KRISHAN KUMAR SHARMA, MUMBAI V. ACIT 31(2), MUMBAI

ITA 622/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9883 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: B V JHAVERI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO 622/MUM/2017 KRISHAN KUMAR SHARMA ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 622/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) KRISHAN KUMAR SHARMA PROP. ARYAN INTERIORS 131, SHANTA INDUSTRIAL ESTATE I.B PATEL ROAD GOREGAON(E) MUMBAI 400 063 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 31(2) C-13,4 TH FLOOR, PRATYAKSHKAR BHAVAN BKC, BANDRA(E) MUMBAI -400 051 ./ ./PAN/GIR NO. AAFPS-7689-L ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : B.V.JHAVERI, LD. AR REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 23/08/2017 / DATE OF PRONOUNCEMENT : 06 /09/2017 ITA NO 622/MUM/2017 KRISHAN KUMAR SHARMA ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF LD. COMMISSIONER OF IN COME TAX (APPEALS)-42 [CIT(A)], MUMBAI DATED 02/09/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS CIVIL CONTRACTOR UNDER PROPRIETORSHIP CONCERN NAMELY ARYAN INTERIORS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 27/03/2015 AT RS.58,19,110/- AFTER A DDITION OF BOGUS PURCHASES FOR RS.10,97,707/-. THE ORIGINAL RETURN WAS FILED A T RS.46,36,934/- ON 29/09/2009 WHICH WAS PROCESSED U/ S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.10,97,707/- FROM THREE PARTIES. CONSEQUENTLY, NO TICE U/S 148 DATED 18/03/2014 WAS ISSUED WHICH WAS FOLLOWED BY STATUTO RY NOTICE U/S 143(2) / 142(1). THE ASSESSEE REFLECTED NET PROFIT OF RS.47.47 LACS AGAINST TURNOVER OF RS.471.28 LACS. 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICES U /S 133(6) WERE ISSUED TO THE ALLEGED BOGUS SUPPLIERS, HOWEVER, THE SAME WERE RETURNED BACK UN-SERVED BY POSTAL AUTHORITIES. UPON CONFRONTATION, THE ASS ESSEE CONTENDED THAT THE PURCHASES WERE GENUINE SINCE THE PAYMENTS WERE ITA NO 622/MUM/2017 KRISHAN KUMAR SHARMA ASSESSMENT YEAR 2009-10 3 THROUGH BANKING CHANNELS. HOWEVER, NOT CONVINCED, L D. AO NOTED THAT THE ASSESSEE COULD NOT PRODUCE ENOUGH DOCUMENTARY E VIDENCES TO SUBSTANTIATE THE PURCHASES AND ACTUAL DELIVERY OF G OODS AND THEREFORE, TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 02/09/2 016 WHERE LD. CIT(A) NOTED THAT THE ASSESSEE REFLECTED NET PROFIT RATE OF 10% AND FURTHER THE CONTRACT WORK CARRIED OUT BY THE ASSESS EE WAS SUBJECT TO SUPERVISION OF THE CUSTOMERS. FINALLY, AFTER PLACIN G RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS, LD.CIT(A) RESTRICTED THE S AME TO 25% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] CONTENDED THAT THE ASSESSEE REFLECTED NET MARGIN OF APPROX. 10% WHICH WAS ALREADY ON THE HIGHER SIDE. OUR ATTENTION WAS DRAWN TO THE FACT THAT THE ASSESSEE WAS A CIVIL CONTRACTOR AND WORKED FOR REPUTED CUSTOMER WHERE TH E WORK CARRIED OUT BY THE ASSESSEE WAS SUBJECT TO STRICT SUPERVISION. FURTHER, THE ASSESSEE WAS IN POSSESSION OF PURCHASE DOCUMENTS AND THE PAY MENTS WERE THROUGH BANKING CHANNELS AND THEREFORE, ADDITION TO THE EXTENT OF 25% WAS ON THE HIGHER SIDE. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OUR ATTENTION TO THE FACT THAT NOTICES U/S 133(6) COULD NOT BE SERVED SINCE NONE OF THE PARTY WAS FOUND AT THE GIVEN ADDRESS. F URTHER, THE ASSESSEE COULD NOT PRODUCE SUFFICIENT DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE ITA NO 622/MUM/2017 KRISHAN KUMAR SHARMA ASSESSMENT YEAR 2009-10 4 PURCHASES AND ACTUAL DELIVERY OF GOODS AND THEREFOR E, RIGHTLY BEEN SADDLED WITH IMPUGNED ADDITIONS. IT WAS FURTHER CON TENDED THAT THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASSESSEE AND MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SAME SINCE NO CONFIRMATIONS ETC. WAS FILED BY THE ASSESS EE BEFORE LOWER AUTHORITIES AND NONE OF THE PARTIES COULD BE PRODUC ED FOR CONFIRMATION OF PURCHASES AND THEREFORE, NO FURTHER RELIEF COULD BE GRANTED TO THE ASSESSEE IN THE CIRCUMSTANCES. 6. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT CONSUMPTION OF MATERIAL SINCE ASSESSEE WAS ENGAGED AS CIVIL CONTRACTOR WHICH IS MATERIAL INTENSIVE. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE WORK OF THE ASSESSEE WAS SUBJECT TO S UPERVISION BY REPUTED CUSTOMERS. AT THE SAME TIME, THE ASSESSEE C OULD NOT PRODUCE ANY CONFIRMATIONS FROM ANY OF THE ALLEGED BOGUS SUPPLIERS AND FURTHER NOTICES U/S 133(6) COULD NOT BE SERVED DUE TO NON-A VAILABILITY OF ANY OF THE PARTY AT THE GIVEN ADDRESS, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE TO SUBSTANTIATE ACTUAL DELIVERY OF MATERIAL. THEREFORE, IN SUCH A S ITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEM ENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN T HE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW THE NATURE O F ASSESSEES ITA NO 622/MUM/2017 KRISHAN KUMAR SHARMA ASSESSMENT YEAR 2009-10 5 BUSINESS AND NET PROFIT ALREADY DECLARED BY THE ASSESSEE, WE RESTRICT THE SAME TO 10% OF BOGUS PURCHASES OF RS.10,97,707/- WHICH COMES TO RS.1,09,770/-. 7. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 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