ASST CIT CIR 2, KALYAN V. KETANKUMAR JAYANTIBHAI PATEL, AMBERNATH

ITA 5237/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6842 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAN
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR , HON'BLE ACCOUNTANT MEMBER ITA.NO. 5041 /MUM/201 5 (A.Y : 2010 - 11 ) SHRI KETANKUMAR J. PATEL PROP. M/S. UNIQUE CHEMOPLANT EQUIPMENTS, B - 76, MIDC, AMBERNATH INDUSTRIAL AR EA, ANAND NAGAR, AMBERNATH EAST MUMBAI 421 506 PAN NO : ABUPP 7639 R V. DY. COMMISSIONER OF INCOME - TAX CIRCLE 2 , MUMBAI (APPELLANT) (RESPONDENT) ITA.NO. 5237/MUM/2015 (A.Y:2010 - 11 ) THE ASS T. COMMISSIONER OF INCOME - TAX, CIRCLE - 2, KALYAN, 2 ND FLOOR, MOHAN PLAZA, WAYLE NAGAR, KADAKPADA, KALYAN (W) 421 301 V. SHRI KETANKUMAR J. PATEL PROP. M/S. UNIQUE CHEMOPLANT EQUIPMENTS, B - 76, MIDC, AMBERNATH INDUSTRIAL AREA, ANAND NAGAR, AMBERNATH EAST - 421 506 PAN NO : ABUPP 7639 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIMAL PUNMIYA REVENUE BY : SHRI M.C. OMI NINGSHAN DATE OF HEARING : 01.03 .2018 DATE OF PRONOUNCEMENT : 29 . 05 .2018 2 ITA.NO. 5041 & 5237/MUM/2015 (A.Y:2010 - 11) SHRI KETANKUMAR J. PATEL O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) 3, THANE, DATED 25.08.2015 FOR THE ASSESSMENT YEAR 2010 - 11. 2. THE ONLY ISSUE IN BOTH THE APPEALS OF THE ASSESSEE AND REVE NUE IS IN RESPECT OF PARTLY DELETING THE ADDITION MADE TOWARDS BOGUS PURCHASES. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN IDENTICAL ISSUE CAME UP BEFORE THE TRIBUNAL FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2009 - 10 AND THE TR IBUNAL RESTRICTED THE ADDITION/DISALLOWANCE TO 2% ON THE ALLEGED BOGUS PURCHASES. COPY OF THE ORDER IS PLACED ON RECORD. LD. COUNSEL ALSO SUBMITTED THAT THE PARTIES ARE IDENTICAL, THEREFORE THE SAME MAY BE FOLLOWED FOR THE YEAR UNDER APPEAL. 4. LD. D R STRONGLY PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 5. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, WE FIND THAT AN IDENTICAL ISSUE CAME UP BEFORE THE TRIBUNAL FOR THE ASSESSMENT YEAR 2009 - 10 AND THE PARTY NAMELY M/S. NAVRATAN METAL IMPEX IS COMMO N FOR BOTH THE ASSESSMENT YEARS I.E. 2009 - 10 & 2010 - 11. THE OTHER PARTY FROM WHOM 3 ITA.NO. 5041 & 5237/MUM/2015 (A.Y:2010 - 11) SHRI KETANKUMAR J. PATEL THE ASSESSEE PURCHASED MATERIAL DURING THE ASSESSMENT YEAR UNDER APPEAL IS M/S. SHRITI ENTERPRISES AND IT HAS BEEN STATED IN THE ASSESSMENT ORDER THAT ASSESSEE ALLEGEDLY MAD E PURCHASES OF .30, 373/ - FROM THIS PARTY IN THE CURRENT ASSESSMENT YEAR. WE ALSO FIND THAT THE ASSESSEE DID NOT MAKE ANY PURCHASES FROM THIS PARTY DURING THE ASSESSMENT YEAR 2009 - 10. THE TRIBUNAL WHILE DISPOSING OF APPEAL FOR THE ASSESSMENT YEAR 2009 - 10 IN RESPECT OF THE PURCHASES MADE BY THE ASSESSEE FROM M/S. NAVRATAN METAL IMPEX OBSERVED AS UNDER: 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S. UNIQUE CHEMOPLANT EQUIPMENTS, WHICH IS ENGAGED IN THE BUSINESS OF FABRICATION OF VARIOU S EQUIPMENTS FOR CHEMICAL, PHARMACEUTICAL AND ALLIED INDUSTRIES. THE CASE WAS REOPENED AS THE PARTIES NAMELY; M/S. POOJA STEEL & ALLOYS, M/S. AIANKAR STEELS AND M/S. NAVRATAN METAL IMPEX FROM WHOM THE ASSESSEE HAD MADE PURCHASES ARE INVOLVED IN PROVIDING H AWALA ENTRIES. THE AO MADE AN ADDITION OF RS.1,46,66,445/ - ON ACCOUNT OF BOGUS PURCHASES AS THE ASSESSEE FAILED TO DISCHARGE ITS PRIMARY ONUS OF PRODUCING THE RESPECTIVE PARTIES AND PROVING THE GENUINENES S OF THE PURCHASE TRANSACTION. THE AO ADDED ENTIRE P URCHASE IN ASSESSEES INCOME. 5. BY THE IMPUGNED ORDER THE LD. CIT(A) UPHELD ADDITION TO THE EXTENT OF 20% OF BOGUS PURCHASES. 6. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD, WE FOUND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF FABRICATION OF VARIOUS EQUIPMENTS FOR CHEMICAL, PHARMACEUTICAL AND ALLIED INDUSTRIES. ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT, AO REOPENED THE ASSESSMENT AND MADE ADDITION IN RESPECT OF SUSPICION SUPPLIERS WHO WERE ALLEGED TO HAVE ISSUED ONL Y BILLS WITHOUT ACTUAL DELIVERY OF GOODS. 7. BY THE IMPUGNED ORDER, CIT(A) UPHELD THE ADDITION TO THE EXTENT OF 20% BY OBSERVING THAT IT IS A CASE WHERE GOODS WERE RECEIVED FROM THE AUTHORITIES OTHER THAN THE PERSON WHO HAD ISSUED THE BILLS OF SUCH. IT WAS ALSO OBSERVED THAT PAYMENT WAS MADE BY AC COUNT PAYEE CHEQUE. THE CIT(A) ALSO OBSERVED THAT THERE WAS CORRESPONDING SALES AND THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. WE ALSO FOUND THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAD 4 ITA.NO. 5041 & 5237/MUM/2015 (A.Y:2010 - 11) SHRI KETANKUMAR J. PATEL SHOWN GP OF 28.97% AS COMPARED TO THE GP OF IMMEDIATELY PRECEDING YEAR AT 19.23%. THUS, IT IS CLEAR THAT GP SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS NOT ONLY MUCH BETTER THAN THE GP OF EARLIER YEARS BUT EVEN ON ABSOLUTE TERMS, WE FOUND THAT IT IS A VERY REASONABLE GP, LOOKING TO THE NATURE OF TRADE ASSESSEE IS INVOLVED. UNDER THESE FACTS AND CIRCUMSTANCES, MAKING FURTHER ADDITION OF 20% WILL BE UNREASONABLE. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 2% OF THE A LLEGED BOGUS PURCHASES. WE DIRECT ACCORDINGLY. 6. AS COULD BE SEEN FROM THE ABOVE, TRIBUNAL RESTRICTED THE DISALLOWANCE TO 2% ON THE ALLEGED BOGUS PURCHASES IN RESPECT OF M/S. NAVRATAN METAL IMPEX AND OTHER PARTIES IN THE ASSESSMENT YEAR 2009 - 10. FACTS AND CIRCUMSTANCES BEING IDENTICAL, WE DIRECT THE ASSESSING OFFICER TO RESTRICT ADDITION/DISALLOWANCE TO 2% IN SO FAR AS THE PURCHASES FROM M/S. NAVRATAN METAL IMPEX ARE CONCERNED. IN RESPECT OF PURCHASES MADE FROM M/S. SHRITI ENTERPRISES IS CONCERNED THE L D. CIT(A) RESTRICTED THE DISALLOWANCE TO 20% AND FOR THE REASONS GIVEN BY THE LD. CIT(A), WE SUSTAIN THE DISALLOWANCE/ADDITION IN SO FAR AS THE PURCHASES MADE FROM M/S. SHRITI ENTERPRISES IS CONCERNED. GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 7. S INCE WE HAVE SUSTAINED ADDITION/DISALLOWANCES IN SO FAR AS PURCHASES MADE FROM M/S. NAVRATAN METAL IMPEX TO 2% FOLLOWING THE TRIBUNALS ORDER AND SUSTAINED THE ACTION OF THE LD. CIT(A) IN RESTRICTING THE DISALLOWANCE TO 20% ON THE PURCHASES MADE FROM M/S. SHRITI ENTERPRISES , THE APPEAL OF THE REVENUE IS DISPOSED OF ACCORDINGLY. 5 ITA.NO. 5041 & 5237/MUM/2015 (A.Y:2010 - 11) SHRI KETANKUMAR J. PATEL 8. NO OTHER GROUND HAS BEEN ARGUED BEFORE US BY THE LD. COUNSEL AND THEREFORE THE OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. 9. IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH MAY, 2018 SD/ - SD/ - ( RAJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 29 / 05 / 2017 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM