DCIT 1(1)(2), MUMBAI V. FUTURA INFRAPROJECTS LTD, MUMBAI

ITA 4403/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9990 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Bogus purchase; Unexplained expenditure; Onus to prove
• Section: 143(3); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4403/MUM/2016 ASSESSMENT YEAR: 2009 - 10 DCIT - 1(1)(2) 579 , AAYAKARBHAVAN, M.K. ROAD MUMBAI - 400020. VS. FUTURA INFRAPROJECTS LTD. 303, 3 RD FLOOR, RAJENDRA CHAMBERS (W) MUMBAI - 400001. PAN NO. AAACF6879R APPELLANT RESPONDENT REVENUE BY : MS. ARJU GARODIA, DR ASSESSEE BY: MR. NARAYAN ATAL, A R DATE OF HEARING : 16/08 /2017 DATE OF PRONOUNCEMENT : 30/08/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSME NT YEAR IS 2009 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 2 , MUMBAI AND ARISES OUT OF ORDER U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT 1961, ( T HE ACT). 2. THE GROUND S OF APPEAL READ AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO THE EXTENT OF 3.43% OF TOTAL ITA NO. 4403/MUM/2016 2 ALLEGED BOGUS PURCHASES FROM HAWALA DEALERS INSTEAD OF UNEXPLAINED EXPENDITURE U/S 69 OF THE I. T . ACT , 19 61 OF RS.93,87,443/ - ADDED BY THE AO BY IGNORING THE FACTS BROUGHT ON RECORD AND DULY CONCEDED BY HIM THAT GOODS ARE PROCURED FROM GREY MARKET IN CASH AND BOGUS BILLS ARE PROCURED FROM HAWALA OPERATORS TO WHOM CHEQUES ISSUED ARE FOUND TO BE IMMEDIATELY WIT HDRAWN IN CASH, THEREBY ADDITION MADE TO THE EXTENT OF INVESTMENT MADE IN UNACCOUNTED PURCHASES MADE IN CASH TO THE EXTENT OF POSITIVE PEAK (IN RESPECT OF ALL SUCH PARTIES) AND UNACCOUNTED COMMISSION PAID FOR PROCURING SUCH BOGUS BILLS SHOULD HAVE BEEN ADD ED/CONFIRMED IN ADDITION TO THE AD - HOC PERCENTAGE O F SUCH PURCHASES AS HELD BY HIM. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ADDITION WAS MADE ON THE BASIS OF INFORMATION RECEIVE D FROM THE DIT(INV) AND SALES TAX DEPARTMENT, MAHARASHTRA WITH REGARD TO BOGUS PURCHASES MADE BY THE ASSESSEE FROM DEALERS WITHOUT SUPPLY OF ACTUAL GOODS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CON SIDERING THAT THE HAWALA DEALERS HAVE ADMITTED ON OATH BEFORE THE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIAL TO ANYBODY . 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE PURCHASE TRANSACTIONS DURING THE C OURSE OF ASSESSMENT PROCEEDINGS . 3. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A INFRASTRUCTURAL BUILDER AND CONTRACTOR. THE ASSESSING OFFICER (AO) ASKED THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO PROVE GENUINENESS OF PURCHASES FROM FOLLOWING PARTIES: ITA NO. 4403/MUM/2016 3 VAT NO. NAME OF T HE HAWALA OPERATOR PERIOD (F.Y) BILL AMOUNT (RS.) 27300637267V KRC TRADING CO. PVT. LTD. 2008 - 09 1040598 27600611203V VICTOR TRADERS 2008 - 09 3283631 27650564276V JINDAL STEEL CORPN. 2008 - 09 5063214 TOTAL 93,87,443 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF THE ABOVE PURCHASES. IN RESPONSE TO IT, THE ASSESSEE FILED A REPLY BEFORE THE AO ON 17.01.2014 ALONG WITH COPY OF PURCHASE INVOICE, DELIVERY CHALLAN, LORRY R ECEIPT, EVIDENCE OF PAYMENT THROUGH CHEQUE DULY HIGHLIGHTED IN BANK STATEMENT, LEDGER ACCOUNT OF THE PARTIES. THE ASSESSEE ALSO STATED BEFORE THE AO THAT IT HAS MAINTAINED STOCK REGISTER AT VARIOUS SITE AND IT CAN BE PRODUCED WHENEVER THE DEPARTMENT DESIR ES TO VERIFY THE SAME. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE REPLY OF THE ASSESSEE AND MADE AN ADDITION OF RS.93,87,443/ - ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT ONLY THE ADDITION OF PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES OF RS.93,87,443/ - COULD BE MADE TO THE INCOME SHOWN BY THE ASSESSEE. CONSIDERING THE FACTS OF THE CASE THE LD. CIT(A) ESTIMATED PR OFIT @ 3.43% I.E . THE GROSS PROFIT SHOWN BY THE ASSESSEE ON THE SAID PURCHASES OF RS.93,87,443/ - AND IT COMES TO ITA NO. 4403/MUM/2016 4 RS.3,21,990/ - . THUS HE RESTRICTED THE DISALLOWANCE FROM RS.93,87,443/ - TO RS.3,21,990/ - . 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE AO. THE LD. DR ALSO FILES A WRITTEN SUBMISSION. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE SUPPORTS THE ORDER OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE BEGIN WITH THE WRITTE N SUBMISSION FILED BY THE LD. DR. WE FIND THAT IT IS A GENERAL SUBMISSION IN THE CASE OF BOGUS PURCHASE. IT IS NOT BASED ON THE PECULIARITY OF THE INSTANT CASE. WE HAVE MENTIONED AT PARA 3 HERE - IN - ABOVE THAT THE ASSESSEE FILED A REPLY/EXPLANATION BEFORE TH E AO ON 17.01.2014 ENCLOSING COPY OF THE PURCHASE INVOICE, DELIVERY CHALLAN, LORRY RECEIPT, EVIDENCE OF PAYMENT THROUGH CHEQUE DULY HIGHLIGHTED IN BANK STATEMENT, LEDGER ACCOUNT OF THE PARTIES. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT IT MAINTAINED S TOCK REGISTER AT VARIOUS SITE AND IT COULD BE PRODUCED WHENEVER THE DEPARTMENT DESIRED TO VERIFY THE SAME. THUS THE ONUS SHIFTED TO THE AO. WE FIND THAT INSTEAD OF VERIFYING THE CONTENTIONS OF THE ASSESSEE AND INSTEAD OF ASKING THE ASSESSEE TO PRODUCE THE STOCK REGISTER , THE AO HAS MADE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. IN VIEW OF THE ABOVE, THE WRITTEN SUBMISSION FILED BY THE LD. DR DOES NOT ADDRESS THE INSTANT CASE IN CIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SC); CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540, 545 (SC), IT HAS BEEN HELD THAT ITA NO. 4403/MUM/2016 5 THE ONUS TO PROVE THAT THE APPARENT IS NOT REAL IS ON THE PARTY WHO CLAIMS IT TO DO SO. THE AO IN THE INSTANT CASE HAS FAILED TO DO SO. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/08/2017. SD/ - S D/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 30/08/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI