SUNIL D KURLEKAR, MUMBAI V. DCIT 30(2), MUMBAI

ITA 4482/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0116 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 28-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Principle of natural justice; Period of limitation; Non compliance; Tax effect; Time period of passing order; Condonation of delay
• Section: 143(3); 133(6)

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 4482/ MUM/2016 ( / ASSESSMENT YEAR : 2011-12) SUNIL D. KURLEKAR, A-601 ADARSH CLASSIC, ADARSH VIHAR COMPLEX, OFF MARVE ROAD, MALAD (WEST), MUMBAI 400 064. / V. DY. COMMR. OF IT 30(2), C-13, PRATYAKSHA KAR BHAVAN, BKC, BANDRA EAST, MUMBAI 400 051. ./ PAN : AFEPK6360A ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI KETAN L. VAJANI REVENUE B Y : SHRI V. VIDHYADHAR / DATE OF HEARING : 17.08.2017 / DATE OF PRONOUNCEMENT : 28.08.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 4 482/MUM/2016, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 03.03.2016 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 41, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2011-12, APPELLATE PR OCEEDINGS BEFORE LEARNED CIT(A) HAS ARISEN FROM THE ASSESSMENT ORDER DATED 2 8.03.2014 PASSED BY ITA 4482/MUM/2016 2 LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- L. THE LEARNED C.I.T.(A) HAS ERRED IN SUSTAINING ADDITION/DISALLOWANCE TO THE EXTENT OF 35% OF PURCH ASES OF RS. 29,18,477/- I.E. RS. 10,21,467/- HELD AS BOGUS/NON- GENUINE PURCHASES BY THE ASSESSING OFFICER MENTIONED IN PAR A 3 OF THE APPEAL ORDER. THE C.I.T. HAS ARBITRARILY ESTIMATED THIS ON THE BASIS OF G. P. RATIO OF THE APPELLANT. THE LEARNED C.I.T. (A) ERRED IN ESTIMATING HIS INCOME AT TOO HIGH A FIGURE AND R ESULTS INTO UNFAIR, UNJUST AND ILLOGICAL ADDITION. BECAUSE OF A RBITRARY ASSESSMENT THE APPELLANT IS PUT TO GREATER HARDSHIP AND PRAYS FOR FAIR TREATMENT, IN THESE PRESENT PROCEEDINGS. 2. THE LEARNED C.I.T. (A) HAS ERRED IN SUSTAINING ADDITION/DISALLOWANCE TO THE EXTENT OF RS. 29,301/- IN RESPECT OF SHORT BOOKING OF RECEIPTS AS PER 26AS STATEMENT RS. 9,49,336/- VIS-A-VIS LEDGER ACCOUNT AT RS. 9,20,035/- IN CASE OF ONE OF THE CUSTOMER OF THE APPELLANT M/S. SHREE KRISHNA CONTRO LS PVT. LTD. MENTIONED IN PARA 5.1 OF THE APPEAL ORDER. ADDITION MERELY ON THE BASIS OF TRANSACTIONS REPORTED IN FORM 26AS IS UNREASONABLE, UNJUST, BIASED AND UNFAIR, TO THE APPELLANT. 3. THE APPELLANT CRAVES FOR CANCELLATION OF THE UNF AIR ASSESSMENT IN UNJUST AND ARBITRARY MANNER FOR THE RELIEFS, SOU GHT ABOVE, THE APPELLANT PRAYS. 3. AT THE OUTSET, WE FIND THAT THIS APPEAL IS FILED LATE BY 7 DAYS BY THE ASSESSEE, BEYOND THE TIME PERIOD STIPULATED FOR FIL ING OF APPEAL U/S 253(3) OF THE 1961 ACT. THE ASSESSEE HAS DULY FILED AFFIDAVIT DATED 20 TH JUNE, 2017 SIGNED BY SHRI SUNIL D. KURLEKAR , THE ASSESSEE. I T IS AVERRED IN THE AFORE- STATED AFFIDAVIT THAT THE DELAY IN FILING APPEAL L ATE BY 7 DAYS HAD MAINLY OCCURRED DUE TO THE VISIT OF HIS OVERSEAS BUSINESS ASSOCIATES TO INDIA FOR ITA 4482/MUM/2016 3 VARIOUS BUSINESS PURPOSES AND HE HAD TO ATTEND VARI OUS BUSINESS MEETINGS WITH THEM. MOREOVER IT IS ALSO AVERRED IN THE SAID AFFIDAVIT THAT THE ASSESSEES OFFICE AND FACTORY WERE DEPRIVED OFF THE POWER DUE TO SOME TECHNICAL PROBLEM IN THE TRANSFORMER OF MSEB IN THAT AREA AND DUE TO THIS HE COULD NOT MEET HIS CA TO DISCUSS FILING OF APPEAL IN THE ITAT, HENCE, THE ASSESSEE PRAYED FOR CONDONATION OF DELAY OF 7 DAYS IN FILING OF THIS AP PEAL WITH THE TRIBUNAL BEYOND TIME STIPULATED U/S 253(3) OF 1961 ACT. THE SAID AF FIDAVIT IS PLACED ON RECORD IN FILE. ON THE OTHER HAND, LD DR OPPOSED THE PRAYE R OF CONDONATION OF DELAY BY THE ASSESSEE AND SUBMITTED THAT THIS APPEAL IS F ILED LATE BY 7 DAYS AND THE SAME MAY NOT BE ADMITTED IN THE INTEREST OF JUSTICE . AFTER HEARING BOTH THE PARTIES AND CONSIDERING MATERIAL ON RECORD AND BY RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COLLECTOR L AND ACQUISITION V. MST KATIJI & ORS. (1987) 167 ITR 471(SC) , IN OUR CONSI DERED VIEW IN THE INSTANT CASE BASED ON FACTUAL MATRIX AS IS EMERGING FROM RE CORDS , THE ASSESSEE HAS DEMONSTRATED A SUFFICIENT CAUSE WHICH PREVENTED THE ASSESSEE FROM FILING THIS APPEAL IN TIME BEFORE THE TRIBUNAL AS STIPULATED AN D MANDATED U/S 253(3) OF 1961 ACT AND UNDER THESE CIRCUMSTANCES KEEPING IN V IEW SUBSTANTIAL INTEREST OF JUSTICE, WE ARE INCLINED TO CONDONE DELAY OF 7 D AYS IN FILING OF THIS APPEAL LATE BY THE ASSESSEE BEYOND THE TIME STIPULATED U/S 253(3) OF 1961 ACT, MORE- SO THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECO RD TO CONTROVERT STAND AND CLAIMS OF THE ASSESSEE AS AVERRED IN THE AFFIDA VIT . THUS, WE ADMIT THIS APPEAL AND PROCEED TO DECIDE THIS APPEAL ON MERITS. WE ORDER ACCORDINGLY. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND IS PROPRIETOR OF M/S HI TECH TOOLS, ENGAGED IN THE BUS INESS OF MANUFACTURING OF HIGH PRECISION METAL PARTS, SHEET METAL TOOLS, MOUL DS, DYES AND MACHINERY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) R.W.S. 143(2) OF THE 1961 ACT, NOTICES U/S 133(6) OF THE ACT WERE ISSUED BY THE A.O. TO THE ITA 4482/MUM/2016 4 FOLLOWING PARTIES TO VERIFY THE GENUINENESS OF PURC HASES MADE BY THE ASSESSEE FROM THE FOLLOWING PARTIES:- M/S PRARTHI TRADING CO. M/S KRISH CORPORATION M/S KANTILAL BROTHERS M/S INSPIRE TRADERS THE NOTICES ISSUED TO ALL THE ABOVE PARTIES WERE RE TURNED UN-SERVED BY THE POSTAL AUTHORITIES, EXCEPT IN THE CASE OF M/S KANTI LAL BROTHERS, HOWEVER, THERE WAS NO COMPLIANCE EVEN FROM THIS PARTY TO WHOM THE NOTICE U/S 133(6) WAS SERVED. IT WAS OBSERVED BY THE AO THAT IN SOME OF T HE CASES, WHERE THE PARTIES WERE NOTIFIED BY THE SALES TAX AUTHORITIES AS SUSPE CTED TO HAVE BEEN ENGAGED IN ISSUING BILLS WITHOUT DELIVERY OF MATERIALS, ADD RESSES WERE NOT PROVIDED BY THE ASSESSEE. THE ASSESSEE WAS ASKED TO SUBSTANTIAT E THE GENUINENESS OF THE PURCHASES BY PRODUCING THE PARTIES/FURNISHING EVIDE NCES WITH CONFIRMATION. THE ASSESSEE WAS SHOW CAUSED BY THE AO TO SUBSTANTI ATE THE GENUINENESS OF THE PURCHASES WHEREIN LETTER WAS ISSUED TO THE ASSE SSEE BY THE AO, THE RELEVANT PORTION OF THE LETTER IS REPRODUCED BELOW: - 'SUB: ASSESSMENT PROCEEDINGS IN YOUR CASE FOR THE A .Y. 2011-12 - REG. PLEASE REFER TO THE ABOVE. 1. NOTICE U/ S 133(6) ISSUED TO THE FOLLOWING PARTI ES TO VERIFY THE PURCHASES HAVE BEEN RETURNED UNSERVED, THOUGH S ENT ON THE ADDRESSES PROVIDED BY YOU. I) M/ S PRARTHI TRADING CO. II} M/ S KRISH CORPORATION ITA 4482/MUM/2016 5 III) INSPIRE TRADERS 2. NOTICE U/S 133(6) ISSUED TO M/S KANTILAL BROTHER S TO VERIFY THE PURCHASES HAS REMAINED NON COMPLIED , THOUGH SE RVED ON THE ADDRESS PROVIDED BY YOU. 3. SIMILARLY, NO ADDRESSES HAVE BEEN PROVIDED IN RE SPECT OF THE FOLLOWING PURCHASE PARTIES: I. M/S MAHAVIR ENTERPRISES II. M/S OMKAR TRADING CO. III. M/S PAYAL ENTERPRISES IV. M/S PRATIK ENTERPRISES V. M/ S REKHA TRADING CO. VI. M/S SHRADDHA TRADING CO. VII. M/S VARDHMAN TRADERS VIII. M/S VIRAJ TRADING CO. IX. M/S VIRESH SALES CORPORATION IX. M/S YASH CORPORATION 4. YOU ARE REQUESTED TO SUBSTANTIATE THE GENUINENES S OF PURCHASES BY PRODUCING THE PARTIES/FURNISHING EVIDE NCES WITH CONFIRMATION, FAILING WHICH THE SAID PURCHASES WILL BE TREATED AS NON GENUINE AND ACCORDINGLY DISALLOWED. THE A.O. ALSO OBSERVED THAT IN THE CASE OF FOLLOWIN G THREE PARTIES, THE ADDRESSES WERE NOT AVAILABLE IN THE DETAILS OF PURC HASES PROVIDED BY THE ASSESSEE, WHO WERE ALSO APPEARING IN THE LIST OF SU SPECTED DEALERS PUBLISHED BY SALES TAX AUTHORITIES. 1. SHIVRAJ TRADERS ITA 4482/MUM/2016 6 2. SAJ ENTERPRISES 3. JAIN CORPORATION. THE ASSESSEE IN REPLY TO THE ABOVE SHOW CAUSE NOTIC E, SUBMITTED THE COPIES OF BILLS AND BANK STATEMENTS TO SHOW THAT THE PAYMENTS TOWARDS THE PURCHASES HAD BEEN DULY MADE THROUGH BANKING CHANNEL. THE ASS ESSEE ALSO STATED THAT IT WAS NOT POSSIBLE TO PRODUCE THE PARTIES ON SHORT PERIOD AS MANY OF THE PARTIES MIGHT HAVE SHIFTED PLACES AND HENCE THE NOT ICES WERE RETURNED UN- SERVED. THE A.O. OBSERVED THAT THE SUBMISSION OF TH E ASSESSEE THAT THE TIME ALLOWED TO PRODUCE THE PARTIES WAS INSUFFICIENT WAS NOT ACCEPTABLE FOR THE REASON THAT THE COMMENCEMENT OF ASSESSMENT PROCEEDI NGS WERE DELAYED OWING TO THE NON COMPLIANCE FROM THE ASSESSEE SIDE TO THE NOTICES ISSUED BY REVENUE, THE DETAILS OF PURCHASES AND SALES BEING S UBMITTED ONLY ON 18 TH FEBRUARY, 2014 (WHICH WAS CLOSE TO THE LIMITATION P ERIOD FOR FRAMING OF ASSESSMENT WHICH LIMITATION PERIOD WAS GOING TO EXP IRE ON 31 ST MARCH, 2014 ) ALTHOUGH THE FIRST NOTICE SEEKING SUCH DETAILS WERE ISSUED BY THE AO ON 14 TH NOVEMBER, 2013. THE A.O. ALSO OBSERVED THAT MERELY BECAUSE THE BANK STATEMENTS WERE SUBMITTED BY THE ASSESSEE WAS NOT I N ITSELF SUFFICIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASES. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS ALSO NOT PRODUCED EVIDENCES IN SUPPORT OF THE DELIVERY AND TRANSPORT OF MATERIAL ALLEGEDLY SUPPLIED BY THESE P ARTIES. THE A.O. OBSERVED THAT THE PARTIES FROM WHOM THE ALLEGED PURCHASES WE RE MADE BY THE ASSESSEE ARE ALL IN THE NOTIFIED LIST OF SALES TAX DEPARTMEN T AS ENTITIES WHO WERE INVOLVED IN ISSUING OF BILLS WITHOUT ACTUAL SUPPLY/ DELIVERY OF MATERIAL. THUS, THE A.O. OBSERVED THAT THE ASSESSEE HAS FAILED TO S UBSTANTIATE THE GENUINENESS OF THE PURCHASE TRANSACTION IN SPITE OF OPPORTUNITY PROVIDED TO THE ASSESSEE TO PRODUCE THE PARTY AND SUBSTANTIATE ITS GENUINENESS. THE A.O., THEREFORE, ADDED AN AMOUNT OF RS. 34,09,991/- AS UNPROVED PURCHASES BEING HELD TO BE BOGUS PURCHASES BY THE AO, VIDE AS SESSMENT ORDER DATED 28- 03-2014 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT . ITA 4482/MUM/2016 7 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28-03-20 14 PASSED BY THE A.O. U/S 143(3) , THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE LD. CIT(A). 6. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED T HAT THE COPIES OF THE INVOICES FROM VARIOUS PARTIES WERE FILED BEFORE THE A.O. WHE REBY THE PROPER NAME, ADDRESS, CONTACT NO. AND VAT REGISTRATION OF THE PA RTIES WERE GIVEN. IT WAS SUBMITTED THAT THE BANK STATEMENTS WERE SUBMITTED T O SHOW THAT THE PAYMENTS TOWARDS THE SAID PURCHASES WERE MADE THROU GH BANKING CHANNEL. THE ASSESSEE SUBMITTED THAT AUDITED ACCOUNTS OF THE ASSESSEE , WHICH WERE AUDITED U/S 44AB OF THE ACT WERE ACCEPTED BY THE A .O. . IT WAS SUBMITTED THAT THE AO HAS NOT DOUBTED THE SALES AND HAS ACCEP TED THE SALES AS GENUINE. IT WAS SUBMITTED THAT THE GOODS SOLD CANNOT BE MANU FACTURED WITHOUT PROCURING THE REQUISITE RAW MATERIALS FROM THE ALLE GED PURCHASE PARTIES AND THE AO HAS NOT TAKEN INTO ACCOUNT THE PURCHASES CON SUMED FOR THE MANUFACTURING OF THE FINISHED GOODS. IT WAS ALSO SU BMITTED THAT THE PURCHASE FROM ONE OF THE PARTIES M/S REKHA TRADING CO, WAS E RRONEOUSLY ASSESSED AS NON-GENUINE BECAUSE THE TIN OF THE PARTY DOES NOT M ATCH THE TIN ON THE MAHARASHTRA VAT WEBSITE WHICH IS DECLARED AS SUSPI CIOUS SUPPLIER AND HENCE IT WAS SUBMITTED THAT THE A.O. OVER ASSESSED THE INCOME TO THE TUNE OF RS. 4,91,514/- MADE FROM REKHA TRADING CO.. THE ASS ESSEE SUBMITTED BEFORE LEARNED CIT(A) THAT DEFAULT ON THE PART OF THE SUPP LIERS, SUCH AS NON PAYMENT OF VAT AND NON FILING OF VAT RETURN CANNOT BE A SUF FICIENT REASON FOR THE MAKING ADDITION TO THE RETURN OF INCOME ON ALLEGATI ON THAT PURCHASES WERE BOGUS. IT WAS SUBMITTED BY THE ASSESSEE BEFORE LEA RNED CIT(A) THAT THE A.O. HAS NOT GRANTED CROSS EXAMINATION OF THESE PARTIES AND ALSO NOT SUPPLIED THE COPIES OF AFFIDAVIT/STATEMENT OF THE SAID PARTIES T O THE ASSESSEE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THERE WERE DIVERGENT DECISIONS DELIVERED BY THE HIG H COURTS AND TRIBUNAL ON ITA 4482/MUM/2016 8 THE SAID SUBJECT. THE LEARNED CIT(A) OBSERVED THA T IN SUCH CASES A REASONABLE AND FAIR VIEW HAS TO BE TAKEN WHEREIN A CERTAIN PERCENTAGE OF PURCHASE PRICE HAS TO BE DISALLOWED. THE LD. CIT(A ) OBSERVED THAT IN SUCH CASES THE EXACT SOURCE OF GOODS OR INFLATION IS ONL Y KNOWN TO THE ASSESSEE. THUS, IN THESE CASES PROFIT EMBEDDED IN SUCH TRANSA CTIONS OF PURCHASES AND SALES WILL BE MUCH HIGHER THAN NORMAL GP RATIO. THE LEARNED CIT(A) OBSERVED THAT 100% DISALLOWANCE CANNOT BE MADE IN THIS INSTA NT CASE AS THE AO DID NOT CARRY OUT INDEPTH ENQUIRIES AND INVESTIGATIONS WHICH WERE REQUIRED TO BE DONE BY THE AO. THE LEARNED CIT(A) OBSERVED THAT N OTICE U/S 133(6) OF THE ACT ISSUED BY THE A.O. WERE ALSO RETURNED BACK UN-SERVE D. THE ASSESSEE ALSO FAILED TO PRODUCE THE PARTIES FOR VERIFICATION AND THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE DELIVERY AND TRANSPORT OF THE MATERIALS FROM THE BOGUS SUPPLIERS. THUS, THE LD. CIT(A) CON CLUDED THAT THE ASSESSEE HAD TAKEN BOGUS BILLS AND THE ASSESSEE FAILED TO ES TABLISH THAT THE RAW MATERIALS WERE PURCHASED FROM THE PARTY WHICH HAS I SSUED THE BILLS AND HENCE INFLATION OF PURCHASES IS NOW TO BE ESTIMATED BASED ON FACTS OF THE CASE. THE LEARNED CIT(A) CONCLUDED THAT THE ASSESS EE PROCURED MATERIAL FROM SOME OTHER SOURCES OR IT WAS FROM THE SUPPRESSED ST OCK OF THE PRECEDING YEARS. THE LEARNED CIT(A) OBSERVED THAT THE ASSESS EE HAD DECLARED GP AT 29.13%. THE TOTAL PURCHASE OF RS. 2.57 CRORES HAD BEEN DEBITED TO PROFIT AND LOSS ACCOUNT, OUT OF WHICH PURCHASES TO THE TUNE O F RS. 34,09,991/- HAD BEEN DISALLOWED. THE ASSESSEE STATED THAT THE DISA LLOWANCE OF RS. 4,91,514/- WAS ON ACCOUNT OF ERROR OR WRONG IDENTIFICATION ON THE SIDE OF SUPPLIER. THUS, AS PER LEARNED CIT(A), THE PURCHASE DISALLOWANCE SH OULD HAVE BEEN RESTRICTED TO RS. 29,18,477/- BY THE AO. THE LD. CIT(A) ACCOR DINGLY ESTIMATED DISALLOWANCE @35% OF PURCHASE PRICE TO BE REASONABL E DISALLOWANCE AND ACCORDINGLY WORKED OUT DISALLOWANCE/ADDITION TO THE EXTENT OF 35% OF PURCHASE PRICE OF RS. 29,18,477 I.E. RS. 10,21,467/ - WHICH DISALLOWANCE WAS SUSTAINED BY LEARNED CIT(A) AND BALANCE ADDITION OF RS. 23,88,524/- WAS ITA 4482/MUM/2016 9 DELETED BY LEARNED CIT(A) , VIDE APPELLATE ORDERS D ATED 03-03-2016 PASSED BY LEARNED CIT(A). 7. AGGRIEVED BY THE APPELLATE ORDER DATED 03-03-20 16 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL.THE REVENUE IS NOT IN APPEAL AND IT IS STATED BY LEARNED DR THAT IT IS ON LY DUE TO SMALLNESS OF THE TAX EFFECT THE APPEAL WAS NOT FILED KEEPING IN VIEW CBDT CIRCULAR NO. 21/2015 OF 10 TH DECEMBER 2015 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A.O. HAS DISALLOWED 100% OF THE PURCHASE PRICE OF THE MATERIAL ALLEGEDL Y PURCHASED FROM THESE ALLEGED HAWALA DEALERS WHOSE NAMES ARE LISTED IN TH E LIST NOTIFIED BY MAHRASHTRA VAT AUTHORITIES TO BE SUSPICIOUS DEALERS , WHILE LD. CIT(A) RESTRICTED THE SAME TO 35%. THE LD. COUNSEL SUBMITT ED THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF M/S HI TECH TOOLS, ENGAGED IN THE BUSINESS OF MANUFACTURING OF HIGH PRECISION METAL PARTS, SHEET METAL TOOLS, MOULDS, DYES AND MACHINERY. THE ASSESSEE HAD DECLARED GP AT 29.1 3%. . IT WAS SUBMITTED THAT THE ASSESSEE IS NOT LIABLE TO EXCISE DUTY. IT IS SUBMITTED THAT SOME REASONABLE DISALLOWANCE SHOULD BE MADE AS THE LEARN ED CIT(A) HAS UPHELD THE DISALLOWANCE / ADDITIONS TO THE TUNE OF 35% WHICH I S VERY HIGH. IT IS SUBMITTED THAT VAT ON THE PRODUCTS DEALT WITHIN BY THE ASSESSEE RANGES FROM 4-12.5% AND ACCORDINGLY DISALLOWANCE BE WORKED OUT. IT WAS SUBMITTED THAT COPIES OF STATEMENTS/AFFIDAVITS RECORDED BY THE MAH ARASHTRA VAT AUTHORITIES WERE NOT FURNISHED TO THE ASSESSEE AND CROSS EXAMIN ATION OF THESE PARTIES WAS NOT ALLOWED. 9. THE LD. D.R. RELIED ON THE ORDER OF THE LD. CIT( A) AND SUBMITTED THAT THE REVENUE HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNA L KEEPING IN VIEW THE SMALLNESS OF AMOUNT INVOLVED IN THE APPEAL SINCE I T IS COVERED BY LOW TAX EFFECT CIRCULAR ISSUED BY CBDT NO. 21/2015 DATED 10 TH DECEMBER 2015. ITA 4482/MUM/2016 10 10. WE HAVE HEARD RIVAL CONTENTIONS AND ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS A N INDIVIDUAL AND IS PROPRIETOR OF M/S HI TECH TOOLS, ENGAGED IN THE BUS INESS OF MANUFACTURING OF HIGH PRECISION METAL PARTS, SHEET METAL TOOLS, MOUL DS, DYES AND MACHINERY. THE ASSESSEES CASE WAS SELECTED BY REVENUE FOR FRA MING SCRUTINY ASSESSMENT U/S 143(2) R.W.S. 143(3). THE A.O. IN ORDER TO VER IFY PURCHASES ISSUED NOTICE U/S 133(6) OF THE ACT TO THE PARTIES FROM WHICH THE ASSESSEE MADE PURCHASES , WHEREIN NOTICES RETURNED UNSERVED IN ALL CASES EXCE PT ONE CASE, WHILE EVEN IN THIS ONE CASE WHERE THE NOTICE U/S 133(6) WAS SERVE D, THERE WAS NO COMPLIANCE TO THE SAID NOTICE. THE ASSESSEE WAS ASK ED TO PRODUCE THE PARTIES WHICH THE ASSESSEE FAILED TO PRODUCE. THE SAID PART IES WERE LISTED AS ALLEGED ACCOMMODATION ENTRY PROVIDERS BY MAHARASHTRA VAT AU THORITIES, WHEREIN THESE ALLEGED BOGUS DEALERS HAD DEPOSED BEFORE MVAT AUTHORITIES THAT THEY WERE MERELY ISSUING BILLS WITHOUT SUPPLYING ANY MAT ERIAL . THE ASSESSEE DELAYED THE SUBMISSIONS OF DETAILS DURING ASSESSMEN T PROCEEDINGS WHEREIN REPLIES WERE SUBMITTED ON 18-02-2014 WHEN THE MATTE R WAS GETTING TIME BARRED IN MARCH 2014 WHILE NOTICES WERE FIRST ISSUE D BY THE AO TO SUBMIT THESE DETAILS IN THE MONTH OF NOVEMBER 2013, WHICH AS PER AO PREVENTED AO FROM MAKING FURTHER ENQUIRIES IN THE MATER. IT IS ONLY CLAIMED BY THE ASSESSEE THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE C HEQUES AND INVOICES ARE AVAILABLE. THE ASSESSEE DID NOT PRODUCE ANY EVI DENCE TO SUBSTANTIATE DELIVERY AND TRANSPORT OF MATERIAL BEFORE THE AUTHO RITIES BELOW. THE ASSESSEE IS MANUFACTURER AND THE DETAILS OF CONSUMPTION/UTIL IZATION OF THE SAID MATERIAL FOR MANUFACTURING OF FINISHED GOODS DEALT IN BY THE ASSESSEE WAS NOT SUBMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BE LOW AND HENCE THE UTILIZATION/CONSUMPTION DID NOT STOOD PROVED . TH US , IT COULD BE SAID THAT THE ASSESSEE FAILED TO DISCHARGE ITS PRIMARY ONUS B EFORE THE AUTHORITIES BELOW. THE ASSESSEE ALSO DID NOT PRODUCE THESE PARTIES BEF ORE THE AUTHORITIES BELOW. MERELY SUBMITTING INVOICES AND CLAIMING THAT PAYMEN TS ARE MADE BY BANKING ITA 4482/MUM/2016 11 CHANNEL IS NOT SUFFICIENT TO DISCHARGE THE PRIMARY ONUS CAST ON THE ASSESSEE AS SAID PURCHASES STOOD CREDITED IN ASSESSEES BOOK S OF ACCOUNTS. EVEN IF WE ESCHEW INCRIMINATING STATEMENTS GIVEN BY THESE ALLE GED BOGUS DEALERS BEFORE MVAT AUTHORITIES , THE ASSESSEE DID NOT DISCHARGE I TS ONUS CAST UNDER PROVISIONS OF THE 1961 ACT . THE ASSESSEE ALSO COUL D NOT SUBSTANTIATE THE GENUINENESS OF THE PURCHASES KEEPING IN VIEW THAT T HE SAID PARTIES FROM WHOM ASSESSEE MADE PURCHASES WERE LISTED AS BOGUS D EALERS ISSUING MERELY BOGUS BILLS WITHOUT ANY PHYSICAL DELIVERY OF THE GO ODS. THE AO MADE ADDITIONS OF RS. 34,09,991/- BY TREATING THE ENTIRE PURCHASES FROM THESE ALLEGED BOGUS DEALERS AS BOGUS/UNPROVED PURCHASES. THE LD. CIT(A) RESTRICTED THE ADDITION TOWARDS ALLEGED BOGUS PURCHASES TO 35% OF THE ALLE GED PURCHASES I.E. RS. 29,18,477/- WHICH LED TO ADDITION TO THE TUNE OF RS . 10,21,467/- WHICH WAS SUSTAINED/UPHELD BY LEARNED CIT(A).THE LEARNED CIT( A) HAD ALSO GIVEN RELIEF TO THE ASSESSEE OF RS. 4,91,514/- ON THE GROUNDS THAT THERE WAS DIFFERENCE IN TIN NUMBER WHICH LED TO WRONG IDENTIFICATION OF SUP PLIER NAMELY REKHA TRADING COMPANY. THE LD. CIT(A) DID NOT CONDUCT AN Y ENQUIRY RATHER RELIEF WAS GRANTED ON THE GROUNDS THAT ONLY PROFIT EMBEDDE D ON THESE ALLEGED BOGUS PURCHASES CAN BE BROUGHT TO TAX WHICH WAS ASSESSED AT 35% OF THE ALLEGED PURCHASES WITHOUT GOING INTO DETAILS OF CONSUMPTION /UTILIZATION OF MATERIAL FOR MANUFACTURE OF FINISHED GOODS MANUFACTURED BY T HE ASSESSEE AND WITHOUT ANY EVIDENCES BROUGHT ON RECORD BUT MERELY ON PRODU CTION OF INVOICES AND PAYMENTS BEING MADE THROUGH BANK . WE HAVE OBSERVE D FROM THE PERUSAL OF PAPER BOOK FILED BY THE ASSESSEE BEFORE THE TRIBUNA L WHICH IS PLACED IN THE FILE FROM THE PROFIT AND LOSS ACCOUNT FOR THE THREE FINA NCIAL YEARS NAMELY 2008- 09, 2009-10 AND 2010-11 THAT CONSUMPTION OF MATERIA L WHICH WAS AROUND 54.5% (APPROX) FOR THE FINANCIAL YEAR ENDED 31-03-2 009 (PB/PAGE30) AND 31- 03-2010(PB/41) HAS SUDDENLY GONE UP TO 66% IN THE S UBJECT ASSESSMENT YEAR 2011-12(FY 2010-11)(PB/PAGE 3) AND IN THE SAME PERI OD GP RATIO ALSO FELL FROM 37%(APPROX) FOR FY 2008-09 AND 2009-10 TO 29% IN FY 2010-11 , WHICH THE ASSESSEE DID NOT EXPLAINED TO THE AUTHORITIES B ELOW AT ALL NOR DETAILS OF ITA 4482/MUM/2016 12 CONSUMPTION/UTILIZATION OF THESE MATERIAL FOR MANUF ACTURE OF FINISHED PRODUCTS WAS BROUGHT ON RECORD BY THE ASSESSEE. KEE PING IN VIEW PECULIAR FACTUAL MATRIX OF THE CASE WHERE NO CONSUMPTION/UTI LIZATION OF THE MATERIAL FOR MANUFACTURE OF FINISHED GOODS AS WELL FALL IN GP RATIO WAS NOT EXPLAINED BY THE ASSESSEE NOR GENUINENESS OF THE PURCHASES ST OOD PROVED, THE MATTER NEEDS TO GO BACK TO THE A.O. FOR DE-NOVO DETERMINAT ION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. . AS SUCH, THE APPELLATE O RDER OF THE LD. CIT(A) IS SET ASIDE AND MATTER IS SENT BACK TO THE FILE OF A.O. F OR DENOVO DETERMINATION OF THE ISSUE ON MERITS IN ACCORDANCE WITH LAW . THE A SSESSEE IS DIRECTED TO FILE EVIDENCES AND EXPLANATIONS INCLUDING UTILIZATION A ND CONSUMPTION OF THE MATERIAL FOR MANUFACTURING OF THE FINISHED GOODS D EALT IN BY THE ASSESSEE BEFORE THE A.O. AND SUBSTANTIATE GENUINENESS OF THE PURCHASES, IN THE DE NOVO PROCEEDING TO SUBSTANTIATE ITS CLAIM. NEEDLE SS TO SAY, THE A.O. SHALL PROVIDE SUFFICIENT OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WI TH LAW. AT THIS STAGE WE ARE REMINDED OF THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF N. K. PROTEINS LTD. V. DCIT (2017-TIOL-23-SC-IT). WE ORDE R ACCORDINGLY. 11.THE ASSESSEE IS ALSO AGGRIEVED BY THE DECISION O F LEARNED CIT(A) IN SUSTAINING ADDITION TO THE TUNE OF RS.29,301/- IN R ESPECT OF SHORT BOOKING OF RECEIPT AS PER 26AS STATEMENT WHICH REFLECTED RS.9, 49,336/- TO THE CREDIT OF ONE OF THE CUSTOMER M/S SHREE KRISHNA CONTROLS PRIV ATE LIMITED, WHILE THE ASSESSEE LEDGER REFLECTED RS.9.20,035/- TO THE DEBI T OF SAID PARTY. NO ARGUMENTS WERE ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING. IN VIEW OF NON PRESSING OF THE S AID GROUND BY LEARNED COUNSEL FOR THE ASSESSEE W.R.T. GROUND NO 2 , IT ST AND DISMISSED. WE ORDER ACCORDINGLY. ITA 4482/MUM/2016 13 12. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 4482/MUM/2016 FOR A.Y. 2011-12 IS PARTLY ALLOWED FOR STATISTICAL PURP OSE IN THE MANNER INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2017. # $% &' 28.08.2017 ( ) SD/- SD/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 28.08.2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI G BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI