INCOME TAX OFFICER, WARD 4(1), THANE V. AMKAY PRODUCTS PRIVATE LIMITED, MUMBAI

ITA 6066/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8112 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Bogus purchase; Cost of acquisition; Onus to prove
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER ITA NO. 60 66 / M/2017 ASSESSMENT YEAR: 20 1 0 - 11 INCOME TAX OFFICER WARD(4)(1), THANE, ROOM NO.3, ASHAR I.T. PARK, 6 TH FLOOR, A - WING, ROAD NO.16Z , WAGLE INDUSTRIAL ESTATE, THANE (W) - 400 604 VS. M/S. AMKAY PRODUCTS PVT. LTD. , AMKAY ENCLAVE, 68, RASHMI PARK BUNGALOW, DHUMAK NAGAR, WALIV ROAD, VASAI (E) - 401 208 PAN: AA G C A6560N (APPELLANT) (RESPONDEN T) ASSESSEE BY : NONE REVENUE BY : SHRI RAM TIWARI, D.R. DATE OF HEARING : 2 3 .11 .201 7 DATE OF PRONOUNCEMENT : 18 .12 .201 7 O R D E R PER R.C. SHARMA , ACCOUNTANT MEMBER: TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FO R THE ASSESSMENT YEAR 20 1 0 - 11, IN THE MATTER OF ORDER PASSED UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE ACT. 2. IN THIS APPEAL REVENUE IS AGGRIEVED BY THE ACTION OF LD. CIT(A) FOR UPHOLDING THE ADDITION OF 12.5% ON THE BOGUS PURCHASES. 3. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 4. I HAVE HEARD THE LD. D.R. AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT AO HAS MADE 100% ADDITION IN RESPECT OF BOGUS PURCHASES SO FOUND. BY THE IMPUGNED ORDER THE LD. CIT(A) UPHELD ITA NO.6066/M/2017 M/S. AMKAY PRODUCTS PVT. LTD. 2 ADDIT ION TO THE EXTENT OF 12.5% OF BOGUS PURCHASES AFTER HAVING THE FOLLOWING OBSERVATION. (I) I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER; CASE LAWS RELIED UPON BY THE APPELLANT AND THE FA CTS OF THE CASE. (II) FROM THE ABOVE DISCUSSION, IT IS SEEN THAT THE APPELLANT DID NOT PRODUCE THE HAWALA DEALER BEFORE THE ASSESSING OFFICER FOR CROSS VERIFICATION. THE APPELLANT HAS BOOKED THE AFORESAID PURCHASES IN ITS BOOKS OF ACCOUNTS AS EXPENSES, T HEREFORE, THE ONUS TO PROVE THE GENUINENESS AND CORRECTNESS OF THE PURCHASE TRANSACTIONS LIES WITH THE APPELLANT BY PRODUCING THE PARTIES, BUT FAILED TO DO SO. THE STATEMENT OR AFFIDAVIT FILED BY THE HAWALA DEALERS BEFORE THE SALES TAX DEPARTMENT HAS EVIDE NTIARY VALUE, WHICH CANNOT BE IGNORED. (III) THERE ARE VARIOUS REASONS AS TO WHY THE HAWALA DEALERS WERE ABSCONDING AND ALSO NOT APPEARED BEFORE THE ASSESSING OFFICER FOR CROSS EXAMINATION DURING ASSESSMENT PROCEEDINGS, WHEREAS IN OTHER PURCHASES NO SUCH ANOMALY HAVE BEEN FOUND BY THE ASSESSING OFFICER. AT LEAST, THE APPELLANT COULD HAVE PRODUCED COPY OF RETURN FILED ALONG WITH P & L A/C AND B/S OF HAWALA DEALER BEFORE ASSESSING OFFICER, BUT FAILED TO DO SO. (IV) THE GP RATIO SHOWN BY THE APPELLANT FO R THE RESPECTIVE YEARS ARE @ 10.49% IN A.Y. 2009 - 10, 13.25% FOR AY. 2010 - 11, 14.13% IN A.Y. 2011 - 12. THE AVERAGE GP RATIO COMES TO 12.62%; THEREFORE, THE GP UNDER APPEAL IS REASONABLE. ON THE PURCHASES, THERE WERE CORRESPONDING SALES AND THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND FURNISHED DELIVERY CHALLANS AS DISCUSSED IN PARA 5.11 OF THE ASSESSMENT ORDER, THEREFORE, THE DISALLOWANCE OF ENTIRE PURCHASES MADE FROM HAWALA DEALER IS NOT JUSTIFIED. (V) FROM THE ABOVE DISCUSSION, IT CAN BE CONCLUDED THAT, IT IS CASE WHERE THE GOODS WERE RECEIVED FROM THE PARTIES OTHER THAN THE PERSONS WHO HAD ISSUED THE BILLS OF SUCH GOODS. THOUGH THE PURCHASES WERE SHOWN TO HAVE BEEN MADE BY MAKING PAYMENT TO HAWALA DEALERS BUT GOODS MUST HAVE COME FROM GREY MARKET, THEREFORE, UNDER SUCH CIRCUMSTANCES, THE CHANCES OF PURCHASE COST BEING INFLATED COULD NOT BE RULED OUT. IT IS ALSO SEEN THAT, THE APPELLANT IS NOT MAINTAINING THE STOCK REGISTER AT ALL. ACCORDINGLY, THE BOOK RESULT OF THE APPELLANT IS REJECTED U/S.145(3) OF THE ACT. THE CASE LAWS RELIED UPON BY THE APPELLANT ARE NOT SIMILAR TO THE FACTS OF THE CASE OF THE APPELLANT. (VI) THE AR OF THE APPELLANT ARGUED THAT, IN APPELLANT'S OWN CASE FOR A.Y. 2009 - 10, THE THEN LD. CIT (A) - 16, MUMBAI, VIDE ORDER NO.CIT(A) - 16/IT - 414/ITO - 9(1)(2)/2015 - 16 DATED 08.02.2017 HAS ESTIMATED @ 12.5% OF THE PURCHASES MADE FROM THE BOGUS ENTITIES AND THE AR OF THE APPELLANT HAS FURTHER STATED THAT THE ITA NO.6066/M/2017 M/S. AMKAY PRODUCTS PVT. LTD. 3 DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE THEN CIT - (A) - 16, MUMBAI . CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ENTIRE AMOUNT OF PURCHASES CANNOT BE ADDED AND IT WOULD BE REASONABLE TO DISALLOW AN AMOUNT O F RS.4,86,242/ - CALCULATED @ 12.5% OF THE PURCHASES AMOUNTING TO RS.3 8, 8 9,936/ - MADE FROM HAWALA DEALERS . THE BOOK RESULT OF THE APPELLANT IS REJECTED U/S.145(3) OF THE ACT. THEREFORE, THE APPEAL OF THE APPELLANT ON THIS GROUND IS PARTLY ALLOWED. 4. THE DETAILED FINDING SO RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTE D BY LD. DR B Y BRINGING ANY POSITIVE MATERIAL ON RECORD. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR UPHOLDING THE ADDITION OF RS.12.5% OF THE ALLEGED BOGUS PURCHASES. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 .1 2. 201 7 . SD/ - (R.C. SHARMA) ACCOUNTANT MEMBER MUMBAI, DATED : 18 . 12 . 201 7 . * KISHORE C OPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.