SUPER STEAM BOILER ENGINEERS PVT. LTD., MUMBAI V. ACIT CIR. 7(2), MUMBAI

ITA 6093/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9775 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR LD
• Assessee Lawyers: TANZIL R PADVEKAR LD
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO.6093/MUM/2016 SUPER STREAM BOILER ENGINEERS PRIVATE LTD ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 6093/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) SUPER STREAM BOILER ENGINEERS PVT. LTD. 101, SHEETAL APARTMENTS PRABHODHAN THAKARE MARG SEWREE WEST MUMBAI 400 015 / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 7(2) AAYKAR BHAWAN MUMBAI-400 020 ./ ./PAN/GIR NO. AAACS-5939-F ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ASSESSEE BY : TANZIL R.PADVEKAR, LD. AR REVENUE BY : V.VIDHYADHAR, LD. DR / DATE OF HEARING : 13/03/2018 / DATE OF PRONOUNCEMENT : 21 /03/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)- 14 [CIT(A)], MUMBAI APPEAL NO.CIT(A)-14/IT-274/14-15 DATED 25/07/2016 QUA CONFIRMATION OF CERTAIN ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED ITA NO.6093/MUM/2016 SUPER STREAM BOILER ENGINEERS PRIVATE LTD ASSESSMENT YEAR 2009-10 2 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-7(2) ON 30/09/2014 U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF BOILERS & BOILER PARTS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 30/09/2014 AT RS.81,04,530/- AFTER ADDITION OF CERTAIN ALLEGED BOGUS PURCHASES FOR RS.41,53,188/-. THE ORIGINAL RETURN WAS FILED ON 30/09/2009 AT RS.39,51,340/- WHICH WAS ACCEPTED IN SCRUTINY ASSESSMENT U/S 143(3) ON 16/11 /2011. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION AGAINST CE RTAIN ALLEGED BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.41,53,188/- FROM TWO SUCH ENTITIES NAMELY ASIAN STEEL & HARIOM TRADERS. CONSEQUENTLY, NOTICE U/S 148 DATED 10/03/2014 WAS I SSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY STATUTORY NOTICE S U/S 143(2) AND 142(1). 2.3 THE ASSESSEE FAILED TO PRODUCE ANY OF THE SAID PARTY FOR CONFIRMATION OF TRANSACTIONS AND ALSO FAILED TO FIL E RELEVANT EVIDENCES TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS WH ICH LED THE LD. AO TO TREAT THE SAME AS BOGUS PURCHASES AND ADD BACK THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME ON LE GAL GROUNDS AS WELL AS ON MERITS WITHOUT ANY SUCCESS BEFORE LD. CI T(A) VIDE IMPUGNED ITA NO.6093/MUM/2016 SUPER STREAM BOILER ENGINEERS PRIVATE LTD ASSESSMENT YEAR 2009-10 3 ORDER DATED 25/07/2016 WHERE LD. CIT(A) CONFIRMED T HE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED COUNSEL FOR ASSESSEE [AR] PRI MARILY CONTESTED THE PROCEEDINGS ON LEGAL GROUNDS BY SUBMITTING THAT THE REASONS RECORDS FOR REOPENING WERE SUPPLIED TO THE ASSESSEE ONLY AF TER ISSUANCE OF NOTICE U/S 143(2) AND THEREFORE, THE PROCEEDINGS AR E TO BE QUASHED IN TERMS OF JUDGMENT OF HONBLE APEX COURT RENDERED IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO [259 ITR 19] . THE LD. AR, IN THE ALTERNATIVE, SUBMITTED THAT FULL DISALLOWANCE OF ALLEGED BOGUS PURCHASES WAS NOT JUSTIFIED SINCE THE ASSESSEE WAS IN POSSESSION OF P RIMARY PURCHASE DOCUMENTS AND THE MATERIAL PURCHASED BY THE ASSESSE E FROM THESE SUPPLIERS WAS FINALLY SOLD BY HIM, WHICH IS EVIDENT FROM THE QUANTITATIVE DETAILS / STOCK REGISTER. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE JUSTIFIED THE REOPENING BY DRAWING OUR ATTENTION TO THE FACTS THAT THE REASONS WERE SUPPLIED WITHIN A REASONABLE TIME DURI NG THE COURSE OF PROCEEDINGS AND THEREFORE, THE ADDITIONS WERE JUSTI FIED. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. SO FAR AS THE LEGAL GROUND IS C ONCERNED, IT IS EVIDENT THAT NOTICE U/S 148 HAS BEEN ISSUED ON 10/03/2014 A ND THE ASSESSEE WHILE RESPONDING TO THE SAME VIDE ITS LETTER DATED 28/03/2014 DEMANDED STATEMENT OF REASONS FOR REOPENING OF ASSESSMENT. A DMITTEDLY THE REASONS HAVE BEEN SUPPLIED TO THE ASSESSEE DURING T HE COURSE OF THE PROCEEDINGS, A COPY OF WHICH HAS BEEN SUBMITTED BY LD. AR. THE MAIN THRUST OF THE ARGUMENTS ADVANCED BY LD. AR IS THAT THESE REASONS HAVE BEEN SUPPLIED ONLY AFTER THE ISSUANCE OF NOTICE U/S 143(2) AND THEREFORE, THE SAME HAS VITIATED THE REASSESSMENT PROCEEDINGS. HOWEVER, WE FIND ITA NO.6093/MUM/2016 SUPER STREAM BOILER ENGINEERS PRIVATE LTD ASSESSMENT YEAR 2009-10 4 NO MERITS IN THE SAME SINCE THERE IS NO SUCH IMPEDI MENT OR REQUIREMENT FOR ISSUANCE OF STATUTORY NOTICE U/S 143(2). IN OTH ER WORDS, THERE IS NO REQUIREMENT IN THE LAW THAT THE REASONS MUST BE SUP PLIED TO THE ASSESSEE BEFORE ISSUANCE OF STATUTORY NOTICE U/S 14 3(2) AND ALSO THERE IS NO PROVISION TO HOLD THAT REASSESSMENT PROCEEDINGS STOOD VITIATED IF THE REASONS ARE SUPPLIED AFTER ISSUANCE OF NOTICE U/S 1 43(2). THEREFORE, THE LEGAL GROUND RAISED BY ASSESSEE STANDS DISMISSED. 6. SO FAR AS THE QUANTUM ADDITIONS ARE CONCERNED, W E FIND THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE TRANSACTIONS BE FORE LD. AO BY PRODUCING ANY OF THE IMPUGNED SUPPLIERS. HOWEVER, A PERUSAL OF DOCUMENTS PLACED ON RECORD REVEALS THAT THE ASSESSE E IS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS LIKE INVOICES & FEW D ELIVERY CHALLANS ETC. THE ASSESSEE HAS ALSO PLACED ON RECORD STOCK REGIST ER OF THE ITEMS PURCHASED FROM THESE SUPPLIERS. THE TURNOVER ACHIEV ED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE AND THE PAYMENTS W ERE MADE BY THE ASSESSEE THROUGH BANKING CHANNELS. THEREFORE, IN SU CH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR P ROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL I N THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHAS ES. KEEPING IN VIEW THE OVERALL FACTUAL MATRIX, WE ESTIMATE THE AD DITIONS @12.5% OF ALLEGED BOGUS PURCHASES OF RS.41,53,188/- WHICH COMES TO RS.5,19,149/- AND DELETE THE BALANCE ADDITIONS. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. ITA NO.6093/MUM/2016 SUPER STREAM BOILER ENGINEERS PRIVATE LTD ASSESSMENT YEAR 2009-10 5 SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21. 03.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. $, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI