ACIT-19(3), MUMBAI, MUMBAI V. M/S VISHISHT EXPORTS, MUMBAI

ITA 4565/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3784 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 143(1); 22; 69; 28

Judgement Text

ITA NO. 4565/MUM/2019 A.Y. 2010 - 11 ACIT - 19(3) VS. M/S VISHISHT EXPORTS 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.4565/MUM/2019 (ASSESSMENT YEAR: 2010 - 11 ) ASSISTANT COMMISSIONER OF INCOME TAX - 19(3), 2 ND FLOOR, ROOM NO. 206, MATRU MANDIR, TARDEO ROAD, MUMBAI 400007 VS. M/S VISHISHT EXPORTS 65/67, SHEKH MEMON STREET, 4 TH FLOOR, ZAVERI BAZAR, MUMBAI - 400002 PAN NO. AACFV4307M (REVENUE) (ASSESSEE) ASSESSEE BY : NONE REVENUE BY : MS. USHA GAIKWAD , D.R DATE OF HEARING : 22 /02/2021 DATE OF PRONOUNCEMENT : 22 /02/2021 ORDER PER RAVISH SOOD, J.M: THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 18, MUMBAI, DATED 09.04.2019 , WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3)R.W.S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) DATED 30.12.2017. THE REVENUE HAS ASSAILED THE IMPUGNED ORDER ON TH E FOLLOWING GROUND S OF APPEAL BEFORE US: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @12.5% OF TOTAL BOGUS PURCHASES AND COMPUTING THE PROFIT FOR THE PURPOSE OF SECTION 28 OF THE I . T. ACT, 1961 TAKING IN TO CONSIDERATION THE BOGUS BILLS AGAINST WHICH NO GOODS HAVE BEEN RECEIVED . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @12.5% OF TOTAL BOGUS PURCHA SES IN PRESUMING THAT THE PURCHASE HAVE BEEN MADE FROM UNKNOWN PARTIES WHEREAS BILLS HAVE BEEN RECEIVED FROM HAWALA DEALER . 3. LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @12.5% OF TOTAL BOGUS PURCHASES THAT PURCHASES HAVE BEEN MADE FROM UNKNOWN PARTI ES WITHOUT CLARIFICATION HOW THE PAYMENT WAS MADE AND WHETHER SECTION 69 OF THE I . T . ACT, 1961 WILL BE APPLICABLE OR NOT . 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE M/S N.K. PROTEIN LTD VS DCIT(SLA - CC NOS. 769 OF 2017 DT. 16.01.2017) , WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND WHEN THE LD. CIT(A) HAS PRONOUNCED ITS ORDER ON 09.04.2019 . ITA NO. 4565/MUM/2019 A.Y. 2010 - 11 ACIT - 19(3) VS. M/S VISHISHT EXPORTS 2 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED BY NOT FOLLOWING THE HON'BLE GUJRAT HIGH COURT DECISION IN THE CASE OF CIT VS. N K INDUSTRIES (IN TAX APPEAL NO. 240 OF 2009 VIDE ORDER DATED 26.02.2016) WHEREIN 100% OF THE BOGUS PURCHASE WAS HELD LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE REVERSING THE ORDER PASSED BY THE HON'BLE ITAT RESTRICTING ADDITION TO 25%. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER OR ADD A NEW GROUND WHICH MAY BE NECES SARY. 2. BRIEFLY STATED, THE ASSESSEE FIRM HAD FILED ITS RETURN OF INCOME FOR A.Y. 2010 - 11 ON 28.09.2010, DECLARING A TOTAL LOSS OF RS. 11,46,670/ - . THE RETURN OF INCOME WAS INITIALLY PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT(INV.), MUMBAI, THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATION PURCHASE BILLS, ITS CASE WAS REOPENED UNDER SEC. 147 OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD CLAIMED TO HAVE MADE PURCHASES AGGREGATING TO RS.7,25,920/ - FROM THE FOLLOWING TWO PARTIES WHICH AS PER THE INFORMATION RECEIVED FROM THE DGIT(INV.), MUMBAI, HAD BEEN BLACKLISTED BY THE SALES TAX DEPARTM ENT: SR. NO. NAME OF THE ASSESSEE AMOUNT (RS.) 1. RITESH CORPORATION 4,43,040/ - 2. PADMAVAT DYES & CHEMICALS 2,82,880/ - TOTAL 7,25,920/ - AS THE ASSESSEE FAILED TO SUBSTANTIATE THE GENUINENESS AND VERACITY OF THE IMPUGNED PURCHASE TRANSACTIONS, THE A.O ADDED THE ENTIRE VALUE OF BOGUS PURCHASE S OF RS.7,25,920/ - TO ITS RETURNED INCOME . ACCORDINGLY, THE A.O VIDE HIS ORDER PASSED UNDER SEC. 143(3) R.W.S 147, DATED 30.12.2017 ASSESSED THE RETURNED LOSS OF THE ASSESSEE AT RS.( - ) 4,20,750/ - . 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). OBSERVING, THAT THOUGH THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AUTHENTICITY OF THE IMPUGNED PURCHASE TRANSACTIONS TO THE HILT, BUT AS THE CONSUMPTION/SALES OF THE GOODS UNDER CONSIDERATION HA D NOT BEEN DOUBTED, THE CIT(A) HELD A CONVICTION THAT THE ADDITION W.R.T THE IMPUGNED PURCHASES WAS LIABLE TO BE RESTRICTED ONLY TO THE EXTENT OF THE PROFIT WHICH THE ASSESSEE WOULD HAD MADE BY CARRYING OUT SUCH IMPUGNED PURCHASES FROM THE OPEN/GREY MARKET . ACCORDINGLY, THE CIT(A) RESTRICTED THE ADDITION IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF 12.5% OF THE AGGREGATE VALUE OF THE IMPUGNED PURCHASES. 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT( A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. AS THE RESPONDENT ASSESSEE DESPITE HAVING BEEN INTIMATED ABOUT THE HEARING OF THE APPEAL HAD FAILED TO PUT UP AN APPEARANCE BEFORE US, WE , THUS ARE CONSTRAINED TO PROCEED WITH THE APPEAL AS ITA NO. 4565/MUM/2019 A.Y. 2010 - 11 ACIT - 19(3) VS. M/S VISHISHT EXPORTS 3 PER RULE 25 OF THE APPELLATE TRIBUNAL RULES, 1963 AND DISPOSE OFF THE SAME AFTER HEARING THE APPELLANT REVENUE AND PERUSING THE ORDERS OF THE LOWER AUTHORITIES. 6. AS IS DISCERNIBLE FROM THE RECORDS, WE ARE PERSUADED TO SUBSCRIBE TO THE VIEW TAKEN BY THE L OWER AUTHORITIES THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE AUTHENTICITY OF THE IMPUGNED PURCHASE TRANSACTION S UNDER CONSIDERATION . A T THE SAME TIME, WE FIND THAT IT IS A MATTER OF FACT BORNE FROM THE RECORDS THAT THE SALES CORRESPONDING TO THE IMPUGNED PURCHASES HAD NOT BEEN DOUBTED OR DISLODGED BY THE A.O. ACCORDINGLY, IN THE BACKDROP OF THE AFORESAID FACTS, WE CONCUR WITH THE VIEW TAKEN BY THE CIT(A) THAT THE ADDITION W.R.T THE IMPUGNED PURCHASES WAS LIABLE TO BE RESTRICTED ONLY TO THE EXTENT OF THE PR OFIT WHICH THE ASSESSEE WOULD HAVE MADE BY PURCHASING THE GOODS IN QUESTION NOT FROM THE AFOREMENTIONED HAWALA PARTY BUT AT A DISCOUNTED VALUE FROM THE OPEN/GREY MARKET. INSOFAR THE QUANTIFICATION OF THE ESTIMATED PROFIT WHICH THE ASSESSEE WOULD HAVE GENER ATED BY PURCHASING THE GOODS FROM THE OPEN/GREY MARKET AT 12.5% BY THE CIT(A), WE FIND NO INFIRMITY IN THE VIEW SO TAKEN BY HIM. WE, THUS FINDING NO REASON TO DISLODGE THE ORDER OF THE CIT(A) , UPHOLD THE SAME. 7. THE APPEAL FILED BY THE REVENUE IS DISMISS ED. ORDER PRO NOUNCED IN THE OPEN COURT ON 22 . 02.2021 SD/ - SD/ - RAJESH KUMAR RAVISH SOOD (ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) MUMBAI, DATE: 22 .02.2021 PS: ROHIT COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI