ITO 32(1)(1), MUMBAI V. ABHAY AUTOMOTIVE COMPANY, MUMBAI

ITA 4939/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7783 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2016
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 69C; 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SIGH, JUDICIAL MEMBER I.T.A. NO. 4939/M/2016 (ASSESSMENT YEAR: 2009 - 2010 ) ITO - 32(1)(1), R.NO.201, C - 11, 2 ND FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI 400 051. / VS. M/S. ABHAY AUTOMOTIVE COMPANY, B/402, SUMER NAGAR, BUILDING NO.3, S.V. ROAD, BORIVALI (W), MUMBAI - 400092. ./ PAN : AAJFA3745K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SAURABH KUMAR RAI, DR / RESPONDENT BY : NONE / DATE OF HEARING : 23.02.2017 / DATE OF PRONOUNCEMENT : 17 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 01.08.2016 IS AGAINST THE ORDER OF THE CIT (A) - 44, MUMBAI DATED 25.5.2016 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS AND THE SAME READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN RESTRICTING ADDITION TO RS. 6,03,737/ - (@ 13.76% OF RS. 43,87,622/ - ) U/S 69C OF THE ACT ON ACCOUNT OF BOGUS PURCHASES AS AGAINST ADDITION OF RS. 43,87,622/ - MADE BY THE AO WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT PRODUCED ANY COGENT EVIDENCE TO SUBSTANTIATE THE FACT THAT HE HAD TAKEN ACTUAL DELIVERY OF GOODS PURCHASED FROM THE PARTIES AND THAT THE NOTICES U/S 133(6) ISSUED TO THE PARTIES FROM WHOM ALLEGED BILLS WERE RECEIVED WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT AVAILABLE AT THIS ADDRESS AND THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE PURCHASE PARTIES BEFORE THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN RELYING UPON JUDGMENT IN THE CASE OF CIT VS. NIKUNJ ENTERPRISES (372 ITR 619) AND SARASWATHI OIL TRADERS VS. CIT (254 ITR 259) (SC) WITHOUT APPRECIATING THAT THE FACTS INVOLVED IN THE APPELLANTS CASE ARE DIFFERENT FROM THE FACTS OF THE ABOVE CASE LAWS. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RESALE OF MOTOR, TRUCK AND AUTO PARTS AND ACCESSORIES. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 1,60,016/ - . ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 45,47,642/ - . IN THE ASSESSMENT, AO MADE ADDITION OF 2 RS.43,87,622/ - ON ACCOUNT OF BOGUS PURCHASES U/S 69C OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT DURING THE YEAR ASSESSEE MADE PURCHASES FROM CERTAIN PARTIES, WHOSE NAMES ARE APPEARING IN THE WHOSE NAMES ARE LISTED BY THE SALES TAX DEPARTMENT IN THEIR WEBSITE IE WWW.MAHAVAT.GOV.IN AS SALES TAX DEFAULTERS. ALL SUCH PURCHASES INVOLVING THE SUPPLIERS ENLISTED THE SAID SALES TAX DEPARTMENT WEBSITE WERE ADDED BY THE AO U/S 69C OF THE ACT IN THE AY UNDER CONSIDERATION. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ EXIMP ENTERPRISES PVT L TD VS. ACIT VIDE WRIT PETITION NO. 2860 OF 2012, DATED 18 TH JUNE, 2014 AND DISPROVED THE ADDITION MADE BY THE AO U/S 69C OF THE ACT. FURTHER, RELYING ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH , ITA NO. 5 53 OF 2012, DATED 16.1.2013, CIT (A) RESTRICTED THE ADDITION TO 13.76% OF SUCH ALLEGED BOGUS PURCHASES OF RS. 43,87,622/ - . AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, NONE APPEARED TO REPRESENT THE ASSESSEES CASE. CONSIDERING THE COVERED NATURE OF THE ISSUES, WE PROCEED TO ADJUDICATE THIS APPEAL ON MERITS WITH THE HELP OF THE LD DR FOR THE REVENUE. 6. ON THE OTHER HAND, LD DR FOR THE REVENU E DUTIFULLY RELIED ON THE ORDER OF THE AO AND THE VIEW TAKEN BY HIM . 7. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES IN GENERAL AND THE CONTENTS OF PARA 4.7 OF THE CIT (A)S ORDER IN PARTICULAR, WE FIND THE SAME ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA FOR THE SAKE OF COMPLETENESS OF THIS ORDER, RELEVANT PORTION FROM THE SAID PARA IS EXTRACTED AS UNDER: - 4.7..........THEREFORE, AFTER CONSIDERING THE TOTALITY OF FA CTS AND AFTER FOLLOWING THE RAIO OF SARASWATHI OIL TRADERS VS. CIT (SC) CITED SUPRA, I AM OF THE OPINION THAT IT IS THE PROFIT ELEMENT ON THE TOTAL COMPONENT IN DISPUTE WHICH NEEDS TO BE ADDED TO THE INCOME OF THE APPELLANT. THE TOTAL AMOUNT WHICH IS BEIN G TREATED AS BOGUS BY THE AO IS RS. 43,87,622/ - . THE APPELLANT HAS SHOWN A GROSS PROFIT RATE OF 13.76%. THUS, 13.76% OF RS. 43,87,622/ - WHICH IS RS. 6,03,737/ - IS ACCORDINGLY CONFIRMED OUT OF AN ADDITION OF RS. 43,87,622/ - AND THE BALANCE IS DELETED. GR OUNDS OF APPEAL NOS. 1, 2 AND 3 ARE THEREFORE PARTLY ALLOWED. 3 8 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE BEFORE GRANTING RELIEF TO THE ASSESSEE, CIT (A) RIGHTLY FOLLOWED THE PRECEDENTS ON THE ISSUE. THEREFORE, WE ARE OF THE CONSIDERED OPIN ION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INT ERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH , 201 7 . SD/ - SD/ - (PAWAN SINGH) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17.03 .201 7 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI