ACIT 20(1), MUMBAI V. M/S.CONSTRUCTION TECHNIQUE, MUMBAI

ITA 6163/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4765 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMATHA MULLAMUDH
• Assessee Lawyers: MRS RUCHI M RATHOD
• Keywords: Bogus purchase
• Section: 142(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAWAN SINGH (JM) ITA NO. 6163/MUM/2018(ASSESSMENT YEAR : 2010-11) ACIT 20(1), 113, PIRARAMAL CHAMBERS, LALBAUG MUMBAI-400012 VS M/S CONSTRUCTION TECHNIQUE A/16, ROYAL INDUSTRIAL ESTATE NAIGAON CROSS ROAD WADALA, MUMBAI-400 031 PAN : AAAFC2940D APPELLANT RESPONDEDNT APPELLANT BY MS. SAMATHA MULLAMUDH (DR) RESPONDENT BY MRS. RUCHI M RATHOD DATE OF HEARING 15-10-2019 DATE OF PRONOUNCEMENT 23-10-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-32, MUMBAI DATED 27.07.2018 FOR ASSESSMENT YEAR 2010-11 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(AJ HAS ERRED IN GRANTING RELIEF OF RS.19,46,816 /- BY RESTRICTING THE ADDITION TO 18.25% OF THE G.P RATIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(AJ FAILED TO APPRECIATE THE FACT THAT ONUS I S ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS AND TRUE N ATURE OF THE TRANSACTION. 3. THE APPELLANT PRAYS THAT APPEAL IS BEING FILED B ECAUSE IT IS COVERED UNDER THE EXCEPTION PROVIDED IN PARA 10(E) OF THE AMENDED INSTRUCTION NO.3 OF 2018 DATED 20.08.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF CONTRACTS OF CIVIL WORKS AND CONSTRUCTI ON OF BUILDING AND REPAIRS OF BUILDINGS, FILED RETURN OF INCOME FOR AY 2010-11 ON 24-09- ITA 6163/MUM/2018 CONSTRUCTION TECHNIQUE 2 2010 DECLARING TOTAL INCOME AT RS.20,25,960/-. THE CASE WAS SELECTED FOR SCRUTINY. IN THE COURSE OF ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER NOTED THAT INFORMATION WAS RECEIVED FROM DD IT (INV) THAT THE CERTAIN PURCHASES SHOWN BY THE ASSESSEE DURING THE FY 2009-10 IS FROM HAWALA TRADERS, WHICH HAVE BEEN IDENTIFIED BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA. THE SAID H AWALA TRADERS ARE INDULGING IN PROVIDING THE BOGUS BILLS. THE DDI T (INV) HAS ALSO FORWARDED COPIES OF RELEVANT STATEMENTS / DOCUMENTS , MADE BEFORE SALES TAX AUTHORITIES WHEREIN THY HAVE CATEGORICALL Y ADMITTED THAT THEY HAVE NOT DONE ANY ACTUAL BUSINESS TRANSACTIONS SUCH AS SALES, PURCHASES, ETC. WITH THE ASSESSEE AND NO ACTUAL DEL IVERY OF GOODS HAS TAKEN PLACE. THEIR MODUS OPERANDI IS TAKING CROSSED CHEQUES FROM PARTIES, DEPOSITING THE SAME IN THE BANK AND AFTER DEDUCTING THE COMMISSION AT A FIXED RATE, WITHDRAWING THE CASH AN D HANDING OVER THE SAME TO THE PARTY / INTERMEDIARY ON BEHALF OF THE P ARTY WHO SOUGHT BOGUS PURCHASE BILLS. THE ASSESSEE IS ONE OF THE BE NEFICIARIES OF THE PURCHASES SHOWN FROM SUCH PARTIES. THE ASSESSING OF FICER NOTED THAT THE ASSESSEE HAS SHOWN FOLLOWING PURCHASES FROM SUC H HAWALA PARTIES. NAME OF THE PARTIES BILL AMOUNT (RS.) 1 HITEN ENTERPRISES 4,12,040 2 R.K. ISPAT 8,20,599 3 MERCURY ENTERPRISES 4,28,354 4 S M TRADING CO. 2,67,247 5 DIAMOND TRADERS 4,14,891 6 SHREE YAMUNA IMPEX 38,295 ITA 6163/MUM/2018 CONSTRUCTION TECHNIQUE 3 TOTAL 23,81,426 3. THE ASSESSEE WAS ISSUED NOTICE U/S 142(1) DATED 22- 02-2013 AND ASKED TO SUBMIT DETAILS SUCH AS CHALLANS, RECORDS RELATIN G TO RECEIPT AND DISPATCH OF GOODS MAINTAINED, PURCHASE RELATED DOCU MENTS ETC RELATED TO THE ABOVE PARTIES. IN RESPONSE, THE ASSESSEE HAS STATED THAT THE INFORMATION RECEIVED FROM SALES-TAX AUTHORITIES IN RESPECT OF ABOVE PARTIES IS WITHOUT ANY BASIS. THE ASSESSEE SUBMITTE D THAT IT HAD EFFECTED THE PURCHASES OF GOODS AND RECEIVED THE DELIVERY OF GOODS. THE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. HOW EVER, RECORDS RELATING TO RECEIPTS OF GOODS, NO PROOF SUCH AS DEL IVERY CHALLANS, LORRY RECEIPTS, ETC. HAVE BEEN SUBMITTED BY THE ASSESSEE. THE ASSESSING OFFICER RECORDED A STATEMENT OF SHRI HARISH RUPAREL , PARTNER OF THE ASSESSEE-FIRM UNDER SECTION 131 ON 25-03-2013. IN T HE STATEMENT THE PARTNER STATED THAT HE HAD ONLY INVOICES / BILLS AN D DELIVERY CHALLANS RELATED TO THOSE PARTIES AND NO OTHER PROOF SUCH AS TRANSPORT RECEIPTS ETC. WAS PRODUCED TO SUBSTANTIATE HIS CLAIM. THE E XPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. HE OBSERVED THAT MERE FURNISHING OF INVOICES / BILLS D ID NOT SUFFICE THE PURPOSE, AS IT HAS BEEN ESTABLISHED BEYOND DOUBT TH ROUGH CONCRETE EVIDENCES THAT THE AFOREMENTIONED PARTIES WERE BOGU S BILLERS. IN THE FACE OF SUCH EVIDENCE ANY BILLS / INVOICES RAISED B Y THEM HAD NO ITA 6163/MUM/2018 CONSTRUCTION TECHNIQUE 4 CREDIBILITY. IN THIS VIEW OF THE MATTER, THE ASSESS ING OFFICER MADE ADDITION OF RS.23,81,426/- BEING 100% OF ALLEGED BO GUS PURCHASES. 4. ON APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITION T O THE EXTENT OF 12.5% OF SUCH PURCHASES BEING THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. AGGRIEVED BY THE ORDER OF LD. CIT(A), TH E REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR TH E REVENUE HEAVILY RELIED UPON THE ORDER OF THE ASSESSING OFFICER. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT THE ASSESSING OFFICER PROVIDED AMPLE OPPORTUNITY TO THE ASSESSEE TO PROVE THE DELIVERY O F THE GOODS, THE ASSESSEE DESPITE GRANTING OPPORTUNITY FAILED TO PRO VIDE ANY EVIDENCE. THE ASSESSING OFFICER MADE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND ACCORDINGLY MADE ADDITIONS OF 100% OF THE BOGUS PURCHASES SHOWN BY THE ASSESSEE. 6. ON THE CONTRARY THE LD. AUTHORISED REPRESENTATIVE (AR) FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD CIT(A). AND WOULD SUBMIT THAT THOUGH THE LD. CIT(A) RESTRICTED THE ADDITIONS TO T HE EXTENT OF 18.25% WHICH IS ON HIGHER SIDE THE ASSESSEE HAS NOT FILED FURTHER APPEAL ONLY TO BUY PEACE. THE LD. AR FOR THE ASSESSEE PRAYED FOR D ISMISSAL OF THE APPEAL. ITA 6163/MUM/2018 CONSTRUCTION TECHNIQUE 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE ORDER OF THE LOWER AUTHORITIES. THE ASSESSING O FFICER MADE THE ADDITION OF 100% OF THE PURCHASES SHOWN FROM THE AL LEGED HAWALA DEALERS ON TAKING HIS VIEW THAT THE ASSESSEE FAILED TO PRODUCE THE EVIDENCE RELATED WITH THE DELIVERY OF THE GOODS. BE FORE THE LD. CIT(A) THE ASSESSEE URGED THAT THE PURCHASES SHOWN BY THE ASSESSEE ARE GENUINE. THE ASSESSEE HAS ALREADY PAID SALE TAX TO THE VENDORS WHICH CAN BE SET OFF AGAINST THE OUTPUT SALE TAX LIABILIT Y, IF THESE PARTIES HAVE NOT DEPOSITED TAX UNDER MAHARASHTRA VALUE ADDED TAX (MVAT). AS THOSE PARTIES HAVE DEFAULTED IN DEPOSIT OF MVAT, TH EREBY THEY WERE DECLARED AS SUSPICIOUS DEALERS IN THE WEBSITE OF MV AT. THE ASSESSING OFFICER HAS NOT CONSIDERED THE EVIDENCES FURNISHED BY THE ASSESSEE. THE SALE OF THE ASSESSEE WAS NOT DISPUTED. THE SALE IS NOT POSSIBLE WITHOUT THE PURCHASE. THE LD. CIT(A) AFTER CONSIDER ING THE SUBMISSION OF ASSESSEE RESTRICTED THE ADDITION TO THE EXTENT O F PROFIT ELEMENT EMBEDDED IN SUCH BOGUS PURCHASES. THE LD. CIT(A) RE STRICTED THE ADDITION TO THE EXTENT OF 18.25% AFTER CONSIDERING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V/S SIMIT P. SHET H (2013) 356 ITR 451 (GUJ). IN OUR VIEW, THE LD. CIT(A) DISALLOWED T HE BOGUS PURCHASES ON REASONABLE BASIS. WE HAVE FURTHER NOTED THAT THE DECISION ARRIVED BY LD. CIT(A) IS IN CONFORMITY WITH THE ORDER OF HONB LE GUJARAT HIGH COURT IN CIT V/S SIMIT P. SHETH (SUPRA), WHICH WE A FFIRM. NO OTHER ITA 6163/MUM/2018 CONSTRUCTION TECHNIQUE 6 CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR FOR THE REVENUE. THEREFORE, IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL FILED BY THE R EVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-10-2019. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT :23 OCTOBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI