KETANKUMAR J PATEL, MUMBAI V. ASST CIT CIR 2, MUMBAI

ITA 4401/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0384 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Keywords: Bogus purchase
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 4401 / MUM/20 16 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI KETANKUMAR J PATEL PROP . M/S. UNIQUE CHEMOPLANT EQUIPMENTS B - 76, MIDC, AMBERNATH (E) MUMBAI 421 506 VS. ASST. CIT CIR 2 MUMBAI PAN/GIR NO. ABUPP7639R APPELLANT ) .. RESPONDENT ) ITA NO. 4868/ MUM/20 16 ( ASSESSMENT YEAR : 2009 - 10 ) DCIT CIR 2 KALYAN VS. SHRI KETANKUMAR J PATEL PROP . M/S. UNIQUE CHEMOPLANT EQUIPMENTS B - 76, MIDC, AMBERNATH (E) MUMBAI 421 506 PAN/GIR NO. ABUPP7639R APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI VIMAL PUNMIYA REVENUE BY SHRI SAURABH DESHPANDE DATE OF HEARING 19 / 01 /201 8 DATE OF PRONOUNCEME NT 19 / 02 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 3, THANE DATED 30/05/2016 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT, 1961. 2. THE FOLLO WING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - ITA NO. 4401/MUM/2016 & 4468/MUM/2016 SHRI KETANKUMAR J PATEL 2 A) THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO MAKE ADHOC ADDITION OF 20% AS INFLATED PURCHASES AMOUNTING TO RS. 29,33,289/ - (BEING 20% OF RS. 1,46,66,445/ - ), FROM THE BELOW STATED PARTIES AND TREATING T HE SAME AS NOT GENUINE PURCHASE OF MATERIALS, WHICH WERE USED IN THE FABRICATION OF EQUIPMENT'S SUPPLIED TO THE CUSTOMERS OF APPELLANT AND TREATING THE SAME AS BOGUS PURCHASES, ON THE BASIS OF INFERENCE AND ASSUMPTIONS AND THE SAME IS NOT BASED ON ANY ADVE RSE EVIDENCE OR DETECTION OF ACCOUNTING ENTRIES IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. NAME OF SUPPLIER PURCHASES DISALLOWED AMOUNT (RS) M/S. NAVRATAN METAL IMPEX RS. 1,15,65,4447 - M/S. POOJA STEEL & ALLOYS RS. 30,18,9337 - M/S. ALANKAR STEELS RS. 82,0687 - TOTAL RS. 1,46,66,4457 - B) THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO DISALLOW AND TO MAKE THE ADDITION TOWARDS THE INFLATED PURCHASES AMOUNTING TO RS.29,33,2897 - (BEING 20% OF RS. 1,46,66,4457 - ), DISREGARDING COMPLETELY THE FACT THAT THE EQUIPMENT FABRICATED OUT OF THE PURCHASE OF MATERIAL FROM M/S. NAVRATAN METAL IMPEX, M/S. POOJA STEEL & ALLOYS AND M/S. ALANKAR STEELS AT THE MANUFACTURING UNIT OF THE APPELLANT IS LIABLE TO EXCISE DUTY AND THE CAPTIONED EQUIPMENT FABRIC ATED AT THE FACTORY OF THE APPELLANT WAS DELIVERED TO THE CUSTOMER ONLY AFTER PAYMENT OF EXCISE DUTY AND THE SAME IS RECORDED IN STATUTORY, EXCISE AND OTHER RECORDS MAINTAINED BY THE APPELLANT. THE LD. A.O. OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE APPELL ANT BEFORE CHARGING INTEREST U/S. 234B OF RS. 34,24,392/ - AND U/S 234C OF RS. 10,0247 - . THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OR MODIFY THE GROUNDS OF APPEAL, AS STATED ABOVE, AT ANY TIME ON OR BEFORE THE HEARING OF APPEAL. 3. THE GROUNDS TAKEN BY RE VENUE ARE AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - 3, THANE ERRED IN DELETING THE ADDITION OF RS. 1,17,33,156 / - OUT OF THE TOTAL ADDITION OF RS. 1,46,66,4457 - MADE ON ACCOUNT OF BOGUS ITA NO. 4401/MUM/2016 & 4468/MUM/2016 SHRI KETANKUMAR J PATEL 3 PURCHASES, DESPITE HOL DING THAT THE PURCHASES WERE NOT GENUINE AND THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE TRA N SACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, LD. CI T(A) - 3. THANE ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE HIS ONUS OF PROVING THE PURCHASES. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) - 3, THANE, MAY BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY G ROUND/GROUNDS, WHICH MAY BE NECESSARY. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. UNIQU E CHEMOPLANT EQUIPMENTS, WHICH IS ENGAGED IN THE BUSINESS OF FABRICATION OF VARIOUS EQUIPMENTS FOR CHEMICAL, PHARMACEUTICAL AND ALLIED INDUSTR IES. THE CASE WAS REOPENED AS THE PARTIES NAMELY; M/S. POOJA STEEL & ALLOYS, M/S. AIANKAR STEELS AND M/S. NAVRATAN METAL I M PEX FROM WHOM THE ASSESSEE HAD MADE PURCHASES ARE INVOLVED IN PROVIDING HAWAL A ENTRIES. THE AO MADE AN ADDITION OF RS.1,46,66,445/ - O N ACCOUNT OF BOGUS PURCHASES AS THE ASSESSEE FAILED TO DISCHARGE ITS PRIMARY ONUS OF PRODUCING THE RESPECTIVE PARTIES AND PROVING THE GENUINENESS OF THE PURCHASE TRANSACTION. .THE AO ADDED ENTIRE PURCHASE IN ASSESSEES INCOME. 5. BY THE IMPUGNED ORDER THE LD. CIT(A) UPHELD ADDITION TO THE EXTENT OF 20% OF BOGUS PURCHASES . 6. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD, WE FOUND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION OF VARIOUS EQUIPMENTS FOR CHEMICAL, PHARMACEUTIC AL AND ALLIED INDUSTRIES. ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT, AO REOPENED THE ITA NO. 4401/MUM/2016 & 4468/MUM/2016 SHRI KETANKUMAR J PATEL 4 ASSESSMENT AND MADE ADDITION IN RESPECT OF SUSPICION SUPPLIERS WHO WERE ALLEGED TO HAVE ISSUED ONLY BILLS WITHOUT ACTUAL DELIVERY OF GOODS. 7. BY THE IMPUGNED ORDER, CIT(A) UPHELD THE ADDITION TO THE EXTENT OF 20% BY OBSERVING THAT IT IS A CASE WHERE GOODS WERE RECEIVED FROM THE AUTHORITIES OTHER THAN THE PERSON WHO HAD ISSUED THE BILLS OF SUCH. IT WAS ALSO OBSERVED THAT PAYMENT WAS MADE BY ACCOUNT PAYEE CHEQUE . THE CIT(A) ALSO OBSERVED THAT THERE WAS CORRESPONDING SALES AND THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. WE ALSO FOUND THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD SHOWN GP OF 28.97% AS COMPARED TO THE GP OF IMMEDIATELY PRECEDING YEAR AT 19.23%. THUS, IT IS CLEAR THAT GP SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS NOT ONLY MUCH BETTER THAN THE GP OF EARLIER YEARS BUT EVEN ON ABSOLUTE TERMS, WE FOUND THAT IT IS A VERY REASONABLE GP, LOOKING TO THE NATURE OF TRADE ASSESSEE IS INVOLVED. UNDER THESE FACTS AND CIRCUMSTANCES, MAKING FURTHER ADDITION OF 20% WILL BE UNREASONABLE. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 2% OF THE ALLEGED BOGUS PURC HASES. WE DIRECT ACCORDINGLY. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS APPEAL OF ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 19 / 02 /201 8 S D/ - ( RAM LAL NEGI ) S D/ - ( R.C.SHA RMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 19 / 02 /201 8 KARUNA SR. PS ITA NO. 4401/MUM/2016 & 4468/MUM/2016 SHRI KETANKUMAR J PATEL 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBA I 6. GUARD FILE. //TRUE COPY//