BHOOMI ELEGANT, MUMBAI V. DCIT 15(3), MUMBAI

ITA 5563/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9081 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 14-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5563/MUM/2016 ASSESSMENT YEAR : 2010-11 BHOOMI ELEGANT 8 TH FLOOR, SAHARA ROAD,KALEDONE, COLDONGRI, ANDHERI (E) MUMBAI 400 069 PAN AAAAB4002E VS. DCIT 15(3) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHAVEER JAIN RESPONDENT BY : SHRI V VIDHYADHAR DATE OF HEARING : 06. 0 9 .2017 DATE OF PRONOUNCEMENT : 09 . 1 0 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) -36, MUMBAI, DATED 13.06.2016, FOR A.Y.2010- 11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN DIRECTING T HE ASSESSING OFFICER TO MAKE DISALLOWANCE ON ACCOUNT OF BOGUS PU RCHASE AT THE RATE 12.5% AMOUNTING TO ` 33,10,253/- 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME ON 04.10.2010 DECLARING INCOME OF ` 5,66,42,717/-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE PURCHASES TO THE E XTENT OF ` 2,20,56,872/- ITA NO.5563/MUM/2016 BHOOMI ELEGANT 2 FROM THE PARTIES, WHOSE NAMES APPEAL IN THE LIST OF HAWALA DEALERS IDENTIFIED BY THE SALES TAX DEPARTMENT AND THE SAME WAS PUT UP ON THE WEBSITE OF THE DEPARTMENT. THERE WERE IN ALL SIXTEEN PARTIES. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) TO THESE PARTIES BUT THEY WERE R ETURNED WITH THE REMARK NOT KNOWN EXCEPT ONE I.E M/S. BHUMI ENTERPRISE, F ROM WHOM ASSESSEE MADE PURCHASES TO THE TUNE OF ` 3,97,800/-. THE ASSESSING OFFICER TREATED THE SUM OF ` 2,20,56,872/- AS BOGUS PURCHASES AND ADDED IT TO T HE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTED SUNDRY CREDITORS OUTSTANDING AS ON 31.03.2010 WERE M/S. AGNI CONTROL INDIA ` 85,960/- AND M/S. S S TRADING PVT LTD ` 23,23,125/- RELATED TO EARLIER YEAR. THE ASSESSIN G OFFICER ISSUED NOTICE TO M/S. S S TRADING PVT LTD., U/S. 133(6), W HICH RETURNED BACK. THE ASSESSING OFFICER THEREFORE FURTHER ADDED BOTH THES E AMOUNTS. ADDITION WAS ALSO MADE FOR ` 7,59,375/- AND ` 13,42,650/- IN RESPECT OF BOGUS LABOUR CHARGES PAYABLE. THUS, TOTAL ADDITION OF ` 2,65,67,982/- WAS MADE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) RESTR ICTED THE ADDITION TO 12.5% OF ` 2,64,82,022/- I.E. ` 33,10,253/- IN VIEW OF THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASES OF CIT VS S IMIT P SETH 356 ITR 451 AND BHOLANATH POLY FAB PVT LTD. 355 ITR 290 AND THA T OF AHMEDABAD BENCH OF THIS TRIBUNAL IN THE CASE OF SANKET STEEL TRADER S VS. ITO IN ITA NO. 2801/AHD/2008 DATED 20.05.2011. ITA NO.5563/MUM/2016 BHOOMI ELEGANT 3 3. WE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE THR OUGH THE ORDER OF THE TAX AUTHORITIES BELOW. WE NOTED THAT IN THIS CASE THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DE PARTMENT, THAT THE ASSESSEE MADE BOGUS PURCHASES FROM VARIOUS PARTIES AMOUNTING TO ` 2,20,56,872/-. THE ASSESSEE WAS ASKED TO PROVE TH E GENUINENESS OF THE PURCHASES. THE ASSESSEE CONTENDED THAT ALL THE PUR CHASES WERE GENUINE BUT THE CONTENTION WAS NOT ACCEPTED BY THE ASSESSING OF FICER. THE ASSESSING OFFICER ALSO MENTIONED THAT THE NOTICE ISSUED U/S. 133(6) TO THESE PARTIES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WI TH THE REMARK NOT KNOWN OR NO COMPLIANCE HAS BEEN RECEIVED IN RESPONSE TO N OTICE ISSUED. ONLY THE PARTY VIZ. M/S BHUMI ENTERPRISES, FROM WHOM PURCHAS ES TO THE TUNE OF ` 3,97,800/- WAS MADE, VIDE LETTER DATED 16.01.2013 DENIED ANY TRANSACTION WITH THE ASSESSEE. THE ASSESSING OFFICER ALSO NOTE D THAT CERTAIN CREDIT BALANCE OUTSTANDING IN THE BOOKS OF THE ASSESSEE AS ON 31.03.2010, OUT OF THAT ALSO, THE ASSESSING OFFICER TREATED THE PARTIE S TO BE BOGUS AND, THEREFORE, MADE ADDITION IN THE INCOME OF THE ASSES SEE FOR BOGUS PURCHASES FROM HAWALA PARTIES AT ` 2,20,56,872/- AND FROM OTHER PARTIES OF ` 23,23,125/-, ` 7,59,375/- AND ` 13,42,650/- THE ADDITION IN RESPECT OF AGNI CONTROL INDIA WAS MADE U/S. 41(1) AMOUNTING TO ` 85,960/-. THUS, THE TOTAL ADDITION ` 2,65,67,982/- WAS MADE. WHEN THE MATTER WENT BEFO RE THE CIT(A), THE CIT(A) DIRECTED THE ASSESSING OFFICER T O ADD THE INCOME EMBEDDED THEREIN ONLY IN RESPECT OF THE SUM OF ` 2,64,82,022/- @12.5%. ITA NO.5563/MUM/2016 BHOOMI ELEGANT 4 THE CIT(A) WHILE HOLDING SO RELIED ON THE DECISIONS OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SETH AND B HOLANATH POLY FAB PVT LTD. (SUPRA). 4. WE HAVE CONSIDERED THE FACTS OF THE CASE INDEPEN DENTLY ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. THE LEARNED AR BEF ORE US VEHEMENTLY CONTENDED THAT AT THE MOST THE BOGUS PURCHASE WHICH WERE MADE FROM THE PARTIES, WHO WERE ON THE SITE OF SALES TAX DEPARTME NT WERE TO THE EXTENT OF ` 2,20,56,872/- AND REST OF THE PARTIES WERE THE SYND ICATORS AND ARE NOT THE PARTIES WHO ARE UNREGISTERED DEALERS, WHERE THE ASS ESSEE WOULD HAVE SAVED THE VAT. THE ASSESSING OFFICER JUST ADDED THE AMOU NT OF THESE CREDITORS AS NOTICE U/S. 133(6) COULD NOT BE SERVED ON THEM. EV EN THOUGH THE LEARNED AR BEFORE US VEHEMENTLY CONTENDED THAT ALL THE PURCHAS ES INCLUDED THESE PARTIES WHO WERE GENUINE, THE ASSESSEE HAS PRODUCED COPIES OF PURCHASES BILLS, ALL PAYMENTS HAVE BEEN MADE THROUGH CHEQUES. THE REVEN UE HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE TH OSE PARTIES. THE ASSESSEE HAS GIVEN ADDRESS FROM THE PURCHASE BILLS WHICH RELATED TO F.Y. 2009-10, WHILE THE NOTICES WERE ISSUED U/S. 133(6) SOMETIME IN 2012. THE ASSESSEE WAS NOT AT ALL CONFRONTED. IN THIS REGARD , IF THE ASSESSEE COULD HAVE GIVEN CONFIRMATION IN RESPECT OF OTHER PARTIES AMOU NTING TO ` 23,23,125 FROM S.S.TRADING CO. AND ` 7,59,375 FROM S S TRADING PVT. LTD. THE ASSESSEE HAS DULY GIVEN COPY OF BANK STATEMENT AND CONFIRMATION. THUS, THESE VERY ITA NO.5563/MUM/2016 BHOOMI ELEGANT 5 PARTIES ARE VERY MUCH IN EXISTENCE. ALTHOUGH ALL T HESE ADDITIONS ARE TO BE DELETED, IF AT ALL ANY HAS TO BE SUSTAINED BY THE C IT(A) IT SHOULD HAVE RESTRICTED THE ADDITION TO ` 2,20,56,872/-. ON THE BASIS OF EVIDENCE FILED BY THE ASSESSEE, WE NOTED THAT THE ASSESSEE HAS MADE P URCHASES ONLY TO THE EXTENT OF ` 2,20,56,872/- FROM THE PARTIES, WHO WERE IN THE LI ST OF HAWALA DEALERS ON THE WEBSITE OF MAHARASHTRA SALES TAX DEP ARTMENT. REST OF THE PARTIES REPRESENT SYNDICATORS, PART OF THAT RELATE TO THE OPENING BALANCE. THEREFORE, IF ANY ADDITION HAS TO BE MADE BY THE RE VENUE IT SHOULD HAVE BEEN MADE ONLY IN RESPECT OF ` 2,20,56,872/-. IT IS NOT DENIED BY THE LEARNED AR THAT ALL THESE PARTIES WERE UNREGISTERED DEALER AND, THEREFORE, IF ASSESSEE WOULD HAVE SAVED FROM THE PURCHASES MADE FROM THESE PARTIES IT WILL BE VAT AMOUNT. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HARIRAM BHAMBHANI IN ITA 313/2013 DECIDED ON 04.12.2015, HA S HELD THAT REVENUE CANNOT BRING THE ENTIRE SALES CONSIDERATION TO TAX BUT ONLY THE PROFIT ATTRIBUTABLE ON THE TOTAL UNRECORDED SALES CONSIDER ATION, WHICH ALONE CAN BE SUBJECT TO INCOME TAX. SINCE THE ASSESSEE WOULD H AVE SAVED VAT, THEREFORE, IN OUR OPINION, THE CIT(A) HAS RIGHTLY ESTIMATED TH E PROFIT EMBEDDED IN THE PURCHASE @12.5%. BUT IN OUR OPINION, IT IS ONLY TH E SUM OF ` 2,20,56,872/- ARE BOGUS PURCHASES FOR WHICH THE ASSESSEE HAS PROC URED BILLS FROM UNREGISTERED DEALERS. WE, THEREFORE, DIRECT THE AS SESSING OFFICER TO ESTIMATE THE INCOME @12.5% ON THE SUM OF ` 2,20,56,872/- AND TO THAT EXTENT WE ITA NO.5563/MUM/2016 BHOOMI ELEGANT 6 CONFIRM THE ORDER OF THE CIT(A). THUS, THE GROUND TAKEN BY THE ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF OCTOBER, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 9 TH OCTOBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, I BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI