JOY PACKAGING PVT. LTD. (FORMERLY KNOWN AS JOY CLOSURES PVT. LTD.), MUMBAI V. ITO 10 (2)(1), MUMBAI

ITA 5588/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3423 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase; Depreciation; Onus to prove
• Section: 69C; 142(1); 133(6); 143(1); 143(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 5588/MUM/2018(ASSESSMENT YEAR : 2011-12) M/S JOY PACKAGING PVT LTD (FORMERLY KNOWN AS JOY CLOSURES PVT LTD), BHARAT TIN WORKS BLDG, MAROL MAROSHI ROAD, MAROL, ANDHERI (E), MUMBAI-400 059 PAN : AAACJ3119Q VS ITO, 10(2)(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI ANIL THAKKAR AR RESPONDENT BY SHRI AKHTAR H ANSARI SR. DR DATE OF HEARING 20-11-2019 DATE OF PRONOUNCEMENT 25-11-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)- 51, MUMBAI DATED 04-07-2018 FOR THE ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- THE LD CIT (A) IS ERRED IN CONFIRMING A SUM OF RS. 2,86,8027- (25% OF RS.L 1,47,2077- ) U/S 69C ON ACCOUNT OF UNPROVED 7 NON GENUINE AND BOGUS PURCHASES, AS INCOME OF THE APPELLANT AS ALLE GED INFLATED PURCHASES AS PER INFORMATION RECEIVED FROM SALES TA X AUTHORITIES THROUGH DGIT (INVESTIGATION), MUMBAI. THE APPELLANT REQUESTS TO DELETE THE ADDITION CONFIRMED BY THE LD CIT (A). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF METAL CON TAINERS, FILED ITS COMPONENTS, PLASTIC CAPS, ETC. FILED ITS RETURN OF INCOME ON 27-09-2011 2 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD DECLARING TOTAL INCOME AT RS.1,21,307/- WHICH WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEP ARTMENT, GOVERNMENT OF MAHARASHTRA INFORMING THAT CERTAIN HAWALA OPERAT ORS WERE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVE RY OF GOODS. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA REFERRED THE LIST OF SUCH HAWALA DEALERS AND THE BENEFICIARY TO THE DGIT (INV ESTIGATION), MUMBAI. THE NAME OF ASSESSEE APPEARED IN THE LIST OF BENEFI CIARIES. THE ASSESSEE ALLEGEDLY MADE THE PURCHASES OF RS.11,47,207/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE A BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT, THEREFOR E, RE-OPENED THE ASSESSMENT UNDER SECTION 147. NOTICE UNDER SECTION 148 DATED 08-03-2015 WAS ISSUED TO THE ASSESSEE. THE ASSESSING OFFICER THEN ISSUED NOTICES U/S 143(2) AND 142(1) ALONG WITH A QUESTIONNAIRE. DURI NG THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN PURCHASES FROM THE FOLLOWING PARTIES, WHO WERE DECLARED AS HAWALA DEAL ERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA: NAME OF THE PARTIES BILL AMOUNT (RS.) 1 VM UDYOG 3,15,000 2 RAVIRAJ IMPEX PVT LTD 1,96,206 3 NEELOFAR TRADE PVT LTD 4,32,338 4 ASHTAVINAYAK TRADING COMPANY 67,500 3 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD 5 VIHOL ENTERPRISES 1,36,163 TOTAL AMOUNT 11,47,207/- 3. IN ORDER TO ASCERTAIN THE TRANSACTION THE ASSESSIN G OFFICER ISSUED NOTICE UNDER SECTION 133(6) TO ALL THE PARTIES. THE ASSESS ING OFFICER RECORDED THAT NO RESPONSE WAS RECEIVED FROM THE PARTIES AND THAT THE NOTICES WERE RETURNED BACK UNSERVED. THE ASSESSEE FURNISHED THE LEDGER EXTRACT OF ALL THE PARTIES. AFTER ANALYSING THE BOOKS OF THE ASSES SEE AND THE EVIDENCES FURNISHED BY ASSESSEE, THE AO CONCLUDED THAT THE PU RCHASES MADE BY ASSESSEE FROM THE ABOVE PARTIES WERE NOT GENUINE AS CLAIMED AND DEBITED IN HIS P&L ACCOUNT. FURTHERMORE, THE DIRECTORS OR T HE PROPRIETORS OF THE HAWALA DEALERS MADE STATEMENT BEFORE SALES TAX AUTH ORITIES THAT THEY WERE ACTING ON THE DIRECTION OF ONE TUSHAR RUPAREL, WHO WERE GIVING THEM COMMISSION. IT WAS FURTHER CONCLUDED BY THE ASSESSI NG OFFICER THAT THE PRIMARY ONUS TO PROVE THE GENUINENESS OF THE PURCHA SES WAS ON THE ASSESSEE, IT WAS THE DUTY OF THE ASSESSEE TO PROVID E THE COMPLETE ADDRESS OF THE PARTIES, THE ASSESSEE WAS REQUIRE TO PRODUCE THE PARTIES, THE PAYMENTS THROUGH THE CHEQUE IS NOT SACROSANCT. THE ASSESSEE IS UNABLE TO CORRELATE EXACT INWARD, CONSUMPTION WITH CORRESPOND ING PURCHASES. AND THAT HE DOUBTS ONLY THOSE PURCHASES FOR WHICH THE G ENUINENESS WAS NOT PROVED. THE ASSESSING OFFICER ACCORDINGLY DISALLOW ED (RS. 286,802/-) BEING 25% AS UNEXPLAINED EXPENSES OF TOTAL PURCHAS ES OF THE ALLEGED NON 4 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD GENUINE PURCHASES OF RS. 11,47,207/- ON APPEAL, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. FURTHER AGGRIEVED, ASSESSEE HAS FILED FURTHER APPEAL BEFORE US. 4. WE HAVE HEARD THE SUBMISSIONS OF THE LD.AR FOR THE ASSESSEE AND THE LD .DR OF THE REVENUE. THE LD. AR OF THE ASSESSEE SUBM ITS THAT THE ASSESSEE FURNISHED COMPLETE DETAILS OF PURCHASES AND THE SAL ES MADE AGAINST THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF 25%% OF THE ALLEGED BOGUS PURCHASES. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT ASSESSEE HAS ALREADY SHOWN GRO SS PROFIT (GP) AT 19.8% . THE ADDITION SUSTAINED ON ACCOUNT OF ALLEGED BOGUS PURCHASES IS ON HIGHER SIDE. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THERE IS NO FINDING OF THE ASSESSING OFFICER THAT THE PAYMENT M ADE BY THE ASSESSEE WAS RETURN BACK TO THE ASSESSEE OR IT WAS A CIRCULA R TRANSACTION. 5. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSING OFFICER IDENTIFIED ALLEGED BOGUS PURCHASES OF RS. 11,47,207 /-, OUT OF WHICH RS. 8,32,207/- WAS ON ACCOUNT OF RESALE OF MATERIAL AND PURCHASE OF RS. 3,15,500/- ON ACCOUNT OF FIXED ASSET. THE LD. AR FO R THE ASSESSEE FINALLY SUBMITS THAT IN ORDER TO BUY PEACE THE DISALLOWANCE ON ACCOUNT OF DISPUTED PURCHASE MAY BE RESTRICTED ON REASONABLE B ASIS I.E. 8% OF THE IMPUGNED/ ALLEGED BOGUS PURCHASE, KEEPING IN VIEW T HAT THE ASSESSEE HAS 5 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD SHOWN GP @ 10.8% AND ON ACCOUNT OF PURCHASE FOR FIX ED ASSET THE ASSESSEE MAY BE ALLOWED DEPRECIATION. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. T HE LD. DR FURTHER SUBMITS THAT INVESTIGATION WING OF INCOME-TAX DEPAR TMENT HAS MADE FULL-FLEDGED INVESTIGATION IN RESPECT OF HAWALA TRA DERS. THE HAWALA TRADERS WERE/ARE ENGAGED IN PROVIDING BOGUS BILL WITHOUT AC TUAL DELIVERY OF GOODS. THE ASSESSEE HAS SHOWN BOGUS PURCHASES ONLY TO INFLATE THE PROFIT. THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSI NG OFFICER HAS GIVEN SUFFICIENT RELIEF. THE ASSESSING OFFICER AND THE LD CIT(A) HAS PASSED A VERY DETAILED AND REASONABLE ORDER. THE ASSESSEE IS NOT ENTITLED FOR ANY FURTHER RELIEF. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE REPR ESENTATIVES AND PERUSED THE RECORD. A SHORT ISSUE FOR OUR ADJUDICAT ION IS WHETHER THE DISALLOWANCE OF ALLEGED BOGUS PURCHASE @ 25% IS REA SONABLE OR NOT. THE LD. AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE ASSESSEE HAS ALREADY SHOWN GP @ 10.8% AND FURTHER DISALLOWANCE @ 25% WOULD INCREASED THE GP DRASTICALLY, WHICH IS NOT POSSIBLE IN THE BUSINESS OF THE ASSESSEE. WE HAVE EXAMINED THE FACTS OF THE PRESENT CASE INDEPENDENTLY AND FIND THAT THE LOWER AUTHORITY MAINLY RELIED ON THE STATEMENT OF THE 6 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD ALLEGED HAWALA PARTIES, RECORDED BY THE SALES TAX D EPARTMENT. THE ASSESSING OFFICER HAS NOT DISCUSSED THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE, EXCEPT RECORDING IN PARA 4 THAT DETAI LS HAVE BEEN CALLED, EXAMINED AND PLACED ON RECORD. THE SALES OF THE ASS ESSEE ARE NOT DISPUTED. THE BOOKS OF ACCOUNT ARE ALSO NOT REJECTE D BY THE ASSESSING OFFICER. BEFORE LD CIT(A) THE ASSESSEE SPECIFICALLY STATED THAT OUT OF TOTAL DISPUTED PURCHASES OF RS. 11,47,207/-, PURCHASE OF RS. 8,32,207/- WAS ON ACCOUNT OF RESALE OF MATERIAL AND PURCHASE OF RS. 3 ,15,500/- ON ACCOUNT OF FIXED ASSET, THIS FACT IS NOT VERIFIED BY LD CIT (A). CONSIDERING THE FACT OF THE PRESENT CASE AND THE NATURE OF BUSINESS ACTI VITIES OF THE ASSESSEE, WE ARE OF THE VIEW THAT TO AVOID THE REVENUE LEAKAG E, THE CERTAIN REASONABLE DISALLOWANCE OF THE DISPUTED PURCHASES W OULD MEET THE END OF JUSTICE, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION WITH REGARD TO BOGUS PURCHASES @ 12% OF THE DISPUTE D PURCHASES. IN THE RESULT THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25-11 -2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 25 TH NOVEMBER, 2019 PK/- 7 ITA 5588/MUM/2018 JOY PACKAGING PVT LTD COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI