ITO 27 (3)(5), MUMBAI V. VIJAY H. GANDHI , MUMBAI

ITA 6178/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2232 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H ANSARILD
• Keywords: Bogus purchase
• Section: 143(3); 142(1); 133(6); 143(2); 148

Judgement Text

1 ITA NO.6178/MUM/2018 VIJAY H. GANDHI ASSESSMENT YEAR-2009-10 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI . . , , BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6178/MUM/2018 ( / ASSESSMENT YEAR: 2009-10) I.T.O WARD 27(3)(5) ROOM NO. 428, 4 TH FLOOR, TOWER NO. 6, VASHI RLY STATION COMPLEX, VASHI NAVI MUMBAI-400 703 / VS. VIJA Y H. GANDH I MANI NIWAS, MAHUL VILLAGE OPP. HANUMAN TEMPLE CHEMBUR, MUMBAI-400 074. !'# ./ ./PAN/GIR NO. AADPG-3327-P ( ! /APPELLANT ) : ( ' ! / RESPONDENT ) ! / APPELLANT BY : SHRI AKHTAR H. ANSARI-LD.DR ' ! / RESPONDENT BY : NONE / DATE OF HEARING : 14/11/2019 / DATE OF PRONOUNCEMENT : 20/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIO NER OF INCOME-TAX (APPEALS)-25, MUMBAI [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO.CIT(A)- 25/IT-515/2015-16/234 DATED 02/08/2018 ON FOLLOWING GROUNDS OF APPEAL: - 2 ITA NO.6178/MUM/2018 VIJAY H. GANDHI ASSESSMENT YEAR-2009-10 (I) WHETHER ON THE FACTS & THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.51,6 77/- AND RS.1,30,332/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHA SES AND ON ACCOUNT OF CASH PAYMENT U/ S. 69C, WITHOUT APPRECIATING THE FA CT THAT THE ASSESSEE HAD FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMEN TARY EVIDENCES IN SUPPORT OF HIS CLAIM AND WITHOUT CONSIDERING THE LATEST APE X COURT DECISION IN THE CASE OF N. K. PROTEINS LTD. WHEREIN IT IS HELD THAT ONCE IT IS PROVED THAT THE PURCHASES ARE BOGUS THEN ADDITION SHOULD BE MADE ON ENTIRE PURCHASES AND NOT ON PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES? (II) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWAL A PURCHASES BY DISALLOWING ONLY RS.2,58,383/- AND RS.28,618/- BEING 12.5% OF T HE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PRODUCING DELIVERY CHALLANS, TRANSPORTATION DETAILS ETC. WERE NOT FULFILLED BY THE ASSESSEE? 2. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJO URNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE P ROCEED TO DISPOSE-OFF THE APPEAL AFTER HEARING LEARNED DEPARTMENTAL REPRESENT ATIVE WHO SUPPORTED THE ADDITIONS MADE BY LD.AO. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED AS BUILDING MATERIA L SUPPLIER WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) R.W.S. 147 ON 03/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.8.2 3 LACS AFTER CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.3.64 LACS FILED BY THE ASSESSEE ON 29/ 09/2009 WHICH WAS PROCESSED U/S 143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM THE DGIT (INV.) WING, MUMBAI/SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF ACCOMMODATION PURCHAS ES BILLS AGGREGATING TO RS.22.15 LACS STATED TO BE OBTAINED FROM AN ENTI TY NAMELY M/S SAM 3 ITA NO.6178/MUM/2018 VIJAY H. GANDHI ASSESSMENT YEAR-2009-10 ENTERPRISES. ACCORDINGLY, THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON 24/03/2014 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1) WHEREIN THE A SSESSEE WAS DIRECTED TO SUBSTANTIATE THE STATED PURCHASE TRANSACTIONS BY FI LING REQUISITE DETAILS. ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES, HOWEV ER, NOTICE ISSUED U/S 133(6) TO CONFIRM THE TRANSACTIONS REMAINED UNSERVE D AND THE ASSESSEE FAILED TO PRODUCE THE STATE SUPPLIER TO CONFIRM THE TRANSACTIONS. RESULTANTLY, THE STATED PURCHASES WERE TREATED AS UNVERIFIABLE. ACCORDINGLY, THE ASSESSEE WAS SADDLED WITH ADDITION OF RS.1.48 LACS U/S 69C, BEING CASH PAID TO THE STATED PARTY AND ANOTHER ADDITION OF RS .3.10 LACS, BEING 15% OF CHEQUE PAYMENT OF RS.20.66 LACS PAID TO THE STATED PARTY. IN EFFECT, THE ASSESSEE WAS SADDLED WITH EFFECTIVE DISALLOWANCE OF APPROX. 21% AGAINST THESE PURCHASES. 4. AGGRIEVED, THE ASSESSEE CONTESTED THE STAND OF T HE LD. ASSESSING OFFICER BEFORE LEARNED FIRST APPELLATE AUTHORITY VI DE IMPUGNED ORDER DATED 05/07/2018 WHEREIN LD. CIT(A), RELYING UPON THE DEC ISION OF HONBLE GUJARAT HIGH COURT RENDERED IN CIT V/S BHOLANATH POLY FAB PVT LTD. 355 ITR 290 AND CIT V/S SIMIT P. SHETH 356 ITR 451, RESTRICTED THE IMPUGNED ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES AND D ELETED THE BALANCE ADDITIONS. AGGRIEVED, THE REVENUE IS IN FURTHER APP EAL BEFORE US. IT APPEARS THAT THE ASSESSEE HAS NOT PREFERRED ANY FURTHER APP EAL. 5. AFTER CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIA L KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. UNDISPUTEDLY THE ASS ESSEE WAS IN 4 ITA NO.6178/MUM/2018 VIJAY H. GANDHI ASSESSMENT YEAR-2009-10 POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE. HOWEVER, AT THE SAME TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCHASES AND COULD NOT PRODUCE THE SUPPLIER TO CONFIRM THE TRANSACTION S AND THEREFORE, THE ONUS CASTED UPON ASSESSEE, IN THIS REGARD, REMAINED UNDI SCHARGED. THEREFORE, ON THE GIVEN FACTS AND CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMENT E MBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNE D BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AN D UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED FIRST A PPELLATE AUTHORITY HAS RIGHTLY DONE SO. THEREFORE, FINDING THE ESTIMATION OF 12.5% TO BE QUITE FAIR AND REASONABLE, WE DISMISS THE APPEAL. 6. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019 SD/- SD/- (C.N. PRASAD) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20/11/2019 SR.PS:-**PP,SPS 5 ITA NO.6178/MUM/2018 VIJAY H. GANDHI ASSESSMENT YEAR-2009-10 '( )( / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, % - , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER , / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.