DCIT 25(1), MUMBAI V. SHRADDHA DEVELOPERS, MUMBAI

ITA 5244/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1126 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 01-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE LD
• Assessee Lawyers: V G GINDE LD
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 143(3)

Judgement Text

ITA NO.5244/M/2013 SHRADDHA DEVELOPERS ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 5244/MUM/2013 ( / ASSESSMENT YEAR: 2010-11) DEPUTY COMMISSIONER OF INCOME TAX 25(1) PRATYAKSHKAR BHAVAN ROOM NO. 202, 2 ND FLOOR BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051 / VS. SHRADDHA DEVELOPERS B-101/102 CHAMUNDA APARTMENTS RAVAL PADA FLYOVER DASHISAR (E) MUMBAI-400 068 ./ ./PAN/GIR NO. ABGFS-8708-Q ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : V.G. GINDE, LD. AR RE VENUE BY : VISHWAS MUNDHE, LD. DR / DATE OF HEARING : 04/05/2017 / DATE OF PRONOUNCEMENT : 04/05/2017 ITA NO.5244/M/2013 SHRADDHA DEVELOPERS ASSESSMENT YEAR-2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2010- 11 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-35 [CIT(A)], MUMBAI DATED 10/05/2013 QUA DELETION OF ADDITION OF RS.96,26,712/- MADE BY LD. ASSESSING OFFICER [AO] U /S 69C ON ACCOUNT OF BOGUS PURCHASES . 2. FACTS LEADING TO THE DISPUTE ARE THAT THE ASSESS EE, BEING RESIDENT FIRM, WAS ASSESSED U/S 143(3) AT RS.3,62,78,100/- F OR IMPUGNED AY VIDE ASSESSING OFFICER [AO] ORDER DATED 08/02/2013 AFTER ADDITION U/S 69C QUA BOGUS PURCHASES FOR RS.96,26,712/- AS AGAINST RETURNED INCOME OF RS.2,66,51,387/- E-FILED BY THE ASSESSEE ON 14/10/2010. THE ASSESSEE WAS ENGAGED AS BUILDERS & DEVELOPERS . DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS FOUND TO HAVE MADE BOGUS PURCHASES FROM 9 PARTIES WHICH WERE LISTED AS SUSPICIOUS DEALERS BY SALES TAX DEPARTMENT, MAHARASHTRA. TO CONFIRM THE SAME, NOTICES U/S 133(6 ) ISSUED TO THESE PARTIES BUT THE SAME REMAINED UN-SERVED AND SPOT IN QUIRIES MADE BY THE INSPECTOR REVEALED NON-EXISTENCE OF PARTIES AT THE GIVEN ADDRESSES. THE ASSESSEE CONTENDED THAT THE CONSUMPTION OF MATERIAL WAS AVAILABLE ON RECORDS, PURCHASES WERE BACKED BY RESPECTIVE INVOIC ES AND THE PAYMENTS WERE THROUGH BANKING CHANNELS AND THEREFOR E, THERE WAS NO BASIS TO TREAT THE PURCHASES AS BOGUS. HOWEVER, NOT CONVINCED, AO REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE IMPUGNED PURCHASES ITA NO.5244/M/2013 SHRADDHA DEVELOPERS ASSESSMENT YEAR-2010-11 3 AS UNEXPLAINED EXPENDITURE U/S 69C AND ADDED THE SA ME TO THE INCOME OF THE ASSESSEE. 3. THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEF ORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 10/05/2013 AND RAISED SIM ILAR CONTENTIONS AND SUBMITTED VARIOUS DOCUMENTS TO JUSTIFY THE PURC HASES MADE BY HIM. LD. CIT(A) NOTED THAT THE PAYMENTS WERE THOUGH BANK ING CHANNELS, SALES TURNOVER WAS NOT DISPUTED BY AO AND THE ADDIT IONS HAS BEEN MADE MERELY ON THE BASIS OF INFORMATION OBTAINED FROM SA LES TAX DEPARTMENT. FURTHER, THE ASSESSEE SUBMITTED RESPECTIVE PURCHASE INVOICES, LEDGER EXTRACTS, BANK STATEMENT, QUANTITATIVE STATEMENT OF ITEMS PURCHASED, STATEMENT OF PER SQUARE FEET CONSUMPTION OF EACH IT EM, AFTER PERUSAL OF WHICH, THE LD. CIT(A) WAS CONVINCED WITH THE VARIOU S CONTENTIONS OF THE ASSESSEE AND THEREFORE, DELETED THE IMPUGNED ADDITI ONS. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US AND CONTESTED THE RE LIEF PROVIDED BY LD. CIT(A). 4. THE LD. DEPARTMENTAL REPRESENTATIVE DREW OUR ATT ENTION TO THE FACT THAT NONE OF THE ALLEGED BOGUS SUPPLIER APPEARED BE FORE AO IN RESPONSE TO NOTICE U/S 133(6). FURTHER, THE PHYSICAL VERIFIC ATION BY INSPECTOR AT THEIR RESPECTIVE ADDRESSES REVEALED THAT NONE OF THE PART Y EXISTED AT THE GIVEN ADDRESSES WHICH, IN ITSELF, CAST SERIOUS DOUBT ON T HE CLAIM OF THE ASSESSEE. THE ASSESSEE, DESPITE HAVING BEEN MADE SU CH HEAVY PURCHASES FROM THESE SUPPLIERS COULD NOT PRODUCE EV EN A SINGLE SUPPLIER TO SUBSTANTIATE HIS CLAIM. FURTHER, THE ASSESSEE FA ILED TO CONCLUSIVELY PROVE THE ACTUAL PHYSICAL DELIVERY AND CONSUMPTION OF MATERIAL AT VARIOUS PROJECT SITES OF THE ASSESSEE AND THEREFORE, LD. CI T(A) ERRED IN PROVIDING RELIEF TO THE ASSESSEE PARTICULARLY WHEN THE ONUS T O PROVE THE PURCHASES ITA NO.5244/M/2013 SHRADDHA DEVELOPERS ASSESSMENT YEAR-2010-11 4 BEYOND DOUBT SQUARELY LIED ON THE ASSESSEE AND THE ASSESSEE HAS FAILED TO DISCHARGE THE SAME. THEREFORE, THE ASSESSEE DESE RVES FULL DISALLOWANCE AGAINST BOGUS PURCHASES. 5. PER CONTRA, THE LD. COUNSEL FOR ASSESSEE [AR] PLACED RELIANCE O N THE FINDINGS OF LD. CIT(A) TO CONTEND THAT THE ASSE SSEE MADE EXHAUSTIVE SUBMISSIONS IN THIS REGARD BEFORE LD. CIT(A), WHO A FTER CONSIDERING THE SAME, PROVIDED RELIEF TO THE ASSESSEE AND THEREFORE , THE SAME WAS PERFECT IN ORDER AND REQUIRE NO INTERFERENCE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER ANALYZING THE VARIOUS CON TENTIONS OF RESPECTIVE REPRESENTATIVES COUPLED WITH OBSERVATION / FINDINGS OF LD. CIT(A) AND AFTER APPRECIATING FACTUAL MATRIX OF THE CASE, WE F IND THAT THE ASSESSEE DO NOT DESERVE FULL RELIEF AGAINST THE IMPUGNED PUR CHASES PARTICULARLY WHEN NONE OF THE SUPPLIER COULD SUBSTANTIATE THE CL AIM OF THE ASSESSEE BEFORE AO. NO DOUBT, THE ASSESSEE WAS IN POSSESSION OF INVOICES, PAYMENTS WERE THOUGH BANKING CHANNELS, QUANTITATIVE / CONSUMPTION DETAILS WERE AVAILABLE ON RECORD AND SALES TURNOVER WERE NOT DOUBTED BY THE REVENUE, BUT NEVERTHELESS, THE ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM CONCLUSIVELY. THE TRIBUNAL, INVARIABLY, IN AL L SUCH CASES, HAVE TAKEN A STAND THAT EVEN IF PRESUMING THAT ALL PURCHASES W ERE BOGUS, ENTIRE ADDITION THEREOF WAS NOT WARRANTED FOR PARTICULARLY WHEN THE SALES WERE NOT IN DISPUTE AND THE ADDITION, IF ANY, WHICH HAS TO BE MADE IN ALL SUCH CASES IS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN SUCH PURCHASE TRANSACTIONS. THEREFORE, AFTER DUE DISCUSSION WITH RESPECTIVE REPRESENTATIVES, WE RESTRICT THE SAID DISALLOWANCE TO 8% OF ALLEGED BOGUS PURCHASES OF RS.96,26,712/- WHICH COMES TO RS.7,70,137/-. ITA NO.5244/M/2013 SHRADDHA DEVELOPERS ASSESSMENT YEAR-2010-11 5 7. IN NUTSHELL, THE REVENUES STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH MAY, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. !$, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI