ITO 6(2)(1), MUMBAI V. CENTRAL ELECTRICALS & ELECTRONICS P.LTD, MUMBAI

ITA 551/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0261 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Question of law; Accommodation entries
• Section: 142(1); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 551 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 2009 - 10 ) ITO - 6(2)(1) R.NO. 510, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 / VS. M/S. CENTRAL ELECTRICALS & ELECTRONICS P. LTD. 447, TARDEO AC MARKET, TARDEV ROAD, TARDEV, MUMBAI - 400034 ./ ./ PAN/GIR NO. : AAACC 41449 D ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 22.11 .2017 / DATE OF PRONOUNCEMENT : 14 . 02 . 2018 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 05 . 1 1 .20 1 5 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE AY.20 09 - 10 . 2 . THE REVE NUE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.1,02,11,341/ - ON ACCOUNT OF BOGUS PURCHASE. REVENUE BY: S HRI RAJAT MITTAL (DR) ASSESSEE BY : SHRI VIPUL J. SHAH (AR) ITA. NO. 551 M/20 16 A.Y. 2009 - 10 2 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A)ON THE ABOVE GROUND BE SET A SIDE AND THAT OF THE AO BE RESTORE. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E F ILED ITS R ETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 24 .09.20 09 DECLARING TOTAL INCOME T O THE TUNE OF RS.16,16,657 / - . NOTICE U/S 148 OF THE I.T. ACT WAS ISSUED ON 21.03.2014 AFTER RECORDING THE REASONS FOR ESCAPEMENT OF INCOME BY ITO - 5(1)(3), MUMBAI. NOTICES U/S 143(2) AND 142(1) OF THE I.T. ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. IN THIS CASE, THE INFORMATION WAS RECEIVED FROM DGIT(INV.), MUMBAI HAVING RECEIVED INFORMATION IN TURN FROM SALES TAX AUTHORITIES ABOUT SOME OF THE DEALERS UNDER MVAT, 2002 INDULGING IN THE PRACTICE OF PROVIDING ACCOMMODATION ENTRIES IN THE FORM OF ISSUING BOG US SALE BILLS/TAX INVOICES ETC. I.E. NOT SUPPLYING THE GOODS PHYSICALLY BUT PROVIDING SALES BILLS ONLY. THE ASSESS EE WAS ONE OF THE BENEFICIARIES FROM 4 PARTIES I.E., HARSH CORPORATION, RG CORPORATION, UDAY ENTERPRISES AND PUSHTI IMPEX . THE TOTAL PURCHASE WAS TO THE TUNE OF RS.1,02,11,341/ - . THE NOTICE WAS GIVEN TO THE ASSESSEE BUT THE CLAIM OF THE ASSESSEE WAS FOUND UN JUSTIFIABLE, THEREFORE, THE ASSESSING OFFICER TREATED THE TRANSACTION FROM THE ABOVE FROM 4 PARTIES TOTAL TO THE TUNE OF RS.1,02,11,341/ - BOGUS AND ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.1,18, 28,000/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL ITA. NO. 551 M/20 16 A.Y. 2009 - 10 3 BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PA RTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CLAIM OF THE ASSESSEE HAS WRONGLY BEEN ALLOWED , T HEREFORE, IN THE SAID CIRCUMSTANCES, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE AND IS LIABLE TO BE SET ASIDE. HOWEVE R, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A). BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD: - THE A.O. IN HIS ORDER U/S.!43(3) R,W.S. 1 47 OF THE I.T. AC! 1961 MADE ADDITION OF RS, L, 02,1 1,341 / - HOLDING THAT THE APPELLANT HAD MADE THESE PURCHASES AS NON - GENUINE PURCHASE AND &O IT IS A BOGUS PURCHASER HOWEVER IT IS SEEN THAT ALL THE PARTIES ARE READILY AVAILABLE AND THEY ARE HAVING A BA NK ACCOUNT IN THEIR NAMES WHICH PROVES THEIR EXISTENCE. ALL THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. THE A,O. DID NO! TRY TO FIND OUT THE EXISTENCE OF THE PARRIES EVEN THOUGH ALL THE DETAILS WERE PROVIDED BY THE APPELLANT. THE A.O, HAS ABO ACK NOWLEDGED THE SAME IN THE ASSESSMENT ORDER. HE HAS NOT ISSUED NOTICES U/S 133(6) TO THE PARTIES. THERE WAS ALSO NO OTHER MATERIAL AVAILABLE WITH THE A.O. TO CONCLUDE THAT THE PURCHASES ARE BOGUS. THE VAT AUTHORITIES HAVE ALSO GRANTED VAT CREDIT TO THE CUST OMERS OF THE APPELLANT BASED ON DIE SALES CARRIED OUT BY THE APPELLANT THE VAT TIN NUMBER OF THE PA I TIES WERE ALSO IN FARCE AT THE TIME OF THE PURCHASES. DURING THE COURSE OF HEARING THE APPELLANT II4S ALSO PRODUCED THE XEROX COPIES OF THE BILLS OF THE D EALERS, DIE COPIES OF DELIVERY DIAL AS PROOF OF PURCHASES MADE FROM (HE DEALERS, DETAILS OF PURCHASE AND SALES REGISTER AND INVENTORY DETAILS AND ALSO THE BANK STATEMENTS WHICH CLEARLY REFLECT THE PAYMENTS MADE IO THE PARTIES AND (HE AMOUNT CREDITED TO TH EIR ACCOUNT, IT IS SEEN THAT THE A.O. HAS MADE THE ADDITIONS ON MERE PRESUMPTIONS AND ASSUMPTIONS VERIFYING CORRECTLY THAT DIE SUPPLIERS ART HAWALA DEALERS. IT IS SEEN THAT THE APPELLANT IS A TRADER AND LEVIED VAT ITA. NO. 551 M/20 16 A.Y. 2009 - 10 4 ON THE SALES EFFECTED BY THEM. THE PURCHAS ER OF THE PRODUCT HAS AVAILED VAT CREDIT CHARGED BY THE APPELLANT AND THE SAFES TAX DEPARTMENT HAS ALSO ALLOWED. THIS PROVES THAT THE PURCHASES WEN? GENUINE SINCE WITHOUT GENUINE PURCHASE THE APPELLANT CANNOT SELF (HE SAME TO THE THIRD PARTIES. IT IS ALSO SEEN THAT SOME OF THE CUSTOMERS OF THE APPELLANT ARE REPUTED CORPORATE HOUSES AS LARSEN AND TOUBRO & CROMPTON GREAVES RELIANCE IS PLACED ON THE JURISDICTIONAL ITAT AND HIGH COURT ORDERS AND DECISIONS WHERE THE FACTS OF THE CASES ARE IDENTICAL TO THE APPEL LANT'S CASE AND IN ALL THE CASES INFORMATION HAD BEEN RECEIVED FROM THE MAHARASHTRA SALES TAX AUTHORITIES AND THE HON'BLE BOMBAY HIGH COURT AND BOMBAY ITAT HAVE DELETED THE ENTIRE ADDITIONS. 1) 1TO VS. PARESH ARVIND GANDHI ITA NOJ7(J6/ MUM/201 3 2) ACIT VS. RAMILA PRAVIN SHAH ITA NO.5246/MUM/20L3 3) DCIT VS. RAJEEV KALATHIL - IT ANO.6727/ MUM/201 2 4) CIT VS. M/S, NIKUNJ EXIMPT ENTERPRISES PVT. LTD. APPEAL NO.504 OF 2010 MUMBAI HIGH COURT. 10 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT - 1 , MUMBAI VS. M/S. NIKUNJ EXIMP ENTERPRISES PVT. LTD. (APPEAL NO. 5604 OF 2010) MUMBAI HIGH COURT VIDE PARA 7 OF THEIR ORDER DT. 17.12.20 - 12 'WE HAVE CONSIDERED THE SUBMISSIONS ON BEHALF OF THE REVENUE. HOWEVER, FRO M THE ORDER OF THE TRIBUNAL DT. 30.4.2010 W E FIND THAT THE TRIBUNAL HAS DELETED THE ADDITIONS ON ACCOUNT OF BOGUS PURCHASES NOT ONLY ON THE BASIS OF STOCK STATEMENT I.E. RECONCILIATION STATEMENT, BUT ALSO IN VIEW OF THE OTHER FACTS. THE TRIBUNAL RECORDS THAT THE BOOKS OF ACCOUN TS OF THE RESPONDENT ASSESSEE H AVE NOT BEEN REJECTED. SIMILARLY, THE SALES HAVE NOT BEEN DOUBTED AND IT IS AN ADMITTED POSITION THAT SUBSTANTIAL AMOUNT OF SALES HAVE BEEN MADE TO THE GOVERNMENT DEPARTMENT I.E. DEFENCE RESEARCH AND DEVELOPMENT LABORATORY, HYDERABAD. FURTHER, TH ERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIERS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A), ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE RESPONDENT ASSESSEE. THE ASSESSING OFFICER AS WELL AS CIT(A) HAVE DISALLOWED THE DEDUCTION OF RS.1.33 CRORES ON ACCOUNT OF PURCHASES MERELY ON THE BASIS OF SUS PICION BECAUSE THE SELLERS AND THE CANVASSING AGENTS HAVE NOT BEEN PRODUCED BEFORE THEM. WE FIND THAT THE ORDER OF THE TRIBUNAL IS WELL A REASONED ORDER TAKING INTO ACCOUNT ALL THE FACTS BEFORE CONCLUDING THAT THE PURCHASES OF RS.1.33 CRORES WAS NOT BOGUS. NO FAULT CAN BE FOUND WITH THE ORDER DT. 30.4.2010 OF THE TRIBUNAL. IN VIEW OF THE ABOVE, WE FIND THAT QUESTION AS FORMULATED IS NOT A SUBSTANTIAL QUESTION OF LAW. THEREFORE, THE APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. ITA. NO. 551 M/20 16 A.Y. 2009 - 10 5 5. ON APPRAISAL OF THE ABOV E MENTIONED FINDING AS WELL AS THE ORDER OF THE AO , WE NOTICED THAT THE ASSESSING OFFICER RAISED THE ADDITION OF PURCHASE TO THE TUNE OF RS. 1,02 ,11,341/ - FROM THE 4 PARTIES NAME LY HARSH CORPORATION, RG CORPORATION, UDAY ENTERPRISES AND PUSHTI IMPEX ON THE BASIS OF THE INFORMATION RECEIVED FROM DGIT(INV.), MUMBAI. THE DGIT(INV.), MUMBAI RECEIVED AN INFORMATION FROM THE SA LES TAX AUTHORITIES ABOUT THE SO ME OF THE DEALERS UNDER MODVAT ACT , 2002 INDULGING IN THE PRACTICE OF PROVIDING ACCOMMODATION ENTRIES IN TH E FORM OF ISSUING BOGUS SALE BILLS/TAX INVOICES ETC., I.E. NOT SUPPLYING THE GOODS PHYSICALLY AND THEY WERE PROVIDING THE SALES BILL ONLY. NO DOUBT, THE ASSESSING OFFICER RECEIVED THE SAID INFORMATION AN D ACCORDINGLY SERVED THE NOTICE TO THE ASSESSEE AND A FTER GETTING THE REPLY , RAISED THE ADDITION IN QUESTION. THE ASSESSING OFFICER NOWHERE CONDUCTED THE ENQUIRY PROPERLY TO ARRIVE AT THIS CONCLUSION. THE ASSESSING OFFICER NO WHERE ISSUED THE NOTICE S TO WHOM THE ASSESSEE PURCHASE D THE MATERIAL. NO MATERIAL OF ANY KIND WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER IN CONNECTION WITH THE SAID 4 PARTIES EXCE PT BY MAKING THE OBSERVATION OF THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE ASSESSEE MADE THE PAYMENT THROUGH ACCOUN T PAYEE CHEQUE . T HE ASSESSEE ALSO PRODUCED THE COPY OF BILLS OF THE DEALERS AND COPY OF THE DELIVERY CHALLAN . T HE DETAILS OF SALE AND PURCHASE HAS ALSO BEEN GIVEN . T HE AUTHORITY HAS ALSO LEVIED VAT ON SALE EFFECTED BY THEM. THE PURCHASES ALSO AVAIL ED THE VAT CREDIT ITA. NO. 551 M/20 16 A.Y. 2009 - 10 6 CHARGE BY APPELLANT AND SALES TAX DEPARTMENT ALLOWED THE SAME . COPY OF ORDER, COPY OF AUDITED BALANCE SHEET ALONG WITH TAX AUDIT REPORT AND COMPUTATION HAS ALSO BEEN PRODUCED. THE COPY OF THE CONFIRMATION HAS ALSO GIVEN BY SUPPLIERS. SUFFICIENT EVIDENCE WAS GIVEN . T HE CIT(A) HAS RELIED UPON THE ORDER OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. NIKUNJ EXIMP ENTERPRISES (P.) LTD. AND ALSO DISCLOSED THE SO ME OF THE CASE IN WHICH IN THE SIMILAR CIRCUMSTANCES THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. F INDING SUFFICIENT EVIDENCE , THE ADDITION WAS DELETED . W HEN THERE IS SUFFICIENT MATERIEL/EVIDENCE IS AVAILABLE ON RECORD THEN IN THE SAID CIRCUMSTANCES GENERAL INFORMATION PROVIDED BY SALES TAX DEPARTMENT OF MAHARASHTRA OF GOVERNMENT IS NOT ITS ELF SUFFICIENT TO RAISE THE ADDITION. TAKING INTO ACCOUNT OF ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERED WITH AT THIS STAGE. THEREFORE, WE FIND NO GROU ND TO INTERFERE WITH. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NOS. 2 & 3: - 6 . ISSUE NO. 2 & 3 ARE GENERALLY IN NATURE WHICH NOWHERE REQUIRED A NY ADJUDICATION. ITA. NO. 551 M/20 16 A.Y. 2009 - 10 7 7 . IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS HERE BY ORDERED TO BE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 14 .02 . 2018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 14 . 02 . 2018 VIJAY / COPY OF THE O RDER 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// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI