SHRI PANISH P. MEHTA, MUMBAI V. ACIT 19(2)(3), MUMBAI

ITA 5274/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6051 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries; Set aside
• Section: 133(6); 148

Judgement Text

1 ITA 5274/MUM/2008 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI PAWAN SINGH (JM) & SHRI G MANJUNATHA (A M) ITA NO. 5274/MUM/2018(ASSESSMENT YEAR : 2009-10) SHRI PANISH P MEHTA 72, NANUBHAI DESAI ROAD BHAVNAGRI BLDG, 2 ND FLOOR MUMBAI 400 004 PAN : AFNPM5412M VS ACIT 19(2)(3), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY NONE RESPONDENT BY SHRI AKHTAR H ANSARI DATE OF HEARING 26-09-2019 DATE OF PRONOUNCEMENT 01-10-2019 O R D E R PER PAWAN SINGH, JM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 30, MUMBAI DATED 31-05-2018 FOR AY 2009-10. THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- GROUND OF APPEAL L.THE ORDER PASSED BY THE LEARNED COMMISSIONERS APPEAL SHOULD BE SET ASIDE IN TOTO. THE LEARNED COMMISSIONER APPEAL NOT CONSIDERED THE FACTS OF THE CASES AND CASES DECIDED BY THE VARIOUS BENCH ES OF 1TAT FOR NON GENUINE PURCHASES DECIDED BY THE VAT DEPARTMENT, 2.THE CIT (A) DISMISSED THE CASE WITHOUT GOING THRO UGH THE FACTS OF THE CASES HENCE SHOULD BE SET ASIDE AND THE ARBITRARY I NCOME OF RS. 10939Q2/- WHICH IS NOT CORRECT AND SHOULD BE SET ASIDE, THE LEARNED AO ADDED THE ARBITRARY INCOME OF RS. 10 93902/- WHICH IS NOT CORRECT AND SHOULD BE SET ASIDE IN TOTO ABIN1TIO. O N ACCOUNT OF NON GENEUINE PURCHASE AS STATED BY VAT DEPARTMENT. 3.THE LEARNED AO ARRIVED THE FIGURE OF 12.50% FROM THE CASE LAW MENTION. IN FACT OF THE CASE WHICH IS NOT RELEVENT TO US WE ARE TRADERS AND RUNNING BUSINESS ON VERY THIN MARGIN. WE HAVE THE G ROSS PROFIT IN THE COMPANY 7.12% ONLY. HENCE THE ADDITION OF AMOUNT SH OULD BE SETB ASIDE IN TOTO. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING FERROUS AND NON FERROUS METALS, FILED HIS R ETURN OF INCOME FOR AY 2009- 2 ITA 5274/MUM/2008 10 ON 21-09-2009 DECLARING INCOME OF RS.64,66,688. INITIALLY THE RETURN WAS PROCESSED U/S 143(1). THEREAFTER, THE CASE WAS REO PENED ON THE BASIS OF INFORMATION RECEIVED FROM DGIT(INV) WHEREIN IT WAS INFORMED THAT SALES-TAX DEPARTMENT, MAHARASHTRA HAS IDENTIFIED CERTAIN DEAL ERS, WHO WERE INDULGING IN PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF BOGU S BILLS WITHOUT SUPPLY OF ANY GOODS. A LIST OF BENEFICIARIES WAS ALSO FORWAR DED BY THE DGIT(INV). THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF SUCH BOGUS BILLS. THE AO REOPENED THE ASSESSMENT U/S 147. NOTICE U/S 148 DATED 10-02-201 4 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 1 48, THE ASSESSEE FILED HIS RESPONSE AND STATED THAT THE RETURN FILED ORIGINAL LY MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. REASONS FOR R EOPENING WAS PROVIDED TO THE ASSESSEE. THE AO PROCEEDED FOR RE-ASSESSMENT. DUR ING THE RE-ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN PUR CHASES FROM THE FOLLOWING 10 PARTIES:- SR.NO NAME OF HAWALA PARTY AMOUNT 1 R J MEHTA METAL INDUSTRIES 10,78,100 2 MANAV IMPEX 10,08,000 3 STELCO STEEL INDUSTRIES 5,42,276 4 SHUBH LABH METAL AND ALLOYS / BRIGHT ENTERPRISE 9,24,281 5 ROLEX TRADING COMPANY 19,62,744 6 CORAL TRADING CO 6,85,270 7 DHANERA METAL CORPORATION 2,85,270 8 MANISH INDUSTRIAL CORPORATION 19,90,297 9 ASIAN METAL INDUSTRIES 1,21,654 10 PRIME STEEL IMPEX 1,52,741 TOTAL 87,51,217 3 ITA 5274/MUM/2008 IN ORDER TO VERIFY THE GENUINENESS OF PURCHASES, TH E AO ISSUED NOTICE U/S 133(6) TO ALL THE PARTIES, THROUGH REGISTERED POST AT THE ADDRESS PROVIDED BY THE ASSESSEE. NOTICES COULD NOT BE SERVED ON ALL THE P ARTIES AND WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK, NOT KNO WN/ NO SUCH ADDRESS/ LEFT. THE ASSESSEE WAS GIVEN OPPORTUNITY TO EST ABLISH THE GENUINENESS OF PURCHASES BY FURNISHING SUPPORTING EVIDENCES AND TO PRODUCE THE PARTIES. THE ASSESSEE FAILED TO PRODUCE THE PARTIES. HOWEVER, T HE ASSESSEE FURNISHED COPY OF LEDGER ACCOUNT, PURCHASE BILLS, BANK STATEMENT SHOW ING THAT PAYMENTS WERE MADE THROUGH BANKING CHANNEL. THEREAFTER, THE ASSE SSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF INVOICES, BILLS, LEDGER ACCOUNT AND TRANSPORTATION OF GOODS / LORRY RECEIPTS. THE ASSE SSEE FILED THE QUANTITATIVE DETAILS OF PURCHASES AND CORRESPONDING SALES. AFTE R EXAMINING THE EVIDENCES FURNISHED BY ASSESSEE, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO, BY MAKING RELIANCE ON THE DECISION OF GUJAR AT HIGH COURT IN CASE OF CIT VS SIMIT P SHETH ITA NO.553 OF 2012 ORDER DATED 16-01-2013 AND CIT VS BHOLANATH POLY FAB (P) LTD 355 ITR 290 (GUJ) TOOK T HE VIEW THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES IS TO BE TAKEN F ROM THE SAID PURCHASES SHOWN BY THE HAWALA / NONEXISTENT PARTIES. THE ASS ESSEE HAS OBTAINED ACCOMMODATION ENTRIES OF RS.87.51 LAKHS. THEREFORE , THE AO, CONSIDERING THE MARGIN OF PROFIT ON SUCH PURCHASES DISALLOWED 12.5% OF THE AGGREGATE OF 4 ITA 5274/MUM/2008 PURCHASES WHICH CAME TO RS.10,93,902. ON APPEAL BE FORE CIT(A), THE ACTION OF AO IN MAKING ADDITION OF 12.5% OF THE TOTAL ALLEGED BOGUS PURCHASES WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE THE SERVICE OF NOTICE THROUGH REGISTERED POST. PERUSAL OF RECORD SHOWS THAT NOTI CE HAS BEEN DULY RECEIVED ON BEHALF OF ASSESSEE AS THE ACKNOWLEDGEMENT OF SERVIC E OF NOTICE IS AVAILABLE ON RECORD. CONSIDERING THE FACT THAT NEITHER THE ASSE SSEE NOR HIS REPRESENTATIVE HAS COME FORWARD TO EXPLAIN THE FACT, THEREFORE, WE ARE LEFT WITH NO OPTION EXCEPT TO HEAR THE LD.DR FOR THE REVENUE AND TO DECIDE THE AP PEAL ON THE BASIS OF MATERIAL ON RECORD. THE LD.DR SUBMITS THAT INVESTI GATION WING OF INCOME-TAX DEPARTMENT MADE A FULLFLEDGED ENQUIRY. THE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN PURCHASES ARE BOGUS HAWALA DEALERS. THE HAWALA DEALERS WERE INDULGING IN SHOWING BOGUS BILLS WITHOUT DELIVERY O F ANY MATERIAL OR GOODS. THE ASSESSEE OBTAINED ACCOMMODATION BILLS IN ORDER TO INFLATE THE EXPENSES TO BRING DOWN THE PROFIT IN ORDER TO AVOID THE PAYMENT OF GENUINE TAX. THE LOWER AUTHORITIES HAVE ALREADY GIVEN SUBSTANTIAL RELIEF T O THE ASSESSEE. 4. WE CONSIDERED THE SUBMISSIONS OF THE LD DR FOR T HE REVENUE AND GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES. WE HAVE ALSO DELIBERATED ON THE CASE LAW RELIED BY THE LOWER AUTHORITIES. PERUSAL OF REC ORDS REVEALS THAT THE ASSESSEE HAS NOT CHALLENGED THE VALIDITY OF RE-OPENING BEFOR E THE LD.CIT(A) HENCE, THE 5 ITA 5274/MUM/2008 ISSUE OF REOPENING ATTAINED FINALITY. MOREOVER, TH E ASSESSEE HAS ONLY CHALLENGED THE QUANTUM OF ADDITION MADE BY THE AO. WE HAVE FURTHER NOTED THAT ON THE BASIS OF INFORMATION AND EXAMINING THE LIST OF BENEFICIARIES, THE AO IDENTIFIED THAT ASSESSEE HAS SHOWN PURCHASES FROM 1 0 PARTIES MENTIONED ABOVE. IN ORDER TO VERIFY THE GENUINENESS OF PURCHASES, TH E AO ISSUED NOTICES TO THE PARTIES. HOWEVER, NONE OF THE PARTIES COULD BE SER VED WITH THE NOTICE AND THE NOTICES WERE RETURNED WITH THE REMARK, NOT KNOWN/ NO SUCH ADDRESS/ LEFT, BY THE POSTAL AUTHORITIES. THE ASSESSEE WAS ALSO G IVEN OPPORTUNITY TO PRODUCE ALL THE PARTIES FOR VERIFICATION. THE ASSESSEE FAI LED TO PRODUCE THE PARTY. HOWEVER, THE ASSESSEE FILED LEDGER ACCOUNT COPY, PU RCHASE BILLS AND BANK STATEMENT. THE AO FURTHER ASKED THE ASSESSEE TO PR OVE THE TRANSPORTATION AND DELIVERY OF GOODS. THE ASSESSEE FAILED TO PROVE TH E DELIVERY OF GOODS BY SHOWING DOCUMENTARY EVIDENCE ABOUT THE TRANSPORTATI ON OF GOODS. THE AO AFTER CONSIDERING THE FACTS TOOK THE VIEW THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES SHOULD BE DISALLOWED. THE AO DISALL OWED 12.5% OF THE PURCHASES SHOWN FROM ALL THE PARTIES. THE LD. CIT( A) AFFIRMED THE ACTION OF AO HOLDING THAT THERE IS NO PROOF OF DELIVERY OF PU RCHASES. NO SUCH EVIDENCE IS FILED EITHER BEFORE AO OR BEFORE LD. CIT(A). BE FORE US, NEITHER THE ASSESSEE HAS FILED ANY DOCUMENTARY EVIDENCE TO SHOW GROSS PR OFIT EARNED DURING THE YEAR NOR PROVE THE DELIVERY OF GOODS OR ANY WRITTEN SUBM ISSION EXPLAINING THE RECEIPT OF GOODS BY THE ASSESSEE. WE HAVE NOTED TH AT AO REJECTED THE BOOKS OF 6 ITA 5274/MUM/2008 ACCOUNT AND FAIRLY ESTIMATED THE PROFIT EARNED ON S UCH IMPUGNED PURCHASES. THEREFORE, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-10-2019. SD/- SD/- (G. MANJUNATHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 1 ST OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI