ACIT 13(2)(1), MUMBAI V. SAY INDIA JEWELLERS P. LTD, MUMBAI

ITA 5667/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8457 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: AMOD PRABHUDESAILD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 142(1); 147; 148; 2

Judgement Text

ITA.NO.5667/MUM/2016 SAY INDIA JEWELLERS PRIVATE LIMITED ASSESSMENT YEAR-2007-08 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.5667/MUM/2016 ( / ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX-13(2)(1) ROOMNO.146,1 ST FLOOR AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 / VS. SAY INDIA JEWELLERS PRIVATE L TD. UNIT NO.701, BLOCK 1, SEEPZ++ SEZ, ANDHERI(E) MUMBAI-400 096 ! ./ ./PAN/GIR NO. AAACM-7171-K ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : AMOD PRABHUDESAI,LD.AR RE VENUE BY : SUMAN KUMAR, LD. SR. DR / DATE OF HEARING : 01/11/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2007- 08 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 21 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-21/DCIT-13(2)(1)/I.T-117/2015- 16 DATED 27/07/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-13(2) (1), MUMBAI [AO] ITA.NO.5667/MUM/2016 SAY INDIA JEWELLERS PRIVATE LIMITED ASSESSMENT YEAR-2007-08 2 U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 17/03/2015. THE SOLITARY ISSUE INVOLVED IN THE APPE AL IS ADDITION AGAINST CERTAIN ALLEGED BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN MANUFACTURING OF JEWELLERY AND TRADING IN STONES ETC. WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 17/03/2015 AT RS.2,94,12,330 /- UNDER NORMAL PROVISIONS AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.80,69,936/-. THE ORIGINAL RETURN WAS E-FILED ON 28/10/2007 AT RS.2,13,42,396/- WHICH WAS ASSESSED U/S 143(3) ON 1 2/11/2009 AT RS.2,58,84,321/-. 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM INVESTIGATION WING, MUMBAI 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.80,69,936/- FROM FOUR SUCH PARTIES. THE VARIOUS SUPPLIERS, UPON STATEMENT ON OATH U/S 132(4) ADMITTED TO BE INDULGI NG IN PROVIDING ACCOMMODATION BILLS WITHOUT DOING ANY ACTUAL BUSINE SS. CONSEQUENTLY, NOTICE U/S 148 DATED 25/03/2014 WAS ISSUED TO THE A SSESSEE WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1) . 2.3 DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE, INTER-ALIA, PLEADED FOR ADDITION OF PROFIT ELEMENT EMBEDDED IN SUCH PUR CHASE TRANSACTIONS. HOWEVER, NOT CONVINCED, LD. AO CONCLUDED THAT THE A SSESSEE FAILED TO DISCHARGE THE ONUS CASTED ON HIM TO PROVE THE PURCH ASE TRANSACTIONS AND THEREFORE, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ITA.NO.5667/MUM/2016 SAY INDIA JEWELLERS PRIVATE LIMITED ASSESSMENT YEAR-2007-08 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/07/2 016 WHERE LD. CIT(A) AFTER APPRECIATING THE FACTUAL MATRIX AND PL ACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS RESTRICTED THE ADDI TIONS TO 15% OF ALLEGED BOGUS PURCHASES PLUS LOSS OF RS.49,737/- AS CLAIMED BY ASSESSEE AGAINST THESE TRANSACTIONS . AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] RELIED ON THE STAND OF LD. AO WHEREAS LD. COUNSEL FOR ASSESSEE [AR] ASSERT ED THAT ESTIMATION MADE BY LD. CIT(A) WAS QUITE FAIR 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 MANUFACTURING AND TRADING ACTIVITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSE E HAS, TO SOME EXTENT, SHOWN CORRELATION BETWEEN SALES AND PURCHAS ES. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSE SSEE COULD NOT PRODUCE ANY CONFIRMATION FROM ANY OF THE IMPUGNED S UPPLIER AND MOREOVER THE SUPPLIER, UNDER OATH, ADMITTED TO HAVE ENTERED INTO PROVIDING ACCOMMODATION BILLS WITHOUT DOING ANY BUS INESS, WHICH CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SU CH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR P ROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHA SES, WHICH ITA.NO.5667/MUM/2016 SAY INDIA JEWELLERS PRIVATE LIMITED ASSESSMENT YEAR-2007-08 4 LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME TO BE QUITE FAIR & REASONABLE, WE DISMISS REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11 .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