ITO- 27 (1)(4), MUMBAI V. DAIRY UDYOG, MUMBAI

ITA 4969/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0407 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Keywords: Bogus purchase
• Section: 148; 144

Judgement Text

1 ITA NO.4969/MUM/2018 DAIRY UDYOG ASSESSMENT YEAR : 2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4969/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) INCOME TAX OFFICER - 27(1) (4) TOWER 6, 4 TH FLOOR ROOM NO.409, VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400 703. / VS. DAIRY U D YOG C-229A/230A, GHATKOPAR INDL. ESTATE LBS MARG, GHATKOPAR (W) MUMBAI-400 086. ./ ./PAN/GIR NO. AACFD-7661-G ( /APPELLANT ) : ( / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : NONE ' #$ / DATE OF HEARING : 09/09/2019 ' #$ / DATE OF PRONOUNCEMENT : 09/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24 2 ITA NO.4969/MUM/2018 DAIRY UDYOG ASSESSMENT YEAR : 2009-10 MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-24/IT- 530/463/ITO-27(1)(4)/2017-18 DATED 24/05/2018 QUA DELETION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE GROUNDS RAISED BY REVENUE READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.61,239/- MADE BY THE AS SESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMENTARY EVIDE NCES IN SUPPORT OF HIS CLAIM AND WITHOUT CONSIDERING THE LATEST APEX COURT DECIS ION IN THE CASE OF N K PROTEIN LTD. WHEREIN IT IS HELD THAT ONCE IT IS PROVED THAT THE PURCHASES ARE BOGUS THEN ADDITION SHOULD BE MADE ON ENTIRE PURCHASES AND NOT ON PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASES BY DISALLOWING ONL Y RS.8,748/- BEING 12.5% OF THE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PRODU CING TRANSPORT BILLS, DELIVERY CHALLANS ETC. WERE NOT FULFILLED BY THE ASSESSEE. NONE HAS APPEARED FOR ASSESSEE AND THEREFORE, THE M ATTER IS PROCEEDED WITH EX-PARTE QUA THE ASSESSEE. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM WAS ASSESSED FOR IMPUGNED AY U/S. 144 R.W.S. 147 WH EREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8.31 LACS, INTER-ALIA, AFTER ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.0.69 LACS AS AGAINST RETURNED INCOME OF RS.5.10 LACS FILED BY THE ASSESSEE ON 23/09/2009 WH ICH WAS PROCESSED U/S.143(1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRAN SPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHASES TO THE TUNE OF RS.0.69 LACS FROM AN ENTITY NAMELY M/S VINAYAK SALES CORPORATION . ACCORDINGLY, AS PER 3 ITA NO.4969/MUM/2018 DAIRY UDYOG ASSESSMENT YEAR : 2009-10 DUE PROCESS OF LAW, RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 ON 2 9/03/2014 WHICH REMAINED UN-RESPONDED TO BY THE ASSESSEE. CONSEQUEN TLY, THE ASSESSMENT WAS FRAMED ON BEST JUDGMENT BASIS U/S 144 AND THE STATED PURCHASES WERE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. 2.3 THE LEARNED FIRST APPELLATE AUTHORITY, AFTER CO NSIDERING ASSESSEES SUBMISSIONS AND RELYING UPON THE DECISION OF HONBL E GUJARAT HIGH COURT RENDERED IN CIT V/S SIMIT P. SHETH [356 ITR 451] RESTRICTED THE ADDITION TO 12.5% OF DISPUTED PURCHASES WHICH CAME TO RS.8,748/ - AND DELETED THE BALANCE ADDITIONS. AGGRIEVED, THE REVENUE IS IN FUR THER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE IS NOT IN FURTHER APPEAL. 3. WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY LD. DR. 4. WE ARE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASS ESSEES NATURE OF BUSINESS. AS NOTED BY FIRST APPELLATE AUTHORITY, TH E ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER R EFLECTED BY THE ASSESSEE HAS NOT BEEN DISTURBED / DISPUTED BY LD. A O. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTAN TIATE THE PURCHASES DURING ASSESSMENT PROCEEDINGS WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSMENT WAS FRAMED U/S 144. UNDER SUCH CIRCUMSTA NCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY M ARKET AND UNDUE BENEFIT 4 ITA NO.4969/MUM/2018 DAIRY UDYOG ASSESSMENT YEAR : 2009-10 OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRS T APPELLATE AUTHORITY HAS RIGHTLY DONE. THEREFORE, CONCURRING WITH THE AP PROACH OF LEARNED FIRST APPELLATE AUTHORITY IN RESTRICTING THE ADDITIONS TO 12.5%, WE DISMISS THE APPEAL. SO FAR AS THE DECISION OF HONBLE GUJARAT H IGH COURT RENDERED IN N.K. INDUSTRIES LTD. VS DCIT [72 TAXMANN.COM 289] IS CONCERNED, WE FIND THAT THE FACTS OF THAT CASE HAS ALREADY BEEN D ISTINGUISHED BY HONBLE BOMBAY HIGH COURT IN PR.CIT VS. M/S MOHOMMAD HAJI ADAM & CO. [ITA NO.1004 & OTHERS OF 2016, DATED 11/02/2019] WHEREIN HONBLE COURT HAS APPROVED THE ESTIMATION, ON SIMILAR FACTUAL MATRIX, BASED ON GROSS PROFIT RATE. 5. IN RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 09/09/2019 SR.PS:-JAISY VARGHESE / 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 FILE 5 ITA NO.4969/MUM/2018 DAIRY UDYOG ASSESSMENT YEAR : 2009-10 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.