ACIT - 17 (1), MUMBAI V. HOMA ENGINEERING WORKS, MUMBAI

ITA 5047/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0614 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: ADJOURNMENT APPLICATION DATED
• Keywords: Bogus purchase
• Section: 143(3); 131

Judgement Text

1 ITA NO.5047/MUM/2018 A.Y.2010-11 HOMA ENGINEERING WORKS - 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. 5047/MUM/2018 ( / ASSESSMENT YEAR:2010-11 ) ACIT - 17(1) ROOM NO.117, AAYKAR BHAVAN M.K.MARG MUMBAI-400 020. / VS. M/S. HOMA ENGINEERING WORKS 504-506, TRAPINEX HOUSE 15, SHOLAPUR STREET MASJID BUNDER, MUMBAI-400 009 '# ./ ./PAN/GIR NO. AAAFH-0860-K ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : ADJOURNMENT APPLICATION DATED 13/09/2019 / DATE OF HEARING : 16/09/2019 / DATE OF PRONOUNCEMENT : 16/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 201-011 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-56, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)- 2 ITA NO.5047/MUM/2018 A.Y.2010-11 HOMA ENGINEERING WORKS 56/ADDL.CIT(RANGE)-13(1)/2017-18 DATED 25/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN REDUCING THE DISALLOWANCE AT 14.08% AS AGAINST 1 00% ADOPTED BY THE A.O. IN RESPECT OF BOGUS PURCHASES. KEEPING IN VIEW THE SUBJECT MATTER OF THE APPEAL, T HE ADJOURNMENT APPLICATION FILED BY THE ASSESSEE WAS REJECTED BY T HE BENCH. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED AS CONTRACTORS WAS ASSESSED U/ S 143(3) OF THE INCOME TAX ACT, 1961 ON 28/03/2013 WHEREIN THE ASSE SSEE WAS SADDLED WITH ADDITIONS OF RS.20.85 LACS ON ACCOUNT OF ALLEG ED BOGUS PURCHASES. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT T HE ASSESSEE MADE AGGREGATE PURCHASES OF RS.20.85 LACS FROM 7 ENTITIE S, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PARA-4.1 OF THE QUAN TUM ASSESSMENT ORDER. THESE PARTIES, AS PER INFORMATION FROM SALES TAX DE PARTMENT, MAHARASHTRA, WERE SUSPICIOUS DEALERS WHO ISSUED FALSE BILLS WITH OUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE FAILED TO PROVIDE THE WHEREABOU TS OF THE PARTIES. THE STATEMENT U/S 131 WAS RECORDED FROM DIRECTOR OF THE ASSESSEE COMPANY. ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, HOWEV ER, FINDING DISCREPANCIES IN THE DOCUMENTARY EVIDENCES AND RELY ING UPON THE INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTME NT, THE AFORESAID 3 ITA NO.5047/MUM/2018 A.Y.2010-11 HOMA ENGINEERING WORKS PURCHASES WERE TREATED AS BOGUS PURCHASES AND ADDED TO THE INCOME OF THE ASSESSEE. 2.2 THE FIRST APPELLATE AUTHORITY, INTER-ALIA, RELYING UPON VARIOUS JUDICIAL PRECEDENTS, RESTRICTED THE IMPUGNED ADDITIONS TO 14 .08%, BEING THE GROSS PROFIT RATE REFLECTED BY THE ASSESSEE. AGGRIEVED, T HE REVENUE IS IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT APPEALED ANY FURTHER. WE HAVE HEARD AND CONSIDERED THE SUBMISSI ONS MADE BY LD. DR. 3. WE ARE OF THE CONSIDERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. IT TRANSPIRES THAT THE ASSESSEE WAS IN POSSESSION OF P RIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO SUPPLIERS WERE THROUG H BANKING CHANNELS. THE SALES TURNOVER REFLECTED BY THE ASSESSEE HAS NO T BEEN DISTURBED / DISPUTED BY LD. AO. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO PROVE THE DELIVERY OF MATERIAL AND COULD NOT PROVIDE WHEREABOUTS OF ANY OF THE SUPPLIER. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMB EDDED 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 4 ITA NO.5047/MUM/2018 A.Y.2010-11 HOMA ENGINEERING WORKS AUTHORITY IN RESTRICTING THE ADDITIONS TO THE EXTEN T OF GROSS PROFIT RATE REFLECTED BY THE ASSESSEE, WE DISMISS THE APPEAL. 4. IN RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 16/09/2019 SR.PS:-JAISY VARGHESE #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT CONCERNED 5. /0 &)1 , 1 , / DR, ITAT, MUMBAI 6. 0234 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.