ITO 25(1)(3), MUMBAI V. ASHOK H. SANCHETI, MUMBAI

ITA 5685/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8542 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-09-2014
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Assessee Lawyers: B V JHAVERI
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 5685 / MUM/20 1 4 ( ASSESSMENT YEAR : 2010 - 11 ) ITO - 25(1)(3), MUMBAI VS. SHRI ASHOK H SANCHETI 2/E/8, MOOLJI NAGAR, S.V.ROAD, BORIVALI (W) MUMBAI - 400092 PAN/GIR NO. AAVPS1094B APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI A. RAMACHANDRAN ASSESSEE BY SHRI B.V.JHAVERI DATE OF HEARING 07 / 11 /2016 DATE OF PRONOUNCEME NT 06 / 02 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 35 DATED 30.06.2014 FOR THE ASSESSMENT YEAR 2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT WHEREIN REVENUE IS AGGRIEVED FOR DELETI ON OF ADDITION OF RS.2,61,77,677/ - U/S. 69C OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. FA CTS IN BRIEF ARE THAT ASSESSEE I S A DEALER IN FERROUS AND NON FERROUS METALS. DURING THE COURSE OF SCRUTINY ASSESSMENT, AO OBSERVED THA T THE SALES TAX DEPARTMENT HAS PUBLISHED A LIST OF THE PARTIES BY WHOM BOGUS PU RCHASE BILLS HAVE BEEN ISSUED WITH THE NAMES OF VARIOUS BENEFICIARIES IN THE PUBLIC DOMAIN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITA NO. 5685/2014 SHRI ASHOK H. SANCHETI 2 INFORMATION WAS CALLED BY AO FROM THESE P URCHASE PARTIES AND IN ALL THE CASES THE NOTICES ISSUED U/S. 1 33(6) WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIE S. AO FURTHER OBSERVED THAT ON SCRUTINY OF THE DETAILS, IT WAS NOTICED THAT THESE PURCHASE PARTIES ARE BOGUS PURCHASE PARTIES DECLARED BY THE SALES TAX DEPARTMENT ON THEIR WEBSITE AS HAWALA BO GUS / SUSPICIOUS PARTIE S. THEREFORE , THE ASSESSEE VIDE OFFICE LETTER DATED 8.2.2013 WAS ASKED TO SHOW CAUSE AS TO WHY THESE PURCHASES SHOULD NOT BE TREAT ED AS UNEXPLAINED EXPENDITURE U/ S.69C AND ASSESSEE WA S ASKED TO PRODUCE THE ABOVE PARTIES TO SUBSTANTIATE HIS CLAIM ALONGWITH DOCUMENTARY EVIDENCES SUCH AS TRANSPORT RECEIPTS, CHALLANS ET C., HOWEVER THESE PARTIES WERE NOT PRODUCED BEFORE THE AO. ACCORDINGLY, AO MADE ADDITION OF RS.2,61,77,677/ - U/S.69C AS UN EXPLAINED EXPENDITURE. 4 . BY THE IMPUGNED ORDER CIT(A) DELETED THE ADDITION AFTER OBSERVING AS UNDER: - I HAVE' GONE THROUGH TH E FACTS. OF THE CASE. THE MAIN C ONTENTI ON OF THE' A O FOR D ISALLOWING THE SA I D PURCHASES IS ON THE BASIS OF LIST 'PUBLI S HED BY THE SALES TAX DEPARTMENT AND ON THE BASIS' THAT THE NOTICES U/S.133(6 ) WERE RETURNED UNSERVED AND THIRDLY, ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO PROD UCE THE PURCHASERS FOR VERI F I CATION EVEN THOUGH H E WAS GIVEN THE OPPORTUNITY TO DO SO . THE APPELLANT ON THE OTHER HAND. HAS S UBMITTED ALL THE DETAILS OF THE PURCHA SE BILLS, THE SOURCE OF PAYMENT THROU G H BANK ACCOUNT AND THE FACTUM OF THE SALES BEING MADE ON THE' BASIS OF SAID PURCHASES WHICH HAS NOT BEEN DISPUTED BY THE AO. .THE APPELLANT HAS 'SUBM ITTED T HEREFORE,' THAT THESE PURCHASES CANNOT BE DOUBTED AND TREATED AS BOGUS. KEEPING IN MIND THE FACTS OF THE PRESENT CASE. WH ERE THE APPELLANT HAS DULY DISCHARGED HIS ONUS OF SHOWIN G THE' EVI DENCE OF ACTUAL' PURCHASES AND THE SALES BEING MADE ON THE BASIS OF THE SAID PURCHASES AND THE SOURCE OF PAYMENT NOT BEIN G IN DOUBT AND' NEITHER THERE BEING ANY EVIDENCE NOTICED BY TH E AO THAT ANY OF THE PAYMENTS MADE BY THE ITA NO. 5685/2014 SHRI ASHOK H. SANCHETI 3 CHEQUES HAVE BEEN R OUTED BACK TO THE APPELLANT, TH E R ATIO IN. THE DECISION OF NIKUN J EXIMP ENTERPR ISES PVT. LTD OF THE JURISDICTIONAL H O N'BLE HIGH CO URT IS FOUND TO DIRECTLY APPLY T O TH E FACTS OF THE PRESENT CASE. IN THE LIGHT OF THE SAID DECISION THE APPEAL IS ALLOWED . 5 . AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. IT WAS ARGUED BY LEARNED DR THAT THE LEARNED CIT(A) GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE NOTICES UNDER 133(6) ISSUED TO THE PARTIES FROM WHOM ALLEGED BILLS WERE RECEIVED WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES AND THE ASSESSEE HAS A LSO FAILED TO PRODUCE THE PARTIES BEFORE THE A.O. HE FURTHER CONTENDED THAT THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAS NOT PRODUCED ANY COGENT EVIDENCE TO SUBSTANTIATE THE FACT THAT HE HAD TAKEN ACTUAL DELIVERY OF GOODS PURCHASED FR OM THESE PARTIES. 6 . ON THE OTHER HAND, LEARNED AR PLACED ON RECORD GP CHART OF THE ASSESSEE TO INDICATE THAT GROSS PROFIT SHOWN BY ASSESSEE DURING THE YEAR WAS M ORE OR LESS AT PAR AS SHOWN IN THE EARLIER ORDERS, ACCORDINGLY, HE CONTENDED THAT ADDITION IF ANY SHOULD BE UPHELD TO THE DIFFERENCE IN GP @0.95% ON THE ALLEGED BOGUS PURCHASES OF RS.2,61,77,677/ - . 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNC EMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AND FOUND THAT AO HAS MADE ADDITION IN RESPECT OF BOGUS PURCHASES AND FOUND THAT NOTICES ISSUED TO ALL THESE BOGUS SUPPLIERS U/S.133 (6) WERE RETURNED UNDELIVERED BY POSTAL AUTHORITIES AND ASS ESSEE ALSO FAILED TO ITA NO. 5685/2014 SHRI ASHOK H. SANCHETI 4 PRODUCE THE PARTIES BEFORE THE AO. HOWEVER, THE CIT(A) HAS NOT DEALT WITH THIS OBSERVATION OF AO AND WITHOUT CONTROVERTING AOS FINDING DELETED ENTIRE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 8 . FROM THE RECORD, WE FOUND THAT ASSES SEE HAD SHOWN GP IN THE A.Y.2008 - 09 AT 7.53% AND I N A.Y.2009 - 10 AT 7.51% . HOWEVER DURING THE YEAR UNDER CONSIDERATION, GP SHOWN BY THE ASSESSEE WAS ONLY 6.09% WHICH IS MUCH LOWER THAN THE GP SHOWN IN THE EARLIER YEAR. HOWEVER, NO REASONS WERE ASSIGNED FOR DECLINE OF GP DURING THE YEAR UNDER CONSIDERATION. KEEPING IN VIEW ENTIRETY OF FACTS AND CIRCUMSTANCES , WE RESTRICT THE ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASE SO AS TO FULFILL THE LEAKAGE IN R EVENUE. WE DIRECT ACCORDINGLY. 9 . IN THE RESULT, APP EAL OF THE REVENUE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 02 /2017 S D/ - ( RAVISH SOOD ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED 06 / 02 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, M UMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//