SUPER FORGE PVT LTD., Mumbai V. ITO WARD 14(3)(4), Mumbai

ITA 4842/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3709 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Section: 133(6); 201; 48; 22; 147

Judgement Text

1 I.T.A. NO.4842/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) I.T.A. NO. 48 42 /MUM/201 9 (ASSESSMENT YEAR 20 1 1 - 1 2 ) M/S. SUPER FORGE PVT LTD 3/ C - 16, TAXIMEN SOCIETY L.B.S. MARG, KURLA (WEST) MUMBAI PAN : AAKCS3468H VS ITO,WD.14(3)(4), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI VIMAL PUNMIYA, ( AR ) RESPONDENT BY MS. SMITA VERMA, ( DR ) DATE OF HEARING 01 - 02 - 2021 DATE OF PRONOUNCEMENT 25 - 02 - 2021 O R D E R THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DATED 3 0 - 0 4 - 201 9 OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 22 , MUMBAI FOR THE ASSESSMENT YEAR 20 1 1 - 1 2 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE MADE ON ACCOUNT OF NON GENUINE PURCHASES . 3 . BRIEFLY THE FACTS ARE, THE ASSESSEE, A RESIDE NT COMPANY, IS ENGAGED IN MANUFACTURE AND SALE OF PIPE FITTINGS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 29 - 01 - 2011 DECLARING TOTAL INCOME OF RS.1,52,444/ - . ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION W ING OF 2 I.T.A. NO.4842/MUM/2019 THE DEPARTMENT THAT THE ASSESSEE IS A BENEFICIARY OF HAWALA TRANSACTIONS THROUGH NON GENUINE PURCHASES, THE ASSESSING OFFICER REOPENED THE ASSESSMENT U NDER SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPO N THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES OF RS.28,95,516/ - FROM TWO PARTIES. FURTHER, TO INDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES, THE A SSESSING O FFICER ISSUED NOTICES U NDER SECTION 133(6) OF THE ACT TO THE CONCERNED SELLING DEALE R S WHICH RETURNED BACK UNSERVED.THE EVIDENCES FURNISHED BY THE ASSESSEE COULD NOT ALSO SATISFY THE A SSESSING O FFICER TO ACCEPT THE PURCHASES AS GENUINE. THEREFORE, ULTIMATELY HE CONCLUDED THAT THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE TWO PARTIES ARE NON GENUINE. NOTICING THAT THE ASSESSEE HAS DISCLOSED GROSS PROFIT RATE OF 16% FOR THE YEAR UNDER CONSIDERATION, THE A SSESSING O FFICER HELD THAT THE ASSESSEE MUST HAVE EARNED PROFIT AT THE SAME RATE FRO M THE NON GENUINE TRANSACTION. ACCORDINGLY, HE DISALLOWED 16% OUT OF THE ALLEGED NON GENUINE PURCHASES AND MADE AN ADDITION OF RS.4,63,286/ - . THE ADDITION SO MADE BY THE A SSESSING O FFICER WAS ALSO SUSTAINED BY THE LEARNED COMMISS IONER (APPEALS). 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ASSESSEE HAD PURCHASED THE GOODS FROM GENUINE SOURCES AND HAS ALSO MADE PAYMENT THROUGH BANKING CHANNEL. FURTHER, HE SUBMITTED, ASSESSEE EFFECTS SALES ONLY TO GOVERNMENT AGENCIES AND T HE ASSESSEE HAS ESTABLISHED THE CO - RELATION BETWEEN THE PURCHASES AND THE SALES. HE SUBMITTED, THE BOOKS OF ACCOUNT MAINTAINED REFLECTING THE PURCHASES AND SALES HAVE ALSO BEEN PRODUCED BEFORE THE DEPARTMENTAL AUTHORIT IES . HE SUBMITTED, FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN GROSS PROFIT RATE OF 27%. HE SUBMITTED, FOR LAST SO MANY YEARS THE ASSESSEE IS PURCHASIN G GOODS FROM THE VERY SAME PARTIES . HE SUBMITTED, WHILE 3 I.T.A. NO.4842/MUM/2019 CONSIDERING SIMILAR DISALLOWANCE MADE IN ASSESSMENT YEAR 2010 - 11 IN RESPECT OF PURCHASES MADE FROM THE VERY SAME PARTIES, THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE TO 3% OF THE NON GENUINE PURCHASES. IN THIS REGARD, HE DREW ATTENTION TO THE ORDER OF THE TRIBUNAL IN ITA NO.6719/MUM/2018 DATED 20 - 05 - 2020. THUS, HE SUBMITTED, IN THE IMPUGNED ASSESSMENT YEAR ALSO THE DISALLOWANCE SHOULD BE RESTRICTED TO 3%. 5. STRONGLY RELYING UPON THE OBSERVATIONS OF THE A SSESSING O FFICER AND LEARNED COMMISSIONER (APPEALS) LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FAILED TO FURNISH COGENT EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. SHE SUBMITTED, EVEN NOTICES ISSUED U NDER SECTION 133(6) OF THE ACT ALSO RETURNED UNSERVED. THEREFORE, SHE SUBMITTED, WHEN THE ASSESSEE WA S UNABLE TO PROVE THE GENUINENESS OF PURCHASES, THE DISALLOWANCE MADE WAS JUSTIFIED. 6. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, ON THE BASI S OF INFORMATION RECEIVED FROM S ALES - TAX DEPARTMENT THROUGH THE INVESTIGA TION WING, THE A SSESSING O FFICER FOUND THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE WERE NON GENUINE. AS IT APPEARS FROM THE FACTS ON RECORD, IN COURSE OF ASSESSMENT PROCEEDINGS, THOUGH , THE ASSESSEE FURNISHED SOME DOCUMENTARY EVIDENCES , HOWEVER, THEY WERE NOT TO THE SATISFACTION OF THE A SSESSING O FFICER. THEREFORE, HE TREATED THE PURCHASES AS NON GENUINE. HOWEVER, ULTIMATELY, HE RESTRICTED THE DISALLOWANCE TO 16% BEING THE GROSS PROFIT SHOWN BY THE ASSESSEE. FROM THE AFORESAID FACTS, IT IS VERY MUCH CLEAR THAT THE A SSESSING O FFICER WAS CONVINCED THAT NOT ONLY ASSESSEE HAD PURCHASED THE GOODS, BUT CORRESPONDING SALES HAVE BEEN MADE . I FIND, WHILE DEALING WITH IDENTICAL NATURE OF DISPUTE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 4 I.T.A. NO.4842/MUM/2019 2010 - 11, THE TRIBUNAL IN ITA NO.6719/MUM/2018 DATED 20 - 05 - 2020 HAS RESTRICTED THE DISALLOWANCE TO 3% OF THE ALLEGED NON GENUINE PURCHASES. THE FACTUAL POSITION RELATING TO THE DISALLOWANCE MADE IN THE IMPUGNED ASSESSMENT YEAR IS IDENTICAL. THEREFORE, RESPECTFULLY F OLLOWING THE DECISION OF THE DIVISION BENCH , AS REFERRED TO ABOVE , I DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 3% OF THE ALLEGED NON GENUINE PURCHASES. GROUNDS ARE PARTLY ALLOWED. 7. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRON OUNCED ON 25 / 02/2021. SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DT : 25 /02/2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI