ITO - WD- 3(3), KALYAN V. MILAN NATWARLAL BHAYANI, DOMBIVALI

ITA 5100/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6044 (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 HANSARI; SAURABH KUMARLD DRS
• Assessee Lawyers: DEVENDRA JAIN LD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5100/MUM/2018 SHRI MILAN NATWARLAL BHAYANI ASSESSMENT YEAR 2009-10 - 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.5100/MUM/2018 ( / ASSESSMENT YEAR:2009-10 ) INCOME TAX OFFICER - WARD - 3(3) ,KALYAN 2 ND FLOOR, RANI MANSION MURBAD ROAD, KALYAN (W)-421 301. / VS. SHRI MILAN NATWARLAL BHAYANI 19, PARIGANDHA APARTMENT MANPADA ROAD. NEAR NAVJIVAN HOSPITAL DOMBIVALI (E)-421 201. !'#$ ./ ./PAN/GIR NO. AAWPB 0699 L ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) REVENUE BY : S/SHRI AKHTAR H. ANSARI AND SAURABH KUMAR-LD.DRS ASSESSE E BY : SHRI DEVENDRA JAIN-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 APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONE R OF INCOME-TAX (APPEALS)-1, THANE, [IN SHORT REFERRED TO AS CIT(A) ], APPEAL NO. ITA NO.646 & 647/14-15 D ATED 26/06/2018 ON FOLLOWING GROUNDS: - 2 ITA NO.5100/MUM/2018 SHRI MILAN NATWARLAL BHAYANI ASSESSMENT YEAR 2009-10 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 ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF CHEMI CALS UNDER PROPRIETORSHIP CONCERN NAMELY M/S KALAPI CHEMIE PHARMA, WAS ASSESS ED FOR IMPUGNED AY U/S. 143(3) R.W.S. 147 ON 22/07/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.12.26 LACS, AFTER SOL E ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.8.40 LACS AS AGAINST RETURNED INCOME OF RS. 3.86 LACS FILED BY THE ASSESSEE ON 23/09/2009 WHICH WAS PROCESSED U/S.143(1). 3 ITA NO.5100/MUM/2018 SHRI MILAN NATWARLAL BHAYANI ASSESSMENT YEAR 2009-10 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.8.40 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 PAYMENTS TO THE SUPPLIER WAS THROUGH BANKING CHANNE LS. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTAN TIATE THE PURCHASES 4 ITA NO.5100/MUM/2018 SHRI MILAN NATWARLAL BHAYANI ASSESSMENT YEAR 2009-10 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. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OCTOBER, 2019 SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03/10/2019 SR.PS:-JAISY VARGHESE () *) / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 5 ITA NO.5100/MUM/2018 SHRI MILAN NATWARLAL BHAYANI ASSESSMENT YEAR 2009-10 2. $%'# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. -. $'/ , / , / DR, ITAT, MUMBAI 6. .012 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.