SMRAT INFOCOM, MUMBAI V. INCOME TAX OFFICER , ERSTWHILE WD.15(2)(3), NOW INCOME TAX OFFICER 33(3)(4), MUMBAI

ITA 5214/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6990 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 09-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Bogus purchase
• Section: 69C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 5214 / M/ 20 1 7 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. SMART INFOCOM 306/307, PLOT NO.9, 338, STERLING INDUSTRIAL PREMISES LTD. RAMCHANDRAS LANE EXTN., MALAD (W), MUMBAI - 400064 . VS. ITO, ERSTWHILE WD. 15(2) (3) MUMBAI NOW ITO - 33(3)(4) 1 ST FLOOR, C - 12, PRATYAKASHKAR BHAVAN, BKC, BANDRA (E), MUMBAI. ./ ./ PAN/GIR NO. : ABEFS 1558 C ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 01 . 01 .201 9 DATE OF PRONOUNCEMENT : 08. 01 . 201 9 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01 . 05 .201 7 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 41 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 2011 - 12 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. GROUNDS OF APPEAL AGAINST THE ORDER DATED 01.05.2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 41, MUMBAI. A. ADHOC ADDITION IN RESPECT OF BOGUS PURCHASES OF RS. 33 ,08,312/ - : ASSESSEE BY: SHRI NONE DEPARTMENT BY: SHRI ASHISH KUMAR ITA. NO. 5214 /M/201 7 A.Y. 2011 - 12 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING AND UPHOLDING THE DEFAULTS ON THE PART OF THE SUPPLIERS UNDER THE PROVISIONS OF THE MV AT ACT WOULD BE SUFFICIENT TO HOLD APPELLANT'S PURCHASES AS NON - GENUINE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED AS SESSING OFFICER AND IN ALLEGING THAT THE APPELLANT'S PURCHASES ARE NON - GENUINE WITHOUT BRINGING ON RECORD ANY INDEPENDENT AND RELIABLE EVIDENCES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI HAS ERRED SUSTAINING THE ADDITION IN RESPECT OF ALLEGED BOGUS PURCHASES AT AN ADHOC RATE OF 30% OF RS.1,10,27,708/ - BEING RS.33,08,312/ - . B. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALTER OR DELETE ALL OR ANY OF THE FOREGOING GROU NDS OF APPEAL. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 . 09 .201 1 FOR THE A.Y. 2011 - 12 DECLARING TOTAL I NCOME TO THE TUNE OF RS.10,64,780 / - . THEREAFTER, ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX AUTHORI TIES AND ALSO ON THE BASIS OF INDEPENDENT ENQUIRY CONDUCTED BY THE DEPARTMENT , IT CAME INTO NOTICE THAT THE ASSESSEE HAS TAKEN THE ACCOMMODATION BILLS FOR PURCHASES THROUGH HAWALA OPERATORS, THEREFORE, THE ASSESSMENT WAS REOPENED U/S 148 ON 26.03.2013 AND THE TOTAL PURCHASE IN SUM OF RS.1,10,27,708/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 69C OF THE ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PAYROLL SOFTWARE ATTENDANCE MACHINES AND ALLIED PRODUCT. THE INCOME OF THE AS SESSEE WAS ASSESSED TO THE TUNE OF RS.1,41,39,311/ - . FEELING AGGRIEVED, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ITA. NO. 5214 /M/201 7 A.Y. 2011 - 12 3 RESTRICTED THE ADDITION TO THE EXTENT OF 3 0 % OF THE TOTAL PURCHASE. FEELING AGGRIEVED, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE L D. REPRESENTATIVE OF THE DEPARTMENT HAS GONE THROUGH THE RECORD CAREFULLY. THE LD. REPRESENTATIVE OF THE ASSESSEE FAILED TO APPEAR BEFORE US DESPITE SERVICE , THERE FORE, WE ARE GOING TO DECIDE THE MA TTER OF CONTROVERSY ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE WAS REOPENED UPON THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT . THE AO RAISED THE ADDITION TO THE EXTENT OF 100% OF THE TOTAL BOGUS PURCHASE TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY TAXED AND THE CIT(A) HAS ALSO RESTRICTED THE ADDITION TO THE EXTENT OF 30% OF THE TOTAL BOGUS PURCHASE OF THE ASSESSEE TO THE TUNE OF RS.1,10,27,708/ - . T HE ASSESSEE IS IN THE PROFESSION OF BUSINESS MANUFACTURING & TRA DING OF PAYROLL SOFTWARE ATTENDAN CE MACHINES AND ALLIED PRODUCTS. IN VIEW OF THE LAW SETTLED IN CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) (HIGH COURT) AND THE CIT VS.NIKUNJ EXIMPT ENTERPRISES (P) LTD. (2013) 216 TAXMAN 171 (BOM) . THE ADDITION IS REQU IRED TO BE ADDED TO THE INCOME OF THE ASSESSEE TO THE EXTENT OF INCOME EMBEDDED IN THE PROFIT OF BOGUS PURCHASE . THE GROSS PROFIT MARGIN OF THE APPELLANT IS 27.82% AFTER THE ADDITION THE G.P. RATIO WOULD BE 49.44%. THE SALE IS NOT DISPUTED . THE BOOKS OF ACCOUNT HAVE ALSO NOT BEEN REJECTED. O N SEEING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE VIEW THAT THE ADDITION TO THE ITA. NO. 5214 /M/201 7 A.Y. 2011 - 12 4 EXTENT OF 30% OF THE BOGUS PURCHASE IS VERY HIGH, THEREFORE, W E RESTRICT THE ADDITION OF BOGUS PURCHASE TO TH E EXTENT OF 12.5 % OF THE BOGUS PURCHASE . ACCORDINGLY, THESE ISSUE S ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 5 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 08. 01 . 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 08. 01. 201 9 VIJAY / 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