ITO 28(2)(1), Mumbai V. M/S LIVACO INDUSTRIES, Mumbai

ITA 4452/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4954 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 4452 / /201 9 ((. . 2010-11. ) ITA NO.4452/MUM/2019 (A.Y.2010-11) . 4453 / /201 9 ((. . 2011-12 ) ITA NO.4453/MUM/2019 (A.Y.2011-12) ITO-28(2)(1), ROOM NO.326, 3 RD FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI 400 703 ...... * / APPELLANT ( VS. M/S. LIVACO INDUSTRIES, PLOT NO. R-481, TTC INDUSTRIAL AREA, MIDC, RABALE, NAVI MUMBAI 400 701 PAN: AAAFL 4263E ..... +,/ RESPONDENT *-/ APPELLANT BY : SHRI SANJAY J. SETHI +,-/ RESPONDENT BY : NONE (., / DATE OF HEARING : 07/01/2021 /01 ., / DATE OF PRONOUNCEMENT : 05/04/2021 / ORDER THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) -26, MUMBAI [I N SHORT THE CIT(A)] FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12, RESPECTIVELY. BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 05/04/2019. SINCE, SIMILAR GROUND S HAVE BEEN RAISED BY THE REVENUE IN BOTH THE APPEALS AND THE ISSUE GERMANE TO ADDITI ON IS IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED VIDE THIS COMMON ORDER. 2 . 4452 / /201 9 ((. .2010-11. ) ITA NO.4452/MUM/2019 (A.Y.2010-11) . 4453 / /201 9 ((. .2011-12. ) ITA NO.4453/MUM/2019 (A.Y.2011-12) 2. SHRI SANJAY J. SETHI REPRESENTING THE DEPARTMEN T SUBMITTED THAT DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2010-11 THE ASSESSEE OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.18,77,741/- FROM VA RIOUS DEALERS DECLARED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT O F MAHARASHTRA. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PROV E GENUINENESS OF PURCHASES AND THE DEALERS. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE BOGUS PURCHASES. THE ASSESSEE FILED APPEAL AGAINST ASSESSMENT ORDER DATE D 15/3/2016 PASSED UNDER SECTION 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). THE CIT(A) RESTRICTED THE ADDITION TO 12.5% OF BOGUS PURCHASES . THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SINCE THE ASSESSEE FA ILED TO PRODUCE DOCUMENTARY EVIDENCE TO SHOW TRIAL OF GOODS AND CONSUMPTION OF RAW MATERIAL THE ASSESSING OFFICER RIGHTLY MADE ADDITION OF THE ENTIRE INFLATE D PURCHASES. THE LD. DEPARTMENTAL REPRESENTATIVE PRAYED FOR REVERSING THE FINDINGS OF CIT(A) AND RESTORING THE ADDITION MADE IN ASSESSMENT ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SIMILAR IS THE SITUATION IN ASSESSMENT YEAR 2011-12. THE ASSESSEE MADE BOGUS PU RCHASES TO THE TUNE OF RS.9,97,646/-FROM SUSPICIOUS DEALERS. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE BOGUS PURCHASES AS THE ASSESSEE FAILED TO SU BSTANTIATE GENUINENESS OF THE PURCHASES AND THE DEALERS. 3. THE SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESE NTATIVE HEARD AND ORDERS OF AUTHORITIES BELOW EXAMINED. THE ASSESSEE IS ENG AGED IN MANUFACTURING OF CHEMICAL EQUIPMENT AND FABRICATION WORK. DURING TH E PERIOD RELEVANT TO ASSESSMENT YEAR 2010-11 THE ASSESSEE ALLEGEDLY OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS.18,77,741/- AND IN THE PERIOD RELEVANT TO ASSESS MENT YEAR 2011-12 TO THE EXTENT OF RS.9,97,646/-. UNDISPUTEDLY, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF PURCHASES AND AUTHENTICITY OF THE DE ALERS. 3 . 4452 / /201 9 ((. .2010-11. ) ITA NO.4452/MUM/2019 (A.Y.2010-11) . 4453 / /201 9 ((. .2011-12. ) ITA NO.4453/MUM/2019 (A.Y.2011-12) THE ASSESSING OFFICER HAS ACCEPTED THE SALES TURNOV ER DECLARED BY THE ASSESSEE, THE LOGICAL COROLLARY IS THAT WITHOUT PUR CHASES THERE CANNOT BE PRODUCTION/SALES, HENCE, THE ENTIRE ALLEGED BOGUS P URCHASES CANNOT BE DISALLOWED. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE PCIT VS PRAMASHAKTI DISTRIBUTORS PVT. LTD. IN INCOME TAX APPEAL 413 OF 2017 DECIDED ON 15/7/2019 HAS HELD THAT ONLY THE PROFIT ELEMENT EMBEDDED IN BOGUS PURCHASES CAN BE TAXED. THE ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE ADDED. THE CIT(A) AFTER A PPRECIATING ENTIRE FACTS INCLUDING THE GP DECLARED BY THE ASSESSEE HAS ESTIM ATED GP ON BOGUS PURCHASES AT 12.5% IN THE IMPUGNED ASSESSMENT YEARS. I CONCUR WI TH THE FINDINGS OF CIT(A). THE IMPUGNED ORDER IS UPHELD AND THE APPEALS BY REVENUE ARE DISMISSED, SANS-MERIT. 4. IN THE RESULT, BOTH APPEALS BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 05 TH DAY OF APRIL, 2021. SD./- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3(/ DATED: 05/04/2021 VM , SR. PS (O/S) 4 . 4452 / /201 9 ((. .2010-11. ) ITA NO.4452/MUM/2019 (A.Y.2010-11) . 4453 / /201 9 ((. .2011-12. ) ITA NO.4453/MUM/2019 (A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT , 2. +, / THE RESPONDENT. 3. 4, ( )/ THE CIT(A)- 4. 4, CIT 5. 56+,( , . . . , / DR, ITAT, MUMBAI 6. 6789: / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI