DCIT - CIRCLE - 2, THANE V. TEAM ENGINEERS PVT. LTD., THANE

ITA 5063/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0613 (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: 2011-2012
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: SUBHASH JALANLD
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5063/MUM/2018 A.Y.2011-12 TEAM ENGINEERS PRIVATE LIMITED - 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. 5063/MUM/2018 ( / ASSESSMENT YEAR:2011-12 ) D CIT - CI RCLE - 2, THANE ROOM NO.27, B-WING ASHAR IT PARK WAGLE INDL ESTATE,ROAD NO.16Z THANE-400 604. / VS. M /S. TEAM ENGINEERS P RIVATE L IMITED BLOCK-F, VISHAL INDUSTRIES COMPLEX WESTERN EXPRESS HIGHWAY GHODBUNDER VILLAGE RD., MIRA RD. DIST THANE 401 104. '# ./ ./PAN/GIR NO. AABCT-4850-B ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : SHRI SUBHASH JALAN-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] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, 2 ITA NO.5063/MUM/2018 A.Y.2011-12 TEAM ENGINEERS PRIVATE LIMITED THANE [IN SHORT REFERRED TO AS CIT(A)], ITA NO.822/2014-15 DATED 26/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE LAW CORRECTLY THA T ONCE THE PURCHASES ARE UNVERIFIABLE/NOT GENUINE/BOGUS, THE SAME SHOULD HAVE BEEN DISALLOWED IN ENTIRETY?'. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW BY NOT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASES FROM THE NON-EXISTENT VENDORS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN LAW BY NOT APPRECIATING THE FACT THAT THE ONUS T O JUSTIFY THE CLAIM OF EXPENSES IS ON THE ASSESSEE AND THE SAME HAS FAILED TO DISCHARGE IT IN RELATION TO THE PURCHASES MADE FROM THE NON-EXISTENT VENDORS? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) HAS ERRED IN LAW BY IGNORING, THE FACT THAT THE ASSESSE E COULD NOT SUBSTANTIATE ITS CLAIM OF PURCHASES FROM NON-EXISTENT VENDORS BY MEANS OF RELEVANT SUPP ORTING DOCUMENTS RELATED TO MOVEMENT AND DELIVERY OF GOODS, STOCK REGISTER, ETC. TO ARRIVE A T DISALLOWANCE AT 50% OF THE PURCHASES FROM THE NON-EXISTENT VENDORS? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS WAS JUSTIFIED IN NOT APPRECIATING THE LAW CORRECTLY THA T ONCE THE PURCHASES ARE UNVERIFIABLE / NOT GENUINE / BOGUS, THE SAME SHOULD HAVE DISALLOWED IN ENTIRET Y, PARTICULARLY IN VIEW OF THE RATIO OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN TAX A PPEAL NO. 242 OF 2003 DATED 20/06/2016 IN THE CASE OF N. K. PROTEINS LTD. AGAINST WHICH THE SLP W AS DISMISSED BY THE HON'BLE APEX COURT?. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED AS ENGINEER S & CONTRACTORS WAS ASSESSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX AC T, 1961 ON 27/10/2014 WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.3.28 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. PURSUANT TO REC EIPT OF CERTAIN INFORMATION, IT TRANSPIRED THE ASSESSEE MADE PURCHA SES OF RS.3.28 LACS FROM 2 ENTITIES, THE DETAILS OF WHICH HAS ALREADY B EEN EXTRACTED IN THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, AS PER DUE P ROCESS OF LAW, THE CASE WAS REOPENED VIDE ISSUANCE OF NOTICE U/S 148 O N 19/07/2013 FOLLOWED 3 ITA NO.5063/MUM/2018 A.Y.2011-12 TEAM ENGINEERS PRIVATE LIMITED BY STATUTORY NOTICES U/S 143(2) & 142(1), WHEREIN T HE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASES. 2.2 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, H OWEVER, NOTICES ISSUED U/S 133(6) TO BOTH THE SUPPLIERS REMAINED UN -SERVED AS WELL UN- RESPONDED TO. THE ASSESSEE ALSO FAILED TO PRODUCE A NY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. RESULTANTLY, THESE PURCHA SES WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE LEARNED FI RST APPELLATE AUTHORITY, FINDING THAT CORRESPONDING SALES WERE MADE BY THE A SSESSEE, RESTRICTED THE IMPUGNED ADDITIONS TO 50%. AGGRIEVED, THE REVENUE I S IN FURTHER APPEAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT PRE FERRED ANY FURTHER APPEAL. 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. THE ASSESSEE PROVIDED CORRESPONDING SALES MADE AGAI NST THESE PURCHASES. IT TRANSPIRES THAT THE ASSESSEE WAS IN P OSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO SUPPLIERS WE RE THROUGH BANKING CHANNELS. THE SALES TURNOVER REFLECTED BY THE ASSES SEE HAS NOT BEEN DISTURBED / DISPUTED BY LD. AO. HOWEVER, AT THE SAM E TIME, THE ASSESSEE MISERABLY FAILED TO PRODUCE ANY OF THE SUPPLIER. UN DER SUCH CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WAS TO ACCO UNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN T HE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE. THEREFORE, CO NCURRING WITH THE 4 ITA NO.5063/MUM/2018 A.Y.2011-12 TEAM ENGINEERS PRIVATE LIMITED APPROACH OF LEARNED FIRST APPELLATE AUTHORITY IN RE STRICTING THE ADDITIONS TO THE EXTENT OF 50%, 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.