ITO WD 3(1), KALYAN V. BHUPAT M PATEL, DOMBIVALI

ITA 5354/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Next Hearing Date: 29-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 17-11-2015
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Keywords: Bogus purchase; Tax effect
• Section: 69C

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.5354/M/2015 (ASSESSMENT YEAR: 2009 - 2010) I.T.A. NO.5355/M/2015 (ASSESSMENT YEAR: 2010 - 2011) I.T.A. NO.5356/M/2015 (ASSESSMENT YEAR: 2011 - 2012) INCOME TAX OFFICER, WARD - 3(1), KALYAN, 2 ND FLOOR, RANI MANSION, KALYAN - MURBAD ROAD, NR. S.B.I. KALYAN (W) 421301. / VS. SHRI BHUPAT M. PATEL, PROP. M/S. RELIANCE ENTERPRISES, 3/10, SHREE GURUDATT TOWERS, PANDURANGWADI, MANPADA ROAD, DOMBIVALI - 421201. ./ PAN : AJHPP5793R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SHRIKANT NAMDEO, SR. DR / RESPONDENT BY : NONE / DATE OF HEARING : 29 .11.2016 / DATE OF PRONOUNCEMENT : 16 .12.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION. ALL THE THREE APPEALS ARE FILED BY THE REVENUE FOR THE AYS 2009 - 10, 2010 - 11 AND 2011 - 12. SINCE, THE ISSUES RAISED IN THESE APPEALS ARE INTERCONNECTED / IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OFF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAS OF THIS ORDER. 2. SINCE, THE GROUNDS RAISED IN THESE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF REFERENCE AND ADJUDICATION PURPOSE, THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ITA NO.5354/M/2013 (AY 2009 - 2010) ARE EXTRACTED AND THE SAME READ AS UNDER: - 1.1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN NOT CONFIRMING ADDITION OF BOGUS PURCHASES OF RS. 30,11,143/ - AGAINST GROSS PURCHASES OF RS. 2,52,91,255/ - DESPITE CONFIRMING 2 THAT THE ASSESSEE FAILED TO EST ABLISH THE GENUINENESS OF THE SAID PURCHASES [PARAGRAPH 8 ON PAGE 6 OF THE ORDER OF CIT (A)]. 1.2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FACT THAT THE ASSE SSEE COULD NOT EVEN SUBMITTED TRANSPORT BILLS WHICH CLEARLY PROVES THAT THE GOODS WERE NOT PURCHASED AT ALL. 1.3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FAC T THAT THE INQUIRIES CONDUCTED BY THE AO REVEALED THAT NONE OF THE PARTIES EXISTED AT THE GIVEN ADDRESSES AND NO BUSINESS ACTIVITY WAS BEING CARRIED OUT FROM THOSE ADDRESSES. 1.4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HO NBLE CIT (A) ERRED IN DELETING THE ABOVE ADDITION BY HOLDING THAT IF THE AMOUNT OF BOGUS PURCHASES IS ADDED TO THE INCOME OF THE ASSESSEE, THE NET PROFIT RATE WOULD BE TOO HIGH DESPITE THE FACT THAT THE ASSESSEE IS A TRADER AND THE NET PROFIT IN SUCH BUSI NESS IS USUALLY IN THE VICINITY OF 8%. 1.5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FACT THAT NO RECONCILIATION OF STOCK WAS SUBMITTED BY THE ASSESSEE EITHER DURING ASSESSMENT OR APPELLATE PROCEEDINGS. 1.6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT (A) ERRED IN DELETING THE ABOVE ADDITION DESPITE THE FACT THAT ITEM 28(A) OF THE AUDIT REPORT CLEARLY MENTIONS THAT QUAN TITATIVE DETAILS OF STOCK IN TRADE ARE NOT MAINTAINED. 2. BEFORE US, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT ITS CASE. CONSIDERING THE COMMONALITY OF THE ISSUES INVOLVED IN THESE APPEALS AS WELL AS THE COVERED NATURE OF THE ISSUE, WE PROCEED TO ADJUDICATE THE ISSUES ON MERIT WITH THE HELP OF THE LD DR FOR THE REVENUE IN THE FOLLOWING PARAS OF THIS ORDER. 3. B RIEFLY STATED RELEVANT FACTS , COMMON TO ALL THE THREE YEARS, ARE THAT DURING THE ASSESSMENT PROCEEDINGS IN ALL THESE THREE ASSESSMENT YE ARS AO NOTED THE PURCHASES MADE BY TH E ASSESSEE FROM CERTAIN PARTIES, WHOSE NAMES ARE APPEARING IN THE WHOSE NAMES ARE LISTED BY THE SALES TAX DEPARTMENT IN THEIR WEBSITE IE WWW.MAHAVAT.GOV.IN AS SALES TAX DEFAULTERS. ALL SUCH PURCHASES INVOLVING THE SUPPLIERS ENLISTED THE SAID SALES TAX DEPARTMENT WEBSITE WERE ADDED BY THE AO U/S 69C OF THE ACT IN ALL THE THREE AYS UNDER CONSIDERATION. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DU RING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) RELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ EXIMP ENTERPRISES PVT LTD VS. ACIT VIDE WRIT PETITION NO. 2860 OF 2012, DATED 18 TH JUNE, 2014 AND DISP ROVED THE ADDITION MADE BY THE AO U/S 69C OF THE ACT. FURTHER, RELYING ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH , ITA NO. 553 OF 2012, DATED 16.1.2013, CIT (A) RESTRICTED THE ADDITION TO 12.5% OF SUCH P URCHASES. AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT 3 (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE ISSUES IN THE AYS 2009 - 10, 2010 - 11 AND 2011 - 12. 5. DURING THE PROCEEDINGS BEFORE US, LD DR FOR THE REVENUE SUBMITTED THAT T HE TAX EFFECT IN THE APPEALS FOR THE AYS 2009 - 10 AND 2010 - 11 IS BELOW RS. 10 LAKHS IN EACH CASE. FURTHER, LD DR SUBMITTED THAT THE CIT (A)S ORDER IS COMMON TO ALL THE THREE AYS UNDER CONSIDERATION AND THEREFORE, THESE APPEALS CANNOT BE DISMISSED ON THIS GROUND CONSIDERING THE CBDT CIRCULAR NO.21/2015, DATED 10.12.2015 WHICH IS RELEVANT FOR THE PROPOSITION THAT THE APPEALS FILED BY THE REVENUE WITH A TAX EFFECT OF RS. 10 LAKHS AND BELOW ARE TO BE EITHER DISMISSED BY THE TRIBUNAL AS NOT MAINTAINABLE OR NOT PRESSED BY THE REVENUE. 6. AFTER HEARING THE LD DR FOR THE REVENUE AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, WE FIND, THERE IS NONE TO REPRESENT THE ASSESSEE BEFORE THE BENCH. THE DATE OF HE ARING WAS REPEATEDLY ADJOURNED AND THERE IS PERENNIAL ABSENCE OF THE ASSESSEE IN ALL THE OCCASIONS DESPITE THE ISSUE OF NOTICES BY THE TRIBUNAL DIRECTLY AS WELL AS ISSUE OF NOTICED THROUGH THE OFFICE OF THE DEPARTMENTAL REPRESENTATIVE. CONSIDERING THE ABS ENCE OF THE ASSESSEE BEFORE US AS WELL AS CONSIDERING THE NUMBER OF SUCH CASES COMING BEFORE US REPEATEDLY IE BEING COVERED ISSUES, WE ARE OF THE OPINION, THE MATTER SHOULD BE DECIDED AFTER EXAMINING THE ABOVE FACTS OF THE CASE. I N THE COURT, WE HAVE PERU SED THE SAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NICKUNJ EXIMP ENTERPRISES PVT LTD (SUPRA) AS WELL AS THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH (SUPRA) AND FIND, THE CIT (A) HAS FAIRLY FOLLOWED THE SAID JUDGMENTS OF THE HONBLE HIGH COURTS (SUPRA). THEREFORE, WE ARE OF THE OPINION, THE ORDER OF THE CIT (A), COMMON TO ALL THE THREE ASSESSMENT YEARS IS FAIR AND REASONABLE AND THE SAME DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GRO UNDS RAISED BY THE REVENUE IN ALL THE THREE YEARS ARE DISMISSED. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE DISMISSED. 4 ORDER PRONOU NCED IN THE OPEN COURT ON 1 6 T H DECEMBER, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16.12 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI