DCIT 10(3)(1), MUMBAI V. NIVEDITA CHEMICALS P.LTD, MUMBAI

ITA 4723/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3516 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: ANIL VISHWAKARMA LD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

ITA NO.4723/MUM/2018 & 4739/MUM/2018 ASSESSMENT YEAR :2010-11 M/S. NIVEDITA CHEMICALS P.LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4723/MUM/2018 ( / ASSESSMENT YEAR : 20 10-11) D CIT - 10 (3) (1) ROOM NO.212, AAYKAR BHAVAN, M.K. ROAD MUMBAI- 400 020. / VS. NIVEDITA CHEMICALS PVT. LTD. G-32 GEMS AND JEWELLERY COMPLEX-III SEEPZ, ANDHERI (E) MUMBAI- 400 096. '( ./ ./PAN/GIR NO. AAACN-1799-L ( (* /APPELLANT ) : ( +,(* / RESPONDENT ) & ./ I.T.A. NO.4739/MUM/2018 ( / ASSESSMENT YEAR : 20 10-11) NIVEDITA CHEMICAL S PVT. LTD. G-32 GEMS AND JEWELLERY COMPLEX-III SEEPZ, ANDHERI (E) MUMBAI- 400 096. / VS. D CIT - 10 (3) (1) ROOM NO.212, AAYKAR BHAVAN, M.K. ROAD MUMBAI- 400 020. '( ./ ./PAN/GIR NO. AAACN-1799-L ( (* /APPELLANT ) : ( +,(* / RESPONDENT ) ASSESSEE BY : SHRI ANIL VISHWAKARMA- LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK LD. DR / DATE OF HEARING : 28/11/2019 / DATE OF PRONOUNCEMENT : 28/11/2019 ITA NO.4723/MUM/2018 & 4739/MUM/2018 ASSESSMENT YEAR :2010-11 M/S. NIVEDITA CHEMICALS P.LTD. 2 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID CROSS-APPEALS FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-17, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)] APPEAL NO. CIT(A)-17/IT-19710780/16-17 DATED 18/05/2018. IT IS EVIDENT FROM GROUNDS OF APPEAL THAT THE SOLE ISSUE THAT ARISES F OR OUR CONSIDERATION IS ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. WE HAVE CAREFULLY HEARD RIVAL SUBMISSIONS, PERUS ED RELEVANT MATERIAL ON RECORD AND DELIBERATED ON VARIOUS JUDIC IAL PRONOUNCEMENTS BEING RELIED UPON BY BOTH THE REPRESENTATIVES. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN TRADING OF CHEMICALS, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 23/12/2016 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.225 .09 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.102 .57 LACS AS AGAINST RETURNED INCOME OF RS.122.52 LACS E-FILED BY THE AS SESSEE ON 24/09/2010 WHICH WAS PROCESSED U/S.143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THA T THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS AMOUNTING TO RS.102. 57 LACS FROM 3 SUSPICIOUS ENTITIES, THE DETAILS OF WHICH HAVE ALRE ADY BEEN EXTRACTED ON PAGE-2 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY , THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON ITA NO.4723/MUM/2018 & 4739/MUM/2018 ASSESSMENT YEAR :2010-11 M/S. NIVEDITA CHEMICALS P.LTD. 3 30/03/2016 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTAN TIATE THE PURCHASE TRANSACTIONS. 3.3 THE ASSESSEE DEFENDED THE PURCHASES BY FURNISHI NG COPIES OF PURCHASE INVOICES, DELIVERY CHALLANS, BANK STATEMEN TS SHOWING PAYMENT TO SUPPLIERS THROUGH BANKING CHANNELS. HOWEVER, IT WAS NOTED BY LD. AO THAT THE ASSESSEE WAS NOT FOLLOWING ANY STANDARD OP ERATING PROCEDURE TO MAKE THE PURCHASES AND FAILED TO SUBSTANTIATE THE D ELIVERY OF MATERIAL. NOTICES ISSUES U/S 133(6) TO 3 SUPPLIERS, TO CONFIR M THE TRANSACTIONS, WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES . THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS BUT RELIED ON THE D OCUMENTS FURNISHED IN SUPPORT OF THE PURCHASE TRANSACTIONS. FINALLY, NOT SATISFIED WITH ASSESSEES SUBMISSIONS / EXPLANATIONS, THE STATED P URCHASES WERE TREATED AS BOGUS TRANSACTIONS AND ADDED TO THE INCO ME OF THE ASSESSEE. 4. THE LEARNED CIT(A), AFTER WEIGHING THE FACTUAL M ATRIX IN TERMS OF RATIO OF VARIOUS JUDICIAL PRONOUNCEMENTS, CAME TO A CONCLUSION THAT ASSESSEE HAD INFLATED EXPENSES BY TAKING BOGUS BILL S FROM HAWALA DEALERS. HOWEVER, ENTIRE ADDITIONS WOULD NOT BE JUS TIFIED RATHER THE ADDITIONS WERE TO BE ESTIMATED @25% OF THESE PURCHA SES. THE ADJUDICATION BY LEARNED FIRST APPELLATE AUTHORITY H AS GIVEN RISE TO CROSS- APPEALS BEFORE US. 5. AFTER CAREFUL CONSIDERATION OF ORDERS OF LOWER A UTHORITIES AND AFTER APPRECIATING THE ARGUMENTS ADVANCED BY RESPECTIVE R EPRESENTATIVES, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE N O SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS I.E. TRADING. UNDISPUTEDLY THE ASSESSEE WAS IN POSS ESSION OF PRIMARY ITA NO.4723/MUM/2018 & 4739/MUM/2018 ASSESSMENT YEAR :2010-11 M/S. NIVEDITA CHEMICALS P.LTD. 4 PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIER S WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS A CORPORATE ENTI TY AND ITS BOOKS OF ACCOUNTS WERE SUBJECTED TO AUDIT UNDER VARIOUS STAT UTES. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTAN TIATE THE DELIVERY OF MATERIAL AND ALSO FAILED TO PRODUCE ANY OF THE SUPP LIERS TO CONFIRM THE TRANSACTIONS. THE ONUS CASTED UPON ASSESSEE, IN THI S REGARD, REMAINED UNDISCHARGED. 6. THE STATED FACTUAL MATRIX, IN OUR CONSIDERED OPI NION, WOULD MAKE IT A FIT CASE NOT TO DISALLOW ENTIRE PURCHASES BUT THE ADDITION, WHICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMEN T EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIR ST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. HOWEVER, THE ESTIMAT ION OF 25%, IN OUR OPINION, WOULD BE ON THE HIGHER SIDE. THEREFORE, WE RESTRICT THE SAME TO 12.5% OF ALLEGED BOGUS PURCHASES OF RS.1,02,57,688/ - WHICH COMES TO RS.12,82,211/-. THE IMPUGNED ORDER STAND MODIFIED T O THAT EXTENT. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED WHEREAS THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 28/11/2019 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : ITA NO.4723/MUM/2018 & 4739/MUM/2018 ASSESSMENT YEAR :2010-11 M/S. NIVEDITA CHEMICALS P.LTD. 5 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT 3. 3 ( ) / THE CIT(A) 4. 3 / CIT CONCERNED 5. 45+.6 , 6 , / DR, ITAT, MUMBAI 6. 5789 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.