ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-15 (1)(1), MUMBAI V. M/S. EXCELHONE MANUFACTURING PVT. LTD., MUMBAI

ITA 5373/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1320 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 16-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Bogus purchase; Set aside
• Section: 143(3); 250; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 5373/MUM/2019 (A.Y: 2012-13 ) ASST . COMMISSIONER OF INCOME TAX, CIRCLE 15 (1)(1), ROOM NO. 470, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 / VS. M/S EXCELHONE MANUFACTURING PVT. LTD., R-606, TTC INDUSTRIAL AREA, MIDC, THANE BELAPUR ROAD, RABALE, NAVI MUMBAI - 400701 ./ ./ PAN/GIR NO. : AAACE4747K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY KUMAR MENON, DR / RESPONDENT BY : NONE / DATE OF HEARING 03/02 /20 2 1 / DATE OF PRONOUNCEMENT 08 /02 /202 1 ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 2 - / O R D E R PER PAVAN KUMAR GADALE: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI, PASSED U/S. 143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT (A) ERRED IN COMPUTING PROFIT FOR THE PURPOSE OF SECTION 28 OF THE I.T. ACT,1961 TAKING IN TO CONSIDERATION THE BOGUS BILLS AGAINST WHICH NO GOODS HAVE BEEN RECEIVED. 2) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT (A) ERRED IN PRESUMING THAT GOODS HAVE BEEN MADE FROM UNKNOWN PARTIES WHERE BILLS HAVE BEEN RECEIVED FROM HAWALA DEALERS. 3) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IF THE 14. CIT (A) HAS MADE A PRESUMPTION THAT PURCHASES HAVE BEEN MADE FROM UNKNOWN PARTIES, THE LD.CIT(A) HAS NOT CLARIFIED HOW THE PAYMENT WAS MADE AND WHETHER ACTION 69 OF THE I. T ACT. 1961 WILL BE APPLICABLE? 4) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF N. K. PROTIEN LTD. DATED ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 3 - 16.01.2017, WHICH IS OIL SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF LAND, THE 14. CIT(A) PRONOUNCED ITS ORDER ON 10.05.2019. 5) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED BY NOT ALLOWING THE HON'BLE GUJRAT HIGH COURT DECISION IN THE CASE OF CIT VS N. K. INDUSTRIES (IN INCOME TAX APPEAL NO. 240 OF 2009 VIDE ORDER DATED 26.02.20 16) WHERE IN 100% OF THE BOGUS PURCHASES WAS HELD LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE REVERSING THE ORDER PASSED BY THE HON'BLE ITAT RESTRICTING ADDITION TO 25%? 6) THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 7) THE APPLICANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OR ADD NEW GROUND, WHICH MAY BE NECESSARY'. 3. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE, NOR ADJOURNMENT PETITION WAS FILED. WE HAVE HEARD THE LD. DR SUBMISSIONS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF HONED TUBES AND RECONDITIONING OF HYDRAULIC CYLINDER TUBES. THE RETURN OF INCOME WAS E-FILED ON 29.09.2012 DECLARING THE TOTAL INCOME OF RS. 80,27,600/-.THE RETURN OF INCOME WAS PROCESSED U/S 143 (1). SUBSEQUENTLY, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE NOTICE. THE ASSESSEE HAS FILED INCOME TAX RETURN ON 16.08.2018. SUBSEQUENTLY, NOTICE U/S 143 (2) AND 142 (1) OF ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 4 - THE ACT WAS ISSUED AND IN COMPLIANCE THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE DETAILS. IN THE RE-ASSESSMENT PROCEEDINGS, THE AO HAS CALLED FOR THE EXPLANATIONS ON THE TRANSACTION WITH M/S SAR ENGINEERING LTD RS5,50,620/-.THE A.O. FOUND THAT THE ASSESSEE HAS OBTAINED THE PURCHASES BILLS FROM M/S SAR ENGINEERING LTD. FURTHER, THE AO HAS ISSUED NOTICE U/S 133 (6) OF THE ACT TO M/S SAR ENGINEERING LTD. AND THE SAID NOTICE WAS RETURNED UN-SERVED. THE AO DEALT ON THE DISPUTE ISSUES AND OBSERVED THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION AND HENCE MADE AN ADDITION OF RS.5,50,620/- AND ASSESSED THE TOTAL INCOME OF RS. 85,78,220/- AND PASSED THE ORDER U/S 143 (3) R.W.S. 147 DATED 22.12.2018. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED THE APPEAL WITH THE CIT (APPEALS). THE CIT (A) CONSIDERED THE GROUNDS OF APPEAL, SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE A.O. AND RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (2013) 356 ITR 451 (GUJ) AND OBSERVED THAT THE AO IS OF THE OPINION THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION BUT THE AO HAS NOT DOUBTED THE SALES AND THE ASSESSEE HAS MADE PURCHASES TO SAVE TAXES AND THEREFORE ONLY PROFIT ELEMENT ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 5 - HAS TO BE ESTIMATED. ACCORDINGLY, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE TO THE EXTENT OF 12.5% OF THE PURCHASE VALUE AND PARTLY ALLOWED, THE ASSESSEES APPEAL. 6. AGGRIEVED BY THE ORDER OF CIT (A), THE REVENUE HAS FILED AN APPEAL WITH THE HONBLE TRIBUNAL. THE LD. DR SUBMITTED THAT CIT(A) HAS ERRED IN GRANTING RELIEF IRRESPECTIVE OF FACT THAT THE A.O. HAS MADE SUFFICIENT ENQUIRY AND MADE ADDITION AND PRAYED FOR RESTORATION OF ASSESSING OFFICER ORDER. 7 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE LD.CIT (A) HAS CONSIDERED THE FACTS AND CIRCUMSTANCES AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (SUPRA) AND HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF BOGUS PURCHASES. THE LD.DR HAS SUPPORTED THE ORDER OF THE AO AND COULD NOT CONTROVERT THE FINDINGS OF THE LD. CIT (A) WITH ANY NEW COGENT EVIDENCE OR INFORMATION. WE FIND THAT THE LD. CIT (A) HAS PASSED A REASONED ORDER BY ESTIMATING THE INCOME AT 12.5% OF VALUE OF THE BOGUS PURCHASES TRANSACTION WHICH WAS ACCEPTED. ACCORDINGLY, WE DO NOT FIND ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 6 - INFIRMITY IN THE ORDER OF THE LD. CIT (A) AND UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.02.2021. SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 08.02.2021 AK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// 1. ITA NO. 5373/MUM/2019 M/S EXCELHONE MANUFACTURING PVT. LTD. - 7 - / ( ASST. REGISTRAR) , / ITAT, MUMBAI 2. OTHER MEMBER ON WHICH THE