ACIT - 27(1), NAVI MUMBAI V. BHAGWATI INTERIORS, MUMBAI

ITA 4979/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0408 (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: 2012-2013
• Appeal Filed On: 27-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH RAJHANSLD
• Assessee Lawyers: PRATEEK JAINLD
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

1 ITA NO.4979/MUM/2018 A.Y. 2012-13 M/S. BHAGWATI INTERIORS - 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.4979/MUM/2018 ( / ASSESSMENT YEAR:2012-13 ) A CIT - 27(1) TOWER 6, 4 TH FLOOR ROOM NO.415 VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400 703. / VS. M/S. BHAGWATI INTERIORS 55/B, WAMAN TUKARAM PATIL MARG OPP. AMAR CINEMA, NEAR STAR GARAGE GOVANDI-E MUMBAI-400 088. ./ ./PAN/GIR NO. AAGFB-8358-N ( /APPELLANT ) : ( / RESPONDENT ) REVENUE BY : SHRI ASHUTOSH RAJHANS-LD.DR ASSESSEE BY : SHRI PRATEEK JAIN-LD.AR ' #$ / 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] 2012-13 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24 2 ITA NO.4979/MUM/2018 A.Y. 2012-13 M/S. BHAGWATI INTERIORS MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-24/IT- 150/256/AC-27(1)/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.4,48,016/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT T HAT 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.64,002/- 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. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED AS CONTRACTOR, WAS ASSESSED FO R IMPUGNED AY U/S. 143(3) ON 19/03/2015 4 R.W.S. 147 WHEREIN THE INCOM E OF THE ASSESSEE WAS DETERMINED AT RS.4.83 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.5.12 LACS AS AGAINST RETURNED LOSS OF RS.0.2 8 LACS FILED BY THE ASSESSEE ON 31/03/2014. 2.2 UPON PERUSAL OF PURCHASES MADE BY THE ASSESSEE, IT TRANSPIRED THAT THE ASSESSEE MADE AGGREGATE PURCHASE OF RS.5.12 LAC S FROM TWO ENTITIES WHICH WERE LISTED AS SUSPICIOUS HAWALA DEALERS BY S ALES TAX DEPARTMENT. THE ASSESSEE FAILED TO PRODUCE ANY OF THE PARTY TO SUBSTANTIATE THE PURCHASE TRANSACTIONS WHICH LED LD. AO TO DISALLOW THESE PURCHASES AND ACCORDINGLY THE SAME WERE ADDED TO THE INCOME OF TH E ASSESSEE. 3 ITA NO.4979/MUM/2018 A.Y. 2012-13 M/S. BHAGWATI INTERIORS 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.64,002 /- 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. THE RESPECTIVE REPRESENTATIVES HAVE ADVANCED ARG UMENTS, WHICH WE HAVE DULY CONSIDERED. 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 PRODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEME NT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPEL LATE AUTHORITY HAS RIGHTLY DONE. THEREFORE, CONCURRING WITH THE APPROACH OF LE ARNED FIRST APPELLATE AUTHORITY IN RESTRICTING THE ADDITIONS TO 12.5%, WE DISMISS THE APPEAL. SO FAR AS THE DECISION OF HONBLE GUJARAT HIGH COURT RENDE RED IN N.K. INDUSTRIES LTD. VS DCIT [72 TAXMANN.COM 289] IS CONCERNED, WE FIND THAT THE FACTS 4 ITA NO.4979/MUM/2018 A.Y. 2012-13 M/S. BHAGWATI INTERIORS OF THAT CASE HAS ALREADY BEEN DISTINGUISHED BY HON BLE BOMBAY HIGH COURT IN PR.CIT VS. M/S MOHOMMAD HAJI ADAM & CO. [ITA NO.100 4 & OTHERS OF 2016, DATED 11/02/2019] WHEREIN HONBLE COURT HAS APPROVED THE ESTIMATION, ON SIMILAR FACTUAL MATRIX, BASED ON GRO SS 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 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.