BELAMI FINE CHEMICALS PVT. LTD., MUMBAI V. DCIT- CIRCLE 4 (1)(2), MUMBAI

ITA 6054/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8939 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: PRAVIN N SHAHLD
• Keywords: Bogus purchase
• Section: 143(3); 148

Judgement Text

ITA NO.6054/MUM/2018 M/S. BELAMI FINE CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR :2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6054/MUM/2018 ( / ASSESSMENT YEAR : 2009-10 ) M/S. BELAMI FINE CHEMIC A LS P . LTD. 29, GOPAL BHUVAN, 2 ND FLOOR 99, SHAMALDAS GANDHI MARG MUMBAI- 400 002. / VS. D CIT - CIRCLE - 4(1)( 2 ) , AAYKAR BHAVAN M.K. ROAD MUMBAI- 400 020. $% ./ ./PAN/GIR NO. AAACB-2987-J ( %' /APPELLANT ) : ( ()%' / RESPONDENT ) ASSESSEE BY : SHRI PRAVIN N. SHAH-LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK-LD. DR / DATE OF HEARING : 14/01/2020 / DATE OF PRONOUNCEMENT : 14/01/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-2, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-2/IT/10096/2018-19 ORDER DATED 30 /08/2018 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.6054/MUM/2018 M/S. BELAMI FINE CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR :2009-10 2 1. THE LEARNED C.I.T. (APPEALS)-2, MUMBAI, HAS ER RED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE SUBMISSI ONS MADE BY THE APPELLANT AND CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFI CER (A.O.) OF RS. 8,66,070/- BEING 100% OF TOTAL BOGUS PURCHASES. 2. THE LEARNED C.I.T. (APPEALS)-2, MUMBAI HAS ERR ED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN NOT ADJUDICATING UPON GROUND NO. 2 REGARDING RELIANCE PLACED BY A.O. ON THE INFORMATION OBTAINED FROM THE SALES TAX DEPT/INVESTIGATION WING OF I.T. DEPARTMENT, ON THE PREMISE THAT THE SA ID GROUND WAS NOT TAKEN AS AN ISSUE - BY THE APPELLANT. 3. THE LEARNED C.I.T. (APPEALS)-2, MUMBAI HAS ERR ED IN LAW AND ON FACTS IN NOT FOLLOWING OR NOT REFERRING TO THE SUPREME COURT DEC ISION IN THE CASE OF PR. C.I.T. SURAT V. TEJUA ROHIT KUMAR KAPADIA (2018) 256 TAXMA N PAGE 213. 4. THE LEARNED C.I.T. (APPEALS)-2 MUMBAI HAS ERRE D IN LAW AND ON FACTS IN RELYING UPON THE CONCLUSIONS MADE BY THE A.O. AND NOT ADJUD ICATING UPON INDEPENDENTLY VARIOUS OTHER ISSUES RAISED AND EVIDENCE PRODUCED B Y APPELLANT LIKE PURCHASES MADE AND CONSUMED IN MANUFACTURING PROCESS, SALES E FFECTED INCLUDING EXPORT SALES OUT OF INDIA, PROOF OF TRANSPORTATION AND MOV EMENT OF GOODS PURCHASED, ETC. 5. THE LEARNED C.I.T. (A)-2 MUMBAI ERRED IN LAW A ND ON FACTS IN NOT GIVING DIRECTIONS TO THE A.O. TO CHECK INTEREST CHARGED U/ S. 234-B AND 234-C OF I.T. ACT, AS SPECIFICALLY MENTIONED IN STATEMENT OF FACTS. AS EVIDENT, THE ASSESSEE IS AGGRIEVED BY CONFIRMATI ON OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. WE HAVE CAREFULLY HEARD THE SUBMISSIONS MADE BY BOTH REPRESENTATIVES. WE HAVE ALSO PERUSED MATERIAL ON R ECORD. OUR ADJUDICATION TO ISSUE RAISED IN THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACT URING OF FINE CHEMICALS, WAS ASSESSED FOR YEAR UNDER CONSIDERATIO N 143(3) R.W.S. 147 ON 20/02/2015 WHEREIN THE ASSESSEE WAS SADDLED WITH IMPUGNED ADDITIONS OF RS.8.66 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/09/2009 AT RS.67.08 LACS, WHICH WAS PROCESSED U/S 143(1). ITA NO.6054/MUM/2018 M/S. BELAMI FINE CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR :2009-10 3 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THA T THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS AGGREGATING TO RS.8. 66 LACS FROM AS MANY AS 3 ENTITIES, THE DETAILS OF WHICH HAVE ALREA DY BEEN EXTRACTED IN PARA-5 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY , THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 27/03/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.3 THE ASSESSEE DEFENDED THE PURCHASES BY FURNISHI NG COPIES OF PURCHASE INVOICES, BANK STATEMENTS EVIDENCING PAYME NT TO SUPPLIERS THROUGH BANKING CHANNELS, LEDGER EXTRACTS ETC. BUT THE ASSESSEE FAILED TO SUBSTANTIATE THE DELIVERY OF MATERIAL. CONSEQUENTLY , LD. AO DISALLOWED THESE PURCHASES AND ADDED BACK THE SAME TO THE INCO ME OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY LEARNED CI T(A), IS UNDER APPEAL BEFORE US. 4. AFTER CAREFUL CONSIDERATION OF RIVAL SUBMISSIONS , WE FIND THAT THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITY WHIC H WOULD REQUIRE CONSUMPTION OF RAW MATERIAL. THE ASSESSEE WAS A COR PORATE ENTITY AND ITS BOOKS OF ACCOUNTS WERE SUBJECTED TO AUDIT AS PE R STATUTE. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCU MENTS AND THE PAYMENTS TO THE SUPPLIERS WAS THROUGH BANKING CHANN EL. FURTHER, NO CONCRETE EFFORTS WERE MADE BY LD. AO TO CONFIRM THE STATED TRANSACTIONS FROM THE 3 SUPPLIERS AND THE ADDITIONS WERE MADE PR IMARILY RELYING UPON INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT. HOWEVER, AT THE SAME TIME, THE ONUS TO SUBSTANTIATE THE STATED PURC HASES, WAS ON ASSESSEE AND THE SAID ONUS REMAINED UNDISCHARGED. T HE ASSESSEE ITA NO.6054/MUM/2018 M/S. BELAMI FINE CHEMICALS PRIVATE LIMITED ASSESSMENT YEAR :2009-10 4 COULD NOT PRODUCE EVEN SINGLE SUPPLIER TO CONFIRM T HE TRANSACTIONS. THE STATED FACTUAL MATRIX, IN OUR CONSIDERED OPINION, W OULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITIONS TO ACCOUNT FOR PROFIT E LEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY / UNORGANIZED MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHAS ES. WE ESTIMATE THE SAME @12.5% OF ALLEGED BOGUS PURCHASES OF RS.8,66,070/- WHICH COMES TO RS.1,08,250/-. THE BALANCE ADDITION STANDS DELETED. 5. THE LD. AO IS DIRECTED TO RECOMPUTE THE INCOME O F THE ASSESSEE IN TERMS OF THIS ORDER. THE INTEREST SHALL BE LEVIED I N ACCORDANCE WITH LAW. 6. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY,2020. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14/01/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. %' / THE APPELLANT 2. ()%' / THE RESPONDENT 3. 0 ( ) / THE CIT(A) 4. 0 / CIT CONCERNED 5. 12(+3 , 3 , / DR, ITAT, MUMBAI 6. 2456 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.