SHUBH M L SHAH & SONS STEEL P.LTD, RAIGAD V. DCIT 10(3), MUMBAI

ITA 4456/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1123 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 28-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA JAIN LD
• Keywords: Bogus purchase; Carry forward of business losses; Onus to prove; Reassessment proceedings
• Section: 143(3); 115JB; 147

Judgement Text

ITA NOS.4456 &4457/M/2015 SHUBH M.L. SHAH & SONS STEEL PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 4456 & 4457/MUM/2015 ( / ASSESSMENT YEARS: 2009-10 & 2011-12) SHUBH M . L . SHAH & SONS STE E L PRIVATE LIMITED PLOT NO. 873 NR. BUVA WARE HOUSE SERVICE ROAD KALAMBOLI RAIGAD 400 218 / VS. DEPUTY COMMISSIONER OF INCOME TAX 10(3) MUMBAI 400 020 ./ ./PAN/GIR NO. AACCK-5531-B ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : DEVENDRA JAIN, LD. AR RE VENUE BY : NAVEEN GUPTA, LD. DR / DATE OF HEARING : 04/05/2017 / DATE OF PRONOUNCEMENT : 04 /05/2017 ITA NOS.4456 &4457/M/2015 SHUBH M.L. SHAH & SONS STEEL PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEALS BY ASSESSEE FOR ASSESSMENT YEARS [AY] 2009-10 & 2011-12 ASSAILS THE COMMON ORDER OF LD. C OMMISSIONER OF INCOME TAX (APPEALS)-24 [CIT(A)], MUMBAI DATED 29/0 5/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS WITH RESPECT TO BOGUS PURCHASES. SINCE, COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS AND TH E SAME SPRING OUT OF COMMON ORDER OF LD. CIT(A), WE PROCEED TO DECIDE THE SAME BY WAY OF THIS COMMON ORDER THE FOR SAKE OF CONVENIENCE & BREVITY. FIRST, WE TAKE UP ITA NO. 4456/M/15 FOR AY 2009-10. 2. FACTS LEADING TO THE DISPUTE ARE THAT THE ASSESS EE, BEING RESIDENT CORPORATE ASSESSEE, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY VIDE ASSESSING OFFICER [AO] ORDER DATED 26/11/2013 WHEREIN THE TOTAL INCOME WAS ASSES SED AT RS.1,56,64,400/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES OF RS.39,18,195/-. THE ORIGINAL RETURN OF INCOME WAS F ILED ON 28/09/2009 AT RS.1,06,63,715/- WHICH WAS ASSESSED U/S 143(3) ON 3 0/12/2011 AT RS.1,17,46,200/-. THE ASSESSEE WAS ENGAGED IN THE B USINESS OF TRADING OF CONSTRUCTION MATERIAL . THE REASSESSMENT PROCEEDINGS WERE TRIGGERED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVES TIGATION WING OF THE INCOME TAX DEPARTMENT THAT THE ASSESSEE HAS OBTAINE D BOGUS PURCHASE BILLS AMOUNTING TO RS.39,18,195/- FROM VARIOUS PART IES WHO WERE LISTED AS HAWALA BILL PROVIDERS. IN SUPPORT OF HIS CLAIM, THE ASSESSEE F ILED COPIES OF INVOICES AND LEDGER EXTRACTS OF THE ALLEGED BOGU S SUPPLIERS. HOWEVER, ITA NOS.4456 &4457/M/2015 SHUBH M.L. SHAH & SONS STEEL PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 3 NOT CONVINCED, AO TREATED THE PURCHASES AS BOGUS PU RCHASES ON THE PREMISES THAT THE ASSESSEE FAILED TO ESTABLISH THE PHYSICAL DELIVERY OF GOODS WHICH LED TO THE IMPUGNED ADDITIONS. 3. THE ASSESSEE CONTESTED THE SAME BEFORE LD. CIT(A ) WITHOUT ANY SUCCESS VIDE IMPUGNED ORDER DATED 29/05/2015 AND RA ISED SIMILAR CONTENTIONS AND PLACED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS. HOWEVER, LD. CIT(A) NOTED VARIOUS DISCREPANCIES IN THE DOCUMENTS PRODUCED BY THE ASSESSEE, REACHED A CONCLUSION THAT THE PURCHASES REMAINED UNSUBSTANTIATED BY THE ASSESSEE AND THEREF ORE, CONFIRMED THE ADDITION. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFO RE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTEN TION TO THE FACT THAT THE ASSESSEE WAS A TRADER AND RECONCILED THE Q UANTITATIVE DETAILS AND THEREFORE, AS SALES TURNOVER HAS NOT BEEN DOUBT ED BY THE REVENUE, THE PURCHASE THEREOF COULD NOT BE TREATED AS BOGUS. FURTHER, THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED U/S 44AB AND THE ASSESSEE WAS IN POSSESSION OF PURCHASE INVOICES AND ALL PAYM ENTS WERE THROUGH BANKING CHANNELS AND THEREFORE, THE DELETION DESERV ES TO THE DELETED. THE LD. AR, PLACING ON RECORD COPY OF QUANTITATIVE RECONCILIATION, FURTHER CONTENDED THAT THE ASSESSEE PURCHASED CEMENT FROM T HE ALLEGED BOGUS SUPPLIERS AND SOLD THE SAME DURING IMPUGNED AY ITSE LF AND REFLECTED SALES REVENUE QUA THE SAME AND THEREFORE, ADDITION WAS UNJUSTIFIED. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANC E ON THE ORDER OF LD. CIT(A) BY CONTENDING THAT THE ONUS TO PROVE THE PURCHASES BEYOND DOUBT SQUARELY LIED ON THE ASSESSE E WHICH HE HAS FAILED TO DISCHARGE AND HENCE, THE ASSESSEE DESERVE S FULL DISALLOWANCE AGAINST BOGUS PURCHASES. ITA NOS.4456 &4457/M/2015 SHUBH M.L. SHAH & SONS STEEL PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER ANALYZING THE VARIOUS CON TENTIONS OF RESPECTIVE REPRESENTATIVES COUPLED WITH OBSERVATION / FINDINGS OF LD. CIT(A) AND AFTER APPRECIATING FACTUAL MATRIX OF THE CASE, WE F IND THAT THE FACTS OF THE CASE DO NOT JUSTIFY FULL DISALLOWANCE AGAINST THE I MPUGNED PURCHASES PARTICULARLY WHEN THE ASSESSEE WAS IN POSSESSION OF INVOICES, PAYMENTS WERE THOUGH BANKING CHANNELS, QUANTITATIVE DETAILS WERE AVAILABLE ON RECORD AND SALES TURNOVER WERE NOT DOUBTED BY THE R EVENUE. THE TRIBUNAL, INVARIABLY, IN ALL SUCH CASES, HAVE TAKEN A STAND THAT EVEN IF PRESUMING THAT ALL PURCHASES WERE BOGUS, ENTIRE ADD ITION THEREOF WAS NOT WARRANTED FOR PARTICULARLY WHEN THE SALES WERE NOT IN DISPUTE AND THE ADDITION, IF ANY, WHICH HAS TO BE MADE IN ALL SUCH CASES IS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN SUCH PURCHASE TRANSACTIO NS. THEREFORE, WE RESTRICT THE SAID DISALLOWANCE TO 12.5% OF ALLEGED BOGUS PURCHASES OF RS.39,18,195/- WHICH COMES TO RS.4,89,774/-. THE AS SESSEES APPEAL STANDS PARTLY ALLOWED. 7. NOW, WE TAKE UP ITA NO. 4457/MUM/2015 FOR AY 201 1-12. THE ASSESSEE HAS SUFFERED SIMILAR DISALLOWANCE OF RS.27 ,05,774/- ON ACCOUNT OF BOGUS PURCHASES IN AN ASSESSMENT U/S 143(3) VIDE AO ORDER DATED 08/01/2014 WHICH WAS CONFIRMED BY LD. CIT(A) VIDE I MPUGNED ORDER. THERE BEING NO CHANGE IN FACTS OR CIRCUMSTANCES, TA KING THE SAME STAND, WE RESTRICT THE IMPUGNED DISALLOWANCE TO 12.5% WHIC H COMES TO RS.3,38,222/-. RESULTANTLY, THE ASSESSEES APPEAL S TANDS PARTLY ALLOWED. 8. THE AO IS DIRECTED TO RESTRICT THE ADDITIONS IN TERMS OF OUR ABOVE FINDING AND RE-COMPUTE BOOK PROFITS U/S 115JB AND S ET-OFF/CARRY FORWARD OF BUSINESS LOSSES ETC., IF ANY. ITA NOS.4456 &4457/M/2015 SHUBH M.L. SHAH & SONS STEEL PRIVATE LIMITED ASSESSMENT YEARS-2009-10 & 2011-12 5 9. IN NUTSHELL, BOTH THE APPEALS FILED BY ASSESSEE STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH MAY, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. !$, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI