ACIT 12(1), MUMBAI V. SUMAN V GUPTA, MUMBAI

ITA 5116/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9789 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 05-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 4774 / MUM/20 1 4 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI SUMAN GUPTA NEW HARILEELA HOUSE, 6 TH FLOOR, MINT ROAD, FORT, MUMBAI 400 001 VS. ACIT 12(1), ROOM NO.117, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 001 PAN/GIR NO. AHQPG0220P APPELLANT ) .. RESPONDENT ) ITA NO. 5116/ MUM/20 14 ( ASSESSMENT YEAR : 2010 - 11 ) ACIT 12(1), ROOM NO.117, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 001 VS. SHRI SUMAN GUPTA NEW HARILEELA HOUSE, 6 TH FLOOR, MINT ROAD, FORT, MUMBAI 400 001 PAN/GIR NO. AHQPG0220P APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI BHUPENDRA KARKHANIS REVENUE BY SHRI V. VIDHYADHAR DATE OF HEARI NG 02 / 08 /201 7 DATE OF PRONOUNCEME NT 23 / 08 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 23, MUMBAI DATED 09/05/2014 FOR A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. GRIEVANCE OF ASSESSE E AND REVENUE RELATES TO ADDITION / DELETION MADE ON ACCOUNT OF BOGUS PURCHASES. ITA NO. 4774/MUM/2014 & 5116/MUM/2014 SHRI SUMAN GUPTA 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ASSESSEE US ENGAGED IN TRADING OF STEEL. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO MADE ADDITION ON ACCOUNT OF BOGU S PURCHASES BY OBSERVING THAT SALES TAX DEPARTMENT HAS PROVIDED INFORMATION TO THE EFFECT THAT PARTIES FROM WHOM ASSESSEE HAS MADE THE PURCHASES DO NOT GENUINELY EXIST AND THESE WERE ONLY HAWALA DEALERS. ACCORDINGLY, AO ADDED 25% OF SUCH PURCHASES IN ASSES SEES INCOME. 4. BY THE IMPUGNED ORDER, CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% . B Y OBSERVING THAT IN THE CASE OF BHOLANATH POLYFAB LTD., HONBLE GUJARAT HIGH COURT HAS APPROVED THE PROPOSITION WITH REGARD TO INFLATION IN PURCHASE PRICE OF G OODS FOR THE PURCHASES SO MADE FROM SUCH DEALER. 5. AGAINST THE ABOVE ORDER OF CIT(A) BOTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 6. IT WAS ARGUED BY LEARNED AR THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED YEARWISE DETAILS OF PURCHASES FROM SAI INTERNATIONAL IMPEX ALONGWITH VAT TIN NO., PAN NO.ETC, D ETAILS OF DATEWISE PURCHASES AND PAYMENT MADE TO SAI INTERNATIONAL IMPEX. D ETAILS OF PURCHASES MADE WITH THE ABOVE CONCERN ALONG WITH CORRESPONDING SALES DETAILS, PURCHASE INVOICE COPY FOR FY 2008 - 09 AND 2009 - 10 AND QUANTITATIVE DETAILS OF PURCHASES FROM M/S.SAI INTERNATIONAL IMPEX WERE ALSO FILED . THE PAYMENTS WERE ALSO MADE TO ABOVE CONCERN THROUGH ACCOUNT PAYEE CHEQUES. OUR ATTENTION WAS ALSO INVITED TO RECEIPT OF VAT PAY MENT MADE BY ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF TRANSACTION. LEARNED AR FURTHER CONTENDED THAT SALES OF THE ITA NO. 4774/MUM/2014 & 5116/MUM/2014 SHRI SUMAN GUPTA 3 ASSESSEE ARE UNDISPUTED. SALES ARE ACCEPTED IN TOTAL. BOOKS OF ACCOUNT WERE FOUND TO BE SATISFACTORY. NO ALLEGATION OF ANY DEFICIENCY OR DE FECTS IN BOOKS OF ACCOUNT. QUANTITATIVE DETAILS OF PURCHASES FROM M/S.SAI INTERNATIONAL IMPEX. MATCHING OF QUANTITY - WISE PURCHASES & SALES ARE PROVIDED TO THE DEPARTMENT. THE ASSESSEE MAINTAINS STOCK RECORD FOR EACH METRIC TON OF STEEL PURCHASED AND SOLD D URING THE YEAR. GROSS PROFIT MARGIN FOR THE YEAR IS 0.15%. COMPARISON OF GROSS PROFIT RATIO ALSO PROVES THAT THERE IS NO INFLATION IN THE PURCHASES PRICE . GP RATIO OF THE ASSESSMENT YEAR UNDER CONSIDERATION AS COMPARED TO IMMEDIATELY PRECEDING YEAR IS AS UNDER: - 7. THE ASSESSEE HAS MADE HAS MADE PURCHASES FROM T HE ABOVE CONCERN & CORRESPONDING SALES ARE TALLIED. NATURE OF BUSINESS IS SUCH THAT THE PURCHASES ARE ALWAYS CONNECTED TO SALES & GOODS ARE DELIVERED TO CUSTOMERS' PLACE DIRECTLY FROM THE SUPPLIERS . 8. LEARNED AR ALSO RELIED ON THE FOLLOWING JUDICIAL PRONO UNCEMENTS: - 1. ACIT VS. MAHESH K. SHAH (ITAT MUMBAI) (ITA NO. 5194/MUM/2014) 2. DCIT VS. SHRI SHIVSHANKAR R. SHARMA (ITAT MUMBAI) (ITA NO.5149/MUM/2014 &ITA NO.4260/MUM/2015) 3. RAJESH P. SONI V. ACIT (2006) 100 TTJ 892 (AHD.)(TRIB.) 4. ITO VS. SURANA TRAD ERS [2005] 92 ITD 212 PARTICULARS A.Y. 2009 - 10 A.Y. 2010 - 11 SALES 15,08,45,128 13,19,07,011 PURCHASE 15,06,39,154 13.17,09,973 GROSS PROFIT 2,05,974 1,97,038 GP (% ) 0.14% 0.15% ITA NO. 4774/MUM/2014 & 5116/MUM/2014 SHRI SUMAN GUPTA 4 5. CIT V. NIKUNJ EXIMP ENTERPRISES (P.) LTD. 35 TAXMANN.COM 384 (BOM) 6. BALAJI TEXTILE INDUSTRIES (P) LTD, V. THIRD 1TQ 49 ITD 177 (ITAT MUMBAI) 7. RAMESH KUMAR & CO VS. ACIT ITA NO. 2959/MUM/2014 (ITAT MUMBAI) 8. ACIT VS, RAMILA PRA VIN SHAH ITA NO. 5246/MUM/2013 (ITAT MUMBAI) 9. HIRALAL CHUNILAL JAIN VS. ITO ITA NO. 4547/MUM/2014 (ITAT MUMBAI) 10. ACIT V. M/S. G V SONS ITA NO. 2238 , 2239 & 2240 OF 2012) (ITAT MUMBAI) 11. DCIT VS. RAJEEV G. KALATHIL 67 SOT 52 (ITAT MUMBAI) 12. CIT V HI LUX AUTOMOTIVE (P.) LTD. (2009) 23 DTR 385 / 183 TAXMAN 260 (DEL)(HC) 13. BABULAL C BORANA 282 ITR 251 (BOM) 14.TOTARAM SHARMA VS. ITO WARD - 6(4) (GUJARAT HIGH COURT) ((TAX APPEAL NO. 1344 OF 2008 WITH TAX APPEAL NO. 1355 OF 2008) 15. ROMILA M. NAGPAL (I TANO. 6388/MUM/2016) 16. ITO VS. PARESH ARVIND GANDHI (ITA NO. 5706/MUM/2013) 17. DY. CIT V. ADINATH INDUSTRIES [2001] 252 ITR 4762 (GUJ.) 18. CIT V. M.K. BROS. [1987] 163 ITR 249 (GUJ.) 19. M/S. GEOLIFE ORGANICS VS. ACIT - 23(2) ITA NO. 3699/M/2016 9 . ON THE OTHER HAND LEARNED DR CONTENDED THAT ALL THE INVOICES WERE PREPARED BY ONLY 2 PERSONS , THAT TOO PREPARED ONE TIME AT - A - STRETCH, THOUGH THE DATES OF INVOICES COVERS A PERIOD OF SIX MONTHS. HE FURTHER CONTENDED THAT IT WAS ALSO NOTICED THAT IN CERTAIN C ASES, ON THE VERY SAME DATE MULTIPLE BILLS WERE ISSUED (FOR INSTANCE, 5 INVOICES ISSUED ON 07.08.2009). HE FURTHER CONTENDED THAT SUPPLIER DID NOT RESPOND TO THE NOTICE ISSUED BY AO. 10 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE C ASE. FROM THE RECORD, WE FOUND THAT 25% OF PURCHASES ALLEGED TO BE BOGUS WAS ADDED BY AO IN ASSESSEES INCOME. CIT(A) HAS REDUCED SAME TO 12.5% . B EFORE THE AO , A SSESSEE HAS FILED YEAR WISE DETAILS OF PURCHASES, DETAILS OF PAYMENT MADE THROUGH ACCOUNT PAYEE CHEQUE. IN ADDITION TO THE PURCHASE DETAILS, ASSESSEE HAS ITA NO. 4774/MUM/2014 & 5116/MUM/2014 SHRI SUMAN GUPTA 5 ALSO FILED DETAILS OF CORRESPONDING SALES AFFECTED BY THE ASSESSEE IN RESPECT OF THE VERY SAME GOODS. THE SALES SO AFFECTED ARE NOT IN DISPUTE AND THE SAME WERE ACCEPTED IN TOTAL BY THE AO. WE FOUN D THAT IN THIS CASE AO HAS ONLY ALLEGED PURCHASE MADE FROM SAI INTERNATIONAL. 1 1 . IN RESPECT OF THE GOODS PURCHASED FROM SAI INTERNATIONAL AND SOLD BY THE ASSESSEE , T HE ASSESSEE HAD SHOWN GP RATE 0.15%, HOWEVER, IN RESPECT OF PURCHASES OTHER THAN FROM SAI INTERNATIONAL, THE ASSESSEE HAS DISCLOSED SAME GP OF 0.15%. THUS, IT IS NOT THE CASE WHERE ASSESSEE HAS SHOWN LOWER G.P. IN RESPECT OF ALLEGED BOGUS PURCHASES. IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE GP SHOWN BY THE ASSESSEE ON THE ENTIRE SALE WA S 0.14%. THUS, IT IS CLEAR THAT GP SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS BETTER THAN THE GP SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 12 . IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMS TANCES OF THE CASE, WE MODIFY THE ORDER OF LOWER AUTHORITIES AND DIRECT THE AO TO UPHELD ADDITION OF 2% OF BOGUS PURCHASES. WE DIRECT ACCORDINGLY. 13 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 08 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 08 /201 7 KARUNA SR . PS ITA NO. 4774/MUM/2014 & 5116/MUM/2014 SHRI SUMAN GUPTA 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//