ACIT - 17 (1), MUMBAI V. BHARAT TRADING CO., MUMBAI

ITA 5048/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8842 (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: 2009-2010
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: HARESH P SHAH LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5048/MUM/2018 A.Y.2009-10 M/S BHARAT TRADING CO. - 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. 5048/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) THE ACIT - 17(1) ROOM NO.117, AAYKAR BHAVAN M.K. MARG MUMBAI-400 020. / VS. M/S. BHARAT TRADING CO. 112, SAGAR AVENUE, OPP. SHOPPERS STOP ABOVE ICICI BANK, S.V. ROAD, ANDHERI (W) MUMBAI-400 058 '# ./ ./PAN/GIR NO. AAAFB-5451-G ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD. DR ASSESSEE BY : SHRI HARESH P.SHAH-LD. AR / 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] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-55, 2 ITA NO.5048/MUM/2018 A.Y.2009-10 M/S BHARAT TRADING CO. MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-55/ACIT- 17(1)/IT-410/17-18 DATED 14/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN REDUCING THE DISALLOWANCE AT 8% AS AGAINST 12.50 % ADOPTED BY THE A.O. IN RESPECT OF BOGUS PURCHASES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN THE BUSINESS OF IRON & STEE L WAS ASSESSED U/S 143(3) R.W.S 147 OF INCOME TAX ACT, 1961 ON 16/03/2 015 WHEREIN THE ASSESSEE WAS SADDLED WITH ESTIMATED ADDITIONS OF RS .1.14 LACS ON ACCOUNT OF SUPPRESSION OF PROFIT IN LIEU OF INFLATED PURCHA SES. PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION), IT T RANSPIRED THE ASSESSEE MADE PURCHASES OF RS.9.13 LACS FROM 2 ENTITIES, THE DETAILS OF WHICH HAS ALREADY BEEN EXTRACTED IN THE QUANTUM ASSESSMENT OR DER. ACCORDINGLY, AS PER DUE PROCESS OF LAW, THE CASE WAS REOPENED VIDE ISSUANCE OF NOTICE U/S 148 ON 27/03/2014 FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1), WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE T HE PURCHASES. 2.2 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, H OWEVER, NOTICES ISSUED U/S 133(6) TO BOTH THE ENTITIES REMAINED UN- SERVED / UN-RESPONDED TO AND THE ASSESSEE ALSO FAILED TO PRODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. RESULTANTLY, THE ASSESSEE WAS SADDLED WITH ESTIMATED ADDITIONS OF 12.5% AGAINST THESE PURCHASES. THE LEA RNED FIRST APPELLATE AUTHORITY REDUCED THE ESTIMATE TO 8%, AGAINST WHICH THE REVENUE IS UNDER APPEAL BEFORE US. WE HAVE HEARD AND CONSIDERED THE RIVAL SUBMISSIONS. 3 ITA NO.5048/MUM/2018 A.Y.2009-10 M/S BHARAT TRADING CO. 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. NOTICES I SSUED U/S 133(6) REMAINED UN-RESPONDED TO. UNDER SUCH CIRCUMSTANCES, THE ADDI TIONS WHICH COULD BE SUSTAINED, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDD ED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSE SSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE B ENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPELLATE AUT HORITY HAS RIGHTLY DONE. IT IS NOTED THAT THE ASSESSEE IS ENGAGED IN PRICE SENS ITIVE COMMODITY LIKE IRON & STEEL AND THEREFORE, CONCURRING WITH THE APPROACH OF LEARNED FIRST APPELLATE AUTHORITY IN RESTRICTING THE ADDITIONS TO 8%, 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 4 ITA NO.5048/MUM/2018 A.Y.2009-10 M/S BHARAT TRADING CO. 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.