINED THE ADDITION AT 25% WHICH IS QUITE UNREASONABLE AND ON THE HIGHER SIDE. MOREOVER, WE FIND FROM THE PERUSAL OF THE ORDERS OF CO-ORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF ADESHWER ENTERPRISE VS. DCIT 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.4065, 4066 & 4067/M/2017 A.Y. 2008-09, 2011-12 & 2012- 13 THAT THE TRIBUNAL IN GROUP CONCERNS RESTRICTED T HE ADDITION TO 3% OF THE TOTAL SUCH PURCHASES. WE, THEREFORE, RES PECTFULLY FOLLOWING THE SAID ORDERS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL DIRECT THE AO TO MAKE THE ADDITION AT THE RATE OF 3 % OF SUCH BOGUS PURCHASES. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2018. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28.11.2018. * 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.4349 & 4348/M/2017 M/S. MAHAAVIR UNIVERSAL HOMES PVT. LTD. 5 //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.