ACIT - 19(1), MUMBAI V. HITECH ENGINEERS, MUMBAI

ITA 5877/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4697 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Additional evidence; Reassessment proceedings; Set aside
• Section: 143(1); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 5877/MUM/2017 (ASSESSMENT YEAR 2009-10 ) ACIT - 19(1) ROOM NO. 203, 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007. VS. M/S HI TECH ENGINEERS 477-479, GOLDEVAL, LADI BAZAAR, MAULANA AZAD ROAD, MUMBAI-400004. PAN: AAAFH0253L APPELLANT RESPONDE NT APPELLANT BY : SHRI MANOJ KUMAR SINGH (SR. DR) RESPONDENT BY : NONE DATE OF HEARING : 31.07.2019 DATE OF PRONOUNCEMEN T : 31.07.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-30, MUMBAI DATED 13.06.2017 FOR ASSESSMENT YEAR 2009-10 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT PERVERSE IN NOT CONSIDERING THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF N K PROTEIN LTD. DATED 16.01.2 017, WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT ORDER WAS ALREADY THE LAW OF THE LAND WHEN THE LD. CIT(A) HAS GIVEN H IS DECISION VIDE ORDER DATED 13.06.2017 ?' 2. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE LD. CIT(A) ERRED DIRECTING THE AO TO RESTRICT THE E STIMATION OF THE PROFIT AT 15% INSTEAD OF 100% OF THE TOTAL NON-GENUINE PURCHA SES WITHOUT ACCEPTING THAT THE ASSESSEE DID NOT DISCHARGE HIS DUTY TO PRO VE THE PURCHASES MADE FROM THE ELEVEN PARTIES WHERE GENUINE AND DID NOT PRODUC E ANY STOCK REGISTER, CONSUMPTION REGISTER, CONSTRUCTION REGISTER ETC AND ALSO COULD NOT PROVE THE ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 2 NEXUS BETWEEN PURCHASES AND SALES AS THERE IS NO MA TCHING SALES VIS-A-VIS PURCHASES ?' 3. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE UNDER 46A OF THE I T RULE 1962 ?' 4. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN OVERLOOKING THE FACT THAT ADDITION MADE BY AO BASED ON DETAILS OF SCAM UNEARTHED BY SALES TAX DEPARTMENT W HEREIN IT WAS ESTABLISHED THAT THE ASSESSEE HAD TAKEN BILLS FROM BOGUS PARTIE S WITHOUT ACTUALLY MAKING PURCHASES FROM THEM ?' 5. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP-FIRM ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR, FILED ITS RETU RN OF INCOME FOR ASSESSMENT YEAR ON 26.09.2009 DECLARING TOTAL INCOM E OF RS. 86,00,000/- (APPROX.). THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(1) ON 28.11.2011. THE ASSESSMENT WAS RE-OPENED UNDER SECTION 147 ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT CERTAIN HAWALA OPERA TORS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DEL IVERY OF GOODS. THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA REFE RRED THE LIST OF SUCH HAWALA DEALERS TO THE DGIT (INVESTIGATION), MU MBAI. IN THE INFORMATION IT WAS ALLEGED THAT THE ASSESSEE IS ALS O ONE OF THE BENEFICIARY WHO HAD MADE THE PURCHASES OF RS. 72,66,255/- FROM SUCH HAWALA DEALERS. ON THE BASIS OF INFORMATION, THE ASSESSING OFFICER MADE HIS BELIEF THAT THE INCOME OF THE ASSESSEE ESCAPED THE ASSESSMENT AND RE- ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 3 OPENED THE ASSESSMENT UNDER SECTION 147. ACCORDINGL Y NOTICE UNDER SECTION 148 WAS ISSUED ON 22.03.2014. THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 FILED REPLY DATED 29.05.20 13 AND STATED THAT ORIGINAL RETURN FILED BY ASSESSEE BE TREATED AS RET URN IN RESPONSE TO THE SAID NOTICE. THE ASSESSING OFFICER AFTER SERVING NO TICE UNDER SECTION 143(2) DATED 26.11.2014 PROCEEDED FOR RE-ASSESSMENT . DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS SHOWN PURCHASES FROM NINE THE PARTIES, WHICH HAS BEEN DEC LARED AS HAWALA DEALERS BY THE SALE TAX DEPARTMENT, GOVERNMENT OF M AHARASHTRA. THE ASSESSING OFFICER SUMMARISED THE DETAILS OF PURCHA SES FROM SUCH NINE PARTIES IN THE FOLLOWING MANNER; S.NO. NAME OF THE ASSESSEE AMOUNT RS. 1 JAIN CORPORATION 980936 2 KRISHNA ENTERPRISES 1396026 3 OM ENTERPRISES 1377890 4 YASH IMPEX 739710 5 SAM ENTERPRISES 608657 6 NEELAM ENTERPRISES 538520 7 JAIN TRADING CORPORATION 683684 8 VSK ENTERPRISES 561105 9 KESAR ENTERPRISES 379727 TOTAL 7266255 3. DURING THE REASSESSMENT PROCEEDINGS THE ASSESSING O FFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE PURCHASES. THE ASSESSE E WAS ALSO ASKED TO PRODUCE THE SELLER, PAN, BILLING VOUCHER WITH DATE, DESCRIPTION OF GOOD PURCHASED, QUALITY, RATE, GOODS DISPATCHED ALONG WI TH THE DATE, MODE OF ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 4 TRANSPORTATION AND THE RELEVANT EVIDENCE THEREON. T HE ASSESSEE WAS ALSO ASKED TO PRODUCE THE STOCK REGISTER DETAILS OF CONS TRUCTION AND TO SHOW THAT THE MATERIAL PURCHASE WAS CONSUMED. THE ASSESS ING OFFICER NOTED THAT ASSESSEE FAILED TO PRODUCE THE PARTIES AND THE RELEVANT RECORD REQUIRED BY HIM. THE ASSESSING OFFICER FURTHER NOTE D THAT THE ASSESSEE DO NOT MAINTAIN THE CONSUMPTION REGISTER TO SHOW THE C ONSUMPTION OF ALLEGED GOODS/ MATERIAL AT SITE. THE ASSESSING OFFI CER CONCLUDED THAT THE CORRECTNESS OF COMPLETENESS OF THE BOOKS OF ACCOUNT IS NOT ESTABLISHED SO FAR AS THE SPECIFIC PURCHASES FROM THE ALLEGED HAWA LA PARTIES ARE CONCERNED. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SECTION 145(3) OF THE ACT. THE ASSES SING OFFICER DISALLOWED THE ENTIRE AGGREGATE PURCHASES SHOWN FRO M ALL THE PARTIES. ON APPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS RESTRICTED TO 15%. THE LD CIT(A) RESTRICTED THE DISALLOWANCE TO THE EX TENT OF THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. AGGRIEVED BY TH E ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. 4. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE THE SER VICE OF NOTICE. WE HAVE LEFT NO OPTION EXCEPT TO HEAR THE SUBMISSION O F LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND TO DECIDE T HE CASE ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE LD. DR SUBMITS THAT INVESTIGATION WING OF INCOME-TAX DEPARTMENT HAS MADE FULL-FLEDGED INVESTIGATION IN RESPECT OF HAWALA TRADERS. THE HAWALA TRADERS WERE/ ARE ENGAGED IN ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 5 PROVIDING BOGUS BILL WITHOUT ACTUAL DELIVERY OF GOO DS. THE ASSESSEE HAS SHOWN BOGUS PURCHASES TO INFLATE THE PROFIT. THE LD . DR FOR THE REVENUE SUBMITS THAT THE LD CIT(A) FAILED TO CONSIDER THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE PURCHASES AND THE ENTIRE PURCHASE S WERE LIABLE DISALLOWED. THE LD. DR SUBMIT THAT LD. CIT(A) HAS WRONGLY RESTRICTED THE ADDITION TO THE EXTENT OF 15%. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR FOR TH E REVENUE AND PERUSED THE RECORD. WE HAVE NOTED THAT DURING THE R E-ASSESSMENT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN PUR CHASES OF RS. 72,66,255/- FROM NINE PARTIES, WHOSE NAMES WERE LIS TED IN THE NAMES OF HAWALA DEALERS. THE ASSESSEE WAS ASKED TO SUBSTANTI ATE THE PURCHASES BY SHOWING SUFFICIENT EVIDENCE. BEFORE US NONE APPEARE D ON BEHALF OF THE ASSESSEE NOR ARE ANY WRITTEN SUBMISSIONS FILED. WE HAVE SEEN THE ASSESSMENT WAS REOPENED ON THE BASIS OF CREDIBLE IN FORMATION RECEIVED BY ASSESSING OFFICER. DURING THE REASSESSMENT THE A SSESSING OFFICER MADE THE ADDITION OF ENTIRE AGGREGATE PURCHASES SHOWN FR OM THE SAID HAWALA DEALER AS NON-GENUINE PURCHASES. BEFORE LD. COMMISS IONER (APPEALS) THE ASSESSEE ALSO FURNISHED WRITTEN SUBMISSION, THE SUBMISSIONS OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER FO R HIS REMAND REPORT WITH THE DIRECTIONS TO CONDUCT ENQUIRIES WITH REGAR D TO THE GENUINENESS OF THE PAYMENTS. THE REMAND REPORT OF THE ASSESSING OFFICER WAS RECEIVED BY LD. COMMISSIONER (APPEALS) ON 11.04.201 7. IN THE REMAND ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 6 REPORT THE ASSESSING OFFICER RETREATED HIS EARLIER STAND AND ALSO STATED THAT THE CONSUMPTION SHEET CANNOT BE CONSIDERED AS BASIS OF CONSUMPTION AS THE SAME IS NOT MAINTAINED ON THE BASIS OF DATE WIS E CONSUMPTION. THE LD. COMMISSIONER (APPEALS) AFTER CONSIDERING THE RE MAND REPORT AND THE OTHER MATERIAL CONSIDERED THE ESTIMATED PROFIT ON S UCH BOGUS PURCHASES AND CAME TO THE CONCLUSION THAT PROFIT EMBEDDED IN SUCH NON-GENUINE PURCHASES ARE 15%. THE LEARNED COMMISSIONER (APPEAL S) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND VARIOUS CASE LAWS INCLUDING THE DECISION OF HONBLE GUJARAT HIGH COURT IN BHOLA NATH POLY FAB PRIVATE LIMITED 255 ITR 290 (GUJARAT) AND SANJAY OI L CAKE LTD 316 ITR 274(GUJARAT) CONCLUDED THAT IT IS APPROPRIATE T O MADE THE ADDITION TO THE EXTENT OF PROFIT ELEMENT ON THE ALLEGED BOGUS P URCHASES INSTEAD OF ADDING THE TOTAL AMOUNT OF PURCHASE. THE LEARNED CO MMISSIONER (APPEALS) ALSO CONCLUDED THAT THE ASSESSEE EXECUTED WORKS AND RECEIVED PAYMENT FROM MUNICIPAL CORPORATION OF GREATER MUMBA I (MCGM) FOR COMPLETING THE CONTRACT WORK. THE EXECUTION OF WORK CANNOT BE MADE WITHOUT MAKING PURCHASES AND ACCORDINGLY RESTRICTED THE DISALLOWANCE TO THAT EXTENT BY FOLLOWING THE DECISION OF GUJARAT HI GH COURT AS NOTED ABOVE. BEFORE US, THOUGH THE LEARNED DR FOR THE REV ENUE SUBMITTED THAT HIS DEPARTMENT HAS MADE FULL-FLEDGED INVESTIGATION ABOUT THE SAID HAWALA DEALERS WHICH WERE ENGAGED IN PROVIDING BOGU S BILL WITHOUT ACTUAL DELIVERY OF GOODS. HOWEVER, THE LEARNED DR F OR THE REVENUE ITA NO. 5877 MUM 2017-M/S HI TECH ENGINEERS. 7 FAILED TO CONVINCE US AS TO WHY THE CONCLUSION DRAW N BY LEARNED COMMISSIONER (APPEALS) IN BY TAKING INTO CONSIDERAT ION THE FACT THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH BOGUS PURCHASE S MUST BE DISALLOWED AND NOT THE ENTIRE PURCHASES AS HELD IN VARIOUS CASE LAWS REFERRED BY LD COMMISSIONER (APPEALS). HENCE, WE AR E IN AGREEMENT WITH THE CONCLUSION ARRIVED BY LD. COMMISSIONER (AP PEALS), WHICH WE AFFIRM. NO CONTRARY FACT OR LAW IS BROUGHT TO NOTIC E TO TAKE OTHER VIEW. THEREFORE, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY THE VENUE. IN THE RESULT APPEAL OF THE REVENUE IS D ISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2019. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 31 .07.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI