ACIT 19(2), MUMBAI V. NOCIL STEEL, MUMBAI

ITA 4505/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8171 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase; Peak credit
• Section: 69C; 142(1); 133(6)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 4505 /MUM/20 1 5 ( / ASSESSMENT YEAR : 2 0 11 - 2012 ) THE ACIT - 19(2), ROOM NO.2 07, MATRU MANDIR, MUMBAI - 400007 / VS. M/S NOCIL STEEL, 9 - MULJI THAKARSHI BUILDING, SHIDHI LANE, NANUBHAI DESAI ROAD, MUMBAI - 400004 ./ PAN : AACFN9127D ( / APPELLANT) : ( / RESPONDENT ) / APPEL LANT BY : SHRI T A KHAN / RE SPONDENT BY : NONE / DATE OF HEARING : 7 .12.2017 / DATE OF PRONOUNCEMENT : 7. 1 2 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE CH ALLENGING THE ORDER DATED 15.5.2015 PASSED BY THE LD.CIT(A) - 30, MUMBAI WHEREIN THE ASSESSEE HAS CHALLENGED THE RESTRICTION OF NET ADDITION TO 7.50% OF THE PURCHASES FROM THE PARTIES WHICH WERE NOT PROVED TO BE GENUINE . AT THE OUTSET, WE WOULD LIKE TO MENT ION HERE THAT NEITHER THE ASSESSEE N OR ITS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HEARING AND THERE WAS ALSO NO APPLICATION SEEKING 2 I.T.A. NO . 4505 /MUM/2015 ADJOURNMENT OF THE HEARING RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD . THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EX - PARTE ON MERITS AFTER HEARING THE LD .DR. 2 . THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE RESTRICTION OF ADDITION ON ACCOUNT OF BOGUS P URCHASES TO THE TUNE OF 7.5% OF THE TOTAL OF SUCH ALLEGED PURCHASES WHICH WERE NOT PROVED TO BE GENUINE. 3 . FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 23.9.2011 DECLARING TOTAL INCOME AT RS.28,38,950/ - . THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FERROUS AND NON - FERRO US METALS AND ITS ALLIED PRODUCTS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ISSUED NOTICES U/S 133(6) TO THE VARIOUS PARTIES FROM WHOM THE ASSESSEE MADE PURCHASES DURING THE YEAR. HOWEVER, THE NOTICE ISSUED TO APEX FERROMATE PVT LTD WAS RETU RNED UNSERVED BY THE POSTAL AUTHORITY. THEREAFTER IT WAS NOTICED THAT THE SAID PARTY IS A HAWALA DEALER WHICH WAS IDENTIFIED BY THE DGIT(INV), MUMBAI AND ALSO FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA . THEREFORE, THE AO ISSUED NOTICE TO TH E ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASE FAILING WHICH THE SAME WOULD BE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE PAYMENTS OF THE 3 I.T.A. NO . 4505 /MUM/2015 PURCHASES WERE MADE THROUGH BANKING CHANNELS, A ND ALSO PLACED BEFORE THE AO COMPLETE DETAILS THEREOF. THE LD.AR ALSO SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND THERE WERE NO MENTION ABOUT THE NON - GENUINE PURCHASES. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION OF T HE LD. AR AND HE FINALLY ADDED THE SUM OF RS.51,49,820/ - TO THE TOTAL INCOME U/S 69C AS PEAK CREDIT ON THE BASIS OF UNDISCLOSED CASH WHICH HAS BEEN UTILIZED IN SUCH PURCHASES. THE ADDITION WAS CHALLENGED BEFORE THE FAA WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE PARA 2.10 AND 2.12 OF THE APPELLATE ORDER WHICH IS AS UNDER : 2.10 GROUND NO.1 AND II ARE GENERAL IN NATURE AND FOR THE REASONS TO BE GIVEN IN RESPECT OF SUBSEQUENT GROUNDS, THEE GROUNDS NEEDS NOT BE ADJUDICATED SEPARATELY. 2.11 GROUND NO.III HAS NOT BEEN PRESSED BY THE LD.AR DURING THE COURSE OF APPELLATE PROCEEDINGS AND HE HAS ACCORDINGLY, INDICATED AGAINST SAID GROUND IN FORM NO.35. ACCORDINGLY , GROUND NO.III IS DISMISSED AS NOT PRESSED. 2.12 GROUND NO.IV (WRONGLY TYPES AS III AGAIN) IS IN RESPECT OF ACTION OF THE LD.AO IN TREATING THE PURCHASES FROM ONE OF ITS SUPPLIERS AS BOGUS AND THEREBY MAKING AN ADDITION U/S 69C OF RS.51,49,820/ - LD.AO MADE THE ABOVE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM MVAT AUTHORITY AS IN EARLIE R YEARS. 2.12.1 SIMILAR ISSUE WAS ADJUDICATED IN THE APPELLANTS OWN CASE FOR AY 2010 - 11 IN APPEAL NO. CIT(A) - 30/ACIT. 19(2)/424/2014 - 15(SUPRA). FOR THE DETAILED REASONS GIVEN THEREIN WHICH SHALL APPLY ON ALL FOCUS TO THIS CASE, THE GROUND RAISED IS PART LY ALLOWED BY ESTIMATING THE EMBEDDED INCOME AT 12.5% OF THE TOTAL PURCHASES OF RS.96,08,509/ - FROM THE BOGUS SUPPLIER. HOWEVER , AS THE APPELLANT HAS ALREADY OFFERED AN AVERAGE GROSS PROFIT OF 5% DURING THE LAST F EW YE A RS, THE NET ADDITION CONFIRMED WOU LD BE 7.50% (12.5% - 5.00%0 ACCORDINGLY GROUND NO.IV IS PARTLY ALLOWED 4 I.T.A. NO . 4505 /MUM/2015 4. AFTER HEARING THE LD DR. AND ON PERUSAL OF THE RECORDS AS PLACED BEFORE US , WE FIND THAT THE ASSESSEE UNDOUBTEDLY HAS AVAILED HAWALA ENTRIES FROM THE HAWALA OPERATORS . THE EXPLANA TION OFFERED BY THE ASSESSEE DID NOT FIND FAVOUR OF THE ASSESS ING OFFICER AND HENCE THE AO ADDED A SUM OF RS.51,49,820/ - TO THE TOTAL INCOME U/S 69C AS PEAK CREDIT ON THE BASIS OF UNDISCLOSED CASH WHICH WERE TREATED AS BOGUS PURCHASE. THE CIT(A) PART LY SUSTAINED THE ADDITION AT 7.5 % OF THE TOTAL BOGUS PURCHASES. HAVING CONSIDERED THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS, WE FIND THAT THE LD.CIT(A) WHILE RESTRICTING THE ADDITION OF 7.5% OF THE TOTAL BOGUS PURCHASES FOLLOWED ITS PREDECESSO RS ORDER . WE ALSO FIND THAT THE CO - ORDINATE BENCHES OF THE TRIBUNAL HAVE BEEN TAKING A CONSISTENT VIEW UNDER SAME FACTS THAT SOME PERCENTAGE ADDITION RANGING FROM 5% TO 12.50% OR A REASONABLE PERCENTAGE OF THE BOGUS PURCHASE SHOULD BE MADE TOWARDS SAVING S WHICH THE ASSESSEE MAY HAVE MADE BY PURCHASING THE MATERIAL FROM GRAY MARKET THEREBY SAVING VAT AND OTHER INCIDENTAL TAXES. THEREFORE WE ARE OF THE OPINION THAT THE LD.CIT(A) HAS TAKEN A REASONED AND COGENT VIEW IN THE ASSESSEES CASE BY APPLYING 7 .5 0% OF THE BOGUS PURCHASES AND THEREFORE WE FIND NO REASON TO INTERFERE IN THE SAME. ACCORDINGLY WE AFFIRM THE ORDER OF CIT(A) BY DISMISSING THE APPEAL OF THE ASSESSEE. 5 I.T.A. NO . 4505 /MUM/2015 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 7 TH DE C, 2017. S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 7. 1 2 .2017 SR.PS:SRL: / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI