ITO-3(1)(4), Mumbai V. M/s. Global Instile Solid Industries Ltd, Mumbai

ITA 5023/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3601 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKUL D
• Assessee Lawyers: SANJAY SETHI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , SMC BENCH MUMBAI BEFORE : SHRI M.BALAGANESH, AM & SHRI PAVAN KUMAR GADALE , JM ITA NO. 5023 /MUM/ 20 19 ( ASSESSMENT YEAR : 2011 - 1 2 ) ITO - 3(1)(4), MUMBAI ROOM NO.666, 6 TH FLOOR AAYAK AR BHAVAN M.K.ROAD, MUMBAI - 400020 VS. M/S. GLOBAL INSTILE SOLID INDUSTRIES LTD., 1501, MAKER CHAMBERS V JAMNALAL BAJAJ ROAD NARIMAN POINT, MUMBAI - 400021 PAN/GIR NO. AABCG1174D (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI SANJAY SETHI REVENUE BY SHRI MUKUL D.PANDYA DATE OF HEARING 15 / 02 /202 1 DATE OF PRONOUNCEMENT 17 / 02 /202 1 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5023/MUM/2019 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) - 8, MUMBAI IN APPEAL NO. CIT(A) - 8/IT - 161/2017 - 18 DATED 23/05/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/11/2017 BY THE LD. INC OME TAX OFFICER 3(1)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO . 5023/MUM/2019 M/S. GLOBAL INSTILE SOLID INDUSTRIES LTD., 2 2. THE ONLY EFFECTIVE ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES TO 12.5% OF VALUE THEREOF I N THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GRANITES, MARBLES, SLATE DESIGNER MOSAICS, NATURAL STONE ETC., IT IS NOT IN DISPUTE THAT ASSESSEE HAD MADE CERTAIN PURCHASES TO THE TUNE OF RS.3,71,535/ - FROM M/S. HENIL SALES AGENCY WHOSE NAME APPEARED TO BE A TAINTED DEALER IN THE WEBSITE OF GOVERNMENT OF MAHARASHTRA, SALES TAX DEPARTMENT AND ACCORDINGLY, THE LD. AO SOUGHT TO TREAT THE SAME AS INGENUINE PURCHASES AND MADE DISALLOWANCE OF RS.3,71,535/ - WHILE COMPLETING THE ASSESSMENT. WE FIND THAT ASSESSEE HAD SUBMITTED ALL THE DETAILS PERTAINING TO PURCHASE MADE FROM THE ABOVE P ARTY INCLUDING PURCHASE INVOICES, DELIVERY CHALLANS, EXTRACT OF STOCK REGISTERS, DETAILS EVIDENCING THE PAYMENTS MADE BY ACCOUNT PAYEE CHEQUE ETC., WE FIND THAT THE LD. AO HAD PROCEEDED TO MAKE THIS ADDITION ONE BASED ON THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND ALSO IN VIEW OF THE FACT THAT NOTICE SENT BY HIM U/S.133(6) OF THE ACT OF M/S. HENIL SALES AGENCY COULD NOT BE SERVED AT THE GIVEN ADDRESS AND ASSESSEE ALSO FAILED TO PRODUCE THE PARTY BEFORE HIM. BASED ON THI S, HE DOUBTED THE PURCHASES MADE FROM THE SAID PARTY AND HELD IT TO BE BOGUS AND PROCEEDED TO MAKE ADDITION IN THE ASSESSMENT. THE LD. CIT(A) OBSERVED THAT ASSESSEE COULD HAVE MADE PURCHASES FROM THE GREY MARKET IN ORDER TO HAVE SAVING IN VAT AND MAKING PU RCHASES AT LOWER PRICE. THE LD. CIT(A) OBSERVED THAT IT IS NOT IN DISPUTE THAT THE SALES MADE OUT OF SUCH PURCHASES HAD NOT BEEN DOUBTED ITA NO . 5023/MUM/2019 M/S. GLOBAL INSTILE SOLID INDUSTRIES LTD., 3 BY THE LD. AO AND HENCE, ONLY THE PROFIT PERCENTAGE COULD BE BROUGHT TO TAX @12.5%. 4. AGGRIEVED, THE REVENUE IS IN AP PEAL BEFORE US. 5. WE FIND THAT THE ASSESSEE HAS NOT PREFERRED ANY APPEAL AGAINST THE ORDER OF THE LD. CIT(A) DUE TO SMALLNESS OF THE AMOUNT. THE LD. AR BEFORE US STATED THAT OUT OF THE TOTAL PURCHASES OF RS.5.35 CRORES MADE BY THE ASSESSEE, ONLY THE MIN ISCULE PORTION OF RS.3,71,535/ - WAS FOUND TO BE BOGUS WHICH WORKS OUT TO HARDLY 0 .7% APPROXIMATELY. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE ARGUMENTS ADVANCED BY BOTH THE SIDES AND WE FIND THAT SINCE THE SALES MADE OUT OF ALLEGED PURCHASES HAD NOT BEE N DOUBTED BY THE REVENUE, THE N ONLY PROFIT ELEMENT COULD BE BROUGHT TO TAX THEREON. THIS PROFIT ELEMENT HAS BEEN REASONABLY ESTIMATED BY THE LD. CIT(A) @12.5% BY PLACING RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIM IT P SHETH REPORTED IN 356 ITR 451 ON WHICH WE DO NOT FIND ANY INFIRMITY AND HENCE, WE ARE NOT INCLINED TO INTERFERE IN THE SAME. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER P RONOUNCED ON 17 / 02 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAV AN KUMAR GADALE ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 17 / 02 / 2021 ITA NO . 5023/MUM/2019 M/S. GLOBAL INSTILE SOLID INDUSTRIES LTD., 4 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//