SANSKAR STEEL CENTRE, MUMBAI V. INCOME TAX OFFICER-19(3)(2), MUMBAI

ITA 5003/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8158 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 21-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Non compliance
• Section: 142(1); 144

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO. 5003/MUM/2017 ( / ASSESSMENT YEAR: 2009 - 10 ) M/S. SANSKAR STEEL CENTRE 5 TH FLOOR, 502, GANESH DARSHAN, 9 TH KHETWADI LANE, MUMBAI - 40 0004 / VS. INCOME - TAX OFFICER, 19(3)(2) MATRUMANDIR, TARDEO ROAD, MUMBAI - 400 007 ./ ./ PAN/GIR NO. AAYFS 3752 P ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. RUTUJA N. PAWAR / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 12.10.2017 / DATE OF PRONOUNCEMEN T : 12.12 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: T HIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.05.2017 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. 2. T HE ISSUE RAISED IS THAT THE LD . COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN SUSTAINING DISALLOWANCE OF 100% OF BOGUS PURCHASE AMOUNTING TO RS.44,70,927/ - . 2 ITA NO. 5003/MUM/2017 (A.Y. 2009 - 10) M/S. SANSKAR STEEL CENTRE VS. ITO 3. IN THIS CASE , THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 ON 12.8.2009 DECLARING TOTAL INCOME OF RS.2 0,506/ - . THE RETURN WAS PROCESSED U/S. 143(1) OF THE I. T. ACT. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE DGIT (INV.) WING, MUMBAI THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM THE EIGHT PARTIES TO THE TUNE OF RS.44,70,927/ - . THE CASE WAS RE - OPENED AND NOTICE U/S. 143(2) AND 143(1) WERE ISSUED. NOTICE U/S. 142(1) DATED 17.7.2014 WAS DISUSED AND DULY SERVED ON THE ASSESSEE. SUBSEQUENTLY, ON THE CHANGE OF JURISDICTION, A FRESH NOTICE U/S. 142(1) WAS ISSUED ON 16.12.2014 AND DULY SERVED ON THE ASSESSEE . IN RESPONSE TO THE SAID NOTICES, NO ONE ATTENDED. DURING THE COURSE OF HEARING, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO FILE NECESSARY DETAILS/DOCUMENTS/BILLS/VOUCHERS ETC. OF THE PURCHASES MADE FROM THE ALLEGED HAWALA PARTIES AND ALSO DETAILS OF THE CORRESPONDING SALES OF THE GOODS SO AS TO LINK THE PURCHASES WITH SALES SUPPORTED BY BILLS AND VOUCHERS. THE ASSESSING OFFICER ALSO CONDUCTED INDEPENDENT ENQUIRIES/INVESTIGATIONS UNDER THE I. T. ACT AND DULY CONFRONTED THE ASSESSEE WITH THE SAME. HOWEVER, THERE WAS NO RESPONSES FROM THE ASSESSEE. IN VIEW OF THIS UTTER NON COMPLIANCE AND THE ASSESSMENT GETTING TIME BARRED BY LIMITATION ON 31.3.2015, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE INITIAL BURDEN OF ESTABLISHING THE GENUINENESS OF THE PURCHASES MADE BY IT AND ADDED TO THE INCOME OF THE ASSESSEE TOTAL NON - GENUINE PURCHASES OF RS.44,70,927/ - AND COMPLETED THE ASSESSMENT U/S. 144 R.W.S. 147 OF THE I. T. ACT. 3 ITA NO. 5003/MUM/2017 (A.Y. 2009 - 10) M/S. SANSKAR STEEL CENTRE VS. ITO 4 . A GAINST THE ABOVE ORDER , THE ASSESSEE APP EALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5 . AGAINST THE ABOVE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFOR E THE ITAT. 6 . I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PART IES TO OBTAINED BOGUS BILLS. THE ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RELA TING TO REOPENING REMAINS UN - ASSAILED. IN SUCH FACTUAL SCENARIO, THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PAR TY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO, IT IS AMPLY CLEAR THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREP ARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS IS BOGUS AND NON - EXISTENT. 4 ITA NO. 5003/MUM/2017 (A.Y. 2009 - 10) M/S. SANSKAR STEEL CENTRE VS. ITO 7 . HOWEVER, I NOTE THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE FACTS OF THAT CASE WERE A LITTLE DIFFERENT , AS T HE SALES IN THAT CASE WERE BASICALLY TO GOVERNMENT DEPARTMENTS. 8 . IN THE PRESENT CASE, I FIND THAT SALES HAVE NOT BEEN DOUBTED. SO 100% DISALLOWANCE OF PURCHASES IS NOT SUSTAINABLE . FA CTS OF THE CASE INDICATING THAT THE ASSESSEE HAS MADE PURCHASES FROM THE GREY MARKET, OPERATING IN THE GRAY MARKET GIVES THE ASSESS EE VARIOUS SAVINGS AT THE EXPENSE O F THE EXCHEQUER. HENCE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT DISALLOWANCE OF 12. 5 % OF THE PURCHASE WOULD MEET THE END OF JUSTICE. I DIRECT ACCORDINGLY . 9. THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THIS PROPOSITION. 1 0 . IN THE RESULT , THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.12.2017 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 12.12.2017 . . ./ ROSHAN I , SR. PS 5 ITA NO. 5003/MUM/2017 (A.Y. 2009 - 10) M/S. SANSKAR STEEL CENTRE VS. ITO / 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. REGIST RAR) , / ITAT, MUMBAI