DCIT CEN CIR 3(3), MUMBAI V. PAG INTERNATIONAL P. LTD, MUMBAI

ITA 5033/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0121 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3); 133(6); 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 5033 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 0 9 - 10 ) DY. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE - 3(3), R OOM . NO. 401, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S PAG INTERNATIONAL PVT LTD., 6 0 - 62 KIKA STREET, GULALWADI, MUMBAI - 400004 ( / APPELLANT ) .. ( / RE SPONDENT ) ./PAN NO. : AACCP6936H / APPELLANT BY: WRITTEN SUBMISSION BY DR / RESPONDENT BY SHRI RYAN SALDANAH / DATE OF HEARING : 6 .7. 201 7 / DATE OF PRONOUNCEMENT : 28. 8. 201 7 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 5 1 , MUMBAI D A T ED 30.7. 2015 PERTAINING TO A.Y. 20 0 9 - 10. 2 . THE ONLY ISSUE INVOLVED IN THE APPEAL IS AGAINST THE DELETION OF ADDITION BY THE LD.CIT(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES FROM M/S SAMAY SALES CORPORATION. 3. FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 2 6. 9.20 09 DECL ARING TOTAL INCOME OF RS. 1,30,370/ - . THE ASSESSMENT WAS FRAMED VIDE ORDER DATED 12.12.2011 U/S 143(3) OF THE ACT ASSESSING THE TOTAL INCOME AT RS.1,77,360/ - . THEREAFTER, THE AO RECEIVED THE INFORMATION FROM THE ITA NO . 5033 / M/1 5 2 SALES TAX DEPARTMENT, MUMBAI, THAT THE ASSESSEE HAS MADE BOGUS PURCHASES AMOUNTING TO RS.68,54,885/ - FROM M/S SAMAY SALES CORPORATION WHICH WAS A HAWALA PARTY AND PROVIDING ACCOMMODATION ENTRIES OF BOGUS PURCHASES. ACCORDINGLY, THE AO ISSUED NOTICE UNDER SECTION 148 OF THE ACT . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM M/S SAMAY SALES CORPORATION. IN RESPONSE TO THE EXPLANATION CALLED FOR BY THE AO, THE ASSESSEE SUBMITTED THE CO PIES OF BILLS AND VOUCHERS, RECEIP TS OF VAT PAID AND DETAILS OF PURCHASES ETC . HOWEVER, COULD NOT PRODUCE THE CONFIRMATION FROM THE SAID HAWALA PARTY. MOREOVER, THE NOTICES SENT U/S 133(6) OF THE ACT WERE RETURNED UNSERVED . THE AO UPON NOT BEING CONVINCED WITH THE EXPLANATION RENDERED B Y THE ASSESSEE DISALLOWED THE ENTIRE PURCHASE U/S 69C OF THE ACT BY FRAMING THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 21.3.2014 ASSESS ING THE TOTAL INCOME OF THE ASSESSEE AT RS.70,32,250/ - . 4. IN THE APPELLATE PROCEEDINGS, THE LD .CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS DULY PRODUCED ALL THE RELEVANT DOCUMENTS , DULY RECORDED THE TRANSACTIONS IN THE BOOKS OF ACCOUNT , FURNISHED STOCK REGISTER , PURCHASE AND SALES TALLY REGISTER . THE LD. CIT(A) ALSO O BSERVED THAT THE AO DID NOT DOUBT THE BOOKS OF ACCOUNTS AND ACCEPTED THE SAME AND AND CONSEQUENTLY DELETED THE ADDITION BY FOLLOWING HIS PREDECESSORS ORDER FOR THE ASSESSMENT YEAR 2010 - 11 IN WHICH THE SIMILAR ADDITION WAS ALTOGETHER DELETED. AGGRIEVED B Y THE ORDER OF FAA, THE REVENUE IS IN APPEAL BEFORE US. ITA NO . 5033 / M/1 5 3 5 . WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS AVA ILED HAWALA ACCOMMODATION ENTRIES OF BOGUS PURCHASES OF RS.68,54,885/ - FROM M/S SAMAY SALES CORPORATION AND COULD NOT PRODUCE THE CONFIRMATION BEFORE THE AO TO PROVE THE GENUINENESS OF THE PURCHASES. EVEN, THE NOTICE SENT U/S 133(6) OF THE ACT WERE RE TUR NED UNSERVED. IN SUCH A CIRCUMSTANCES, THE PLAUSIBLE PRESUMPTION IS THAT THE ASSESSEE MIGHT HAVE PURCHASED THE MATERIAL FROM THE GRAY MARKET THEREBY MAKING SAVINGS OF VAT AND OTHER RELEVANT TAXES. UNDER SUCH FACTS , VARIOUS BENCHES OF THE TRIBUNAL HAVE DECIDED AND UPH E LD THE ADDITION AT THE RATE OF 12.5% OF THE TOTAL BOGUS PURCHASES. THEREFORE, TO MAINTAIN CONSISTENCY WITH THE TRIBUNAL ORDER S , WE DIRECT THE AO TO APPLY 12.5% GP TO COVER THE LEAKAGE OF REVENUE. THE AO IS DIRECTED ACCORDINGLY. 6 . IN THE RES U LT THE APPEAL OF THE REVENUE IS PARTLY ALLOWED TO THE EXTENT MENTIONED ABOVE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28TH AUG, 2017 . 28TH AUG , 2017 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOU NTANT MEMBER MUMBAI: 28. 8. 2017 . . ./ SRL , SR. PS ITA NO . 5033 / M/1 5 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI