ITO 25(2)(2), MUMBAI V. UNI PACKS (INDIA), MUMBAI

ITA 5239/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1828 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 26-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANTOSH MANKOSKAR
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5239/M/2013 ASSESSMENT YEAR: 2010-11 O/O. ITO 25(2)(2), C-11 BLDG., ROOM NO.106, PRATYAKSHKAR BHAVAN (E), BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 51 VS. M/S. UNI PACKS (INDIA) 1, SUJA APT., GROUND FLOOR, I.C. COLONY, BORIVALI (W), MUMBAI 400 092 PAN: AAAFU 7506J (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIMAL PUNMIYA, A.R. REVENUE BY : DR. SANTOSH MANKOSKAR, D.R. DATE OF HEARING : 24.11.2015 DATE OF PRONOUNCEMENT : 16.12.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 23.05.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE REVENUE HAS AGITATED THE ACTION OF THE LD. C IT(A) IN DELETING THE ADDITION OF RS.1,07,61,920/- MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) ON ACCOUNT OF UNEXPLAINED EX PENDITURE UNDER SECTION 69C RELATING TO THE PURCHASE OF GOODS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FLEXIBLE PLASTIC MATER IALS AND IS ALSO INVOLVED IN TRADING ACTIVITIES. DURING THE ASSESSMENT PROCEEDI NGS, THE AO NOTED THAT THE ITA NO.5239/M/2013 M/S. UNI PACKS (INDIA) 2 ASSESSEE HAD MADE PURCHASES TO THE TUNE OF RS.1,07, 61,920/- FROM TWO PARTIES WHOSE NAMES WERE LISTED IN THE LIST OF SUSPICIOUS D EALERS AS PROVIDED IN THE OFFICIAL WEBSITE OF SALES TAX DEPARTMENT, GOVERNMEN T OF MAHARASHTRA, WHO WERE ALLEGEDLY PROVIDING ACCOMMODATION ENTRIES WITH OUT DOING ACTUAL BUSINESS. THE AO RELIED UPON THE STATEMENT TAKEN BY THE SALES TAX DEPARTMENT FROM SOME OF THE ABOVE LISTED PARTIES AND CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE IN RESPECT OF THE ABOVE STATED AMOU NT WERE BOGUS. HE THEREFORE ADDED THE SAID AMOUNT AS UNEXPLAINED EXPENDITURE IN TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED BY THE ABOVE ADDITION, T HE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 4. THE LD. CIT(A), CONSIDERING THE OVERALL FACTS AN D CIRCUMSTANCES OF THE CASE AND THE EVIDENCES FURNISHED BY THE ASSESSEE, D ELETED THE ADDITIONS SO MADE BY THE AO. BEING AGGRIEVED BY THE ABOVE DELETION, THE REVENUE HAS COME IN APPEAL BEFORE US. 5. THE LD. A.R. OF THE ASSESSEE, BEFORE US, HAS SUB MITTED THAT THE STATEMENT IF ANY, OF THE SUSPICIOUS DEALERS WERE ALLEGEDLY MA DE BEFORE THE SALES TAX AUTHORITIES, HOWEVER, NO SUCH STATEMENT HAD BEEN RE CORDED IN THIS RESPECT BY THE INCOME TAX AUTHORITIES. THE ASSESSEE WAS NOT G IVEN OPPORTUNITY TO CONFRONT THE SAID PERSONS BY WAY OF CROSS EXAMINATI ON. ALL THE PAYMENTS WERE MADE THROUGH CHEQUES WHICH WERE REFLECTED IN THE BA NK STATEMENTS OF THE RESPECTIVE PARTIES. THE ASSESSEE HAD PRODUCED ALL THE DETAILS SUCH AS LEDGER ACCOUNTS, COPIES OF PURCHASE BILLS, COPIES OF BANK STATEMENTS, MONTHLY QUANTITATIVE STATEMENTS AND INVENTORY OF CLOSING ST OCK. HE HAS FURTHER CONTENDED THAT EVEN THE SALES MADE FROM THESE PURCH ASES AND THE PROFIT THEREUPON WAS ACCEPTED BY THE AO. HE HAS ALSO RELI ED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. M/ S. NIKUNJ EXIMP ENTERPRISES PVT. LTD. ITA NO.5604 OF 2010 DECIDED ON 17.12.2012 AND FURTHER ITA NO.5239/M/2013 M/S. UNI PACKS (INDIA) 3 OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DIAGNOSTICS V. CIT (2012) 20 TAXMANN.COM 692 (CAL.). THE LD. D.R. ON THE OTHER HAND, HAS RELIED UPON TH E FINDINGS OF THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ADDITIONS IN THIS CASE HAVE BEEN MADE ON THE GROUND THAT NAME OF THE TWO SUPPLIERS FIGURED IN THE LIST OF SUSPICIOUS DEALERS IN THE WEBSITE OF SALES TAX DEPARTMENT. EXCEPT THAT NO EVIDENCE HAS BEEN POINTED OUT BY THE AO WHI CH MAY PROVE THAT THE ASSESSEE HAS INDULGED IN THE BOGUS PURCHASES. EVEN WE FIND THAT THE AO HIMSELF HAS ADMITTED THE PURCHASES AND SALES AS GEN UINE. THE FOLLOWING LINES FROM THE ASSESSMENT ORDER ARE RELEVANT IN THIS RESP ECT. THE PURCHASES OF THE ASSESSEE, PER SE, ARE NOT THE ISSUE HERE AND THESE ALLEGED PURCHASES ARE NOT BEING TREATED AS BOGUS. THE SALES TAX DEPARTMENT HAS COME DOWN HARD ON THE PERNICIOUS PRACTICES INDULGED IN B Y THESE UNSCRUPULOUS TRADERS FIGURING IN THE LIST OF SUSPICIOUS DEALERS AND IT I S EVIDENT THAT THE ASSESSEE HAS NOT PURCHASED THE GOODS FROM THESE ALLEGED SUPPLIERS. IT IS EQUALLY TRUE THAT THE GOODS, HAVE SOMEHOW ENTERED IN THE ASSESSEE'S REGULAR BUSI NESS. THE ASSESSEE HAS BEEN UNABLE TO GIVE ANY CONVINCING OR COGENT EXPLANATION AS TO HOW THESE GOODS HAPPENED TO COME IN HIS POSSESSION. THE ASSESSEE HA S, THUS, INCURRED EXPENDITURE ON SUCH PURCHASES WHICH IS NOT EXPLAINED. THE PURCH ASES ARE NOT BEING TREATED AS BOGUS OR SHAM RATHER THE EXPENDITURE INCURRED ON SU CH PURCHASES IS TREATED AS UNEXPLAINED. WHEN THE AO HIMSELF HAS NOT DOUBTED THE PURCHASE AND SALE TRANSACTION AND ALL THE EXPENDITURE HAS BEEN DULY ACCOUNTED IN THE BOOKS OF ACCOUNT, THEN IT CAN NOT BE SAID TO BE A CASE OF UNEXPLAINED EXPENDITURE . IT IS NOT THE CASE OF THE AO THAT THE GOODS WERE PURCHASED BY THE ASSESSEE AT A LESSER RATE OR THAT SOMEONE HAS SUPPLIED THE GOODS TO THE ASSESSEE FOR FREE OR THAT THE ASSESSEE HAS BOOKED A BOGUS EXPENDITURE. WHEN IT IS NOT SO, SOLELY ON THE BASIS OF UNCONFRONTED AND GENERAL STATEMENTS OF ALLEGED SUPPLIERS MADE BEFORE SALES TAX AUTHORITIES, ADDITION U/S 69C UNDER THE CIRCUMSTANCES ON ACCOUNT OF PURCHASES ARE NOT WARRANTED AT ALL. ITA NO.5239/M/2013 M/S. UNI PACKS (INDIA) 4 7. SO FAR AS THE LEGAL ASPECT IS CONCERNED, THE LD. AR HAS BROUGHT OUR ATTENTION TO THE DECISION OF THE HONBLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. M.K. BROTHERS (1987) 163 ITR 249 WHEREIN IT HA S BEEN HELD THAT WHERE THERE WAS NOTHING TO INDICATE THAT THE AMOUNT GIVEN BY THE ASSESSEE FOR THE PURCHASES MADE HAD COME BACK TO THE ASSESSEE IN ANY OTHER FORM AND WHERE THERE WAS NO EVIDENCE THAT THE SAID CONCERNS GAVE B OGUS VOUCHERS TO THE ASSESSEE AND EVEN THE STATEMENTS MADE BY THE ALLEGE D SUPPLIERS IN NO WAY IMPLICATE THE TRANSACTION WITH THE ASSESSEE THEN UN DER SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT ENTRIES FOR THE PURCHASE OF GOO DS MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE BOGUS AND NO ADDITION IN THIS RESPECT CAN BE MADE. THE LD. A.R. OF THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. N IKUNJ ENTERPRISES (P.) LTD. (2013) 35 TAXMAN.COM 384 (BOMBAY) WHEREIN THE HONBLE BOMBAY HIGH COURT HAS UPHELD THE FINDINGS OF THE TRIBUNAL THAT WHERE THE ASSESSEE FILED LETTERS OF CONFIRMATION OF SUPPLIERS, COPIES OF BANK STATEMENT SHOWING ENTRIES OF PAYMENT THROUGH ACCOUNT PAYEE CHEQUES TO SUPPLIERS AND STOCK RECONCILIATION STATEMENTS, SALE OF PURCHASED GOODS WAS NOT DOUBTED, THE TRANSACTIONS WERE SUPPORTED WITH EVIDENCES AND CONF IRMATIONS, IN SUCH AN EVENT MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARE D BEFORE THE AO OR THE LD. CIT(A), ONE CAN NOT CONCLUDE THAT THE PURCHASES WER E NOT GENUINE. 8. IN VIEW OF THE ABOVE DISCUSSION, THERE IS NO MER IT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.12.2015. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.12.2015. * KISHORE, SR. P.S. ITA NO.5239/M/2013 M/S. UNI PACKS (INDIA) 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.