ITO 24(3)(3), MUMBAI V. S.D. INDUSTRIES, MUMBAI

ITA 4934/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7895 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 28-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDE
• Assessee Lawyers: NAVEEN KUMAR MISHRA
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 147

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./4934/MUM/2014 , / ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER-24(3)-3 ROOM NO.705, 7TH FLOOR, C-11, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. VS. M/S. S.D. INDUSTRIES 2/10, SINGH INDUSTRIAL ESTATE RAM MANDIR ROAD, GOREGAON (W) MUMBAI-400 051 PAN:AALFS 5326 C ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI VISHWAS MUNDE-CIT-DR /ASSESSEE BY: SHRI NAVEEN KUMAR MISHRA / DATE OF HEARING: 20/03/2017 / DATE OF PRONOUNCEMENT: 22.03.2017 PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 30/05/2014,OF THE CIT ( A)-44,MUMBAI THE ASSESSING OFFICER(AO)HAS FILED THE PRESENT APPEAL. ASSESSEE-FIRM ,ENGAGED IN MANUFACTURING ENGINEERING GOODS,FILED ITS RETURN OF INCOME ON 2/10/2010, DECLARING TOTAL INCOME OF RS.19.19 LAKHS.THE AO COM PLETED THE ASSESSMENT U/S. 143 (3) OF THE ACT, ON 25/03/ 2013,DETERMINING ITS INCOME AT RS. 75, 31, 300/-. 2 .EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION OF AD DITION OF RS.56.12 LAKHS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES.DURING THE COURSE OF HEARING BEFORE US,REPRESENTATIVES OF BOTH THE SIDES AGREED THAT IDENTICAL STANDS DELIBERAT -ED UPON AND DECIDED BY THE TRIBUNAL IN ITS ORDER 2 5.08. 2016.(ITA/ 213/MUM/ 2015-AY.2009-10).IN THAT MATTER THE TRIBUNAL HAD TA KEN NOTE OF THE FACTS AND HAD DECIDED THE ISSUE AS UNDER: 2.BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THA T THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND LABOUR JOB OF ENGINEERING GOODS . ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 7,55,840/-. ASSES SMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 147 OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 42,43,90/- WHICH INCLUDES ADDITION OF RS. 34,88,069/- ON ACCOUNT OF BOGUS PU RCHASES . AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE ASSESSE E S APPEAL. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRI BUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. AT THE OUTSET, LD REPRESENTATIVES OF BOTH THE PA RTIES AGREED TO THE POINT THAT THE ISSUE INVOLVED IN THE REVENUE S APPEAL IS AGAINST THE RELIEF GRANTED BY THE CIT ( A) ON THE ADDITION INVOLVING THE ACCOMMODATION ENTRIES QUA THE PURCHAS ES FROM THE SUPPLIERS, WHOSE NAMES ARE 4934/M/14-10-11 SD INDUSTRIES 2 LISTED BY THE SALES TAX DEPARTMENT IN THEIR WEBSITE IE WWW.MAHAVAT.GOV.IN AS SALES TAX DEFAULTERS. THEY ALSO FAIRLY MENTIONED THAT THE TRI BUNAL IS CONSISTENTLY TAKING A VIEW ON THE ISSUE THAT BY NOT CONFIRMING SUCH BOGUS ADDITION SU PPLIED BY SUCH PARTIES RATHER THE TRIBUNAL IS CONSISTENTLY RESORTING TO CONFIRMING THE ADDITIONS TO GP OF THE CONCERNED ASSESSEE S. IN THIS REGARD THEY BROUGHT OUR ATTENTION TO THE DECISION O F THE TRIBUNAL IN THE CASE OF SHRI PRATAP U PUROHIT VIDE ITA NO.5296/M/2013 (AY 2010-2011), DAT ED 10.02.2016. FURTHER, THEY MENTIONED THAT IF THE SAID APPROACH OF CONFIRMING THE GP BASE D ADDITIONS ON SUCH BOGUS PURCHASES INVOLVING SUCH TAINTED SUPPLIERS, WHOSE NAMES ARE A PPEARED IN THE SAID WEBSITE OF THE SALES TAX DEPARTMENT, THE INSTANT APPEAL FILED BY THE REVENUE SHOULD BE DISMISSED UPHOLDING THE ORDER OF THE CIT (A). 5. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF TH E ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 2.3 IN PARTICULAR, I FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA FOR T HE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION FROM THE SAID PARA IS EXTRACTED AS UNDER:- 2.3. .......... ........... FURTHER, WHILE DEALING WITH THE ASSESSEES OWN CAS E FOR AY 2010-2011 ON IDENTICAL ISSUE I HAVE HOLD THAT AVERAGE GP OF PAST THREE YEARS IE @ 20% O F THE BOGUS PURCHASES AFTER GIVING CREDIT FOR THE GP ALREADY OFFERED AND BALANCE AS ESCAPED I NCOME FOR THE PURPOSES OF TAXATION VIDE MY ORDER IN APPEAL NO. CIT(A)-34/IT-96/13- 14. THEREFO RE, FOLLOWING THE SAME I HOLD THAT TO JUDGE SUCH INFLATED PURCHASE / COST ESTIMATE GP AT 20% CO NSIDERING THE AVERAGE GP OF PAST 3 YEARS AND ACCORDINGLY DIRECT THE AO TO ACCEPT THE GP @ 20 % OF THE BOGUS PURCHASES AND GIVE CREDIT FOR THE GP ALREADY OFFERED ON SUCH PURCHASE AND TAX THE BALANCE AS ESCAPED INCOME FOR THE PURPOSES OF TAXATION & DELETE THE BALANCE ADDITION. 6. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENC E. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. AS THE FACTS FOR THE YEAR UNDER APPEAL ARE IDENTICA L TO THE FACTS OF AY.2009-10, SO,RESPECTFULLY FOLLOWING THE SAME WE DECIDE THE EFFECTIVE GROUND O F APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY TH E AO STANDS DISMISSED. !'#$%&' . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH , 2017. $( ) #% 22 $* , 2017 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 22.03.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ . //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.