ITO, WD - 3(3), KALYAN V. MUKESH DIPCHAND, MUMBAI

ITA 5098/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6041 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: LAJARI OSWALLD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5098-99/MUM/2018 SHRI MUKESH DIPCHAND ASSESSMENT YEARS 2009-10 & 2011-12 - 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.5098/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) & ./ I.T.A. NO.5099/MUM/2018 ( / ASSESSMENT YEAR:2011-12 ) INCOME TAX OFFICER - WARD - 3(3) - KALYAN 2 ND FLOOR, RANI MANSION MURBAD ROAD, KALYAN (W)-421 301. / VS. SHRI MUKESH DIPCHAND DOSHI 201, RAJ DARSHAN SARVODAYA NAGAR MULUND WEST, MUMBAI-400 080. !'#$ ./ ./PAN/GIR NO. AABPD 8994 P ( #$ /APPELLANT ) : ( %&#$ / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI-LD.DR ASSESSEE BY : MS. LAJARI OSWAL-LD. AR / DATE OF HEARING : 18/09/2019 / DATE OF PRONOUNCEMENT : 03/10/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR S [IN SHORT REFERRED TO AS AY] 2009-10 AND 2011-12 CONTEST COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, THANE, [IN SHORT REFERRE D TO AS CIT(A)], APPEAL 2 ITA NO.5098-99/MUM/2018 SHRI MUKESH DIPCHAND ASSESSMENT YEARS 2009-10 & 2011-12 NO. ITA NO.127 & 1000/14-15 D ATED 20/06/2018. THE GROUNDS RAISED IN AY 2009-10 READ AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE LAW CO RRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE/NOT GENUINE /BOGUS, THE SAME SHOULD HA VE BEEN DISALLOWED IN ENTIRETY?' 1 . 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 FAC T 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 FAC T THAT THE ONUS TO 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 ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF PURCHASES FROM NON-EXISTENT VENDORS BY MEA NS OF RELEVANT SUPPORTING DOCUMENTS RELATED TO MOVEMENT AND DELIVERY OF GOODS , STOCK REGISTER, ETC. TO ARRIVE AT DISALLOWANCE AT 25% OF THE PURCHASES FROM THE NON-E XISTENT VENDORS? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) HAS WAS JUSTIFIED IN NOT APPRECIATING THE LA W CORRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE / NOT GENUINE / BOGUS, THE SAME SH OULD HAVE DISALLOWED IN ENTIRETY, PARTICULARLY IN VIEW OF THE RATIO OF THE DECISION O F THE HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO. 242 OF 2003 DATED 20/06/2016 IN THE CASE OF N. K. PROTEINS LTD. AGAINST WHICH THE SLP WAS DISMISSED BY THE HON'BLE APEX COU RT?. 6. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES. 2.1 FACTS FOR AY 2009-10 IN BRIEF, ARE THAT THE ASS ESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF IRON & STEEL UNDER PROPRIETORSHIP CONCERN NAMELY M/S VARDHMAN STEEL CO RPORATION, WAS ASSESSED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 05/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.9.9 8 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.7.75 LACS AS AGAINST RETURNED 3 ITA NO.5098-99/MUM/2018 SHRI MUKESH DIPCHAND ASSESSMENT YEARS 2009-10 & 2011-12 INCOME OF RS.2.22 LACS FILED BY THE ASSESSEE ON 25/ 09/2009 WHICH WAS PROCESSED U/S.143(1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRAN SPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ALLEGED BOGUS PURCHASES TO THE TUNE OF RS.7.75 LACS FROM 2 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, AS PER DUE P ROCESS OF LAW, RE- ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE A SSESSEE U/S 147 BY ISSUANCE OF NOTICE U/S 148 FOLLOWED BY STATUTORY NO TICES U/S 143(2) & 142(1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE T HE PURCHASE TRANSACTIONS. 2.3 ALTHOUGH, THE ASSESSEE DEFENDED THE PURCHASES, HOWEVER, NOTICE ISSUED U/S 133(6) TO CONFIRM THE TRANSACTIONS, REMA INED UN-RESPONDED TO AND THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPL IER TO CONFIRM THE TRANSACTIONS. THEREFORE, THE BOOKS WERE REJECTED U/ S 145(3) AND THE STATED PURCHASES WERE ADDED TO THE INCOME OF THE ASSESSEE. 2.4 THE LD. CIT(A), AFTER CONSIDERING ASSESSEES SU BMISSIONS, VARIOUS JUDICIAL PRONOUNCEMENTS, MATERIAL ON RECORD AND AFT ER APPRECIATING THE GROSS PROFIT / NET PROFIT TRENDS FOR VARIOUS YEARS, RESTRICTED THE ADDITIONS TO 25% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVE NUE IS IN FURTHER APPEAL BEFORE US. 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 WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE 4 ITA NO.5098-99/MUM/2018 SHRI MUKESH DIPCHAND ASSESSMENT YEARS 2009-10 & 2011-12 PAYMENTS TO THE SUPPLIER WAS THROUGH BANKING CHANNE LS. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTAN TIATE THE PURCHASES DURING ASSESSMENT PROCEEDINGS. THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS AND ALSO FAIL ED TO PROVE THE DELIVERY OF MATERIAL. UNDER SUCH CIRCUMSTANCES, THE ADDITIONS W HICH 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 LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. THEREFORE, CONCURRING WITH THE APPROACH OF LD. CIT(A), WE DISMISS THE APPEAL. 4. FACTS ARE PARI-MATERIA THE SAME IN AY 2011-12 WH EREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.14.06 LACS ON ACCO UNT OF ALLEGED BOGUS PURCHASES IN AN ASSESSMENT FRAMED U/S 143(3) ON 21/03/2014. T HE FIRST APPELLATE AUTHORITY RESTRICTED THE SAME TO 25%. THE IMPUGNED ORDER IS COMMON ORDER FOR BOTH THE YEARS. HENCE, OUR OBSERVA TION, CONCLUSION AS WELL AS ADJUDICATION AS FOR AY 2009-10 SHALL MUTATIS MUTANDIS APPLY TO THIS YEAR ALSO. RESULTANTLY, THE APPEAL STANDS DISMISSED . 5. BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 5 ITA NO.5098-99/MUM/2018 SHRI MUKESH DIPCHAND ASSESSMENT YEARS 2009-10 & 2011-12 MUMBAI; DATED : 03/10/2019 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 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.