SHREYANS METAL (INDIA), MUMBAI V. ITO RG 19(3)(3), MUMBAI

ITA 5517/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8783 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN LD
• Assessee Lawyers: NITESH JOSHI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA.NO.5517/MUM/2016 SHREYANS METAL (INDIA) ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5517/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) SHREYANS METAL (INDIA) SHOP NO.1, GROUND FLOOR MALI BHUVAN 8 TH KHETWADI LANE MUMBAI-400 004 / VS. INCOME TAX OFFICER RANGE 19(3)(3) MATRU MANDIR,2 ND FLOOR TARDEO ROAD MUMBAI- 400 007 ! ./ ./PAN/GIR NO. AANFS-1907-R ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : NITESH JOSHI ,LD.AR RE VENUE BY : V. JENARDHANAN, LD. SR.DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)- 30/19(3)(3)/243/2015-16 DATED 16/08/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER RANGE 19(3)(3), ITA.NO.5517/MUM/2016 SHREYANS METAL(INDIA) ASSESSMENT YEAR-2009-10 2 MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 13/03/2015. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION ON ACCOUNT OF CERTAIN BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF STAINLESS STEEL RAW MATERIAL WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 13/03/2015 AT RS.60,24,160/- AFTER ADDITION OF CERT AIN BOGUS PURCHASES FOR RS.52,84,346/-. THE ORIGINAL RETURN WAS FILED ON 23/09/2009 AT RS.7,39,811/- WHICH WAS PROCESSED U/S 143(1). AS AL READY STATED, THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION A GAINST BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.2,11,37,383/- FROM FIFTEEN SUCH ENTITIES. CONSEQ UENTLY, NOTICE U/S 148 DATED 10/02/2014 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). 2.3 TO CONFIRM THE IMPUGNED TRANSACTIONS, NOTICES U /S 133(6) WAS ISSUED TO THE SUPPLIERS AT THE ADDRESSES PROVIDED B Y THE ASSESSEE. HOWEVER, THE SAME COULD NOT BE SERVED AND RETURNED BACK UN-SERVED WITH REMARKS LIKE LEFT, NOT KNOWN ETC. THE ASSESSEE, IN TURN, FURNISHED SALE/PURCHASE INVOICES, STOCK REGISTER, BANK STATEM ENT ETC. HOWEVER, LD. AO FINDING DISCREPANCIES IN THE SAME, TREATED THE P URCHASES AS NON- GENUINE AND PLACING RELIANCE ON SEVERAL JUDICIAL PR ONOUNCEMENT, ESTIMATED ADDITION @ 25% AGAINST THE ALLEGED BOGUS PURCHASES WHICH CAME TO RS.52,84,346/-. ITA.NO.5517/MUM/2016 SHREYANS METAL(INDIA) ASSESSMENT YEAR-2009-10 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 16/08/2 016 WHERE THE LD. CIT(A), AFTER CONSIDERING VARIOUS CONTENTIONS & SUB MISSIONS, RESTRICTED THE IMPUGNED ADDITIONS TO 12.5%. AGGRIEVED, THE ASS ESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] OPPOSED THE ES TIMATED ADDITIONS ON THE GROUND THAT CONFIRMATION WITH RESP ECT TO FEW PARTIES WAS AVAILABLE ON THE RECORD AND GROSS PROFIT RATES IN T HE IMPUGNED AY WAS IN LINE WITH EARLIER YEARS AND FURTHER QUANTITATIVE DE TAILS WERE AVAILABLE ON RECORD. PER CONTRA, LD. DR CONTENDED THAT ADEQUATE RELIEF HAS ALREADY BEEN GRANTED BY LD. CIT(A) AND THE SAME WAS QUITE F AIR AND REASONABLE. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED / DISTURBED BY THE R EVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD N OT PRODUCE ANY CONFIRMATION FROM THE ANY OF THE FIFTEEN SUPPLIERS AND ALL NOTICES ISSUED U/S 133(6) WERE RETURNED BACK, WHICH CAST SERIOUS D OUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION , WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THE LD. AR HAS CONTENDED THAT THE ASSESSEE MADE VAT PAYMENT WITH ITA.NO.5517/MUM/2016 SHREYANS METAL(INDIA) ASSESSMENT YEAR-2009-10 4 RESPECT TO FIVE PARTIES. THE ASSESSEE DESERVES THE BENEFIT OF THE SAME. HENCE, ON OVERALL FACTS AND CIRCUMSTANCES AND KEEPI NG IN VIEW ASSESSEES NATURE OF BUSINESS, WE REDUCE THE ESTIMA TED ADDITION TO 10% OF ALLEGED BOGUS PURCHASES OF RS.2,11,37,383/- WHICH COMES TO RS.21,13,738/-. THE ORDER OF LD. CIT(A) STANDS MODI FIED TO THAT EXTENT. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. $'. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI