ASSISTANT COMMISSIONER OF INCOME TAX 15(2)(1), MUMBAI V. JYOTI SWITCHGEARS PRIVATE LIMITED, MUMBAI

ITA 529/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5391 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH LD
• Assessee Lawyers: ADJ APPLICATION REJE CTED
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.529/MUM/2018 ( / ASSESSMENT YEAR: 2010-11) A CIT - 15(2) (1) ROOM NO.357, 3 RD FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI - 400 020. / VS. M/S. JYOTI SWITCHGEARS P VT. L TD. W-379, MIDC, RABALE NAVI MUMBAI - 400 614. ! ./ ./PAN/GIR NO. AABCJ-8882-B ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : ADJ. APPLICATION-REJECTED DEPARTMENT BY : CHAUDHARY ARUN KUMAR SINGH-LD.DR / DATE OF HEARING : 13/05/2019 / DATE OF PRONOUNCEMENT : 16/05/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-24, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO. CIT(A)- 24/ACIT/15(2)(1)/IT-25/2016-17 DATED 03/10/2017. THE SOLE ISSUE INVOLVED UNDER THE APPEAL IS ESTIMATION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2 DURING HEARING, THE ASSESSEES REPRESENTATIVE, VIDE ADJOURNMENT LETTER DATED 13/05/2019 SOUGHT ADJOURNMENT IN THE MATTER, HOWEVER, THE SAME WAS REJECTED BY THE BENCH KEEPING IN VIEW THE FACT THAT THE ASSESSEE FAILED TO APPEAR ON FIRST OCCASION WHEREAS TOOK ADJOURNMEN T ON THE SECOND OCCASION. ACCORDINGLY, THE APPEAL IS HEARD EX-PARTE QUA THE ASSESSEE AFTER APPRECIATING THE WRITTEN SUBMISSIONS MADE BY LD. DR . 2.1 FACTS ON RECORD REVEAL THAT THE ASSESSEE WAS BE EN ASSESSED U/S 143(3) R.W.S. 147 ON 20/02/2016 WHEREIN THE INCOME HAS BEEN DETERMINED AT RS.173.30 LACS AFTER DISALLOWANCE OF ALLEGED BOGUS PURCHASES FOR RS.104.79 LACS AS AGAINST RETURNED INCOME OF RS.68. 51 LACS E-FILED BY THE ASSESSEE ON 01/10/2010 WHICH WAS PROCESSED U/S 143( 1). 2.2 THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACTURING OF ELECTRICAL GOODS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS PURSUANT TO RECEIPT OF CER TAIN INFORMATION THAT THE ASSESSEE WAS ENGAGED IN THE PRACTICE OF INFLATI NG THE PURCHASES THROUGH HAWALA PARTIES. ACCORDINGLY, THE CASE WAS REOPENED VIDE ISSUE OF NOTICE U/S 148 DATED 18/03/2015 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). 2.3 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE MADE AGGREGATE PURCHASES OF RS.104.79 LACS FROM 11 SUSPI CIOUS DEALERS, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED IN PARA 2 OF THE QUANTUM ASSESSMENT ORDER. THE STATEMENT MADE BY THESE PARTI ES BEFORE SALES TAX AUTHORITIES REVEALED THAT THESE PARTIES WERE INDULG ED IN PROVIDING ACCOMMODATION BILLS WITHOUT CARRYING OUT ANY ACTUAL TRANSFER OF GOODS. TO CONFIRM THE TRANSACTIONS, NOTICES U/S 133(6) WERE I SSUED TO THE SUPPLIERS, 3 HOWEVER, NONE APPEARED NOR SUBMITTED ANY DOCUMENTAR Y EVIDENCES IN SUPPORT OF LEGITIMACY OF THEIR BUSINESS. THE SAME W AS CONFRONTED TO THE ASSESSEE. THE ASSESSMENT ORDER, AT PARA 2.5, RECORD A FINDING THAT THE ASSESSEES REPRESENTATIVE HAS SHOWN INABILITY TO FU RNISH THE EXPLANATION AND AGREED FOR THE ADDITION. THE FAILURE ON THE PAR T OF THE ASSESSEE TO FURNISH SATISFACTORY REPLY RESULTED INTO DISALLOWAN CE OF AFORESAID PURCHASES. ACCORDINGLY, IMPUGNED ADDITIONS OF RS.104.79 LACS W AS MADE IN THE HANDS OF THE ASSESSEE. 3.1 BEFORE LD. CIT(A), THE ASSESSEE, INTER-ALIA, DREW ATTENTION TO THE FACT THAT THE ASSESSEE SUBMITTED COPIES OF INVOICES, DEL IVERY CHALLANS, LEDGER EXTRACTS, PROOF OF PAYMENT ETC. AND THEREFORE, THE PURCHASES COULD NOT BE TREATED AS BOGUS. HOWEVER, IT WAS NOTED THAT THE CHALLANS NUMBERS / INVOICES DID NOT BEAR THE VEHICLE NUMBER / TRANSPOR T DETAILS. THE MATERIAL ON RECORD AS WELL AS ASSESSEES SUBMISSIONS LED THE LD . FIRST APPELLATE AUTHORITY TO FORM AN OPINION THAT THE ASSESSEE FAIL ED TO DISCHARGE THE PRIMARY ONUS CASTED UPON HIM TO ESTABLISH THE GENUI NENESS OF THE TRANSACTIONS AND THE OBSERVATIONS OF HONBLE APEX C OURT RENDERED IN CIT VS. DURGAPRASAD MORE 82 ITR 540 AS WELL AS SUMATI DAYAL VS. CIT 214 ITR 801 WAS APPLICABLE TO THE FACTUAL MATRIX. 3.2 IN THE BACKGROUND OF VARIOUS DECISIONS OF HIGHE R JUDICIAL AUTHORITIES, LD. CIT(A) PROCEEDED TO ESTIMATE THE ADDITION ON AC COUNT OF ALLEGED BOGUS PURCHASES IN VIEW OF THE FACT THAT THE SALES WERE ACCEPTED AN D THE ADDITION OF ENTIRE PURCHASES WOULD LEAD TO ABSURD PROFITS. T HEREFORE, THE ADDITION WAS TO BE RESTRICTED TO ACCOUNT FOR ELEMENT OF PROF IT EMBEDDED IN PURCHASES WHICH THE ASSESSEE WOULD HAVE MADE BY PURCHASING GO ODS FROM SOME 4 UNKNOWN ENTITIES. FINALLY, FOLLOWING THE DECISION O F HONBLE GUJARAT HIGH COURT RENDERED IN CIT VS. SIMIT P.SHETH [356 ITR 451] & CIT VS. BHOLANATH POLY FAB. P. LTD. [355 ITR 290], THE IMPUGNED ADDITIONS WERE RESTRICTED TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. UPON CAREFUL CONSIDERATION, WE ARE OF THE CONSID ERED OPINION THAT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF M ATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE SALES TURNOV ER WAS NOT DISPUTED BY THE LD. AO AND THE ASSESSEE WAS IN POSSESSION OF PR IMARY PURCHASE DOCUMENTS VIZ. COPIES OF INVOICES, DELIVERY CHALLAN S AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THEREFORE, LD. CIT(A), IN OUR OPINION, CLINCHED THE ISSUE IN RIGHT PERSPECTIVE AND HENCE, WOULD NOT REQUIRE ANY INTERFERENCE ON OUR PART. WE HOLD SO. 5. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/05/2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 16/05/2019 5 SR.PS:-JAISY VARGHESE ! '! / 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