ACIT 32(1), MUMBAI V. HIMANSHU K MODI, MUMBAI

ITA 5364/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8046 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 18-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAN
• Assessee Lawyers: KAMLESH N DOSHI
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI PAWAN SINGH, JM ./ I.T.A. NO. 5364/MUM/2015 ( / ASSESSMENT YEAR: 2011 - 12) ASST. CIT 32(1), PRATYAKSHAR KAR BHAVAN, ROOM NO. 202, C - 11, 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400 051 / VS. SHRI HIMANSHU K. MODI (PROP. OF VITRAG CONSTRUCTION CO.) C - 4/1006, YOGI DARPAN SOCIETY, EKSAR ROAD, BORIVALI WEST, MUMBAI - 400 091 ./ ./ PAN/GIR NO. AACPM 8724 B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. C. OMI NINGSHAN / RESPONDENT BY : SHRI KAMLESH N. DOSHI / DATE OF HEA RING : 18.09.2017 / DATE OF PRONOUNCEMENT : 11.12 .2017 / O R D E R PER SHAMIM YAHYA , A. M.: T HIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 44, MUMBAI DATED 02.09.2015 AND PERTAINS TO THE ASSESSMENT YEAR 2011 - 12. 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING DISALLOWANCE OF ONLY 8% OF BOGUS PURCHASE AMOUNTING TO RS.8,40,390/ - 2 ITA NO. 5364/MUM/2015 (A.Y. 2011 - 12) ASST. CIT VS. SHRI HIMANSHU K. MODI INSTEAD OF 100% DISALLOWANCE MADE BY THE ASSESS ING OFFICER AMOUNTING TO RS.1,05,04,893/ - . 3. I N THIS CASE THE ASSESSING OFFICER NOTED THAT SOME OF THE PURCHASES MADE BY THE ASSESSEE WERE FROM PARTIES WHOSE NAMES APPEARED IN THE LIST OF SUSPICIOUS DEALERS WHO INDULGE IN ISSUING ONLY BILLS WITHOUT DELI VERING ANY GOODS AS PER THE AVERMENTS OF THE SALES TAX DEPARTMENT AS WELL AS ENQUIRIES CONDUCTED BY THE INCOME TAX DEPARTMENT. HE IDENTIFIED ELEVEN SUCH PARTIES FROM WHOM THE ASSESSEE HAD MADE PURCHASES AMOUNTING TO RS.1,05,04,893/ - . HE NOTED THAT THE NOTI CES U/S. 133(6) COULD NOT BE SERVED ON THESE PARTIES. THEREAFTER , THE ASSESSING OFFICER INTER ALIA OBSERVED THAT THERE IS NO EVIDENCE OF MOVEMENT OF DELIVERY OF GOODS . THE ASSESSING OFFICER CONCLUDED THAT THE PURCHASES OF THE ASSESSEE PER SE ARE NOT TREATE D AS BOGUS. YET THE ASSESSEE HAS NOT PURCHASED THE GOODS FROM THESE ALLEGED SUPPLIERS. THE GOODS HAVE SOMEHOW ENTERED IN THE ASSESSEES REGULAR BUSINESS. THE ASSESSEE HAS BEEN UNABLE TO GIVE ANY CONVINCING OR COGENT EXPLANATION AS TO HOW THESE GOODS CAME I N HIS POSSESSION. HE, THEREFORE, TREATED THE PURCHASES AS UNEXPLAINED AND MADE THE DISALLOWANCE U/S. 69C OF THE I. T. ACT. 4. AGAINST THE ABOVE ORDER , THE ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) NOTED THAT SALES HAVE NOT BEEN DOUBTED. HE REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF SMITH P. SETH AND RESTRICTED THE DISALLOWANCE TO 8%. 3 ITA NO. 5364/MUM/2015 (A.Y. 2011 - 12) ASST. CIT VS. SHRI HIMANSHU K. MODI 5. AGAINST THE ABOVE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE THE ITAT. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WE RE BEING USED BY CERTAIN PARTIES TO OBTAINED BOGUS BILLS. ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. IN SUCH FACTUAL SCENARIO , THE ASSESSING OFFICER HAS MADE THE NE CESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE PARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRAN SPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO , IT IS AMPLY CLEAR THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PREPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILL S ARE BOGUS AND NON - EXISTENT. 7. THE S ALES T AX DEPARTMENT IN ITS ENQUIRY HAVE FOUND THE PARTIES TO BE PROVIDING BOGUS ACCOMMODATION ENTRIES. THE ASSESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE N OTICES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NEITHER THE ASSESSEE HAS BEEN ABLE TO PRODUCE ANY CONFIRMATION FROM THESE PARTIES. IN SUCH CIRCUMSTANCE THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. WE FIND IT FURTHER 4 ITA NO. 5364/MUM/2015 (A.Y. 2011 - 12) ASST. CIT VS. SHRI HIMANSHU K. MODI STRANGE THAT ASSESSEE WANTS THE REVENUE TO PRODUCE ASSESSEES OWN VENDORS, WHOM THE ASSESSEE COULD NOT PRODUCE. THE P URCHASE BILLS FROM THESE NON - EXISTENT THE/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES. IN LIGHT OF THE OVERWH ELMING EVIDENCE THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS DULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL 214 ITR 801 AND DURGA PRASAD M ORE 82 ITR 540. HOWEVER , WE FIND SALES HAVE NOT BEEN DOUBTED IN THIS CASE. IT IS SETTLED LAW FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP E NTERPRISES THAT WHEN SALES ARE NOT DOUBTED , 100% DISALLOWANCE FOR PURCHASES CANNOT BE DONE. HOWEVER , WE FIND THAT THE PRESE NT CASE IS DIFFERENT FROM THE ABOVE CASE AS IN THAT CASE BEFORE THE HONBLE HIGH COURT , THE SALES WERE MADE TO GOVERNMENT DEPARTMENT WHICH IS NOT THE CASE HERE. WE FIND THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , A DISALLOWANCE OF 12.5% OF THE BOGUS P URCHASES WOULD SERVE THE INTEREST OF JUSTICE. ACCORDINGLY , WE MODIFY THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) A ND DIRECT THAT DISALLOWANCE IN THIS CASE SHOULD BE LIMITED TO 12.5% OF THE BOGUS PURCHASES. 8 . THE L EARNED COUNSEL OF THE ASSESSEE FAIRLY AGREED TO THE ABOVE PROPOSITION. 9 . IN THE RESULT , THIS APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017 SD/ - SD/ - ( PAWAN SINGH ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 11.12.2017 5 ITA NO. 5364/MUM/2015 (A.Y. 2011 - 12) ASST. CIT VS. SHRI HIMANSHU K. MODI . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPOND ENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI