ITO WD- 2(4), THANE V. PARTH TRADERS, MUMBAI

ITA 5399/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4662 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase
• Section: 133(6); 143(2); 147; 148

Judgement Text

1 ITA 5399/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 5399/MUM/2018 (ASSESSMENT YEAR : 2009-10) INCOME-TAX OFFICER WARD 2(4), MUMBAI VS PARTH TRADERS 63, MIRA CO-OP HOUSING SOCIETY NEAR ASMITA SUPER MARKET, MAYA NAGAR, MIRA ROAD (E), THANE 401 107 PAN : AABFP4130F APPELLANT RESPONDEDNT APPELLANT BY SHRI AKHTAR H ANSARI SR DR RESPONDENT BY NONE DATE OF HEARING 10-10-2019 DATE OF PRONOUNCEMENT 14-10-2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-2, NASIK DATED 02.07.2018 FOR ASSESSMENT YEAR 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ''WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE LA W CORRECTLY THAT ONCE THE PURCHASES ARE UN VERIFIABLE/NOT GENUINE/BOGUS, THE SAME SHOULD HAVE BEEN DISALLOWED IN ENTIRETY?'. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT (A) HAS ERRED IN LAW BY NOT APPRECIATING TH E FACT THAT THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASES FROM THE NON-EXISTENT VENDORS? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN JAW BY NOT APPRECIATING THE FACT THAT THE ONUS TO JUSTIFY THE CLAIM OF EXPENSES IS ON THE ASSESSEE AND THE SAME HAS FAILED TO DISCHARG E IT IN RELATION TO THE PURCHASES MADE FROM THE NON-EXIS TENT VENDORS? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW BY IGNORING, THE FA CT THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF PURCHASES FROM NON-EX ISTENT VENDORS BY MEANS 2 ITA 5399/MUM/2018 OF RELEVANT SUPPORTING DOCUMENTS RELATED TO MOVEMEN T AND DELIVERY OF GOODS, STOCK REGISTER, ETC, TO ARRIVE AT DISALLOWAN CE AT 12.5% OF THE PURCHASES FROM THE NON-EXISTENT VENDORS? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN NOT APPRECIATING TH E LAW CORRECTLY THAT ONCE THE PURCHASES ARE UNVERIFIABLE / NOT GENUINE / BOGU S, THE SAME SHOULD HAVE BEEN DISALLOWED IN ENTIRETY, PARTICULARLY IN VIEW O F THE RATIO OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO. 242 OF 2003 DATED 20/06/2016 IN THE CASE OF N. K. PROTEINS LTD. AGAIN ST WHICH THE SLP WAS DISMISSED BY THE HON'BLE APEX COURT? 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR AY 2009-10 ON 12-09-2009 DECLARING TOTAL INCOME AT RS.4,41,9503. THE RETURN OF INCOME WAS PROCESSED UN DER SECTION 143(1). THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTM ENT, GOVERNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERA TORS WERE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOODS. THE SALE TAX DEPARTMENT, GOVERNMENT OF MA HARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BE NEFICIARY TO THE DGIT (INVESTIGATION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST OF BENEFICIARY. THE ASSESSEE ALLEGEDLY MA DE THE PURCHASES OF RS.40,70,920/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE A BELIEF TH AT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, THEREFORE, RE-OPEN ED THE ASSESSMENT UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 07.05.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. REASONS 3 ITA 5399/MUM/2018 RECORDED WERE SUPPLIED TO THE ASSESSEE. THE ASSESSI NG OFFICER AFTER SERVING NOTICE UNDER SECTION 143(2) DATED 21.07.201 4 PROCEEDED FOR RE-ASSESSMENT. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THE FOLL OWING PARTIES, WHICH WAS DECLARED AS HAWALA DEALERS BY THE SALE TA X DEPARTMENT, GOVERNMENT OF MAHARASHTRA. NAME OF THE PARTIES BILL AMOUNT (RS.) 1 M/S ADIJIN ENTERPRISES RS.72,314 2 M/S SHAH INDUSTRIES RS.5,98,218 3 M/S PAYAL ENTERPRISES 7,29,052 4. SMARTLINK TRADEX PVT LTD 26,71,336 TOTAL 40,70,920 3. IN ORDER TO VERIFY THE TRANSACTION THE ASSESSING O FFICER ISSUED NOTICE UNDER SECTION 133(6) TO ALL THE PARTIES. THE NOTICE S SENT TO THE PARTIES WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH T HE REMARK LEFT OR NOT KNOWN. THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE PURCHASES AND ISSUED SHOW-CAUSE NOTICE AS TO WHY THE AFORESAI D TRANSACTION SHOULD NOT BE TREATED AS NON-GENUINE. THE ASSESSEE FILED ITS EXPLANATION AND FURNISHED THE COPY OF LEDGER ACCOUN T AND PROOF OF PAYMENT THROUGH CHEQUES. THE ASSESSING OFFICER NOT ACCEPTED THE EXPLANATION FURNISHED BY ASSESSEE AND NOTED THAT TH E ASSESSEE HAS NOT PRODUCED LORRY RECEIPT, TRANSPORTATION DETAILS AND OCTROI CHALLAN ETC. THE ASSESSING OFFICER ON THE BASIS OF THE MATERIAL 4 ITA 5399/MUM/2018 BEFORE HIM AND AFTER REFERRING THE REPORT OF THE IN VESTIGATION OF SALES TAX AUTHORITIES ADDED THE ENTIRE AMOUNT OF AL LEGED BOGUS PURCHASES TO THE TOTAL INCOME AMOUNTING TO RS.40,70 ,920. ON APPEAL, THE LD. CIT(A), RELYING UPON A PLETHORA OF JUDGEMENTS, RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF T HE ALLEGED BOGUS PURCHASES. AGGRIEVED BY THE ORDER OF LD. CIT(A), T HE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE US D ESPITE SERVICE OF NOTICE THROUGH REGISTERED POST. THEREFORE, WE HEAR D THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASS ESSING OFFICER MADE THE DISALLOWANCE OF 100% OF THE ALLEGED BOGUS PURCHASES AS THE ASSESSEE COULD NOT PRODUCE THE PARTIES FOR VERI FICATION AS ALSO THAT ASSESSEE COULD NOT PRODUCE ANY DELIVERY CHALLA N, TRANSPORT CHALLAN, OCTROI CHALLAN, ETC. CONCERNING OF THE ALL EGED BOGUS PURCHASES. THE LD. CIT(A) RELYING UPON A VARIOUS D ECISIONS OF SUPERIOR COURTS HELD THAT ADDITION IS WARRANTED ONL Y TO THE EXTENT OF PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. THEREFO RE, HE MAINTAINED ADDITION @12.5% ON THE ALLEGED BOGUS PUR CHASES. THE ASSESSEE HAS NOT APPEARED BEFORE US TO EXPLAIN ITS POSITION. FROM 5 ITA 5399/MUM/2018 THE ORDER OF LD.CIT(A) WE FIND THAT HE HAS RELIED U PON THE FOLLOWING JUDGEMENTS WHILE ARRIVING AT HIS CONCLUSI ON:- 1. CIT VS SUN ENGINEERING WORKS (P) LTD 198 ITR 197 (S C) 2. ITAT, MUMBAI BENCH G (THIRD MEMBER IN M/S GRINDWE LL NORTON LTD VS DCIT (2004) 91 ITD 412 (MUM)(TM) 3. CIT VS SIMIT P SHETH (2013) 38 TAXMANN.385 (GUJ) 5. THE LD. DR BEFORE US COULD NOT SHOW ANY CONTRARY DE CISION TO COME TO A DIFFERENT CONCLUSION THAN THE ONE ARRIVED AT BY THE LD.CIT(A). THEREFORE, WE AFFIRM THE DECISION ARRIV ED AT BY THE LD.CIT(A). 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14-10-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 14 TH OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI