ASSISTANT COMMISSIONER OF INCOME TAX 15(3)(1), MUMBAI V. TEN CONSTRUCTIONS (INDIA) PRIVATE LIMITED , MUMBAI

ITA 4911/MUM/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6119 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN PRATAP SINGHDR
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4911/MUM/2017 ( ASSESSMENT YEAR: 2010-11 ) ACIT-15(3)(1) 4TH FLOOR, ROOM NO.451 AAYKAR BHAVAN, M K ROAD MUMBAI-400020 VS. TEN CONSTRUCTIONS (INDIA) PRIVATE LIMITED, 3 RD FLOOR, SHOP NO. J-219, TOWER NO. 5, VASHI RAILWAY STATION, NAVI MUMBAI-400705 PAN : AABCE1303J APPELL ANT ) .. RESPONDENT ) REVENUE BY SHRI. ARUN PRATAP SINGH-DR ASSESSEE BY NONE DATE OF HEARING 10 / 10 /2019 DATE OF PRONOUNCEME NT 10 / 10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST, ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)24, MUMBAI , DATED 28/04/2017 AND IT PERTAINS TO ASSESSMENT YEAR 2010- 11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITIES, FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 26/09/2010, DECLARING TOTAL INCOME OF RS. 81,06,573/- THEREAFTER, THE CASE HAS BEEN REOPENED U/S 147, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT, INVESTIGATION, MUMB AI, AS PER WHICH SALES TAX AUTHORITIES OF GOVERNMENT OF MAHARASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WHO HAD ISSUED BOGUS ITA NO.5270/MUM/2018 MANOJ M. MEHTA 2 PURCHASE BILLS TO VARIOUS PARTIES IN MUMBAI. AS PER LIST OF BENEFICIARIES, THE ASSESSEE IS ONE OF THE BENEFICIA RY, WHO HAD TAKEN ACCOMMODATION BILLS OF BOGUS PURCHASES FROM 14 PART IES AS LISTED BY THE AO IN PARA 2 OF ASSESSMENT ORDER AMOUNTING TO R S. 1,40,64,522/-. THE CASE WAS SELECTED FOR SCRUTINY A ND THE ASSESSMENT HAS BEEN COMPLETED U/S. 143(3).R.W.S. 14 7 OF THE I.T.ACT, 1961 ON 30/03/2016 AND DETERMINED TOTAL IN COME OF RS. 2,21,71,095/, AFTER MAKING 100% ADDITIONS TOWARDS A LLEGED BOGUS PURCHASES FROM THOSE PARTIES AND MADE ADDITIONS OF RS. 1,40,64,522/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSE HAS FILED ELABORATE WRITTEN SUBMISSIONS, ON THE ISSUE, WHICH HAS BEEN REPRODUCED AT PARA 2.3.1 ON PAGES 5 TO 15 OF LD.CIT (A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFO RE THE LD.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTIES ARE GENUINE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCES. THEREFO RE, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIRD PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEV ANT SUBMISSION OF THE ASSESSEE AND ALSO BY FOLLOWING CERTAIN JUDICIA L PROUNCEMENTS INCLUDING THE DECISION OF ITAT, MUMBAI IN CASE OF V INOD.S DEORA VS. DCIT IN ITA NO. 7723/MUM/2014 DELETED ADDITION MADE BY THE AO TOWARDS ALLEGED BOGUS PURCHASES. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD TH E LD. DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. AO HAS MADE ADDITIONS TOWARDS ALLEGED BOGUS PURCHASES @ 100% OF SUCH PURC HASES, ON ITA NO.5270/MUM/2018 MANOJ M. MEHTA 3 THE GROUND THAT THE ASSESSEE IS ONE OF THE BENEFICI ARY OF ACCOMMODATION ENTRIES OF BOGUS PURCHASE BILLS ISSUE D BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUGH ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FILE FURTHER EVIDENC E IN THE BACKDROP OF CLEAR FINDING BY THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA THAT THOSE PARTIES ARE INVOLVED IN PROVIDING ACCOMM ODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GOODS. THE LD. AO HAD AL SO TAKEN SUPPORT FROM THE INVESTIGATION CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO COME TO THE CONCLUSION THAT PURCHASE FROM THE SAID PARTIES IS BOGUS IN NATURE. IT IS THE CONTENTIONS O F THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT PURCHASES FROM TH E ABOVE PARTIES ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNIS HED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS, STOCK DETAI LS AND BANK STATEMENT TO PROVE THAT PAYMENT AGAINST SAID PURCHA SES HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. 5 HAVING CONSIDERED ARGUMENTS OF THE LD. DR AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES HA S FAILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTHOUGH, ASSESSEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAI LED TO FILE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO SATISF ACTIONS OF THE LD.AO. AT THE SAME TIME, THE LD. AO HAD ALSO FAILE D TO TAKE THE INVESTIGATION TO A LOGICAL CONCLUSION BY CARRYING O UT NECESSARY ENQUIRES, BUT HE SOLELY RELIED UPON INFORMATION RE CEIVED FROM INVESTIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. UN DER THESE CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. FURTHER, VARIOUS HIGH COURTS AND TRIBUNALS HAD CONS IDERED AN IDENTICAL ISSUE IN LIGHT OF INVESTIGATION CARRIED OUT BY THE SALES TAX ITA NO.5270/MUM/2018 MANOJ M. MEHTA 4 DEPARTMENT AND HELD THAT IN CASE PURCHASES CLAIMS T O HAVE MADE FROM ALLEGED HAWALA DEALERS , ONLY PROFIT ELEMENT E MBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HIGH COURT, IN THE CAS E OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT AT THE TIME OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARDSTICKS COULD BE ADOPTED, BUT IT DEPENDS UPON FACTS OF EACH CASE. THE ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSUE AND DEPENDING UPON FACTS OF EACH CASE, DIRECTED THE LD.AO TO ESTIMATE 10 TO 15% PROFIT ON TOTAL ALL EGED BOGUS PURCHASES. IN THIS CASE, CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE, THE LD. AO HAS ESTIMATED 100% PROFIT, WHE REAS THE LD.CIT(A) HAS COMPLETELY DELETED ADDITION MADE TOWA RDS ALLEGED BOGUS PURCHASES. ALTHOUGH, LD. CIT(A) COMPLETELY DE LETED ADDITION MDE TOWARDS ALLEGED BOGUS PURCHASES, BUT FAILED TO GIVE REASONS FOR ARRIVING AT SUCH CONCLUSION. WE, FURTHER, NOTED THA T THE LD. CIT(A) HAD ALSO FAILED TO GIVE HIS FINDINGS AS TO HOW THE ASSE SSEE HAS EXPLAINED PURCHASES FROM THOSE PARTIES, MORE PARTICULARLY IN THE BACKDROP OF FINDINGS OF SALES TAX DEPARTMENT. ACCORDINGLY, WE A RE NOT INCLINED TO CONCUR WITH FINDINGS OF THE LD. CIT (A). UNDER THSE CIRCUMSTANCES, THE ONLY OPTION LEFT WITH US IS TO ESTIMATE PROFIT ON A LLEGED BOGUS PURCHASES WHICH IS SUPPORTED BY THE DECISION OF HON BLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS SIMITH P.SHETH 35 6 ITR 451. 6. THEREFORE, CONSIDERING FACTS AND CIRCUMSTANCES O F THIS CASE AND ALSO CONSISTENT WITH VIEW TAKEN BY THE CO-ORDIN ATE BENCH IN NUMBER OF CASES, WE DIRECT THE AO TO REDUCE ADDITIO N MADE TOWARDS ALLEGED BOGUS PURCHASE TO 12.50% PROFIT SUCH PURCHA SES. ITA NO.5270/MUM/2018 MANOJ M. MEHTA 5 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /10/ 2019 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 10 /10/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//