T.M. MOHAMEDALLY, MUMBAI V. ITO WD 14(2)(2), MUMBAI

ITA 5357/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0409 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Keywords: Bogus purchase; Opportunity of being heard; Additional evidence; Onus to prove
• Section: 69C; 143(3); 147

Judgement Text

ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5357/MUM/2014 ( / ASSESSMENT YEAR:2009-10) T.M.MOHAMEDALLY HARHARWALA BUILDING 112, LOHAR CHAWL MUMBAI-400 002 / VS. INCOME TAX OFFICER 14(2)(2) EARNEST HOUSE NARIMAN POINT MUMBAI 400 021 ! ./ ./ PAN/GIR NO.AACFT-2448-M ( !# /APPELLANT ) : ( $!# / RESPONDENT ) REVENUE BY : DR. A.K. NAYAK, LD. DR ASSESSEE BY : NONE / DATE OF HEARING : 08/06/2017 / DATE OF PRONOUNCEMENT : 08/06/2017 2 ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-25 [CIT(A)], MUMBAI DATED 02/07/2014 QUA CONFIRMATION OF ADDITION ON ACCOUNT OF CERTAIN BOGUS PURCHASES. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESP ITE BEING PROVIDED WITH SUFFICIENT OPPORTUNITY OF BEING HEARD AND SERV ICE OF RPAD NOTICES AND THEREFORE, WE PROCEED TO DISPOSE-OFF THE SAME ON TH E BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMEN TAL REPRESENTATIVE. 3. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF TOOLS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 FOR THE IMPUGNED AY WHE RE THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.7,63,38,3 90/- AFTER ADDITION OF BOGUS PURCHASES U/S 69C FOR RS.7,46,76,767/-. THE ASSESSEE WAS SUBJECTED TO A SURVEY ON 22/01/2013 PURSUANT TO REC EIPT OF CERTAIN INFORMATION FROM THE SALES TAX DEPARTMENT REGARDING DEALERS INDULGING IN THE PRACTICE OF BOGUS / ACCOMMODATION BILLING AND THE ASSESSEE STOOD BENEFICIARY OF THOSE BOGUS PURCHASES. THE STATUTORY NOTICES U/S 148/143(3)/142(1) WERE ISSUED FROM TIME TO TIME. TH E ORIGINAL RETURN OF INCOME WAS FILED ON 22/10/2010 DECLARING TOTAL INCO ME OF RS.16,61,619/- 3 ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 AND THE SAME RETURN WAS OFFERED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S 148. THE ASSESSEE REFLECTED TURNOVER OF RS.16.19 CR ORES WITH DECLARED GP/NP OF 15.59% / 1.85%. 4. SEVERAL OPPORTUNITIES WERE PROVIDED TO THE ASSES SEE TO SUBSTANTIATE THE PURCHASES BY FILING THE NECESSARY DOCUMENTS AND BY PRODUCING THE SAID SUPPLIERS AND FILE CONFIRMATION LETTERS / AFFIDAVIT S ETC. BUT THE ASSESSEE FAILED TO COMPLY THE SAME. THE SUMMONS ISSUED TO ALLEGED B OGUS SUPPLIERS COULD NOT BE SERVED SINCE THEY WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND FURTHER ADDRESS AND TELEPHONE NUMBERS PRINTED ON THEIR BILL S WERE FOUND TO BE FALSE. THE ASSESSEE COULD NOT PROVE THE DELIVERY OF GOODS BY PRODUCING DELIVERY CHALLANS / TRANSPORT DETAILS ETC. AND MERE LY ASSERTED THAT THE SAID PURCHASE WERE GENUINE AND SALES COULD NOT HAVE BEEN POSSIBLE WITHOUT MAKING THE PURCHASES. FINALLY, THE CONDUCT OF THE ASSESSEE AND SURROUNDING CIRCUMSTANCES / MATERIAL LED THE AO TO CONCLUDE THAT THE ASSESSEE FAILED TO DISCHARGE PRIMARY ONUS OF PROVIN G THE PURCHASES AND THEREFORE, SADDLED WITH IMPUGNED ADDITION U/S 69C A GAINST ALLEGED BOGUS PURCHASES MADE FROM FOLLOWING PARTIES:- NO. NAME AMOUNT (RS.) 1. SAMAY SALES COPRORATION 3,65,30,887/- 2. K.V.TRADING CO. 5,99,147/- 3. SUNRISE ENTERPRISES 5,09,625/- 4. KESAR ENTERPRISES 5,62,500/- 5. EXCEL INDUSTRIES 5,77,125/- 6. KAVISH INTERNATIONAL 56,250/- 7. NAVKAR TRADERS 25,333/- 8. SONA TOOL TRADERS 2,15,40,661/- 9. SONA ENGINEERING COMPANY 1,48,37,699/- TOTAL 7,46,76,767/- 4 ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 5. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 02/07/2 014 WHERE THE ASSESSEE CONTENDED THAT THE PURCHASE / SALES INVOIC ES / BOOKS OF ACCOUNTS WERE VERIFIED BY THE LD. AO AND THE SALES WERE NOT DISPUTED BY THE REVENUE. THE ASSESSEE PRODUCED QUANTITATIVE DETAILS WHICH WERE TEST CHECKED BY THE LD. AO AND FURTHER AN AFFIDAVIT OF S UPPLIER CONFIRMING THE TRANSACTIONS WAS PRODUCED BEFORE LD. AO AND THEREFO RE, TREATING PURCHASES AS BOGUS AND ADDITION THEREOF U/S 69C WAS NOT JUSTIFIED. REL IANCE WAS PLACED ON MANY JUDICIAL PRONOUNCEMENTS TO SUPPORT V ARIOUS CONTENTIONS. THE ASSESSEE ALSO SUBMITTED ADDITIONAL EVIDENCES IN THE FORM OF PURCHASE INVOICES, CONFIRMATION OF ONE SUPPLIER NAMELY SANJAY SALES CORPORATION, AUDITED ACCOUNTS OF TWO SUPPLIERS NAMELY SONA TOOL TRADERS & SONA ENGINEERING COMPANY WITH CONFIRMATION LETTERS, QUANTITATIVE/SALES DETAI LS OF THESE THREE SUPPLIERS, SAMPLE COPY OF SALES BILL ET C. AGAINST WHICH REMAND REPORT WAS CALLED FROM THE LD. AO. FINALLY AFTER AP PRECIATING THE DOCUMENTS/SUBMISSIONS, REMAND REPORT, GP/NP RATE EA RNED BY THE ASSESSEE, LD. CIT(A) PLACED RELIANCE ON VARIOUS JUD ICIAL PRONOUNCEMENTS AND RESTRICTED THE SAID DISALLOWANCE TO 15% OF ALLE GED BOGUS PURCHASES OF RS.746.76 LACS WHICH CAME TO RS.1,12,01,514/-. AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE FINDINGS OF LD. AO AND CONTENDED THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES MADE BY HIM IN ANY MANNER AND MERE PR ODUCTION OF 5 ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 DOCUMENTS WAS NOT SUFFICIENT TO PROVE THE ACTUAL DE LIVERY OF GOODS. THE ASSESSEE FAILED TO PRODUCE THE PARTIES BEFORE LD. A O AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS. SUMMONS ISSUED TO THE SUPPLIERS REMAINED UN-SERVED SINCE ADDRESSES / CONTACT NUMBERS WERE NO T GENUINE. THE COMPLETE ONUS TO PROVE THE PURCHASES SQUARELY LIED ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE AND THEREFORE, RIG HTLY BEEN SADDLED WITH FULL DISALLOWANCE AND THE LD. CIT(A) ERRED IN GRANT ING RELIEF TO THE ASSESSEE. 7. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUMENTS OF LD. DR THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASES AND IT COULD NOT PRODUCE EVIDENCES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CONFIRMATORY LETTERS FROM THE ALL EGED BOGUS SUPPLIERS. HOWEVER, EVEN IF ALL THE PURCHASES ARE FOUND TO BE BOGUS, WE FIND THAT SALES TURNOVER HAS NOT BEEN DISPUTED BY THE REVENUE AND MOREOVER, THE ASSESSEE IS IN POSSESSION OF PRIMARY PURCHASE DOCUM ENTS AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AUDITED. THE PAYMEN TS ARE THROUGH BANKING CHANNELS.THEREFORE, IN SUCH A SITUATION, TH E ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURC HASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE SO AFTER ELABORATE DISCUSSI ON AND APPRECIATION OF FACTS. THEREFORE, THE ORDER OF LD. CIT(A) BEING, FA IR, REASONABLE AND A 6 ITA NO.5357/MUM/2014 T.M.MOHAMEDALLY ASSESSMENT YEAR 2009-10 PLAUSIBLE VIEW, REQUIRE NO INTERFERENCE ON OUR PART AND THE SAME IS HEREBY CONFIRMED. 8. THE ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH JUNE, 2017. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08 .06.2017 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