INCOME TAX OFFICER-20(1)(4), MUMBAI V. DURGA TRADERS, MUMBAI

ITA 4904/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6573 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 133(6); 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 4904 / MUM/ 201 7 ( / ASSESSMENT YEAR: 20 09 - 10 ) ITO - 20(1)(4) ROOM NO.112, 1 ST FLOOR, PI RAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 . / VS. M/S. DURGA TRADERS 288, KOLSA BUNDER, DARUKHANA MUMBAI - 400010. ./ ./ PAN/GIR NO. : AAAFD 3742 L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 30 . 01 .201 9 / DATE OF PRONOUNCEMENT : 20. 02 . 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FIL ED THE PRESENT APPEAL AGAINST THE ORDER DATED 22 . 0 3 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 32 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 1 0 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' I ) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RANTING RELIEF OF RS.2,52,13,156/ - BY RESTRICTING THE ADDITION TO 9.98% OF THE ALLEGED BOGUS PURCHASES FROM HAWALA PARTIES. REVENUE BY : S HRI DURGA DUTT (SR AR) ASSESSEE BY: NONE ITA NO.4904 /M/201 7 A.Y.20 09 - 10 2 (2) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ONUS IS ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS AND TRUE NATURE OF THE PURCHASES TRANSACTION.' (3) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE HAWALA DEALERS HAVE ADMITTED ON OATH BEFORE THE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIAL TO ANYBODY. (4) 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONCLUD ING THAT ASSESSEE HAD MADE CASH PURCHASES FROM OTHER PARTIES WHICH WERE NOT RECORDED IN THE BOOKS WITHOUT MENTIONING HOW THIS AND WITH WHAT EVIDENCE BEFORE HIM SUCH FINDING WAS ARRIVED AT. IF SUCH EVIDENCE OF CASH PURCHASES WAS GIVEN THE SAME SHOULD HA VE BEEN REMANDED TO THE A.O. FOR HIS EXAMINATION AND COMMENTS.' (5) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. (6) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GRO UND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 23 .09.20 09 DECLARING TOTAL IN C OME TO THE TUNE OF RS.3,32,810 / - . THE AO RECEIVED THE INFORMATION FROM THE SALES TAX DEPARTM ENT (INV.) WING THAT THE ASSESSEE TOOK THE BOGUS PURCHASE ENTRY FROM 4 PARTIES TO THE TUNE OF RS.2,80,08,394/ - . THEREAFTER, THE AO REOPENED THE ASSESSMENT U/S 147 /148 OF THE I.T. ACT . ON VERIFICATION, ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HAS TA KEN THE BOGUS ENTRY FROM 5 PARTIES I.E. (I) SIDDHIVINAYAK STEEL IN SUM OF RS.1,23,12,961/ - (II) CHANCHAL TUBE CORPORATION IN SUM OF RS.32,46,217/ - (III) SURAT TUBE CORPORATION IN SUM OF RS.16,02,412/ - (IV) SHRISHTI ENTERPRISES IN SUM OF RS.6,38,674/ - AND ( V) ITA NO.4904 /M/201 7 A.Y.20 09 - 10 3 ASIAN STEEL IN SUM OF RS.1,02,08,130/ - TOTAL IN SUM OF RS.2,80,08,394/ - . THE NOTICE WAS ISSUED TO THE SAID PARTIES U/S 133(6) OF THE ACT BUT THE PARTIES WERE NOT RESIDING AT THE GIVEN ADDRESS, THEREFORE, THE AO ADDED THE BOGUS PURCHASE IN SUM OF RS.2,80 ,08,394/ - TO THE INCOME OF THE ASSESSEE AND ASSESSED THE INCOME IN SUM OF RS.2,83,41,200/ - . THEREAFTER, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 9.98% ON THE TOTAL ALLEGED BOGUS PURCHASE TO THE TUNE OF RS .2,80,08,394/ - . FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE L D. REPRESENTATIVE OF THE DEPARTMENT AND HAS GONE THROUGH THE CASE FILED CAREFULLY. ALL THE ISSUES ARE IN CONNECTION WITH T HE RESTRICTION OF ADDITION TO THE EXTENT OF 9.98% OF THE TOTAL BOGUS PURCHASE IN SUM OF RS.2,80,08,394/ - . THE CONTENTION OF THE REVENUE IS THAT THE TOTAL BOGUS PURCHASE IS LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5.8 IN THE INSTANT CASE. THE APPELLANT IS NOT II) A POSITION TO PROVE THE EXISTENCE OF THE SUPPLIERS. THERE IS ENOUGH CIRCUMSTANTIAL EVIDENCE CASTING A DOUBT ON THE NATURE OF THE TRANSACTION. I AM OF THE FIRM BELIEF THAT THE APPELLANT HAD MADE CASH PURCHASES FROM OTHER PARTIES WHICH WERE NOT RECORDED IN THE BOOKS. THE APPELLANT TOOK ONLY BILLS FROM THESE 5 PARTIES AS ACCOMMODATION TO EXPLAIN THE PURCHASES. THE .AO HAS DISALLOWED ENTIRE BOGUS PURC HASES. GIVEN THE FACT THAT THE APPELLANT HAS AHEAD RECORDED A GP OF 9.98% IN HIS BOOKS, AND THE SALES HAVE NOT BEEN DOUBTED. I AM OF THE OPINION THAT THE DISALLOWANCE ON THE ISSUE OF' BOGUS PURCHASE BE RESTRICTED AT RECORDED AVERAGE IN HIS BOOKS OF ACCOUNT S FOR YEAR UNDER CONSIDERATION WHICH IS RECORDED 9.98% IN AUDITED ACCOUNTS. THEREFORE. I DIRECT THE AO TO ESTIMATE PROFIT OF 9.98% ON THE TOTAL ALLEGED BOGUS PURCHASE OF ITS. 2.80.083941 - WHICH WORKS OUT TO RS 27,95.238/ - . THE AMOUNT OF ITS RS.27.95.238/ - IS SUSTAINED OUT OF THE ADDITION OF ITA NO.4904 /M/201 7 A.Y.20 09 - 10 4 RS2.80.08,394/ - MADE BY THE AO. THE APPELLANT GETS A RELIEF OF THE BALANCE RS.2,52,13,156/ - . THE GROUND OF APPEAL IS PARTLY ALLOWED. 5 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE CIT(A) HAS CONSIDERED T HE LAW SETTLED BY THE VARIOUS COURTS SUCH AS THE DECISION BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH POLY FAB PVT. LTD. REPORTED IN 355 ITR 290 (GUJ), VIJAYA PROTEIN VS. CIT 58 ITD 428 (AHD) & CIT VS. SIMIT P. SHETH 356 ITR 451 (GUJ) . I N THE SAID MENTIONED LAW, IT IS WELL - SETTLED THAT THE PROFIT RATIO EMBEDDED TO THE TRANSACTION IS REQUIRED TO BE ADDED TO THE INCOME OF THE ASSESSEE. THE CIT(A) HAS CONSIDERED THE GP RATIO SHOWN BY ASSESSEE WHICH WAS @ 9.98% IN THE BOOKS OF ACCOUNT. IN THE INSTANT CASE, SALE IS NOT DOUBTED, THEREFORE, THE CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 9 . 98% OF THE TOTAL BOGUS PURCHASE IN SUM OF RS.2,80,08,394/ - . TAKING INTO ACCOUNT, ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT CIT(A) HAS DE CIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE UPHELD THE FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THESE ISSUES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 20. 02.2019 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 20. 02.2019 . V IJAY ITA NO.4904 /M/201 7 A.Y.20 09 - 10 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI