INCOME TAX OFFICER-15(2)(4), MUMBAI V. M/S. PRECISE CONCHEM PVT. LTD, MUMBAI

ITA 5392/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7506 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 19-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , . . , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ./ ITA NO. 5392 / MUM/ 2019 ( / AS SESSMENT YEAR 2011 - 12 ) THE INCOME - TAX OFFICER WARD 15(2)(4) ROOM NO. 360, AAYAKAR BHAVAN, M.K. ROAD, MARINE LINES, MUMBAI - 400 020 / VS. M/S PRECISE CONCHEM PVT. LTD. 202, THE GREAT EASTERN CHAMBERS CHS LTD., PLOT NO.28, SECTOR - 11, CBD BELAPUR, NAVI MUMBAI - 400 614 ( / APPELLANT) ( / RESPONDENT) . /PAN NO. AAECP8516C / APPELLANT BY : MS. SMITA VERMA, DR / RESPONDENT BY : MS. HIRAL SEJPAL, AR / DATE OF HEARING: 11 .03. 2021 / DATE OF PRONOUNCEMENT: 16. 03 .202 1 / O R D E R , PER VIKAS AWASTHY , JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 24 , M UMBAI [IN SHORT THE CIT(A)] DATED 20 TH MAY, 2019 FOR THE AY 11 - 12 . 2. MS. SMITA VERMA REPRESENTING THE DEPARTMENT SUBMITTED THAT DURING THE PERIOD RELEVANT TO AY UNDER APPEAL, THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.15,00,085/ - FROM M/S SIVAMANI TRADERS PRIVATE LIMITED, A DECLARED HAWALA OPERATOR BY THE PAGE | 2 ITA NO. 5392 /MUM/2019 M/S PRECISE CONCHEM P. LTD .; AY 11 - 12 SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE PURCHASE AND THE SUPPLIER. SINCE, THE ASSESSEE IS ENGAGED IN TH E MANUFACTURING PROCESS, THEREFORE, ONE TO ONE RELATION WITH THE PURCHASE AND SALES COULD NOT BE ESTABLISHED. THEREFORE, THE AO MADE ADDITION OF THE ENTIRE BOGUS PURCHASES. THE ASSESSEE FILED APPEAL AGAINST THE SAID ADDITION. THE CIT(A) FOLLOWING THE DECIS ION RENDERED IN THE CASE OF CIT VS. SIMIT P. SHETH (2013) 356 ITR 451 (GUJ), RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCHASES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DECISION IN SIMIT P. SHETH (SUPRA) IS IN RESPECT OF TRADING OF GOODS AND IN THE PRESENT CASE, THE ASSESSEE IS A MANUFACTURER, THEREFORE, THE RATIO LAID DOWN IN THE SAID DECISION WOULD NOT APPLY IN THE FACTS OF THE PRESENT CASE. THE LEARNED D R PRAYED FOR RESTORING 100% DISALLOWANCE OF BOGUS PURCHASES . TO BUTTRESS HER C ONTENTION, PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF NK PROTEINS LTD VS . DCIT (2017) 292 CTR 354 (SC) . 3. ON THE OTHER HAND, SHRI HIRAL SEJPAL APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE FINDINGS OF THE CIT(A). THE LEARNED AR SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED VARIOUS DOCUMENTS VI Z . GRN, GOODS INSPECTION REPORT, LORRY RECEIPTS, DETAILS OF PAYMENT S, INVOICES ETC. THE ASSESSEE WAS ABLE TO ESTABLISH PURCHASE OF GOODS AN D TRAIL OF GOODS SO PURCHASED . DESPITE THAT THE AO MADE ADDITION OF 100% ALLEGED BOGUS PURCHASE. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) AFTER APPRECIATING THE FACTS AND DOCUMENTS ON RECORD RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PAGE | 3 ITA NO. 5392 /MUM/2019 M/S PRECISE CONCHEM P. LTD .; AY 11 - 12 PURCHASES. THOUGH NO ADDITION WAS WARRANTED IN THE CASE OF ASSESSEE, HOWEVER, THE ASSESSEE ACCEPTED THE SAME TO AVOID FURTHER LITIGATION. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDES AND HAVE EXAMINE D THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS ALLEGEDLY OBTAIN ED BOGUS PURCHASE BILLS FROM HAWALA OPERATOR . THE AO MADE ADDITION OF THE ENTIRE SUCH BOGUS PURCHASES. THE ASSESSEE IS ENGAGED IN MANUFACTURING ACTIVITY. UNDISPUTEDLY, THE SALES TURNOVER DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE. WITHOUT PU RCHASE, THE MANUFACTURING ACTIVITY CANNOT BE CARRIED OUT. ALTHOUGH, ONE TO ONE CORRELATION BETWEEN PURCHASE S AND SALES AFTER MANUFACTURING PROCESS CANNOT BE ESTABLISHED. HOWEVER, THE PROCESSING ACTIVITIES CANNOT BE CARRIED OUT UNLESS, THERE ARE INPUTS. THE CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE RESTRICTED THE DISALLOWANCE TO 12.5% OF THE BOGUS PURCHASES. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER HENCE, THE SAME IS UPHELD AND THE APPEAL BY REVENUE IS DISMISSED, BEING DEVOID OF ANY MERIT. 5. IN THE RES ULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON _ TUESDAY THE_ 16 TH DAY OF MARCH, 2021 . SD/ - SD/ - ( . . / N.K. PRADHAN ) ( / VIKAS AWASTHY ) ( / ACCOUNTANT MEMBER) ( / JUDICIAL MEMBER ) , / MUMBAI, DATED: 16 . 03.2021 , . / SUDIP SARKAR, SR.PS PAGE | 4 ITA NO. 5392 /MUM/2019 M/S PRECISE CONCHEM P. LTD .; AY 11 - 12 / 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. / BY ORDER, //TRUE COPY// / (ASSTT. REGISTRAR) , / ITAT, MUMBAI