ITO - WD - 3 (4), KALYAN V. SIDDHI CORPORATION, DOMBIVALI

ITA 5104/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5183 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• 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: R BHOOPATHI
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5104/MUM/2018(A.Y. 2009-10) ITA NO.5105/MUM/2018(A.Y. 2010-11) ITO-WD-3(4) 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN(W)- 421301 MAHARASHTRA ...... APPELLANT VS. SIDDHI CORPORATION, 12A,3 RD FLOOR, SWASTIK BLDG., SAMALE WADAD, SAVARKAR ROAD, DOMBIVALI, MAHARASHTRA. PAN:ABFFS3228N ..... RESPONDENT APPELLANT BY : SHRI R.BHOOPATHI RESPONDENT BY : MS. NEHA PARANJPE DATE OF HEARING : 18/09/2019 DATE OF PRONOUNCEMENT : 30/10/2019 ORDER PER VIKAS AWASTHY, JM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGA INST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1(IN SHORT TH E CIT(A))THANE DATED 25/06/2018 COMMON FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. SINCE THE FACTS GIVING RISE TO THESE APPEALS ARE SI MILAR AND BOTH APPEALS ARE DIRECTED AGAINST THE SINGLE ORDER OF CIT(A) FOR TWO DIFFERENT ASSESSMENT YEARS, THESE APPEALS ARE TAKEN UP TOGETH ER FOR ADJUDICATION AND ARE DISPOSED OF BY THIS COMPOSITE ORDER. 2 ITA NO.5104/MUM/2018(A.Y. 2009-10) ITA NO.5105/MUM/2018(A.Y. 2010-11) 2. THE BRIEF FACTS COMMON FOR BOTH ASSESSMENT YEARS ARE AS UNDER:- THE ASSESSEE IS A DEALER IN ELECTRICAL, HARDWARE AN D IRON AND STEEL ITEMS. ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA REGARDING ASSESSEES DEALINGS WITH HA WALA DEALERS, THE REVENUE REOPENED ASSESSMENT OF THE ASSESSEE FOR A SSESSMENT YEARS 2009-10 AND 2010-11. DURING ASSESSMENT PROCEEDIN GS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD INDULGED IN BOGUS PURCHASES FROM THE FOLLOWING PARTIES:- SR.NO. NAME OF PURCHASE PARTY A.Y 2009-10 A.Y. 2010-11 1. M/S. SAMPARK STEELS RS. 3,80,505/- RS. 4,19,235/ - 2. M/S.PRAYAN TRADING CO. RS. 6,50,880/- RS. 2,87,4 98/- 3. M/S. VITRAG TRADING CO. RS. 4,32,667/- RS. 3,84, 067/- 4. RAJ TOOLS CORPORATION RS. 51,665/- RS. 35, 521/- TOTAL RS. 15,15,705/- RS.11,26,321/- THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE AFORESAID ALLEGED BOGUS PURCHASES IN THE HANDS OF THE ASSESSEE IN THE RESPE CTIVE ASSESSMENT YEARS. 2.1 AGGRIEVED AGAINST THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) FOR ASSESSMENT YEARS 2009-10 AND 2010-11, THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY AFTER EX AMINING THE FACTS AND PLACING RELIANCE ON VARIOUS DECISIONS CONFIRMED THE DISALLOWANCE IN RESPECT OF ALLEGED BOGUS PURCHASES TO THE EXTENT OF 25% OF SUCH 3 ITA NO.5104/MUM/2018(A.Y. 2009-10) ITA NO.5105/MUM/2018(A.Y. 2010-11) PURCHASES. THUS, FOR THE ASSESSMENT YEAR 2009-10, THE CIT(A) CONFIRMED ADDITION OF RS.3,78,926/- AND FOR ASSESSMENT YEAR 2 010-11, THE ADDITION CONFIRMED ON ACCOUNT OF BOGUS PURCHASES WAS RS.2 ,81,580/-. AGAINST THESE FINDINGS OF THE CIT(A), THE REVENUE IS IN APP EAL FOR BOTH ASSESSMENT YEARS. 3. SHRI R. BHOOPATHI REPRESENTING THE DEPARTMENT V EHEMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERS ING THE FINDING OF CIT(A). THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESS EE COULD NEITHER ESTABLISH GENUINENESS OF THE PURCHASES NOR THE AS SESSEE COULD PRODUCE VENDORS BEFORE THE AUTHORITIES BELOW. THE ASSESSE E HAS FAILED TO DISCHARGE HIS ONUS OF PROVING GENUINENESS OF THE PU RCHASES. THE LD.DEPARTMENTAL REPRESENTATIVE FURTHER PLACED RELIA NCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF NK PROTEINS LTD VS DCIT (2017) 292 CTR 354 (SC) TO CONTEND THAT 100% ADDITION OF THE BOGUS PURCHASES SHOULD BE MADE. 4. ON THE OTHER HAND, MS. NEHA PARANJPE APPEARIN G ON BEHALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE IMPUGNED ORDER. TH E LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT SALES MADE BY THE ASSESSEE WERE NOT DISPUTED BY THE DEPARTMENT, WITHOUT PURCHA SES, THERE CANNOT BE SALES. THE FIRST APPELLATE AUTHORITY, AFTER APP RECIATING THE FACTS AND AFTER ANALYSING VARIOUS DECISIONS HAS RESTRICTED TH E DISALLOWANCE TO THE EXTENT OF 25% GROSS PROFIT, AND THE SAME HAS BEEN A CCEPTED BY THE ASSESSEE. 4 ITA NO.5104/MUM/2018(A.Y. 2009-10) ITA NO.5105/MUM/2018(A.Y. 2010-11) 5. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTA TIVES OF RIVAL SIDES AND HAVE PERUSED ORDERS OF AUTHORITIES BELOW. THE REVENUE IN ITS APPEAL HAS ASSAILED THE FINDINGS OF CIT(A) IN RESTR ICTING DISALLOWANCE ON ACCOUNT OF ALLEGED BOGUS PURCHASES TO 25% GROSS PRO FIT. IT IS AN UNDISPUTED FACT THAT IN REASSESSMENT PROCEEDINGS WH ILE MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES ASSESSING OFFICER HAS NOT RAISED ANY DOUBT ON THE SALES DECLARED BY THE ASSESSEE. WITHOUT P URCHASES THERE CANNOT BE SALES. THUS, THE ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE DISALLOWED. THE DISALLOWANCE CAN ONLY BE MADE TO THE EXTENT OF GROSS PROFIT NOT DECLARED BY THE ASSESSEE. THE CIT(A) HAS ESTIMATED GROSS PROFIT OF 25% ON THE ALLEGED BOGUS PURCHASES AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE IMPU GNED ORDER. ACCORDINGLY, THE SAME IS UPHELD. THE APPEALS BY TH E REVENUE ARE WITHOUT MERIT, HENCE, ARE DISMISSED. 6. IN THE RESULT, APPEALS BY THE REVENUE FOR ASSESS MENT YEAR 2009-10 AND 2010-11 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY THE 30 TH DAY OF OCTOBER, 2019. SD/- SD/- (RAJESH KUMAR) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30/10/2019 VM , SR. PS(O/S) 5 ITA NO.5104/MUM/2018(A.Y. 2009-10) ITA NO.5105/MUM/2018(A.Y. 2010-11) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI