ITO 21 (2)(5), MUMBAI V. PRASAD ENGINEERING WORKS, MUMBAI

ITA 5901/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1486 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3); 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.5901 & 5902/M/2018 ASSESSMENT YEARS: 2009-10 & 2011-12 INCOME TAX OFFICER- 21(2)(5), 1 ST FLOOR, ROOM NO.107, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012 VS. M/S. PRASAD ENGINEERING WORKS, SHED NO.4, GALA NO.6/7, MUSA KILLEDAR COMPOUND, KESHAVRAO KHADE MARG, JACOB CIRCLE, MUMBAI 400 011 PAN: AAAFP4762G (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI RAM TIWARI, D.R. DATE OF HEARING : 17.09.2019 DATE OF PRONOUNCEMENT : 22.10.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE REVENUE AGAINST THE ORDER DATED 16.07.2018 THE COMM ISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10 & 2011-12. ITA NO.5901/M/2018 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT(A) RESTRICTING THE ADDITION TO 25% OF THE B OGUS PURCHASES AS AGAINST THE 100% DISALLOWANCE MADE BY THE AO. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 29.09.2009 DECLARING NIL INCOME AFTER SET TING OFF ITA NOS.5901 & 5902/M/2018 M/S. PRASAD ENGINEERING WORKS 2 BROUGHT FORWARD LOSSES TO THE EXTENT OF PROFIT WHIC H WAS PROCESSED UNDER SECTION 143(3). THEREAFTER, AO REC EIVED INFORMATION FROM DGIT (INV.) VIDE LETTER DATED 01.0 1.2013 THAT THE ASSESSEE IS BENEFICIARY OF HAWALA ACCOMMODATION ENTRIES WHICH CAME TO EARTH FOLLOWING INVESTIGATION BY THE SALES TAX INVESTIGATION, GOVERNMENT OF MAHARASHTRA AND ASSESS EES NAME WAS FOUND TO BE APPEARED IN THE LIST OF BENEFICIARI ES. ACCORDINGLY, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT AFTER RECORDING REASONS TO BELIEVE U/S 148(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A DETAILED QUESTIONNAIRE WAS ISSUED WHICH WAS RESPO NDED BY THE ASSESSEE AND THE REPLY OF THE ASSESSEE IS REPRODUCE D IN PAGE 2 & 3 OF THE ASSESSMENT ORDER. THE AO FOUND THAT THE A SSESSEE RECEIVED ACCOMMODATION ENTRIES FROM FOUR PARTIES AS LISTED IN PAGE NO.1 OF THE ASSESSMENT ORDER FROM WHOM THE AGG REGATE PURCHASE OF RS.4,21,304/- WERE MADE. IN ORDER TO VE RIFY THE GENUINENESS OF THE PURCHASES, THE AO ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE SUPPLIERS. HOWEVE R, ONLY ONE PARTY APPEARING AT SL. NO.1 RESPONDED AND THE NOT ICES WERE RECEIVED BACK UNSERVED IN THE CASE OF REMAINING PAR TIES. ACCORDINGLY, THE AO CAME TO THE CONCLUSION THAT ALL THESE PURCHASES WERE BOGUS AS THE SAME COULD NOT BE VERIF IED AND ADDED THE SAME UNDER SECTION 69C TO THE INCOME OF T HE ASSESSEE BY FRAMING ASSESSMENT UNDER SECTION 143(3) READ WIT H SECTION 147 VIDE ORDER DATED 28.02.2014. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON TO THE EXTENT OF RS.1,05,326/- AND GIVING A RELIEF OF RS.3 ,15,978/- BY APPLYING A RATIO OF 25% TO ASSESS THE PROFIT ELEMEN T IN THE BOGUS ITA NOS.5901 & 5902/M/2018 M/S. PRASAD ENGINEERING WORKS 3 PURCHASES BY FOLLOWING THE DECISION OF HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXM AN 385 (GUJ) AND M/S VIJAY PROTEINS LTD VS CIT [2015] 58 TAXMANN.COM 44 (GUJARAT) BY OBSERVING THAT THE ENTIRE PURCHASES CAN NOT BE ADDED TO THE INCOME OF THE ASSESSEE AS THE CORRESPO NDING SALES HAVE NOT BEEN DISPUTES. 5. AFTER HEARING THE LD. D.R. AND PERUSING THE MATE RIAL ON RECORD, WE OBSERVE THAT IN THIS CASE UNDOUBTEDLY TH E ASSESSEE HAS INDULGED IN BOGUS PURCHASES FROM FOUR PARTIES A GGREGATING TO RS.4,21,304/-. THOUGH THE ASSESSEE FILED VARIOU S EVIDENCES IN SUPPORT OF THE SAID PURCHASES, HOWEVER, THE AO C OULD NOT CARRY OUT THE VERIFICATION DESPITE ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT AS IN THE CASE OF 3 PARTIES, THE SAID NOTICES WERE RETURNED UNSERVED AND FINALLY THE AO ADDED THE ENTI RE PURCHASES TO THE INCOME OF THE ASSESSEE WITHOUT DOU BTING THE CORRESPONDING SALES. THE LD. CIT(A) ALLOWED THE RE LIEF BY FOLLOWING THE DECISION OF CIT VS. M/S. VIJAY PROTEIN (SUPRA) AND CIT VS. SIMIT P. SHETH (SUPRA) AND THUS PARTLY SUST AINED THE ADDITION TO THE EXTENT OF 25% OF THE BOGUS PURCHASE S. AFTER CONSIDERING THE FACTS OF THE CASE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY SUSTAINED T HE ADDITION TO THE EXTENT OF 25% OF THE ALLEGED PURCHASES. THE ORD ER OF LD. CIT(A) IS HELD AND THE AO IS DIRECTED ACCORDINLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO.5902/M/2018 7. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDEN TICAL TO THE ONE AS STATED ABOVE IN ITA NO.5901/M/2018 FOR A.Y. 2009-10. ITA NOS.5901 & 5902/M/2018 M/S. PRASAD ENGINEERING WORKS 4 THEREFORE, OUR FINDING IN ITA NO.5901/M/2018 FOR A. Y. 2009-10, WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2019. SD/- SD/- (VIKAS AWASTHY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.10.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.