ACIT , CIRCLE- 4(2)(2), MUMBAI V. MAZDA HI-TECH ELECTRICALS PVT. LTD., MUMBAI

ITA 6039/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0862 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 23-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTHILAKSHMI NAYAK
• Assessee Lawyers: K K VED
• Keywords: Bogus purchase; Corroborative evidences
• Section: 143(3); 133(6); 143(1); 147; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATH A , ACCOUNTANT MEMBER ITA NO. 6039 & 6040 / MUM . /2018 ( ASSESSMENT YEAR : 20 10 11 & 2011 12 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4(2)(2), MUMBAI . APPELLANT V/S MAZDA HI TECH ELECTRICALS PVT. LTD. 56, GROUND FLOOR, SHOP NO.2A BOTAWALA BUILDING, BOMANJI MASTER LANE DHOBI TALAO, MUMBAI 400 002 PAN AADCM9047M . RESPONDENT REVENUE BY : SMT. JYOTHI LAKSHMI NAYAK ASSESSEE BY : SHRI K.K. VED DATE OF HEARING 02 .12.2019 DATE OF ORDER 19.12.2019 O R D E R PER SAKTIJIT DEY. J.M. THE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING TWO SEPARATE ORDER S , BOTH DATED 2 1 ST AUGUST 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 9 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2010 11 AND 2011 12. 2. THE ONLY COMMON DISPUTE IN BOTH THE APPEALS IS WIT H REGARD TO THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTIN G THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE TO THE EXTENT OF 12.5%. 2 MAZDA HI TECH ELECTRICALS PVT. LTD. 3. B RIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEALERS, IMPORTERS AND SUPPLIERS OF ELECTRICAL SWITCH GEAR, FUSE GEAR, CIRCUIT BREA KERS AND PANEL ACCESSORIES & GOLD BARS, SHARE TRADING, ETC. FOR THE ASSESSMENT YEAR 2010 11, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29 TH SEPTEMBER 2010, DECLARING TOTAL INCOME OF ` 6,63,16,770. THE ASSESSMENT IN CASE OF THE ASSESSEE FOR THE SAID ASSESSMENT YEAR WAS COMPLETED UNDE R SECTION 143(3) OF THE ACT, VIDE ORDER DATED 28 TH FEBRUARY 2013. SIMILARLY, FOR THE ASSESSMENT YEAR 2011 12, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 5,84,87,950. THE RETURN OF INCOME FILED FOR THE ASSESS MENT YEAR 2011 12, WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBS EQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE OFFICE OF THE DGIT (INV.), MUMBAI, AS WELL AS THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT CERTAIN PA RTIES FROM WHOM ASSESSEE CLAIMED TO HAVE MADE PURCHASES WORTH ` 8,03,563 IN ASSESSMENT YEAR 2010 11 AND ` 8,77,189 IN ASSESSMENT YEAR 2011 12, HAVE BEEN IDENTIFIED AS ENTRY PROVIDERS/ HAWALA OPERATORS BY THE SALES TAX DEPARTMENT. ON THE BASIS OF SUCH INFORM ATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT FOR THE ASSESSMENT YEAR 2010 11. WHEREAS, IN THE ASSESSMENT YEAR 2011 12, THE ASSESSING OFFICER TOOK UP THE ISSUE IN SCRUTINY ASSESSMENT PROCEEDINGS. DURING THE ASSESSMENT 3 MAZDA HI TECH ELECTRICALS PVT. LTD. P ROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES THROUGH SUPPORTING EVIDENCES, SUCH AS , PURCHASE INVOICE, DELIVERY CHALLAN, TRANSPORT RECEIPTS, BANK STATEMENT SHOWING PAYMENT, ETC. AS OBSERVED BY THE ASSESSIN G OFFICER, THE ASSESSEE COULD ONLY FURNISH LEDGER EXTRACTS, COPY OF INVOICES, COPY OF BANK STATEMENT SHOWING PAYMENT TO THE CONCERNED PARTIES. HOWEVER, THE ASSESSEE WAS UNABLE TO FURNISH DELIVERY CHALLAN, TRANSPORTATION DETAILS, ETC. FURTHER, TO INDEPENDEN TLY VERIFY THE GENUINENESS OF PURCHASES, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT. AS OBSERVED BY THE ASSESSING OFFICER, ALL SUCH NOTICES RETURNED BACK UNSERVED WITH THE POSTAL REMARK LEFT/NOT KNOWN . THUS, ON THE BASIS OF SUCH FACTS, THE ASSESSING OFFICER CONCLUDED THAT THE PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE. ACCORDINGLY, HE ADDED BACK THE WHOLE OF SUCH NON GENUINE PURCHASES IN BOTH THE ASSESSMENT YEAR IN DISPUTE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION S BEFO RE THE FIRST APPELLATE AUTHORITY. 4. A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT O F FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE ADDITION TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES IN EACH OF THE ASSESSMENT YEAR S . 4 MAZDA HI TECH ELECTRICALS PVT. LTD. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE DELIVERY OF MATERIAL THROUGH SUPPORTING EVIDENCES LIKE DELIVERY CHALLAN, TRANSPOR TATION RECEIPT, STOCK REGISTER, ETC. SH E SUBMITTED , THE NOTICES UNDER SECTION 133(6) OF THE ACT RETURNED BACK UNSERVED , THEREBY , RAISING DOUBT REGARDING EXISTENCE OF THE PARTY , DELIVERY OF GOODS AND GENUINENESS OF TRANSACTION. THAT BEING THE CASE, THE ASSE SSING OFFICER WAS JUSTIFIED DISALLOWING THE ENTIRE NON GENUINE PURCHASES. 6. T HE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE HAS FURNISHED PURCHASE BILLS AS WELL AS SALE INVOICE S, BANK STATEMENT SHOWING PA YMENT THROUGH CHEQUE TO THE SALLING DEA LERS AS WELL AS IT S BOOKS OF ACCOUNT DULY RECORDING ALL PURCHASES AND SALES. THEREFORE , MERELY BECAUSE THE NOTICE S ISSUED UNDER SECTION 133(6) OF THE ACT WERE NOT SERVED OR THE ASSESSEE WAS UNABLE TO FURNISH DELIVERY CHALLAN AND TRANSPORT RECEIPT, THE ENTI RE PURCHASES CANNOT BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HE SUBMITTED , WHEN THE SALES MADE BY THE ASSESSEE HAVE NOT BEEN DOUBTED , ONLY THE PROFIT ELEMENT EMBEDDED IN UNPROVED PURCHASES CAN BE CONSIDERED FOR ADDITION. THUS, HE SUBMITT ED , LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES. 5 MAZDA HI TECH ELECTRICALS PVT. LTD. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. NO DOUBT, THE ASSESSING OFFICER HAD MATERIAL BEFORE HIM WHICH INDICATED THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE IN THE YEARS UNDER CONSIDERATION ARE NON GENUINE. IT IS ALSO A FACT ON RECORD, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FAILED TO FURNISH EVIDENCES TO CONCLUSIV ELY PROVE THE SOURCE OF PURCHASES. HOWEVER, IT ALSO EMANATES FROM RECORD THAT THE SALES EFFECTED BY THE ASSESSEE HAS NOT BEEN DOUBTED , MEANING THEREBY , I N THE ABSENCE OF SUCH PURCHASES THE ASSESSEE COULD NOT HAVE EFFECTED THE SALES. THUS, IN SUCH CIRCUMSTANCES, THE PRESUMPTION IS, THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM UNKNOWN SOURCES BY AVOIDING P AYMENT OF VAT / SALES TAX, ETC. AND TO REGULARIZE SUCH PURCHASES MIGHT HAVE OBTA INED ACCOMMODATION BILLS. THUS, IN THAT VIEW OF THE MATTER, THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. AS COULD BE SEEN, LEARNED COMMISSIONER (APPEALS) RELYING UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V/ S SIMIT P. SHETH, 356 ITR 451 (GUJ.), HAS ESTIMATED THE PROFIT ELEMENT EMBEDDED IN SUCH NON GENUINE PURCHASES @ 12.5% AND RESTRICTED THE ADDITION TO THAT EXTENT IN BOTH THE ASSESSMENT YEARS. IN OUR VIEW, THE AFORESAID D ECISION OF LEARNED COMMISSIONER (APPE ALS) IS IN CONFORMITY WITH THE RATIO LAID DOWN IN VARIOUS DECISIONS OF THE TRIBUNAL AND THE HIGH COURT S IN SIMILAR NATURE 6 MAZDA HI TECH ELECTRICALS PVT. LTD. OF DISPUTE. ACCORDINGLY, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUND S RAISED. 8. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 19.12.2019 SD/ - G. MANJUNATH A ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 19.12.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI