DCIT, CIRCLE- I , THANE V. DANIEL JOSEPH BRITTO, THANE

ITA 5579/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2234 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Assessee Lawyers: DINESH R SHAHLD
• Keywords: Bogus purchase; Tax effect
• Section: 143(3); 133(6); 143(2); 148

Judgement Text

1 ITA NO.5579/MUM/2018 & C.O NO. 241/MUM/2019 DANIEL JOSEPH BRITTO ASSESSMENT YEAR-2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5579/MUM/2018 ( / ASSESSMENT YEAR:2009-10) D.C.I.T, CIRCLE - 1 R.NO.. 22, B-WING, 6 TH FLOOR ASHAR I.T PARK, ROAD NO. 16 Z WAGLE IND. ESTATE, THANE- 400604. / VS. DANIEL JOS EPH B RITTO FLAT NO. 1003, BLDG NO. 5, WIMBLEDON PARK, POKHRAN ROAD NO. 1 THANE (W), MUMBAI-400601. !'# ./ ./PAN/GIR NO. ACUPB-2574-L ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) & C.O NO. 241/MUM/2019 (ARISING OUT OF ITA NO. 5579/MUM/2018) DANIEL JOSEPH BRITTO FLAT NO. 1003, BLDG NO. 5, WIMBLEDON PARK, POKHRAN ROAD NO. 1 THANE (W), MUMBAI-400601. / VS. D.C.I.T, CIRCLE - 1 R.NO.. 22, B-WING, 6 TH FLOOR ASHAR I.T PARK, ROAD NO. 16 Z WAGLE IND. ESTATE, THANE- 400604 !'# ./ ./PAN/GIR NO. ACUPB-2574-L ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ! / APPELLANT BY : SHRI AKHTAR H.ANSARI-LD. DR ' ! / RESPONDENT BY : SHRI DINESH R.SHAH-LD. AR / DATE OF HEARING : 14/11/2019 / DATE OF PRONOUNCEMENT : 20/11/2019 2 ITA NO.5579/MUM/2018 & C.O NO. 241/MUM/2019 DANIEL JOSEPH BRITTO ASSESSMENT YEAR-2009-10 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-1, MUMBAI [IN SHORT REFERRED TO AS CIT(A )], APPEAL NO.771/2014- 15 DATED 06/07/2018 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ASSESSEE HAS ALSO F ILED CROSS-OBJECTIONS AGAINST THE SAME AND PLEAD FOR FURTHER RELIEF IN TH E MATTER. THE REGISTRY HAS NOTED A DELAY OF 48 DAYS IN ASSESSEES CROSS-OBJECT IONS, THE CONDONATION OF WHICH HAS BEEN SOUGHT BY THE ASSESSEE VIDE PETITION DATED 18/10/2019 WHICH IS SUPPORTED BY AN AFFIDAVIT OF THE ASSESSEE. THE DELAY HAS BEEN ATTRIBUTED TO LAPSE ON THE PART OF ASSESSEES CONCE RNED CHARTERED ACCOUNTANT. KEEPING IN VIEW THE QUANTUM OF DELAY AN D IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY AND PROCEED WITH THE MATTER AS ARGUED BEFORE US. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN MANUFACTURING OF ENGINEERING GOODS AND CARRYING OUT JOB WORK UNDER PROPRIETORSHIP CONCERN NAMELY M/S EFFORTS COMBINE WAS ASSESSED FOR YEAR UNDER CONSIDERATION U /S. 143(3) R.W.S. 147 ON 31/10/2014 WHEREIN THE INCOME OF THE ASSESSEE WA S DETERMINED AT RS.44.54 LACS, AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.10.43 LACS AS AGAINST RETURNED INCOME OF RS.34.11 LACS FI LED BY THE ASSESSEE ON 27/06/2013. 3 ITA NO.5579/MUM/2018 & C.O NO. 241/MUM/2019 DANIEL JOSEPH BRITTO ASSESSMENT YEAR-2009-10 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESS EE PROCURED ACCOMMODATION PURCHASE BILLS AGGREGATING TO RS.10.4 3 LACS FROM 3 ENTITIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EX TRACTED AT PARA-8 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 27/05/2013 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142( 1) WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE STATED TRANSACTION S. ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITTING LEDGER EXTRACT S AND BANK STATEMENTS ETC., HOWEVER, NOTICES ISSUED U/S 133(6) TO ALL THE SUPPLIERS, TO CONFIRM THE TRANSACTIONS REMAINED UNSERVED. ACCORDINGLY, THE ST ATED PURCHASES WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE STAND OF L D. ASSESSING OFFICER BEFORE LEARNED FIRST APPELLATE AUTHORITY WHEREIN TH E ASSESSEE WAS AGAIN DIRECTED TO SUBSTANTIATE THE STATED TRANSACTIONS. H OWEVER, THE ASSESSEE COULD NOT FILE COMPLETE DETAILS AND ALSO COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSACTIONS. RELYING UPON RATIO OF VARIOUS JUDICIAL PRONOUNCEMENTS AND AFTER ANALYZING THE TRENDS OF GR OSS PROFIT / NET PROFIT RATE REFLECTED BY THE ASSESSEE IN PREVIOUS AS WELL AS IN SUBSEQUENT YEARS, THE LD. CIT(A) RESTRICTED THE IMPUGNED ADDITIONS TO 25% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US AGAINST WHICH THE ASSESSEE HAS FILED THE CROSS-OBJE CTIONS. 4 ITA NO.5579/MUM/2018 & C.O NO. 241/MUM/2019 DANIEL JOSEPH BRITTO ASSESSMENT YEAR-2009-10 4. AFTER CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIA L KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. UNDISPUTEDLY THE ASS ESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES AND COULD NOT PRODUCE THE SUPPLIER TO CONFIRM THE TRANSACTION S AND THEREFORE, THE ONUS CASTED UPON ASSESSEE, IN THIS REGARD, REMAINED UNDI SCHARGED. HENCE, ON THE GIVEN FACTS AND CIRCUMSTANCES, THE ADDITIONS WH ICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSE SSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE B ENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY DONE SO. HOWEVER, FINDING THE ESTIMATION TO BE ON T HE HIGHER SIDE, WE RESTRICT THE SAME TO 12.5% OF ALLEGED BOGUS PURCHAS ES. THE IMPUGNED ORDER STAND MODIFIED TO THAT EXTENT. THE APPEAL FIL ED BY THE REVENUE STAND DISMISSED WHEREAS THE GROUND RAISED IN CROSS-OBJECT IONS STAND PARTLY ALLOWED. 5. IN CROSS-OBJECTION, THE ASSESSEE HAS PLEADED THA T THE REVENUES APPEAL SHOULD BE DISMISSED ON THE BASIS OF LOW TAX EFFECT CIRCULAR ISSUED BY CBDT. HOWEVER, WE FIND THAT THE CASE WAS REOPENED U PON RECEIPT OF INFORMATION FROM EXTERNAL AGENCY VIZ. SALES TAX DEP ARTMENT, MAHARASHTRA 5 ITA NO.5579/MUM/2018 & C.O NO. 241/MUM/2019 DANIEL JOSEPH BRITTO ASSESSMENT YEAR-2009-10 AND THEREFORE, THE FACTUAL MATRIX WAS COVERED BY ON E OF THE EXCEPTIONS PROVIDED IN THE SAID CIRCULAR AND THE ASSESSEE COUL D NOT BE GRANTED THE BENEFIT OF SAID CIRCULAR. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMIS SED WHEREAS THE CROSS-OBJECTIONS STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019 SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20/11/2019 SR.PS:-**PP,SPS '( )( / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, % - , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.