ACIT RG 5(1), MUMBAI V. ARVIKET SHARES AND SECURITIES P.LTD, MUMBAI

ITA 4958/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1909 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V D PARMAR
• Assessee Lawyers: J P JANGID
• Keywords: Bogus purchase; Onus to prove
• Section: 143(3); 133(6); 147; 148

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY , JM AND SHRI MANOJ KUMAR AGGARWAL , AM ./ I.T.A. NO. 4956/MUM/2015 ( / ASSESSMENT YEAR: 2009 - 2010 ) ANJANI STEEL PLOT NO. 463, ROAD NO. 4, STEEL MARKET, KALAMBOLI, PANVEL, DISTT. RAIGAD MUMBAI / VS. INCOME TAX OFFICER WARD - 01, 3 RD FLOOR TRIFED TOWER OPP. KHADA COLONY NEW P ANVEL 410206 ./ ./ PAN/GIR NO. AA PFA7295Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V .D.PARMAR, AR / RESPONDENT BY : SHRI J.P.JANGID, DR / DATE OF HEARING : 03/11 /2016 / DATE OF PRONOUNCEMENT : 18 /1 1 /2016 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY THE ASSESSEE FOR A SSESSMENT Y EAR [AY] 2009 - 10 ASSAILS THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 2 [CIT(A)], MUMBAI DATED 23 /07/2015 2 ITA NO. 4956 /MUM / 2015 ANJANI STEEL ASSESSMENT YEAR 2009 - 2010 PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 196 1 [ HEREINAFTER THE ACT ] . THE APPEAL PRIMARILY ASSAILS THE STAND OF THE CIT (A) IN UPHOLDING THE REASSESSMENT U/S 147 OF TH E ACT ON LEGAL GROUNDS AS WELL AS ON MERITS. 2 . FACTS QU A THE DISPUTE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2009 - 10 DECLARING A TOTAL INCOME OF RS.21,610/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SOUGHT TO BE REOPENED UPON RECEIPT OF INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING CERTAIN DEALERS INDULGING IN ISSUANCE OF BOGUS PURCHASE BILLS AND ASSESSEE BEING LISTED AS ONE OF THE BENEFICIARIES OF BOGUS PURCHASE BILLS IN RESPECT OF FOLLOWING DEALERS: - SR. NO. NAME OF THE PARTY MAHARASHTRA VAT NO. A.Y. A MOUNT OF BILL TAKEN BY THE ASSESSEE 1. ENTECH ENTERPRISES 27210604094V 2009 - 10 10,61,893/ - 2. SHRITI ENTERPRISES 27520503189V 2009 - 10 7,96,802/ - 3. DEEP ENTERPRISES 27750595164V 2009 - 10 10,55,538/ - TOTAL 26,14,233/ - THEREFORE, THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT DATED 26 /03/2013 . DETAILED INFORMATION WAS SOUGHT FROM THE ASSESSEE BY ISSUING NOTICE U/S 142 (1) OF THE ACT QU A THE PURCHASES MADE FROM THE ALLEGED BOGUS DEALERS. THE ASSESSEE SUBMITTED THAT IT HAS ALREADY PAID VAT AGAINST PURCHASES MADE FROM SUCH DEALERS. TO VERIFY THE GENUINENESS OF THE PURCHASE, NOTICES U/S 133(6) OF THE ACT W ERE SENT TO THE ABOVE T HREE PARTIES AT T HE ADDRESSES PROVIDED BY THE ASSESSEE, OUT OF WHICH TWO NOTICES WERE RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARKS NOT KNOWN. THE THIRD PARTY NAMELY SHRITI ENTERPRISES CATEGORICALLY DENIED ANY TRANSACTION WITH THE ASSESSEE. THE PHYSICAL INSPEC TION BY INSPECTOR AT SITE OF THE TWO PARTIES NAMELY ENTECH ENTERPRISES AND DEEP ENTERPRISES REVEALED THAT THE TWO PARTIES DID NOT EXIST AT THE GIVEN ADDRESS ES . THE ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THE PARTIES BUT CONTENDED THAT PAYMENTS TO T HESE PARTIES HAVE BEEN MADE BY CHEQUES AND THE SAME ARE GENUINE. HOWEVER, AFTER REJECTING THE CONTENTION OF THE ASSESSEE, THE A O CONCLUDED SUCH PURCHASES TO BE NOT GENUINE BUT IN THE NATURE OF AC COMMODATION ENTRIES ONLY AND ACCORDINGLY ADDED THE AMOUNT OF RS.26,14,233/ - TO THE INCOME OF THE ASSESSEE 3 ITA NO. 4956 /MUM / 2015 ANJANI STEEL ASSESSMENT YEAR 2009 - 2010 AND DETERMINED THE TOTAL INCOME AT RS.26,35,840/ - VIDE ORDER DATED 18/03/2014. THE ASSESSEE CONTESTED THE SAME BEFORE THE CIT(A) UNSUCCESSFULLY VIDE ORDER DATED 23 /07/2015 . THE CIT(A) AFTER CONSIDERING THE FACTU AL MATRIX OF THE CASE UPHELD THE REOPENING U/S 147 OF THE ACT. HE FURTHER NOTED THAT ONUS TO PROVE GENUINENESS OF THE PURCHASES SQUARELY LIED ON THE ASSESSEE BY FURNISHING NECESSARY SUPPORTING DOCUMENTS LIKE BANK STATEMENT, CONFIRMATION, DELIVERY CHALLANS, PROPER TRANSPORT RECEIPTS ETC. AND BY PRODUCING THE PARTIES FOR EXAMINATION , WHICH ASSESSEE HAS FAILED TO DISCHARGE . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE WAS ASKED TO FILE THE REQUISITE DETAILS AND TO PRODUCE THE PARTIES FOR EXAMINATIO N. BUT, THE ASSESSEE FAILED TO DO SO. NO TRANSPORT / OCTROI RECEIPTS WERE FILED TO JUSTIFY GENUINENESS OF THE PURCHASES. FURTHER, THE PURCHASE BILLS AND DELIVERY CHALLANS WERE BLANK BILLS WITHOUT ANY MARKING OR SIGNATURE OF THE REPRESENTATIVES AND THE ASSE SSEE FAILED TO PRODUCE PROPER VERIFIABLE DOCUMENTS WHICH COULD PROVE PHYSICAL DELIVERY OF GOODS. MERE PAYMENT BY ACCOUNT PAYEE CHEQUES IS NOT SACROSANCT AND IT WOULD NOT MAKE OTHERWISE NON - GENUINE TRANSACTION AS GENUINE. WHEN, THE ASSESSEE COULD NOT PRODUC E ANY SUPPORTING DOCUMENTS OF THE PURCHASES, AN ADVERSE INFERENCE HAS TO BE DRAWN AGAINST THE ASSESSEE. NO QUANTITATIVE DAY TO DAY INWARD & OUTWARD STOCK REGISTER WAS MAINTAINED BY THE ASSESSEE AND THE PARTIES DID NOT EXIST AT THE PREMISES THE DETAILS OF W HICH WERE FURNISHED BY THE ASSESSEE HIMSELF . AFTER APPLYING SIMILAR OTHER REASONING , CIT (A) CONFIRMED THE STAND OF THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3 . THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT CONTESTED THE REASSESSMENT. THEREF ORE, WE PROCEED TO DECIDE THE MATTER ON MERITS. THE LEARNED COUNSEL FOR THE ASSESSEE [AR] HAS CONTESTED THAT THE AO HAS NOT DISPUTED THE SALES WHEREAS COMPLETE QUANTITATIVE DETAILS HAS BEEN MAINTAINED BY THE ASSESSEE. T HE ASSESSEE IS DEALING IN ONLY ONE IT EM I.E. M.S. PIPES AND THERE IS COMPLETE RECONCILIATION OF QUANTITATIVE DETAILS OF THIS ITEM. IN SUPPORT, HE REFERRED TO THE ASSESSEES PAPER BOOK INTER - ALIA CONTAINING STOCK REGISTER, BANK STATEMENT, COPY OF INVOICES ALONG WITH TRANSPORT RECEIPTS , COMPARA TIVE PROFITABILITY CHART AND VARIOUS AUDITED FINAL STATEMENTS ETC. FILED BEFORE US. HE ARGUED THAT THE BOOKS WERE SUBJECTED TO TAX AUDIT AND THERE WAS NO ADVERSE REMARK WITH RESPECT TO PURCHASES WHICH ARE SUPPORTED BY GENUINE BILLS GIVING 4 ITA NO. 4956 /MUM / 2015 ANJANI STEEL ASSESSMENT YEAR 2009 - 2010 FULL DETAILS OF T HE SUPPLIERS, SUPPORTED BY DELIVERY CHALLANS, TRANSPORT BILLS, ENTRIES INWARD ETC. AND PAYMENT WERE BY ACCOUNT PAYEE CHEQUES WHICH WERE DULY REFLECTED IN THE BANK STATEMENT. THERE IS COMPLETE QUANTITATIVE DETAIL OF PURCHASES AND SALES, GROSS PROFIT IS COMP ARABLE TO EARLIER YEARS AND THUS THE PURCHASES ARE GENUINE. RELIANCE HAS BEEN PLACED ON VARIOUS JUDICIAL PRONOUNCEMENTS. 4 . THE LEARNED DR ON THE OTHER HAND, HAS CONTENDED THAT THE PURCHASES ARE MADE FROM NON - EXISTENT PARTIES AND HENCE, RIGHTLY BEEN TREAT ED THE SAME AS BOGUS PURCHASES AND ADDED TO THE INCOME OF THE ASSESSEE. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. THE ONLY DISPUTE IS WITH REGARD TO THE GENUINENESS OF THE PURCHASES MADE FROM THREE PARTIES. FIRST OF ALL, WE NOTE THAT TIN OF THE ALLEGED SUPPLIERS HAVE BEEN DEACTIVATED BY THE SALES TAX DEPARTMENT, MAHARASHTRA GOVERNMENT DETAILS OF WHICH ARE AS UNDER: - NAME OF THE DEALER DATE OF CANCELLATION OF TIN ENTECH ENTERPRISES 25 - 04 - 2007 SHRITI ENTERPRISES 02 - 02 - 2006 DEEP ENTERPRISES 09 - 03 - 3007 FURTHER, 133(6) NOTICES ISSUED BY THE AO ON THE ADDRESSES PROVIDED BY THE ASSESSEE HIMSELF HAS BEEN RETURNED BACK IN RESPECT OF TWO SUPPLIERS AND THE THIRD SUPPLIER HAS CATEGORICALLY DENIED HAVING UNDERTAKEN THE SAID TRANSACTION. EVEN, THE PHYSICAL VERIFICATION OF THE ACTUAL SITE BY THE INSPECTOR REVEALED THAT THE FIRMS WERE NOT FUNCTIONING AT THAT TIME IN THE SAID PREMISES. THE ASSESSEE WAS ASKED TO PRODUCE THE PARTIES FOR EXAMINATION BUT THE ASSESSEE FAILED TO DO SO DESPITE HAVING BUSINESS RELATION OVER SEVERAL YEARS. PAYMENT THROUGH BANKING CHANNEL IS NOT CONCLUSIVE TO PROVE THE GENUINENESS OF THE PURCHASES RATHER IT IS ONLY ONE OF THE FACTORS TO BE CONSIDERED. UPON CONFRONTATION BY THE BENCH, AR S TATED THAT NO FREI GHT INWARD OR TRANSPORT EXPENDITURE HAS BEEN BOOKED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS AND THEREFORE, NO TDS OR SERVICE TAX HAS BEEN PAID THEREUPON. ON PERUSAL OF THE INVOICES RAISED BY THE ALLEGED BOGUS SUPPLIERS REVEALED THAT CARTAGE CHARGES HAV E NOT BEEN CHARGED IN THE 5 ITA NO. 4956 /MUM / 2015 ANJANI STEEL ASSESSMENT YEAR 2009 - 2010 INVOICES. THE INVOICES BEAR ONLY TRUCK /VEHICLE NUMBER S BUT THE TRANSPORTERS DETAILS ARE MISSING FROM THE INVOICES. THE ABOVE FACTORS RAISE A DOUBT REGARDING GENUINENESS OF THE PURCHASES. THE TRIBUNAL INVARIABLY IN ALL SUCH CASES H AVE TAKEN A STAND THAT EVEN IF THE PURCHASES ARE FOUND TO BE BOGUS, THE ENTIRE ADDITION THEREOF CANNOT BE MADE , PARTICULARLY WHEN SALES ARE NOT DOUBTED BY THE REVENUE AND FOUND C ERTAIN PERCENTAGE OF SUCH BOGUS PURCHASES TO BE A REASONABLE ADDITION TO BE MA DE IN SUCH CASES. THE CASE LAWS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE HAVE BEEN PRONOUNCED ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE WHICH VARIES FROM CASE TO CASE AND CANNOT BE APPLIED ON A STRAIGHT JACKET FORMULA RATHER A VIEW HAS TO BE TAKEN FROM A BROADER ANGLE KEEPING IN VIEW THE PECULIARITY OF THE FACTS AND CIRCUMSTANCES OF EACH CASE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THAT EVEN IF PURCHASES ARE FOUND TO BE BOGUS, THE ENTIRE ADDITION THEREON CANNOT BE SUSTAINED RATHER A DDITION TO THE EXTENT OF 12.5% OF SUCH BOGUS PURCHASES IS REASONABLE IN THE PRESENT CASE OF THE ASSESSEE. WE HOLD SO AND, THEREFORE, RESTRICT THE DISALLOWANCE TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES OF RS.26,14,233/ - . RESULTANTLY, APPEAL OF THE ASSES SEE IS PARTLY ALLOWED. 6 . IN NUTSHELL, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER , 201 6 SD/ - SD/ - ( SAKTIJIT DEY ) ( MANOJ KUMAR AGGAR WAL ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 18 .1 1 .201 6 LAXMIKANT DEKA, SR. PS 6 ITA NO. 4956 /MUM / 2015 ANJANI STEEL ASSESSMENT YEAR 2009 - 2010 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHE ETS ARE ATTACHED 1 0 .11.16 SR.PS/PS 2 DRAFT DICTATED ON 1 0 .11.16 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR 11.11.16 SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/ PS 17.11.16 SR.PS/PS 7 ORDER PRONOUNCEMENT ON 18.11.16 SR.PS/PS 8 FILE SENT TO THE BENCH CLERK 18.11.16 SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER