ITO WARD 3(2), KALYAN V. SHRI DINESH P. MEHTA, MUMBAI

ITA 5304/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6058 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Assessee Lawyers: DINESH P MEHTA
• Keywords: Bogus purchase
• Section: 143(3); 143(2); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 5304/MUM/2018 (ASSESSMENT YEAR 2009-10 ) ITA NO. 5303/MUM/2018 (ASSESSMENT YEAR 2010-11 ) ITA NO. 5302/MUM/2018 (ASSESSMENT YEAR 2011-12 ) ITO WARD- 3(2) KALYAN, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN (W)-421301 VS. SHRI DINESH P MEHTA, PROP. POOJA SALES CORPORATION, 13, REKHA BUILDING, NEAR HDFC BANK, NAHUR ROAD, MULUND EAST, MUMBAI- 400080. PAN: AFMPM3903K APPELLANT RESPONDE NT APPELLANT BY : SHRI AKHTAR H. ANSARI (DR) RESPONDENT BY : SHRI DINESH P. MEHTA (AR) DATE OF HEARING : 01.10.2019 DATE OF PRONOUNCEMEN T : 01.10.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER ; 1. THESE THREE APPEAL BY REVENUE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF LD. CIT(A)-3 NASIK (CAMP OFFICE THANE) DAT ED 11.06.2018 FOR ASSESSMENT YEAR 2009-10, 2010-11 & 2011-12. IN ALL APPEALS, THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL. FAC TS IN ALL APPEALS ARE IDENTICAL EXCEPT VARIATION OF FIGURES OF DISALLOWAN CE OF BOGUS PURCHASES, THEREFORE, ALL THE APPEALS WERE CLUBBED, HEARD TOGE THER AND ARE DECIDED BY COMMON ORDER. FOR APPRECIATION OF FACT, THE APPE AL FOR ASSESSMENT YEAR 2009-10. THOUGH THE REVENUE HAS RAISED AS MANY AS SEVEN GROUNDS ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 2 OF APPEAL, HOWEVER, IN OUR CONSIDERED VIEW, THE ONL Y SUBSTANTIAL GROUND OF APPEAL IS WHETHER THE LD. CIT(A) WAS NOT JUSTIFI ED IN RESTRICTING THE DISALLOWANCE OF BOGUS PURCHASES TO THE EXTENT OF 12 .5% OF BOGUS/HAWALA DEALERS/NON-EXISTENT VENDORS. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF TRADER IN INDUSTRIAL ITEMS, FILED HIS RETURN OF INC OME FOR ASSESSMENT YEAR 2009-10 DECLARING TOTAL INCOME OF RS. 2,12,960 /-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1). THE ASSE SSMENT WAS RE- OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATIO N RECEIVED FROM SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT CERT AIN HAWALA OPERATORS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE SALE TAX DEPARTMENT, GOVERNM ENT OF MAHARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALER S AND THE BENEFICIARY TO THE DGIT (INVESTIGATION), MUMBAI. THE NAME OF AS SESSEE APPEARED IN THE LIST OF BENEFICIARY. THE ASSESSEE ALLEGEDLY MA DE THE PURCHASES OF RS. 3,11,430/- FROM VARIOUS PARTIES, WHOSE NAMES WERE INCLUDED IN THE LIST SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, T HE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAP ED ASSESSMENT, THEREFORE, RE-OPENED THE ASSESSMENT UNDER SECTION 1 47. NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE WHICH WAS RE CEIVED ON 07.08.2013. THE ASSESSING OFFICER AFTER SERVING NOT ICE UNDER SECTION 143(2) PROCEEDED FOR RE-ASSESSMENT. DURING THE ASSE SSMENT, THE ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 3 ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES OF RS. 3,11,430/- FROM THE FOLLOWING PARTIES, WHICH WERE D ECLARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF M AHARASHTRA. NAME OF THE PARTY BILL AMOUNT (RS.) 1 R.J. METAL INDUSTRIES 1,13,466/- 2 AMAR ENTERPRISES 4,118/- 3 MILESTONE CORPORATION 5,538/- 4 PAYAL ENTERPRISE 12,610/- 5 M.R. CORPORATION 26,695/- 6 CORAL TRADING CO. 35,029/- 7 MARCON ENTERPRISES 46,796/- 8 G.S. ENTERPRISES 20,852/- 9 D.R. TRADING CO. 21,937/- 10 V.K. ENTERPRISES 24,388/- TOTAL 3,11,430/- 3. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASE S AND TO FURNISH THE BOOKS, LEDGER, SALES REGISTER, DESCRIPTION OF GOODS , QUANTITY, RATE AND AMOUNT. THE DATE OF DISPATCH OF GOODS AND THE NAME OF PLACE ALONG WITH MODE OF TRANSPORTATION BY ROAD OR OTHER MODE, VEHIC LE NUMBER, AND PAYMENT DETAILS. THE ASSESSEE IN ITS REPLY STATED T HAT HE HAS NOT TAKEN ANY ACCOMMODATION BILLS, ALL THE TRANSACTIONS ARE G ENUINE. PURCHASES WERE MADE VIDE VALID TAX INVOICES. THE PAYMENTS WER E MADE THROUGH ACCOUNT PAYEE CHEQUES. ALL THE TRANSACTIONS ARE ACC OUNTED IN THE BOOKS. THE ASSESSEE SOLD THE MATERIAL AND THE SALES IS ACC OUNTED AND THE PROFIT IS CREDITED TO THE PROFIT & LOSS ACCOUNT. THE SUBMI SSION OF ASSESSEE ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 4 WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE ENTIRE ENTRIES IN ITS BOOKS OF ACCOUNT. THE ASSESSEE COULD NOT PRODUCE THE DOCUMENTARY EVIDENCE OF TRANSPORTATION OF GOODS AND DELIVERY CHALLAN. THE ASSESSEE HAS SHO WN SALES OF RS. 65,46,707/- AND PURCHASES OF RS. 58,91,195/-. OUT O F WHICH, THE PURCHASES FROM ALLEGED HAWALA DEALERS IS RS. 3,11,4 30/-. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF ASSESSEE A ND DISALLOWED THE ENTIRE ALLEGED BOGUS PURCHASES IN ASSESSMENT ORDER DATED 23.02.2015 PASSED UNDER SECTION 143(3) R.W.S 147. 4. ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) RES TRICTED THE ADDITION TO THE EXTENT OF 12.5%. THE LD. CIT(A) WHILE RESTRICTI NG THE DISALLOWANCES RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN CASE OF SIMITH P. SETH (356 ITR 451). THE LD. CIT(A) ALSO C ONCLUDED THAT ASSESSEE MIGHT HAVE MADE THE PURCHASES FROM GREY MA RKET, OPERATING IN THE GREY MARKET LEADS TO VARIOUS SAVINGS ON ACCOUNT OF NON-PAYMENTS OF VARIOUS TAXES BY USE OF UNACCOUNTED MONEY AND ON S UCH PURCHASES, WHEN SALES ARE NOT DISPUTED, THE REASONABLE DISALLO WANCES SHOULD BE CONSIDERED TO AVOID THE REVENUE LEAKAGE. THUS, AGG RIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT AP PEAL BEFORE US. 5. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. DR FOR THE REVENUE ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 5 SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. D R FURTHER SUBMITS THAT INVESTIGATION WING OF INCOME-TAX DEPARTMENT HA S MADE FULL- FLEDGED INVESTIGATION IN RESPECT OF HAWALA TRADERS. THE HAWALA TRADERS WERE/ARE ENGAGED IN PROVIDING BOGUS BILL WITHOUT AC TUAL DELIVERY OF GOODS. THE ASSESSEE HAS SHOWN BOGUS PURCHASES ONLY TO INFLATE THE PROFIT. THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSING OFFICER HAS BROUGHT SUFFICIENT MATERIAL ON RECORD TO PROVE THAT THE PURCHASES SHOWN BY ASSESSEE WERE BOGUS. THE ASSESSEE IS NOT ENTITLE D FOR ANY RELIEF. 6. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMI TS THAT THE ASSESSEE FURNISHED COMPLETE DETAILS OF PURCHASES AND THE SAL ES MADE AGAINST THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAS WRONGLY REJECTED THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER MADE TH E DISALLOWANCE OF 100% OF THE ALLEGED BOGUS PURCHASES. THE ADDITION M ADE ON ACCOUNT OF ALLEGED BOGUS PURCHASES WAS UNREASONABLE. THE LD. C IT(A) RESTRICTED THE DISALLOWANCE ON REASONABLE BASIS. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE REPR ESENTATIVES AND PERUSED THE RECORD. 8. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND LD. AR OF THE ASSESSEE. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF 100% OF THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAS NOT DISPUTED THE SALES OF THE ASSESSEE. THE ASSESSING O FFICER SOLELY RELIED UPON THE REPORT OF INVESTIGATION WING OF SALE TAX D EPARTMENT. BEFORE ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 6 THE LD. CIT(A), THE ASSESSEE URGED THAT THE PURCHAS ES SHOWN BY ASSESSEE ARE GENUINE. THE PAYMENTS OF PURCHASES WERE MADE TH ROUGH ACCOUNT PAYEE CHEQUES. THE GOODS WERE RECEIVED BY ASSESSEE AND QUANTITATIVE DETAILS AND CORRESPONDING SALES OF SHOWN. THOUGH TH E ASSESSEE FAIRLY STATED THAT THEY ARE UNABLE TO PRODUCE THE SUPPLIER FOR VERIFICATION. HOWEVER, THE ASSESSEE HAS PAID SALE TAX ON BEHALF O F THE DEALERS AND RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN SIMITH P. SETH (SUPRA). THE LD. CIT(A) AFTER CONSIDERING THE MATERIAL PLACED BEFORE HIM AND THE RATIO OF THE DECISIONS INCLUDING THE DE CISION OF SIMITH P. SETH CONCLUDED THAT IT HAS BEEN HELD BY VARIOUS COU RTS THAT WHERE ASSESSEE COULD SHOW THAT HE HAS MADE PURCHASES AND THERE ARE CORRESPONDING SALES AGAINST THE PURCHASES, IN SUCH CIRCUMSTANCES, IT IS APPROPRIATE TO TAX THE POSSIBLE PROFIT OF SUCH PURC HASE FROM NON-GENUINE PARTIES. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE PURCHASES OF RS. 3,11,340/-. WE HAVE NOTED THAT THE LD. CIT(A) AFTER CONSIDERING THE MATERIAL AND THE VARIOUS DECISION O F SUPERIOR COURTS ARRIVED ON A FAIR CONCLUSION, WHICH WE AFFIRM. THE LD. DR FOR THE REVENUE FAILED TO BRING ANY CONTRARY DECISION TO OU R NOTICE TO TAKE ANY OTHER VIEW. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 5303/MUM/2014 A.Y. 2010-11 ITA NO. 5302/MUM/2014 A.Y. 2011-12 ITA NO. 5304, 5303 & 5302 MUM 2018-SHRI DINESH P MEHTA 7 10. AS WE HAVE NOTED ABOVE, THE REVENUE HAS RAISED THE IDENTICAL GROUNDS OF APPEAL AS RAISED IN APPEAL FOR ASSESSMENT YEAR 2009 -10. THE DISALLOWANCE MADE BY ASSESSING OFFICER ON ACCOUNT O F ALLEGED BOGUS PURCHASES IS ALSO SIMILAR EXCEPT VARIATION OF FIGUR E OF PURCHASES AND THE OTHER SIMILAR HAWALA DEALERS. CONSIDERING OUR ORDER FOR ASSESSMENT YEAR 2009-10 ON SIMILAR GROUND, THE APPEAL FOR ASSE SSMENT YEAR 2010- 11 & 2011-12 ARE ALSO DISMISSED WITH SIMILAR DIRECT ION. 11. IN THE RESULT, APPEAL OF THE REVENUE FOR ALL THE AY S ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/010/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 01.10.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI