GEMINI ENGI FAB LTD, MUMBAI V. DCIT 9(3)(2), MUMBAI

ITA 5827/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9199 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA LD
• Assessee Lawyers: RUTUJA N PAWAR LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO.5827/MUM/2016 GEMINI ENGI-FAB LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5827/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) GEMINI ENGI-FAB LTD 501, PALM SPRING LINK ROAD MALAD(W) MUMBAI-400 064 / VS. DEPUTY COMMISSIONER OF INCOME TAX 9(3)(2) ROOM NO.418, 4 TH FLOOR AAYKAR BHAVAN M.K.ROAD,MUMBAI 400 020 ! ./ ./ PAN/GIR NO.AAACG-7948-N ( !# /APPELLANT ) : ( $!# / RESPONDENT ) REVENUE BY : ARJU GARODIA, LD. DR ASSESSEE BY : RUTUJA N.PAWAR, LD. AR / DATE OF HEARING : 18/09/2017 / DATE OF PRONOUNCEMENT : 04/10/2017 2 ITA NO.5827/MUM/2016 GEMINI ENGI-FAB LIMITED ASSESSMENT YEAR 2009-10 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-16 [CIT(A)], MUMBAI DATED 29/08/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS AGAINST BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING & TRADING OF ENGINEERING MACHINES WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 11/03/2015 AT RS.3,16,56,220 /- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.2,05,32,621/-. THE ORIGINAL RETURN WAS FILED ON 30/09/2009 AT RS.50,60,120/- WHICH WAS PROCESSE D U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL I S ADDITION AGAINST BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA 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.2,05,32,621/- FROM FOUR PARTIES. CONSEQUENTLY, NOTICE U/S 148 DAT ED 26/03/2014 WAS ISSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY STATUT ORY NOTICES U/S 143(2) AND 142(1). 3 ITA NO.5827/MUM/2016 GEMINI ENGI-FAB LIMITED ASSESSMENT YEAR 2009-10 2.3 THE ASSESSEE, TO SUPPORT PURCHASE TRANSACTIONS, SUBMITTED COPIES OF INVOICES & PAYMENT DETAILS BUT COULD NOT FILE TRANSPORTATION DETAILS AND EVIDENCES OF PHYSICAL DELIVERY OF GOODS. FINALLY, N OT CONVINCED WITH ASSESSEES SUBMISSIONS, LD. AO TREATED THE SAME AS NON-GENUINE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/08/2 016 AND REITERATED THE CONTENTION THAT THE PURCHASES WERE GENUINE. THE LD. CIT(A), RELYING ON SEVERAL JUDICIAL PRONOUNCEMENTS, CONCLUDED THAT THE ONUS WAS ON ASSESSEE TO PROVE THE PURCHASE TRANSACTIONS AND THE ASSESSEE FAILED TO DISCHARGE THE SAME SINCE THE ASSESSEE COULD NOT PROVE ACTUAL DELIVERY OF MATERIAL. FINALLY, AFTER ELABORATE DISCUSSION AND EXAMINING V ARIOUS CASE LAW ON THE ISSUE, LD. CIT(A) RESTRICTED THE IMPUGNED ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES TO ACCOUNT FOR SUPPRESSED PROFIT EMBEDDED IN THE IMPUGNED PURCHASES. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR], SUBMITTED THA T THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS WERE THROUGH BANKING CHANNELS AND THEREFORE, THE ADDITIO N OF 12.5% WAS NOT WARRANTED FOR AND EVEN OTHERWISE THE SAME WAS ON TH E HIGHER SIDE. 5. PER CONTRA, LD. DR PLACING RELIANCE ON THE FINDINGS OF LD. CIT( A) DREW OUR ATTENTION TO THE FACT THAT THE REVENUE HAS ACCE PTED THE STAND OF LD. CIT(A) AND IS NOT IN FURTHER APPEAL BEFORE THIS TRI BUNAL. OUR ATTENTION IS 4 ITA NO.5827/MUM/2016 GEMINI ENGI-FAB LIMITED ASSESSMENT YEAR 2009-10 FURTHER DRAWN TO THE FACT THAT THE ASSESSEE WAS DEA LING IN HEAVY ITEMS LIKE MACHINERY BUT FAILED TO PROVIDE ANY TRANSPORTATION DETAILS OR EVIDENCES TO PROVE ACTUAL DELIVERY OF MATERIAL AND MERE POSSESSI ON OF PURCHASE INVOICES OR PAYMENT THROUGH BANKING CHANNELS, BY ITSELF, WAS NOT CONCLUSIVE TO ESTABLISH THE CLAIM OF THE ASSESSEE. FURTHER, THE A SSESSEE MADE PURCHASES FROM LOCAL PARTIES BUT COULD NOT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF THE TRANSACTION. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS WHICH WAS MATERIAL INTENSIVE AND COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF MATERIAL. THE SALES TUR NOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY EVIDE NCE TO PROVE ACTUAL DELIVERY OF MATERIAL OR FURNISH ANY DETAILS OF TRAN SPORTATION AS REQUIRED BY LD. AO, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAI M. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAM E TO BE QUITE FAIR AND 5 ITA NO.5827/MUM/2016 GEMINI ENGI-FAB LIMITED ASSESSMENT YEAR 2009-10 REASONABLE, WE FIND NO REASON TO INTERFERE WITH THE SAME AND THEREFORE, NO HESITATION IN DISMISSING ASSESSEES APPEAL. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH OCTOBER, 2017. SD/- SD/- (C. N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04 .10.2017 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. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI