QUALITY HEIGHTCON PVT. LTD., MUMBAI V. DCIT CIR. 13(1)(1), MUMBAI

ITA 4825/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0159 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 19-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PURISHOTTAM KUMAR
• Assessee Lawyers: DYANESHWAR KATARAM
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries
• Section: 143(3); 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY , JM AND SHRI RAJESH KUMAR , AM ./ I.T.A. NO . 4 8 25 /MUM/201 6 ( / ASSESSMENT YEA R : 20 12 - 13 ) M/S QUALITY HEIGHTCOM PVT LTD., 612, TOWER A - KOHINOOR CITY, MALL, KOHINOOR CITY, KIROL ROAD, OFF L B S MARG, KURLA (W), MUMBAI - 400070 / VS. DY.COMMISSIONER OF INCOME TAX - 13(1)(1), AAYAKAR BHAVA N, M K ROAD, MUMBAI - 400012. ( / APPELLANT ) ( / RESPONDENT ) PAN: AA A CQ1997R / APPELLANT BY : SHRI DYANESHWAR KATARAM /R ESPONDENT BY : SHRI PURISHOTTAM KUMAR / DATE OF HEARIN G : 9 .8.2017 / DATE OF PRONOUNCEMENT : 29.8 . 2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER OF LD. CIT(A) - 2 , MUMBAI, DATED 1 6. 5. 2016 , PERTAINS TO THE ASSESSMENT YEAR 20 12 - 13 . 2. THE ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL NO.1 IS AGAINST THE CONFIRMATION OF RS.2,07,955/ - BY THE LD.CIT(A) AS MADE BY THE AO AT THE RATE OF @ 1 2. 5% OF THE ALLEGED BOGUS PURCHASES OF RS. 16,63,640/ - 2 I.T.A. NO. 48 25 / MUM/ 201 6 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES OF BOGUS PURCHASES FROM THE PARTIES WHO WERE HAWALA DEALERS IN THE LIST OF HAWALA DEALERS PUBLISHED BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. IN THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS AVAILED BOGUS BILLS FROM FOUR PARTIES VIZ ADINATH TRADING CO., GADADHAR TRADING CO., MILLENIUM MINERALS AND GEETA ENTERPRISES AMOUNTING TO RS.4 , 51 , 206/ - RS.1 , 05 , 139, RS.7,22 , 612/ - AND RS.3 , 84, 683/ - RESPECTIVELY. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, THE AO ISSUED NOTICE S U/S 133(6) TO THE SAID PARTIES WHICH WERE RETURNED BACK UNSERVED . THE INSPECTOR DEPUTED BY THE AO TO VERIFY THESE PURCHASES AND THE PARTIES FROM WHOM THE PURCHASES WERE MADE REPORTED THAT NO SUCH PARTIES WERE EXISTED AT THE ADDRESSED GIVEN BY THE ASSESSEE. FINALLY, THE AO AFTER CONSIDERING THE REPLY AND CONTENTIONS OF THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS AVAILED BOGUS BILLS FROM THESE PARTIES AND ACCORDING ADDED THE SUM OF RS.16,63,640/ - WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 25.3.2015 BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.12,46,55,181/ . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO PARTLY SUSTAINED THE ADDITION OF RS.2,07,955/ - BY APPLYING THE GP RATE AT THE RATE OF 12.5% OF THE TOTAL BOGUS PURCHASE BY OBSERVING HOLDING AS UNDER: 3 I.T.A. NO. 48 25 / MUM/ 201 6 27.. THE NET PROFITS AT OVER 8% IS AS PER NORMS IN C IVIL CONSTR UCTION BUSINESS. THE PROFIT SHOWS AN INCREASING TREND. THE IMP UGNED PURCHASES ARE OF TILES, SAND AND M.S. PLATES. THE VAT APPLICA BLE ON TILES IS 12.5% AND ON SAND IS 5%. EVEN IF MATERIALS HAVE BEEN PURCHASED, THEY ARE NOT PURCHASED FORM THESE P ARTIES AND MA Y BE IN CASH FROM UNDISCLOSED PARTIES. BY PURCHASING FROM THE GREY MARKET THE APPELLANT WOULD HAVE BENEFITTED BY THE SAVINGS OF VAT. THEREFORE, IN FACT AND CIRCUMSTANCES OF THE CASE, IN THIS PARTICULAR CASE, IT IS CONSIDERED MOST APPROPRIATE TO ADOPT 12.5% PROFIT WHICH CAN TAKE CARE OF THE ROTATION OF CAPITAL UTILISED FOR SUCH TRANSACTION. HENCE IN THE LIGHT OF FINDING OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH, 12.5% PROFIT IS FOUND TO BE APPROPRIATE FOR ASCERTAIN MENT OF TAXABLE INCOME RELATED TO SUCH TRANSACTION. THUS, ACCORDINGLY RS.2,07,955/ - (12.5% OF 16,63,640/ - ) IS SUSTAINED AND REST OF ADDITION OF RS.14,55,685/ - IS DELETED. GROUNDS OF APPEAL IS THUS PARTLY ALLOWED. STILL AGGRIEVED BY THE ORDER OF THE LD .CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. AFTER HEARING OF BOTH THE PARTIES ON THE ISSUE AND ON PERUSAL OF ORDERS OF AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE WAS FOUND TO BE INVOLVED IN THE BOGUS PURCHASES AND AVAILED BOGUS ACCOMMODATION ENTRIES OF THE BILLS FROM THE FOUR PARTIES AGGREGATING TO RS.16,63,640/ - WHICH COULD NOT BE VERIFIED BY THE AO AND ACCORDINGLY NOTICES U/S 133(6) WERE ISSUED TO THE PARTIES WERE RETURNED UNSERVED AND EVEN THE INSPECTOR FROM THE DEPARTMENT DEPUTED TO VERIFY THE PARTIES REPORTED THAT NONE OF THE PART IES WAS STAYING AT THE ADDRESS GIVEN BY THE ASSESSEE. THE AO ALSO CALLED FOR THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASE S MADE FROM THESE PARTIES , THE ASSESSEE HAS ALSO FAILED TO ESTABLISHED THE GENUINENE SS OF THE PURCHASE . IT IS 4 I.T.A. NO. 48 25 / MUM/ 201 6 QUITE POSSIBLE THAT THE ASSESSEE HAS MADE THE PURCHASES FROM THE GREY MARKET AT A LOWER RATE THAN THE MARKET RATES AND THEREBY MAKING SAVINGS IN THE FORM OF NON PAYMENT OF LOCAL TAXES SUCH AS VAT/ OCTROI ETC. IT IS ALSO NOT DI SPUTED THAT LARGE NUMBER OF PARTIES ARE ENGAGED IN HAWALA TRANSACTIONS AND SUPPLYING BOGUS BILLS TO VARIOUS PARTIES AND ASSESSEE WAS ONE OF THE BENEFICIARY OF THE SAME. WE FIND THAT THE LD.CIT(A) HAS TAKEN VERY BALANCE AND REASONABLE VIEW IN THE MATTER BY SUSTAINING THE ADDITION AT THE RATE OF 12.5% OF THE TOTAL BOGUS PURCHASES . WE ALSO FIND THAT THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE NUMBER OF CASE S HA VE UPHELD THE ADDITION AT THE RATE OF 12.5 % OF THE BOGUS PURCHASES . IN ORDER TO MAINTAIN, CONSI STENCY WITH THE RATIO LAID DOWN BY THE TRIBUNAL IN SEVERAL ORDERS , WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD.CIT (A) ON THIS ISSUE. ACCORDINGLY, THE ORDER OF THE LD.CIT(A) IS CONFIRMED. GROUND NO.1 TAKEN BY THE ASSESSEE STANDS DISMISSED. 5 . THE SECON D ISSUE RAISED BY THE ASSESSEE IS AGAINST THE NON GRANTING OF TDS CREDIT OF RS.19,07,593/ - AS PER CBDT INSTRUCTION NO.5 /2013 (F NO.275/03/2013 - IT(B). 6. HAVING HEARD BOTH THE PARTIES AT LENGTH ON THE ISSUE, WE FIND THAT THE ISSUE OF NON - GRANTING TDS NE EDS TO BE EXAMINED AT THE LEVEL OF ASSESSING AUTHORITY. WE THEREFORE DIRECT THE AO TO EXAMINE THE ISSUE AFTER AFFORDING THE ASSESSEE FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD. IF THE ASSESSEE 5 I.T.A. NO. 48 25 / MUM/ 201 6 IS ENTITLED TO REFUND TDS OF RS.19,07,593 / - ON THE BASIS O F RECORD AS MAY BE PRODUCED BY THE ASSESSEE , THE SAME MAY BE ALLOWED. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 29TH A UG , 2017 S D SD ( SAKTIJIT DEY ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 29. 8. 2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / T HE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT . REGISTRAR) , / ITAT, MUMBAI