ACIT 27(3), NAVI MUMBAI V. SKY LARK BUILDERS SSJC (GHATKOPAR), MUMBAI

ITA 5174/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0502 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Bogus purchase; Rejection of books of accounts
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5174/MUM/2015 ASSESSMENT YEAR : 2011-12 ACIT 27(3) NAVI MUMBAI VS. SKYLARK BUILDERS SSJC (GHATKOPAR) SHOP NO.1A, SHIV SHAKTI HEIGHTS PANT NAGAR, BEHIND POPULAR HOTEL GHATKOPAR (E) MUMBAI 400 077 PAN AAYFS7231F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAM TIWARI RESPONDENT BY : SHRI M SUBRAMANIAN DATE OF HEARING : 02. 08 .2017 DATE OF PRONOUNCEMENT : 08 .0 8 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-25, MUMBAI, DATED 10.08.2015, FOR A.Y.2011-1 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE DELETION OF ADDITION OF ` 2,47,62,454/- BY THE CIT(A) ON ACCOUNT OF BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT THE DOCUMENTS FURNISHED IN THE SHAPE OF PURCHA SE BILLS, PAYMENT MADE BY ACCOUNT PAYEE CHEQUES ETC., ONLY SUPERFICIALLY S UPPORTS THE ASSESSEES CLAIM CONTRARY TO PRIMARY EVIDENCES AS BORNE OUT BY THE ASSESSING OFFICER IN HIS ORDER. ITA NO.5174/MUM/2015 SKYLARK BUILDERS SSJC 2 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. WE NOTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON BUSINESS OF CONSTRUC TION OF BUILDING. DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE INCURRED VARIOUS EXPENSES INCLUDING PURCHASES OF BUILDING MATERIAL IN QUESTIO N. THE RETURN SHOWING INCOME OF ` 55,49,670/- WAS FILED ON 30.09.2011. WHILE FRAMING ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD M ADE PURCHASES FOR BUILDING MATERIAL FROM UNREGISTERED DEALERS IN ADDI TION TO THE PURCHASES FROM REGISTERED DEALERS. THERE WERE TEN UNREGISTERED DE ALERS AND THE PURCHASES MADE WERE AMOUNTING TO ` 2,47,62,454/-. THE ASSESSEE FURNISHED COPIES OF PURCHASE BILLS, WHICH BEARS DETAILS OF DESCRIPTION OF MATERIAL, QUANTITY/MEASUREMENT OF MATERIAL, RATE/UNIT AND NET PURCHASE AMOUNT ALONG WITH THE LEDGER ACCOUNTS OF THE PARTIES. THE ASSES SEE FURTHER STATED THAT THESE PARTIES HAD DELIVERED MATERIAL, WHICH WAS REC EIVED BY IT AT ITS SITE SITUATED AT SAI JANATA COLONY, PATEL CHOWK, GHATKOP AR (E). THE ASSESSEE FURTHER STATED THAT PAYMENT TO THESE PARTIES INVARI ABLY WAS MADE BY ACCOUNT PAYEE CHEQUES. THE ASSESSING OFFICER ISSUED NOTICE S U/S. 133(6) TO THESE UNREGISTERED PARTIES BUT DID NOT RECEIVE ANY RESPON SE. ULTIMATELY, FEW OF THE PARTIES, AS STATED BY THE ASSESSING OFFICER, FILED REPLIES TO THE NOTICES U/S. 133(6) ON 21.03.2014. THE ASSESSING OFFICER NOTED THAT NONE OF THE PARTIES WERE FILING INCOME TAX RETURN, COPY OF PAN CARD WAS SUBMITTED, EACH OF THE ITA NO.5174/MUM/2015 SKYLARK BUILDERS SSJC 3 PARTIES ESTIMATED NET PROFIT U/S 44AF @5% ON SALE F OR THE YEAR AND INCOME WAS BELOW THE MAXIMUM AMOUNT CHARGEABLE TO TAX AND NONE OF THEM SUBMITTED THEIR BANK STATEMENTS. SINCE THE COMPLIAN CE OF NOTICE WAS PARTIAL, THE ASSESSING OFFICER TREATED EACH OF THE PURCHASES MADE BY THE ASSESSEE TO BE BOGUS ONE AND ON THE BASIS OF PROBABILITY RELYIN G ON THE DECISION OF SUMATI DAYAL V CIT [214 ITR 801], MADE ADDITION OF ` 2,47,62,454/-. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED T HE ADDITION OBSERVING AS UNDER: 2.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION S OF THE APPELLANT. IT IS SEEN THAT THAT A.O HAS NOT GONE BEYOND ISSUIN G NOTICES U/S. 133(6). THERE HAS BEEN NO ATTEMPT TO FIND OUT WHETH ER THE APPELLANT HAD MADE THE PURCHASES OF MATERIALS WHICH WERE REQUIRED FOR THE CONSTRUCTION OF THE BUILDING. IF THE A.O. H AD ANALYZED AND TRIED TO ASCERTAIN WHETHER THE MATERIALS WERE IN FA CT REQUIRED FOR MAKING THE CONSTRUCTION AS WAS CLAIMED, PERHAPS IT WOULD HAVE BEEN POSSIBLE TO KNOW WHETHER THE MATERIALS WERE IN FACT PROCURED. THE A.O HAS ALSO NOT DOUBTED THE VERACITY OF THE CL AIM OF PURCHASES OR HAS NOT POINTED OUT ANY DEFECT IN THE BOOKS AND HAD NOT REJECTED THE BOOKS OF ACCOUNTS. IN A SITUATION LIKE THIS IT MAY NOT BE APPROPRIATE TO DISALLOW PURCHASES ONLY ON THE BASIS OF THE NON RESPONSE TO THE NOTICE U/S. 133(6). THE JURISDICTIO NAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES P. LTD. [372 I TR 619] HAS HELD THAT MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE A.O OR THE CIT(A), ONE CANNOT CONCLUDE THAT THE PUR CHASES WERE NOT MADE BY THE RESPONDENT ASSESSEE. THE HON'BLE HI GH COURT HAS ALSO NOTED THE OBSERVATIONS OF THE TRIBUNAL THAT TH E BOOKS OF ACCOUNTS OF THE APPELLANT HAD NOT BEEN REJECTED, TH E SALES HAD NOT BEEN DOUBTED BEFORE THE PURCHASES WERE DISALLOWED. IN THIS APPEAL THE FACTS ARE SIMILAR. DISALLOWANCE HAS BEEN MADE O NLY ON THE BASIS THAT THE PARTIES TO WHOM THE NOTICE U/S. 133(6) WER E ISSUED, HAD NOT RESPONDED. AS HAS ALREADY NOTED HEREIN BEFORE, THE A.O HAD NOT DONE ANYTHING FURTHER TO ASCERTAIN WHETHER THE MATE RIALS IN ITA NO.5174/MUM/2015 SKYLARK BUILDERS SSJC 4 QUESTION WERE PROCURED AND WHETHER THESE WERE IN FA CT UTILIZED. RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION OF THE JURISDICTIONAL HIGH COURT I HOLD THAT THE DISALLOWANCE, AS HAS BEE N MADE BY THE A.O IS NOT IN ORDER AND THEREFORE THE ADDITION MADE BY DISALLOWING THE PURCHASES IS DELETED. 3. THE LEARNED DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT (SUPRA), HE COULD NOT PRODUCE ANY EVIDENCE TO SUPPORT HIS CONTENTION THAT THE PURCHASES MADE BY T HE ASSESSEE WERE BOGUS. 4. IN OUR VIEW, NO ADDITION CAN BE MADE ON THE BASI S OF PROBABILITY. IT IS NOT A CASE WHERE THE ASSESSEE WAS NOT ENGAGED IN BU SINESS. FACTS IN THE CASE OF SUMATI DAYAL VS. CIT (SUPRA) WERE ENTIRELY DIFFERENT. THE LADY WAS NOT ENGAGED IN ANY BUSINESS AND HAD SHOWN INCOME FR OM LOTTERY, THEREFORE, THE HONBLE SUPREME COURT HAD UPHELD THE ADDITION A FTER TAKING INTO CONSIDERATION THE SURROUNDING CIRCUMSTANCES AND APP LYING THE TEST OF HUMAN PROBABILITY. IN VIEW OF THE DECISION OF HONBLE SU PREME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL 87 ITR 349, WHEN THE O NUS IS ON THE PARTY, WHO ALLEGES THAT THE APPARENT IS NOT REAL. IN THIS CASE, WE NOTED THAT THE ASSESSING OFFICER TREATED THE PURCHASES MADE TO BE BOGUS, MERELY ON THE BASIS THAT SOME OF THE PARTIES DID NOT REPLY TO THE NOTICE ISSUED U/S. 133(6). THE HONBLE JURISDICTIONAL HIGH COURT AS RELIED UPO N BY THE LEARNED AR, WE NOTED IN THE CASE OF NIKUNJ EXIM ENTERPRISES PVT. L TD. 372 ITR 619, HAS HELD THAT MERELY BECAUSE THE SUPPLIERS HAD NOT APPEARED BEFORE THE ASSESSING ITA NO.5174/MUM/2015 SKYLARK BUILDERS SSJC 5 OFFICER OR THE COMMISSIONER (APPEALS), ONE COULD NO T CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE ASSESSEE. THIS IS A CASE WHERE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJECTED AND THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANYTHING, WHICH MAY PROVE THAT TH E EVIDENCES SUBMITTED BY THE ASSESSEE WERE BOGUS. 5. IN VIEW OF THIS FACT, WE DO NOT FIND ANY INFIRMI TY OR ILLEGALITY IN THE ORDER OF THE CIT(A). WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF AUGUST, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 8 TH AUGUST, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI