ITO 4(3)(1), MUMBAI V. PRITI GOLD (INDIA) P. LTD, MUMBAI

ITA 63/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9830 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: MATHURIA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO 63/MUM/2017 PRITI GOLD (INDIA) PRIVATE LIMITED 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. 63/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 4(3)(1) ROOM NO.648, 6 TH FLOOR, AAYKAR BHAVAN M.K.ROAD MUMBAI 400 020 / VS. PRITI GOLD (INDIA) P RIVATE LTD. 2 ND FLOOR,OFFICE NO.20-21 SHANTI BHUWAN 198, KALBADEVI ROAD MUMBAI -400 002 ./ ./PAN/GIR NO. AADCP-7703-P ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : M.S.MATHURIA, LD. AR REVENUE BY : SAURABH DESHPANDE, LD. DR / DATE OF HEARING : 21/08/2017 / DATE OF PRONOUNCEMENT : 23/08/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-9 [CIT(A)], MUMBAI DATED 20/10/2016 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN BOGUS PURCHASES OF RS.47,45,081/-. ITA NO 63/MUM/2017 PRITI GOLD (INDIA) PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF GOLD ORNAMENTS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 19/03/2015 AT RS.55,78,510/- AFTER A DDITION OF BOGUS PURCHASES FOR RS.47,45,081/-. THE ORIGINAL RETURN WAS FILED A T RS.8,33,420/- ON 10/09/2009, 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.47,45,081/- FROM TWO PARTIES. CONSEQUENTLY, NOTI CE U/S 148 DATED 12/03/2014 WAS ISSUED WHICH WAS FOLLOWED BY STATUTO RY NOTICES U/S 142(1)/143(2). 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICE U/ S 133(6) WAS ISSUED TO THE ALLEGED BOGUS SUPPLIER, HOWEVER, THE SAME WAS RETURNED BACK UN- SERVED WITH REMARKS NOT KNOWN WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE CONTENDED THAT THE PURCHASES WERE GENU INE SINCE THE GOODS MANUFACTURED OUT OF THE PURCHASES WERE SOLD S UBSEQUENTLY AND THERE COULD BE NO SALE WITHOUT PURCHASE. HOWEVER, N OT CONVINCED, LD. AO, PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEM ENTS, TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 20/10/2016 WHE RE LD. CIT(A) NOTED THAT THE ASSESSEE PRODUCED LEDGER EXTRACTS, PURCHASES BILLS, BANK STATEMENTS, QUANTITATIVE DETAILS ETC. BEFORE LD. AO AND THE TURNOVER OF ITA NO 63/MUM/2017 PRITI GOLD (INDIA) PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 THE ASSESSEE WAS NOT DISPUTED BY THE LD. AO. FINALL Y, CONVINCED WITH THE VARIOUS CONTENTIONS / SUBMISSIONS OF THE ASSESS EE, LD. CIT(A) DELETED THE IMPUGNED ADDITIONS, AGAINST WHICH THE R EVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT NOTICES U/S 133(6) SENT TO BOTH THE S UPPLIERS WERE RETURNED BACK UNCLAIMED AND THE ASSESSEE COULD NOT ESTABLISH DELIVERY / CONSUMPTION OF MATERIAL BEFORE LD. AO AND THEREFORE , THE ADDITIONS WERE JUSTIFIED. IT WAS FURTHER CONTENDED THAT THE ONUS T O SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASSESSEE AND MERE PA YMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE SA ME SINCE NO CONFIRMATIONS ETC. WAS FILED BY THE ASSESSEE BEFORE LOWER AUTHORITIES AND NONE OF THE PARTIES COULD BE PRODUCED FOR CONFIRMAT ION OF PURCHASES. 5. PER CONTRA, LD. REPRESENTATIVE FOR ASSESSEE [AR] CONTENDED THAT THE TURNOVER WAS ACCEPTED AND BOOKS WERE NOT REJECT ED. THE ACCOUNTS WERE DULY AUDITED AND THE ASSESSEE WAS IN POSSESSIO N OF PRIMARY PURCHASE DOCUMENTS AND THEREFORE, LD. CIT(A), AFTER DUE APPLICATION OF MIND, RIGHTLY DELETED THE SAME. ALTERNATIVELY, LD. AR STATED THAT THE ASSESSEE DEALS IN GOLD ORNAMENTS WHICH WERE SUBJECTED TO VAT @1% AS PER STATE VAT LAWS AND THEREFORE, A REASONABLE ESTIMATE MAY BE MADE FOR SOME ADDITION TO MAKE UP FOR THE SHORTCOMI NGS. 6. HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASES. THE SALES TURNOVER ACHIEVED BY T HE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS W ERE THROUGH BANKING CHANNELS. ON THE OTHER HAND, THE ASSESSEE C OULD NOT PRODUCE ITA NO 63/MUM/2017 PRITI GOLD (INDIA) PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 CONFIRMATIONS FROM THE ALLEGED BOGUS SUPPLIERS AND FURTHER NOTICES SENT U/S 133(6) WERE RETURNED BACK UNDELIVERED IN BOTH T HE CASES. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE M ADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANS ACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSI BLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. WE ESTIMATE THE SAME @5% SINCE THE GOODS IN QUESTION WERE SUBJECTED TO VAT RATE OF 1%. ACCORDINGLY, WE S USTAIN THE ADDITION TO THE EXTENT OF 5% OF BOGUS PURCHASES OF RS.47,45,081/- WHICH COMES TO RS.2,37,254/-. 7. RESULTANTLY, THE REVENUES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 08.2017 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