ITO, W-27(2)(5), MUMBAI, MUMBAI V. SHRI PRATIK M. MEHTA, MUMBAI

ITA 5783/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0316 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Condonation of delay
• Section: 143(3); 133(6); 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 5783 //20 19 (. . 2009-10 ) ITA NO.5783/MUM/2019 (A.Y.2009-10) ITO, WARD-27(2)(5), ROOM NO. 421, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703. /VS. SHRI PRATIK M. MEHTA, 35-B, SINDHU BAUGH, TILAK ROAD, GHATKOPAR (EAST), MUMBAI-400077 ( ' / APPELLANT ) ( (* / RESPONDENT ) PAN NO. AAHPM4344E ... 40 //20 21 (. . 2009-10 ) C.O. NO.40/MUM/2021 (A.Y.2009-10) SHRI PRATIK M. MEHTA, 35-B, SINDHU BAUGH, TILAK ROAD, GHATKOPAR (EAST), MUMBAI-400077 /VS. ITO, WARD-27(2)(5), ROOM NO. 421, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703. ( ' / APPELLANT ) ( (* / RESPONDENT ) PAN NO. AAHPM4344E ' ,/ APPELLANT BY : MS. SMITA VERMA, DR (* ,/ RESPONDENT BY : SH. PARAS SAVLA, AR - / DATE OF HEARING : 06/04/2021 - / DATE OF PRONOUNCEMENT : 01/07/2021 / ORDER 2 . 5783 //20 19 (. .2009-10 ) ITA NO.5783/MUM/2019 (A.Y.2009-10) ... 40 //20 21 (. .2009-10 ) C.O. NO.40/MUM/2021 (A.Y.2009-10) PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-25, MUMBAI [HEREINAFTER REF ERRED TO AS THE CIT(A)] DATED 06.06.2019 FOR THE ASSESSMENT YEAR (AY) 2009- 10. THE ASSESSEE HAS FILED CROSS OBJECTIONS (C.O) IN THE APPEAL BY REVENUE. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING OF PACKAGING BOXES FROM PA PER-SHEETS, CARFT PAPER, ETC. IN ASSESSMENT PROCEEDING UNDER SECTION 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO A S THE ACT], THE AO HELD THAT THE ASSESSEE HAS MADE BOGUS PURCHASES TO THE TUNE O F RS. 18,70,395/- FROM FOLLOWING PARTIES: SR NO. NAME OF THE PARTY AMOUNT 1 N B ENTERPRISES 13,10,220/- 2 J B ENTERLINK 4,07,420/- 3 AMAN ENTERPRISES 1,52,755/- THE AFORESAID PARTIES WERE NAMED AS HAWALA OPERATOR S BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. THE ASSESSEE WAS ASKED TO PROVE GENUINENESS OF AFORESAID DEALERS AND PURCHASES MADE FROM THEM. SINCE, THE ASSESSEE FAILED TO DISCHARGE HIS ONUS IN PROVING GE NUINENESS OF THE DEALERS AND THE PURCHASES MADE FROM THEM, THE AO MADE ADDITION OF ENTIRE ALLEGED BOGUS PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER, THE A SSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE FACTS OF CASE AND THE GROSS PROFIT (GP) DECLARED BY THE ASSESSEE, RESTRICTED THE ADDITION T O 15% OF THE ALLEGED BOGUS 3 . 5783 //20 19 (. .2009-10 ) ITA NO.5783/MUM/2019 (A.Y.2009-10) ... 40 //20 21 (. .2009-10 ) C.O. NO.40/MUM/2021 (A.Y.2009-10) PURCHASES. AGAINST THE RELIEF GRANTED BY THE CIT(A) , THE REVENUE IS IN APPEAL. THE ASSESSEE HAS FILED C.O. AGAINST THE ADDITION CO NFIRMED BY THE CIT(A). 3. MS. SMITA VERMA REPRESENTING THE DEPARTMENT VEHE MENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDI NGS OF CIT(A) IN RESTRICTING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO RS. 2 ,80,559/- I.E. TO THE EXTENT OF 15% OF TOTAL BOGUS PURCHASES. THE LD. DR SUBMITT ED THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN PROVING GENUINENESS OF THE DEALERS AND THE PURCHASES MADE FROM THEM. THE NOTICES ISSUED TO THE DEALERS UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS THE ACT] REMAINED UNSERVED, NO CONFIRMATIONS WERE FILED BY T HE ASSESSEE FROM THE DEALERS AND NO DOCUMENTARY EVIDENCE WAS FILED BY TH E ASSESSEE TO PROVE TRAIL OF GOODS PROCURED FROM SUSPICIOUS DEALERS. 4. ON THE OTHER HAND, SHRI PARAS SAVLA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED COPIES OF INVOICES AND BANK STATEMENTS. THE ASSESSEE HAD SUBMITTED SUFFICIENT E VIDENCE TO PROVE GENUINENESS OF THE PURCHASES, THEREAFTER, NO ADDITI ON ON ACCOUNT OF BOGUS PURCHASES SHOULD BE MADE. 5. BOTH SIDES HEARD, ORDERS OF THE AUTHORITIES BEL OW EXAMINED. THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS IN PROVING GENUINE NESS OF THE PURCHASES. THE ASSESSEE FAILED TO FURNISH COPIES OF DELIVERY CHALL ANS, LORRY RECEIPTS, STOCK REGISTER ETC., TO PROVE TRAIL OF GOODS. PAYMENT TO DEALERS THROUGH BANKING CHANNEL IS NOT SACROSANCT EVIDENCE TO PROVE GENUINE NESS OF PURCHASES AND THUS, DOES NOT ABSOLVE THE ASSESSEE FROM INVOLVEMENT IN O BTAINING BOGUS ENTRY FROM HAWALA DEALERS. THE ASSESSEE HAS NOT BROUGHT ON REC ORD ANY COGENT 4 . 5783 //20 19 (. .2009-10 ) ITA NO.5783/MUM/2019 (A.Y.2009-10) ... 40 //20 21 (. .2009-10 ) C.O. NO.40/MUM/2021 (A.Y.2009-10) DOCUMENTARY EVIDENCE INDICATING MOVEMENT OF GOODS S UCH AS LORRY RECEIPTS, OCTRY RECEIPTS, CONSUMPTION DETAILS, STOCK REGISTER , ETC. NO CONFIRMATIONS FROM SUSPICIOUS DEALERS WERE EITHER PLACED ON RECORD. HE NCE, THE ASSESSEE FAILED TO DISCHARGE HIS ONUS IN PROVING AUTHENTICITY OF THE D EALERS AND ALLEGED PURCHASES MADE FROM THEM. 6. IT IS FURTHER OBSERVED THAT THE SALES TURNOVER A ND STOCK DECLARED BY ASSESSEE HAS NOT BEEN DOUBTED BY THE AO. WITHOUT PU RCHASES THERE CANNOT BE SALE/MANUFACTURING. HENCE, ENTIRE ALLEGED BOGUS PUR CHASE CANNOT BE ADDED BACK. IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUC H TRANSACTION THAT CAN BE BROUGHT TO TAX. [RE: PCIT VS. PARAMSHAKTI DISTRIBUT ORS PVT. LTD. IN INCOME TAX APPEAL NO. 413 OF 2017 DECIDED ON 15.07.2019). A PE RUSAL OF THE IMPUGNED ORDER SHOWS THAT THE ASSESSEE HAS DECLARED GP OF 16 .77% DURING THE PERIOD RELEVANT TO THE AY UNDER APPEAL. THE CIT(A) HAS RES TRICTED THE ADDITION ON BOGUS PURCHASES TO 15%. I SEE NO REASON TO INTERFER E WITH THE FINDINGS OF CIT(A) IN ESTIMATING ADDITIONAL PROFIT MARGIN OF 15% ON UN PROVED PURCHASES. THE IMPUGNED ORDER IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED, SANS MERIT. C.O.NO. 40/MUM/2021 BY ASSESSEE 7. THE C.O. FILED BY ASSESSEE IS TIME BARRED BY 17 DAYS. THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY S UPPORTED BY AN AFFIDAVIT CITING REASONS FOR DELAY IN FILING OF THE C.O. AFTE R EXAMINING THE AFFIDAVIT, IT APPEARS THAT THE DELAY IN FILING OF THE C.O. IS NOT DELIBERATE. THE DELAY HAS BEEN CAUSED DUE TO BONAFIDE REASONS STATED IN THE AFFIDA VIT. TAKING INTO CONSIDERATION, THE REASONS CITED FOR DELAY IN FILIN G OF THE C.O., THE DELAY OF 17 5 . 5783 //20 19 (. .2009-10 ) ITA NO.5783/MUM/2019 (A.Y.2009-10) ... 40 //20 21 (. .2009-10 ) C.O. NO.40/MUM/2021 (A.Y.2009-10) DAYS IS CONDONED AND THE C.O. IS ADMITTED TO BE HEA RD AND DISPOSED OF ON MERIT. 8. IN C.O., THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(A) IN CONFIRMING ADDITION OF RS. 2,80,559/- BY ESTIMATING PROFIT AT THE RATE 15% ON BOGUS PURCHASES. WHILE ADJUDICATING APPEAL OF THE REVENUE , DETAILED REASONS HAVE BEEN GIVEN FOR UPHOLDING THE ORDER OF CIT(A), THERE FORE, THE C.O. FILED BY ASSESSEE ASSAILING THE IMPUGNED ORDER IS REJECTED. 9. IN THE RESULT, APPEAL OF THE REVENUE AND C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 01 ST DAY OF JULY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER /MUMBAI, 2 /DATED: 01/07/2021 SK, PS ( ( ( ( 3 3 3 3 COPY OF THE ORDER FORWARDED TO : 1. ' /THE APPELLANT , 2. (* / THE RESPONDENT. 3. 4 ( )/ THE CIT(A)- 4. 4 CIT 5. ( , . . ., /DR, ITAT, MUMBAI 6. 8 /GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI