DEPUTY COMMISSIONER OF INCOME TAX 11(2)(2), MUMBAI V. SPEED O CONTROLS PRIVATE LIMITED , MUMBAI

ITA 6180/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4824 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Assessee Lawyers: AAKRITI SETH LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147

Judgement Text

ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5336/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) SPEED O CONTROLS PVT. LTD. C-16,NANDJYOT INDUSTRIAL ESTATE SAFED POOL, ANDHERI KURLA ROAD SAKINAKA, ANDHERI(E) MUMBAI-400 072 / VS. DEPUTY COMMISSIONER OF INCOME TAX-11(2)(2) ROOM NO.421, 4 TH FLOOR AAYKAR BHAWAN M.K.MARG,MUMBAI-400 020 ./ ./PAN/GIR NO. AABCS-1430-L ( /APPELLANT ) : ( / RESPONDENT ) & ./ I.T.A. NO.6180/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX-11(2)(2) ROOM NO.421, 4 TH FLOOR AAYKAR BHAWAN M.K.MARG, MUMBAI-400 020 / VS. SPEED O CONTROLS PVT. LTD. C-16,NANDJYOT INDUSTRIAL ESTATE SAFED POOL, ANDHERI KURLA ROAD SAKINAKA, ANDHERI(E), MUMBAI-400 072 ./ ./PAN/GIR NO. AABCS-1430-L ( /APPELLANT ) : ( / RESPONDENT ) & ./ I.T.A. NO.6181/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX-11(2)(2) ROOM NO.421, 4 TH FLOOR AAYKAR BHAWAN M.K.MARG, MUMBAI-400 020 / VS. SPEED O CONTROLS PVT. LTD. C-16,NANDJYOT INDUSTRIAL ESTATE SAFED POOL, ANDHERI KURLA ROAD SAKINAKA, ANDHERI(E), MUMBAI-400 072 ./ ./PAN/GIR NO. AABCS-1430-L ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 2 ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : AAKRITI SETH - LD. AR REVENUE BY : CH. ARUN KUMAR SINGH - LD.DR !' / DATE OF HEARING : 06/02/2019 !' / DATE OF PRONOUNCEMENT : 14/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID CROSS APPEALS FOR ASSESSMENT YEAR [AY] 2009-10 AND REVENUES APPEAL FOR AY 2011-12 CONTEST SEPARATE OR DER OF FIRST APPELLATE AUTHORITY. SINCE COMMON ISSUES ARE INVOLVED, WE PRO CEED TO DISPOSEOFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE AND BREVITY. FIRST, WE TAKE UP CROSS APPEALS FOR AY 200 9-10 WHEREIN THE ISSUE INVOLVED IS ESTIMATE OF ADDITION ON ACCOUNT O F ALLEGED BOGUS PURCHASES. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED IN MANUFACTURING OF CRANE CONTROL GEARS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS ON 23/02/2015 U/S 143(3) READ WITH SECTION 147 BY LD. DEPUTY COMMISSIONER OF INCOME TAX -11(2)(2), MUMBAI [AO] WHEREIN THE INCOME WAS DETERMINED AT RS.307.83 LAC S AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES OF RS.84.25 LACS AS AGAINST RETURNED INCOME OF RS.223.57 LACS E-FILED BY THE ASSESSEE ON 25/09/2009 WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED UPON RECEIPT OF CERTAIN INFORMATION THAT THE ASSESSEE STOOD BENEFIC IARY OF ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 3 ACCOMMODATION PURCHASE BILLS AGGREGATING TO RS.84.2 5 LACS FROM FOUR SUPPLIERS, THE DETAILS OF WHICH HAS ALREADY BEEN EX TRACTED IN PARA 4.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE ASSE SSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. ALTHOUGH THE ASSESSEE FURNISHED COPIES OF INVOICES, DELIVERY CHALLANS, TR ANSPORT RECEIPTS AND BANK STATEMENTS EVIDENCING PAYMENT TO SUPPLIERS THR OUGH BANKING CHANNELS, STOCK REGISTER ETC., HOWEVER, NOTICES SEN T U/S 133(6) TO THESE SUPPLIERS ELICITED NO SATISFACTORY RESPONSE. THE AS SESSEE FAILED TO PRODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACT IONS. THE OVERALL FACTUAL MATRIX LED THE LD.AO TO TREAT THESE PURCHAS ES AS NON-GENUINE AND ACCORDINGLY, THE SAME WERE ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE AGITATED THE SAME WITH P ARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 17/05/2 017 AND MADE ELABORATE SUBMISSIONS TO CONTEND THAT PURCHASES WER E GENUINE. HOWEVER, THE ASSESSEE AGAIN COULD NOT PRODUCE ANY O F THE SUPPLIER TO CONFIRM THE TRANSACTIONS. FINALLY, LD. CIT(A), AFTE R CONSIDERING FACTUAL MATRIX, ASSESSEES SUBMISSIONS AND RELYING UPON VAR IOUS JUDICIAL PRONOUNCEMENTS, CONFIRMED PARTIAL ADDITION IN THE F OLLOWING MANNER: - 2.37. AS NARRATED EARLIER, THE LD. AO. IN THIS CASE HELD THAT THE PARTIES FROM WHICH THE PURCHASE WERE MADE BY THE APPELLANT WERE FOUND TO BE BOGUS AND THAT IS THE REASON FOR WHICH IT WAS NOT PRODUCED DURING THE ASS ESSMENT PROCEEDINGS. THE AR OF THE APPELLANT CONTENDED THAT IN THE INSTANT CASE , THE ISSUE IS NOT EVASION OF VAT. IN FACT IN THIS CASE, THE VAT WAS PAID TWICE. TO SU BSTANTIATE THIS ARGUMENT, THE AR OF THE APPELLANT PRODUCED THE COPIES OF THE VAT PAID C HALLAN ALONG WITH INTEREST AND PENALTY. THE AR FURTHER SUBMITTED THAT OUT OF THE IMPUGNED P URCHASES OF RS.90,11,628/-, THE AMOUNT OF RS.3,46,620/- REPRESE NT THE AMOUNT OF VAT TAX. WHILE ACCOUNTING FOR THE SAID PURCHASES IN THE BOOK S OF ACCOUNTS, THE TAX AMOUNT WAS NOT PASSED TO THE PROFIT AND LOSS ACCOUN T. NOT HAVING DOUBTED THE CONSUMPTION/SALES, THE MOTIVE BEHIND OBTAINING BOGU S BILLS THUS, APPEARS TO BE INFLATION OF PURCHASE PRICE SO AS TO SUPPRESS TR UE PROFITS. CONSIDERING THE FACTS OF THE CASE AS WELL AS THE VARIOUS CASE LAWS CITED (SUPRA), I ESTIMATE THE SUPPRESSED PROFIT TO THE EXTENT OF 12% OF THE PURCH ASES MADE FROM THE BOGUS ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 4 ENTITIES AS THE SUPPRESSED PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES AND ALLOW TO REDUCE THE 4% VAT PAID FROM THE ESTIMATION 12%. THIS ESTIMATION IS IN ADDITION TO THE GP SHOWN BY THE APPELLANT. ACCORDIN GLY, THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. THE FINAL ADDITION, AS PER ORDER GIVING EFFECT DATE D 15/09/2017, HAS BEEN WORKED OUT TO BE RS.9,72,294/- [BEING 12% OF NET PU RCHASES OF RS.81,02,453/- EXCLUDING VAT]. AGGRIEVED, THE REVEN UE AS WELL THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE, MS. AAKRITI SETH, AT THE OUTSET, DREW OUR ATTENTION TO THE FACT THAT THE MATTER IS S QUARELY COVERED BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A Y 2010-11 & 2011-12 VIDE ITA NOS. 5337-38/MUM/2017 ORDER DATED 16/01/2019 AND THEREFORE, THE SAME VIEW MAY BE TAKEN FOR THIS YEAR. THE COPY OF THE ORDER HAS BEEN PLACED ON RECORD. THE LD. DR FAIRLY CONCEDED T HE SAME. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING THE DECISION OF TRIBUNAL IN ASSESSEES APPEAL FOR AY 2010-11 & 2011-12. IT EMER GES THAT SIMILAR ISSUE OF ALLEGED BOGUS PURCHASE WAS AGITATED BY THE ASSESSEE BEFORE THIS TRIBUNAL WHEREIN THE MATTER HAS BEEN CONCLUDED IN THE FOLLOWING MANNER: - 14. UPON CAREFUL CONSIDERATION, WE FIND CONSIDERABL E COGENCY IN THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE, AS OTHERWISE I T WILL BE DOUBLE JEOPARDY TO THE ASSESSEE. ACCORDINGLY, WE MODIFY THE ORDER OF LEARN ED CIT-A AND DIRECT THAT THE DISALLOWANCE IN THIS CASE BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASES AS REDUCED BY THE GROSS PROFIT RATE ALREADY DECLARED BY THE AS SESSEE ON THESE TRANSACTIONS. THE LD. COUNSEL OF THE ASSESSEE FAIRLY ACCEPTED THIS PR OPOSITION. 5.2 WE ARE OF THE CONSIDERED OPINION THAT THERE COU LD BE NO SALES WITHOUT PURCHASE / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE ASSESSEE WAS IN POSSESSION OF ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 5 PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS WERE TH ROUGH BANKING CHANNELS. AT THE SAME TIME, NOTICES SENT U/S 133(6) ELICITED NO SATISFACTORY RESPONSE AND THE ASSESSEE FAILED TO PR ODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. UNDER THESE C IRCUMSTANCES, THE FIRST APPELLATE AUTHORITY WAS FAIR IN ESTIMATING THE ADDI TIONS ON THESE SUSPECTED PURCHASES TO ACCOUNT FOR PROFIT ELEMENT E MBEDDED IN THESE TRANSACTIONS AND UNDUE PROFIT EARNED BY THE ASSESSE E ON ACCOUNT OF POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET. F ROM THE STATEMENT OF FACTS, IT APPEARS THAT THE ASSESSEE HAS ALREADY DEC LARED GROSS PROFIT RATE OF 27%. THEREFORE, WE FIND NO INFIRMITY IN THE ORDE R OF FIRST APPELLATE AUTHORITY IN ESTIMATING THE SAME @12% OF ALLEGED BOGUS PURCHASES. ACCORDINGLY, THE IMPUGNED ADDITIONS AS ESTIMATED BY FIRST APPELLATE AUTHORITY STANDS CONFIRMED. THE CROSS APPEALS STAND DISMISSED. ITA NO. 6181/MUM/2017 : DEPARTMENTAL APPEAL FOR 201 1-12 6. FACTS ARE PARI-MATERIA THE SAME IN THIS AY WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITION OF RS.90.11 LACS ON ACCOU NT OF ALLEGED BOGUS PURCHASES. THE FIRST APPELLATE AUTHORITY, IN THE SIMILAR MANNE R, HAS REDUCED THE SAME TO 12% ON NET PURCHASES. AGGRIEVED , THE REVENUE IS BEFORE US BY WAY OF PRESENT APPEAL. 7. WE FIND THAT THERE WAS ASSESSEES APPEAL ALSO FO R THIS AY WHICH HAS ALREADY BEEN PARTLY ALLOWED BY THE TRIBUNAL VID E ITA NO. 5337- 38/MUM/2017 COMMON ORDER DATED 16/01/2019 FOR AYS 2 010-11 & 2011- 12 . IT APPEARS THAT THE FACTUM OF REVENUES APPEAL WAS NOT BROUGHT TO THE NOTICE OF THE BENCH DURING HEARING OF ASSESSEES AP PEAL. THIS FACT HAS ALSO BEEN NOTED BY THE BENCH IN PARA 12 OF THE STATED ORDER. SINCE A VIEW HAS ALREADY BEEN TAKEN BY THE CO-ORDINATE BENC H IN THE MATTER, WE ITA 5336,6180-81/MUM/2017 SPEED O CONTROLS PVT. LTD. ASSESSMENT YEARS: 2009-10 & 2011-12 6 REFRAIN FROM ADJUDICATING THE SAME ANY FURTHER AND RESPECTFULLY CONCUR WITH THE DECISION RENDERED IN ASSESSEES APPEAL. RE SULTANTLY, THE APPEAL STANDS DISMISSED. CONCLUSION: 8. ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2019. SD/- SD/ - (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14.02.2019 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.