DCIT CENT. CIR. 4(2), CENT. RANGE - 4, MUMBAI V. SARYU PROPERTIES AND HOTELS PVT. LTD., MUMBAI

ITA 5272/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8535 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 24-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: VINAY SINHA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA.NO.5272/MUM/2016 SARYU PROPERTIES AND HOTEL PRIVATE LIMITED ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5272/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4(2) ROOM NO.1918,19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 / VS. SARYU PROPERTIES AND HOTEL PRIVATE LIMITED PLOT NO.25,B-WING GIRNARA, PALI MALA ROAD PALI HILL, BANDRA(W) MUMBAI-400 050 ! ./ ./PAN/GIR NO. AAACS-6983-M ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : VINAY SINHA ,LD.AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 31/10/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011- 12 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 52 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-52/IT/DC-CC-4(2)/274/2015-16 DATED 30/06/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ITA.NO.5272/MUM/2016 SARYU PROPERTIES AND HOTEL PRIVATE LIMITED ASSESSMENT YEAR-2011-12 2 DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-4( 2), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 15/02/2016. THE SOLITARY ISSUE INVOLVED UNDER APPEA L IS ADDITION ON ACCOUNT OF CERTAIN ALLEGED BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN HOTEL BUSINESS & REAL ESTATE DEVELOPMENT & FINANCE WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 15/02/2016 AT RS.1,24,37,410/- UNDER NORMAL PROVISIONS AFTER ADDI TION OF CERTAIN BOGUS PURCHASES FOR RS.65,29,714/-. THE ORIGINAL RETURN WAS E-FILED ON 30/09/2011 AT RS.22,14,170/- WHICH WAS ASSESSED U/S 143(3) ON 30/12/2013 AT RS.59,07,700/-. 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.65,29,714/- FROM TWELVE SUCH PARTIES. CONSEQUENT LY, NOTICE U/S 148 DATED 03/06/2014 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). 2.3 DURING ASSESSMENT PROCEEDINGS, NOTICES U/S 133( 6) WERE SENT TO THE SAID SUPPLIERS TO CONFIRM THE PURCHASE TRANSACT IONS. HOWEVER, THE SAME WERE RETURNED BACK UN-SERVED BY POSTAL AUTHORITIES WITH REMARKS LIKE NOT KNOWN, NOT AVAILABLE, LEFT ETC. THE PHYSICAL INSPECTION REVEALED THAT NONE OF THE PARTIES EXISTED AT THE GIVEN ADDRE SSES. UPON CONFRONTATION, THE ASSESSEE SUBMITTED PURCHASE ORDERS, INVOICES, TRANSPORT DETAILS, STOCK REGISTER, BANK STATEMENT E VIDENCING PAYMENT TO ITA.NO.5272/MUM/2016 SARYU PROPERTIES AND HOTEL PRIVATE LIMITED ASSESSMENT YEAR-2011-12 3 SUPPLIERS ETC. TO SUPPORT THE PURCHASE TRANSACTIONS. HOWEVER, NOT CONVINCED, LD. AO CONCLUDED THAT THE ASSESSEE FAILE D TO DISCHARGE THE ONUS CASTED ON HIM TO PROVE THE PURCHASES TRANSACTI ONS. FINALLY, TREATING THE SAME AS NON-GENUINE PURCHASES, THE SAME WERE AD DED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 30/06/2 016 WHERE LD. CIT(A) AFTER APPRECIATING THE FACTUAL MATRIX AND PL ACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS RESTRICTED THE ADDI TIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] RELIED ON THE STAND OF LD. AO WHEREAS LD. COUNSEL FOR ASSESSEE [AR] ASSERT ED THAT ESTIMATION MADE BY LD. CIT(A) WAS QUITE FAIR AND REASONABLE. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN HOTEL BUSINESS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND T HE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY C ONFIRMATION FROM ANY OF THE IMPUGNED SUPPLIER AND NOTICES SENT U/S 1 33(6) REMAINED UN- SERVED AND PHYSICAL INSPECTION REVEALED THAT PARTIES DID N OT EXIST AT THE GIVEN ADDRESSES, WHICH CAST SERIOUS DOUBT ON ASSESS EES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO ITA.NO.5272/MUM/2016 SARYU PROPERTIES AND HOTEL PRIVATE LIMITED ASSESSMENT YEAR-2011-12 4 FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGA INST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME TO BE QUITE FAIR & REAS ONABLE, WE DISMISS REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11 .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