INCOME TAX OFFICER-19(3)(4), MUMBAI V. SUPREME STEEL IMPEX, MUMBAI

ITA 4869/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6789 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase
• Section: 133(6); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4869/M/2017 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER- 19(3)(4), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007 VS. M/S. SUPREME STEEL IMPEX, 188/2, MAMSUKH, NIWAS, KHETWADI BACK ROAD, MUMBAI 400 004 PAN: AAXFS 7565B (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI CHAUDHARY ARUN KUMAR SINGH, D. R. DATE OF HEARING : 18.04.2019 DATE OF PRONOUNCEMENT : 24.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 06.03.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. AT THE OUTSET, WHEN THE CASE WAS CALLED UP FOR H EARING, NEITHER THE ASSESSEE NOR ITS AUTHORISED REPRESENTAT IVE WAS PRESENT TO ATTEND THE HEARING. WE ARE THEREFORE PR OCEEDING TO DISPOSE OF THE APPEAL EX-PARTE AFTER HEARING THE LD . D.R. AND TAKING INTO ACCOUNT THE FACTS ON RECORD. 3. THE ONLY ISSUE RAISED BY THE REVENUE IN VARIOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) IN CONFIR MING THE ADDITION TO THE TUNE OF 6.5% OF THE TOTAL BOGUS PUR CHASES AS ITA NO.4869/M/2017 M/S. SUPREME STEEL IMPEX 2 AGAINST THE 100% ADDITION ON ACCOUNT OF BOGUS PURCH ASES BY THE AO OF RS.1,07,10,709/-. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A TR ADER IN FERROUS AND NON FERROUS ITEMS AND FILED RETURN OF I NCOME ON 27.09.2009 DECLARING AN INCOME OF RS.6,04,485/- WHI CH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE AO RECEIVED THE INFORMATION FROM DGIT (INV.) MUMBAI VIDE LETTER DAT ED 26.12.2013 THAT THE ASSESSEE IS BENEFICIARY OF BOGU S PURCHASE TRANSACTIONS FROM 8 PARTIES TO THE TUNE OF RS.1,07, 10,709/-. CONSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 148 DAT ED 08.03.2014. THE ASSESSEE FILED A RETURN OF INCOME IN RESPONSE TO NOTICE ISSUED UNDER SECTION1 48. THEREAFTER, TH E STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESS EE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON TO FURNISH VARIOUS EVIDENCES AS MENTIONED IN P AGE NO.2 OF THE ASSESSMENT ORDER TO PROVE THE GENUINENESS OF TH E PURCHASES WHICH WAS PROVIDED BY THE ASSESSEE ON VARIOUS DATES OF HEARING. ULTIMATELY THE BOOKS OF ACCOUNTS OF THE ASSESSEE WE RE REJECTED UNDER SECTION 145(3) OF THE ACT AND THE PURCHASES W ERE TREATED AS BOGUS AND SHAM AND CONSEQUENTLY ADDED TO THE IN COME OF THE ASSESSEE FOR THE REASON THAT NOTICES WERE ISSUE D UNDER SECTION 133(6) TO THESE PARTIES WERE RETUNED UNSERV ED. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON AT 6.5% OF THE BOGUS PURCHASES ON THE GROUND THAT IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ.) THE HONBL E GUJARAT HIGH COURT HAD DIRECTED THE ADDITION TO BE MADE AT 12.5% WHEN THE VAT RATE WAS 10% AND GP WAS TAKEN AT 2.5%. THE LD. ITA NO.4869/M/2017 M/S. SUPREME STEEL IMPEX 3 CIT(A) CONSIDERED THAT IN THE PRESENT CASE THE VAT RATE IS ONLY 4% AND THUS RESTRICTED THE ADDITION TO 6.5% ON THE SAME ANALOGY. THE LD. CIT(A) HELD THAT IT IS ONLY THE P ART OF THE PURCHASES WHICH CAN BE BROUGHT TO TAX AND NOT THE E NTIRE PURCHASES. 6. AFTER HEARING LD DR AND PERUSING THE MATERIAL O N RECORD, WE OBSERVE THAT IN THIS CASE THE SALES OF THE ASSES SEE ARE NOT DISPUTED AND THEREFORE THE POSSIBLE PRESUMPTION IS THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM THE GR EY MARKET THEREBY MAKING VARIOUS TYPES OF SAVINGS SUCH AS NON PAYMENT OF VAT AND OTHER INCIDENTAL CHARGES. IN OUR OPINION, T HE LD. CIT(A) HAS PASSED A VERY REASONED ORDER BY GIVING A FINDIN G THAT THE VAT RATE APPLICABLE TO THE ASSESSEE IS ONLY 4% AS TH E ASSESSEE IS DEALING IN STEEL ITEMS AND REASONABLY ADDED TO 2.5% ON VAT TO ARRIVE AT 6.5% TO ASSESS THE PROFIT ON THE BOGUS P URCHASES OVER AND ABOVE WHAT HAS BEEN DECLARED IN THE BOOKS OF AC COUNTS. THE LD. CIT(A) HAS FOLLOWED THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (SUPRA) IN WHICH THE FACTS ARE THAT THE VAT RATE WAS 10% AND GP WAS TAKEN ONLY 2.5%. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF LD. CIT(A) AND ACCORDINGLY WE ARE I NCLINED TO UPHOLD THE SAME BY DISMISSING THE APPEAL OF THE REV ENUE. 7. IN RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 24.04.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.04.2019. * KISHORE, SR. P.S. ITA NO.4869/M/2017 M/S. SUPREME STEEL IMPEX 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.