PRISTINE ENGINEERING SERVICES, MUMBAI V. DCIT 20(2), MUMBAI

ITA 4848/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0297 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 21-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PURISHOTTAM KUMAR
• Assessee Lawyers: N R AGRAWAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 148

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 . 4 848 /MUM/201 6 ( / ASSESSMENT YEA R : 20 09 - 10 ) PRISTINE ENGINEERING SERVICES, B - 34, NAND BHUVAN INDUSTRIAL ESTATE, MAHAKALI CAVES ROAD , ANDHERI (E), MUMBAI - 4000 93 / VS. DY.COMMISSIONER OF INCOME TAX - 20 ( 2 ) /CIT CITY - 20, PIRAMAL CHAMBERS, P AREL, MUMBAI - 400012. ( / APPELLANT ) ( / RESPONDENT ) PAN: AA AFP1771B / APPELLANT BY : SHRI N R AGRAWAL /R ESPONDENT BY : SHRI PURISHOTTAM KUMAR / DATE OF HEARING : 7.8.20 17 / DATE OF PRONOUNCEMENT : 17. 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) - 51 , MUMBAI, DATED 30.6. 2016 , PERTAINS TO THE ASSESSMENT YEAR 20 09 - 10 . 2 I.T.A. NO. 4848 / MUM/ 201 6 2. ONL Y GROUND RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMING THE ADDITION OF RS.8,60,950/ - ON ACCOUNT OF BOGUS PURCHASE @ 22.34% OF THE ALLEGED BOGUS PURCHASES OF RS.38,53,850/ - . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS TAKEN 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. T HE AO AFTER GOING THROUGH THE AFFIDAVIT OF THE PERSONS W HO PROVIDED ENTRIES TO THE VARIOUS BENEFICIARIES INCLUDING THE ASSESSEE REOPENED THE CASE OF T HE ASSESSEE BY ISSUING NOTICE U/S 148 OF THE ACT . THE AO FOUND THAT THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.38,53,850/ - FROM SUCH SEVEN PARTIES. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS, THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE SAID PARTIES WHICH WERE RETURNED BACK UNSERVED . THE AO, THEREAFTER VIDE ORDERSHEET ENTRY DATED 7.3.2014 ASKED THE ASSESSEE TO PRODUCE THESE PARTIES AL ONG WITH THE NECESSARY DOCUMENTARY EVIDENCES TO PROVE THE GENUINENESS OF THE PURCHASE S . HOWEVER, THE ASSESSEE DID NOT PRODUCE THESE PARTIES NOR FILED ANY INFORMATION AS CALLED FOR BY THE AO TO PROVE THE GENUINENESS OF THE PURCHASES. FINALLY, THE AO AD DED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY FRAMING THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 21.3.2014 BY ASSESSING THE INCOME OF THE ASSESSEE AT RS.99,67,450/ - BY MAKING VARIOUS ADDITIONS . 3 I.T.A. NO. 4848 / MUM/ 201 6 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION OF RS.8,60,950/ - BEING @ 22.34% OF THE TOTAL PURCHASES OF RS.38,53,850/ - WHICH WAS BASED UPON THE GP RATE FOR THE ASSESSMENT YEAR 2009 - 10 AND THEREBY ALLOWING RELIEF OF RS.29,92,900/ - . STILL AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5 . AFTER HEARING OF BOTH THE PARTIES ON THE ISSUE , MATERIALS PLACED BEFORE US AND ON PERUSAL OF ORDER OF AUTHORITIES BELOW, WE FIND THAT THE FAA HAS SUSTAINED THE ADDITION PRIMARILY ON THE BASIS OF RATE OF GP DECLARED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2009 - 10 . THE FAA HAS RECORDED FINDING OF FACTS THAT THE SALES OF THE ASSESSEE HAS NOT BE DISTU RBED BY THE AO IN THE ASSESSMENT PROCEEDINGS WHILE MAKING THE ADDITION FOR THE BOGUS PURCHASES AND ALSO THAT THE ASSESSEE H AS FAILED TO ESTABLISHED THE GENUINENESS OF THE PURCHASE S AND SUSTAINED THE ADDITION EQUAL TO GP RATE. I N OUR CONSIDERED VIEW I N SUCH CASES OF HAWALA PURCHASES, THE ASSESSEE NORMALLY MAKES THE PURCHASES FROM THE OPEN MARKET THEREBY MAKING SAVING IN THE FORM OF NON PAYMENT OF LOCAL TAXES SUCH AS VAT/ OCTROI ETC. IN SUCH CASES, THE TRIBUNAL HAS BEEN TAKING CONSISTENT VI EW OF MAKING ADDITION OF @ 12.50% CONSIDERING THE SAME TO BE FAIR AND REASONABLE IN VIEW OF THE VARIOUS DEFICIENCIES IN THE INVESTIGATION BY THE AO . IN ORDER TO MAINTAIN, CONSISTENCY , WE DIRECT T HE AO TO MAKE 4 I.T.A. NO. 4848 / MUM/ 201 6 ADDITION AT THE RATE OF 12.5% OF THE TOTAL BOGUS PURCHASE WHICH COMES TO RS.4,81,731/ - . ACCORDINGLY, WE PARTLY ALLOW THE APPEAL TO THIS EXTENT. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 17TH AUG , 2017 SD SD ( SAKTIJIT DEY ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 17 TH AUG 2017 SRL,SR.PS / 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 F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI