ITO-28(3)(2), MUMBAI V. SHIRNIVAS YANKAIYYA GANGAPURAM, MUMBAI

ITA 4760/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3446 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 16-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Bogus purchase; Corroborative evidences
• Section: 142(1); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND PAVAN KUMAR GADALE , JM ITA NO. 4760/MUM/2019 (ASSESSMENT YEAR: 2011-12) ITO-28(3)(2) ROOM NO.323, 3 RD FLOOR, 6 TH TOWER VASHI RAILWASY STATION COMPLEX VASHI, NAVI MUMBAI-400 703 VS. SHRINIVAS YANKAIYYA GANGAPURAM 2602, BHUMI COLOSSA, SECTOR 19 AIROLI, NAVI MUMBAI-400 708 PAN/GIR NO. AFBPG4193E ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI VIJAY KUMAR MENON RESPONDENT BY : NONE DATE OF HEARING : 08.06.2021 DATE OF PRONOUNCEMENT : 11 .06.2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI (L D.CIT(A) FOR SHORT) DATED 31.05.2019 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2011-12. 2. THE GROUNDS OF APPEAL READ AS UNDER: (1) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,19,910/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT PARTIES FROM WHOM THESE PURCHASES WERE MADE PROVEN ACCOMMODATION ENTRY PROVIDERS, AS CONCL UDED BY SALES TAX AUTHORITIES PURSUANT TO THE INVESTIGATION CARRIED OUT BY THEM'? (2) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECI SION IN THE CASE OF N.K. PROTEIN LTD VS.DCIT (769 OF 2017), WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES ? (3) THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A ) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE INFOR MATION WAS RECEIVED FROM THE SALES TAX AUTHORITIES, DULY FORWARDED BY DGIT (INVESTIGAT ION), MUMBAI REGARDING VARIOUS 2 4760/MUM/2019 ENTITIES WHO WERE ENGAGED IN THE ACTIVITY OF GIVING ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE GOODS. IT WAS SEEN THAT DURI NG THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, AS PER INFORMA TION, THE APPELLANT HAD OBTAINED BOGUS BILLS FROM THE FOLLOWING PARTIES: - SR.NO. NAME OF THE PARTY AY AMOUNT (IN RS.) 1. NISHA ENTERPRISE 2011-12 1,64,300 2 PADMAVATI TRADING CO. 2011-12 1,55,610 TOTAL 3,19,910 THE ASSESSMENT WAS ACCORDINGLY RE-OPENED AND NOTICE U/S 148 OF THE IT. ACT WAS ISSUED AND SERVED ON THE APPELLANT. STATUTORY NOTIC ES U/S.143(2) & 142(1) WERE ISSUED AND DULY SERVED ON THE APPELLANT. DURING THE RE-ASS ESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE ABOVE MENTIONED PAR TIES WHICH WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THIS FACT WAS COMMUNICAT ED TO THE APPELLANT WHO WAS ASKED TO FURNISH THE CORRECT/NEW ADDRESS OF THE PARTY. SI NCE THE APPELLANT FAILED TO DO SO, THE APPELLANT WAS ASKED TO PRODUCE THE PARTY ALONG WITH THE RELEVANT EVIDENCES SO AS TO VERIFY THE IDENTITY OF THE PARTY AND THE GENUINENES S OF THE TRANSACTIONS. THE APPELLANT, HOWEVER, EXPRESSED HIS INABILITY TO DO SO. THE APPE LLANT SUBMITTED COPIES OF BILLS AND RECONCILIATION STATEMENT OF SALES CORRESPONDING TO PURCHASES MADE. HOWEVER, NO DELIVERY CHALLANS OR TRANSPORTATION DETAILS WERE SU BMITTED. THE AO HELD THAT THE APPELLANT HAD FAILED TO DISCHARGE HIS ONUS OF PROVI NG THE GENUINENESS OF THE TRANSACTIONS. SINCE CORRESPONDING SALES OF PURCHASE S HAD BEEN ACCOUNTED FOR, THE AO WAS OF THE VIEW THAT THE PURCHASES HAVE BEEN MADE F ROM UNDISCLOSED PARTIES IN THE OPEN MARKET IN CASH BUT NOT FROM THE ABOVE MENTIONE D PARTY FROM WHOM ONLY BILLS WERE OBTAINED. 4. UPON ASSESSEE APPEAL LD.CIT(A) DELETED THE ADDI TION BY GIVING A FINDING THAT IN ORIGINAL ASSESSMENT 15% DISALLOWANCE HAS ALREADY BEEN DONE. THE LD. CIT(A) HELD AS UNDER:- 3 4760/MUM/2019 6.1 IN THE ORIGINAL ASSESSMENT INCOME WAS ASSESSED AT RS 8,73,3407- BY ADDING '5% OF THE ALLEGED BOGUS PURCHASES. THE CASE WAS REOPENED ON T HE BASIS OF INFORMATION RECEIVED FROM DGIT (INV.) MUMBAI AND PURCHASES OF RS. 3,19,910/- WERE HELD AS BOGUS PURCHASES. THEREFORE AO DISALLOWED ENTIRE BOGUS PURCHASE AS 15% OF THE P URCHASES WERE DISALLOWED IN THE ORIGINAL ASSESSMENT BALANCE 85% OF THE PURCHASES WERE ADDED. 6.2. DURING APPELLATE PROCEEDINGS IT WAS STATED THA T CASE WAS RE-OPENED TO EXAMINE PURCHASES OF RS. 1,64,3007- FROM M7S. NISHA ENTERPRISES AND R S. 1,55,6107- FROM M/S. PADMAVATI TRADING CO. COPIES OF PURCHASE INVOICES, BANK STATEMENT AND COPY O F VAT AUDIT REPORT WAS FILED. IT WAS CONTENDED THAT PURCHASE FROM M/S. PADMAVATI TRADING CO WAS FOR COMPUTER AND ITS ACCESSORIES AND THE PURCHASES WERE PART OF FIXED ASSETS NOT OF THE STOCK IN TRADE. THEREFORE NO ADDITION CAN BE MADE FOR PURCHASES MADE FOR FIXED ASSETS. THE CO NTENTION OF THE ASSESSEE HAS BEEN VERIFIED FROM THE SUPPORTING EVIDENCES FILED. REGARDING PURC HASES FROM M/S. NISHA ENTERPRISES IT WAS STATED THAT 15% HAS ALREADY BEEN DISALLOWED IN ORIG INAL ASSESSMENT PROCEEDINGS, THEREFORE THE FURTHER ADDITION MADE BY AO MAY BE DELETED. IN SUCH A SITUATION, THE VARIOUS COURTS INCLUDING THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SI MIT P. SHETH, 356 ITR 451 HAVE HELD THAT NOT THE ENTIRE PURCHASES BUT ONLY THE PROFIT ELEMENT EM BEDDED IN THESE PURCHASES WAS TO BE DISALLOWED AND ACCORDINGLY HELD THAT 12.5% OF THE P URCHASES WILL BE REASONABLE AS PROFIT ON MARGIN AGAINST THE BOGUS PURCHASES. THEREFORE, ADDI TION OF 15% MADE IN THE ORIGINAL ASSESSMENT IS REASONABLE AND THERE IS NO NEED OF FURTHER ADDIT ION OF 85% WITH RESPECT TO SAME PURCHASE: THEREFORE, THE ADDITION MADE BY AO IS DELETED AND G ROUND OF APPEAL IS 'ALLOWED.' 5. AGAINST THE ABOVE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE REC ORDS. WE FIND THAT LD.CIT(A) HAS GIVEN A REASONABLE ORDER. WITHOUT DOUBTING THE SAL ES SUCH DISALLOWANCES TANTAMOUNTING TO 100% DISALLOWANCES WHICH IS NOT S USTAINABLE ON THE TOUCHSTONE OF BOMBAY HIGH COURT DECISION IN NIKUNJ EXIMP ENTERPR ISES PVT.LTD. VS CIT. THE DECISION REFERRED BY REVENUE IN GROUNDS OF APPEAL H AS ALREADY BEEN EXPLAINED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF ADAM H.KA ZI HENCE, WE UPHOLD THE ORDER OF LD.CIT(A). 7. IN THE RESULT, THIS APPEAL BY THE REVENUE STA NDS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 11.06.2021 SD/- SD/- (PAVAN KUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 11. 06.2021 THIRUMALESH , SR. PS 4 4760/MUM/2019 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