KHILARI INFRASTRUCTURE PRIVATE LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-15(2)(1), MUMBAI

ITA 6354/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 6022 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 26-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI S RAJEHA
• Keywords: Bogus purchase; Set aside
• Section: 143(3); 145

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH , MUMBAI BEFORE SHRI RAJESH KUMAR, AM & SHRI RAM LAL NEGI, JM ITA NO. 6354 / MUM /201 7 ( / ASSESSMENT YEAR : 20 1 0 - 20 1 1 ) KHILARI INFRASTRUCTURE PVT. LTD. 101 - 104, PRABHAT CENTRE, ANNEXE, SECTOR - 1A, CBD BELAPUR, NAVI MUMBAI - 400614 VS. ACIT - 15(2)(1), MUMBAI ./ PAN NO. : A A FCA 9143 A ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI HARI S. RAJEHA, AR /REVENUE BY : SHRI MANOJ KUMAR SINGH , DR / DATE OF HEARING : 31 / 12 /201 8 / DATE OF PRONOUNCEMENT 31 / 12 /201 8 / O R D E R PER SHRI RAJESH KUMAR , A M : THIS APPEAL BY ASSESSEE ARISES OUT OF THE O RDER OF THE CIT(A) 2 4, MUMBAI, DATED 14.07.2017 , WHICH IN TURN HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 20 10 - 11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER AT THE TIME OF PASSING THE ORDER U/S 143(3) R.W.S. 147 ON 30 .11.2015, DISREGARDING THE SUBMISSIONS MADE BY THE APPELLANT IN THIS REGARD AND ALSO IN THE LIGHT OF THE FACT THAT NO INDEPENDENT ENQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER TO ARRIVE AT THE CONCLUSION OF INCOME ESCAPING ASSESSMENT. 2. ON THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN CONFIRMING THE REOPENING OF THE ASSESSMENT AS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.) THAT AP PELLANT HAD MADE NON - GENUINE / HAWALA PURCHASES OF RS.63,43,806/ - FROM FOUR PARTIES BASED ON FINDINGS OF SALES TAX AUTHORITIES. ITA NO .6354 / 1 7 2 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), ERRED IN CONFIRMING THE REJECTION OF BOOKS OF THE APPELLANT U/S 145 OF THE I.T. ACT. 4. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.7,92,976/ - BEING ESTIMATED GROSS PROFIT IN RESPECT OF N ON GENUINE PURCHASES OF RS.63,43,806/ - @12.5% TREATED AS GP. WITHOUT THERE BEING ANY MATERIAL TO SUGGEST THE EARRING OF GP AS ALLEGED IN THE ASSESSMENT ORDER. 5. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER FAIL ED TO APPRECIATE THAT APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD FURNISHED VARIOUS DOCUMENTARY EVIDENCE IN SUPPORT OF GENUINENESS OF THE TRANSACTIONS IN RESPECT OF PURCHASES MADE BY THE APPELLANT FROM THE PARTIES NAMED IN THE ASSESSMENT ORDE R. 6. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), ERRED IN CONFIRMING THE STAND TAKEN BY THE ASSESSING OFFICER THAT THE PURCHASES OF RS.63,43,806/ - ARE NOT GENUINE BECAUSE APPELLANT COULD NOT PRODUCE THE ALLEGED BOGUS PA RTIES FOR VERIFICATION OF THE ASSESSING OFFICER. 7. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A), ERRED IN REJECTING THE SUBMISSION MADE BY THE APPELLANT THAT AGAINST THE ADDITION MADE ON THE BASIS OF G.P. RAT I O OF 12.5% ON ALLEGED BOGUS PURCHASES, CRED IT FOR 8.58% DECLARED G.P. RATIO FOR THE YEAR SHOULD BE GIVEN, AS G.P. TO THAT EXTENT HAS ALREADY BEEN OFFERED TO TAX BY THE APPELLANT IN THE FINAL ACCOUNTS. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY, DELETE AND/OR CHANGE ALL OR ANY ABOVE GROUNDS ON OR BEFORE THE DATE OF HEARING. 3 . THE COMMON ISSUE RAISED IN THE GROUNDS OF APPEAL BY THE ASSESSEE IS AGAINST CONFIRMATION OF ADDITION OF RS.7,92,976/ - BEING 12.5% OF RS.63,43,806/ - WHICH REPRESENT ED THE BOGUS PURCHASES BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 13.10.2010 DECLARING TOTAL INCOME OF RS.1,12,40,130/ - , WHICH WAS ITA NO .6354 / 1 7 3 PROCESSED U/S.143(1) OF THE ACT. THEREAFTER THE CASE OF THE ASSESSEE WAS REOPENED U/S.147 R.W.S.148 OF THE ACT BY ISSUING NOTICE U/S.148 OF THE ACT ON 19.03.2015. THE CASE OF THE ASSESSEE WAS REOPENED AFTER THE AO RECEIVED INFORMATION FROM DGIT(INV.) THAT THE ASSESSEE HAD ENTERED INTO HAWALA TRANSACTIO NS FOR PURCHASES TO THE TUNE OF RS.63,43,806/ - . THEREAFTER THE ASSESSEE WAS CALLED UPON TO FURNISH THE VARIOUS DETAILS/INFORMATION TO PROVE THE GENUINENESS OF THE PURCHASES. THE ASSESSEE MADE PURCHASES FROM THE FOLLOWING FOUR PARTIES : - SL.NO. NAME OF THE SUPPLIER AMOUNT 1. RIDHI ENTERPRISES 13,59,605/ - 2. JAY ENTERPRISE 16,53,183/ - 3. SHUBHAM ENTERPRISES 18,53,399/ - 4. RIDHI SALES CORPN 14,77,619/ - THE ASSESSEE FILED WITH THE AO THE COPIES OF BILLS AND VOUCHERS, BANK STATEMENT AND ALSO THE PROOF OF D ELIVERY OF MATERIAL IN SUPPORT OF ITS CLAIM, HOWEVER, THE AO WAS NOT CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND FINALLY ADDED THE SUM OF RS.7,92,976/ - TO THE INCOME OF THE ASSESSEE BEING 12.5% AS BOGUS PURCHASES BY FRAMING ASSESSMENT U/S.143(3)/147 OF THE ACT. 5 . IN THE APPELLATE PROCEEDINGS THE CIT(A) UPHELD THE ORDER OF THE AO BY OBSERVING THAT THE AO HAS RIGHTLY RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH, 356 ITR 451, WHEREIN THE HONBLE HIGH COURT HAS CONFIRMED THE ORDER OF THE TRIBUNAL ON ACCOUNT OF ADDITION OF BOGUS PURCHASES TO THE TUNE OF 12.5% . 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IMPUGNED ORDER. LD. AR VEHEMENTLY ARGUED BEFORE ITA NO .6354 / 1 7 4 THE BENCH THAT THE ASSES SEE HAS PRODUCED NECESSARY EVIDENCES IN THE FORM OF BILLS AND VOUCHERS, BANK STATEMENT AND MOVEMENT OF GOODS INCLUDING DELIVERY CHALLANS THROUGH WHICH THE MATERIAL WAS RECEIVED BY THE ASSESSEE. LD. AR SUBMITTED THAT THE GP DURING THE YEAR WAS 8.58% VIS - A - V IS 9.46% IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR. DURING THE YEAR THE ASSESSEE HAS SHOWN THE TURNOVER OF RS. 1 6.6 CRORES AS AGAINST RS.2.6 CRORES IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR. LD.AR SUBMITTED THAT SINCE THE ASSESSEE HAS BEEN PAYING VAT @4%, THE CONFIRMATION OF ORDER OF AO BY THE CIT(A) IS WRONG AS THE ADDITION HAS BEEN MADE IN ORDER TO PROVE THE PROFIT ELEMENT IN PURCHASE @12.5%, WHEREAS UNDISPUTEDLY THE ASSESSEE HAS ALREADY DECLARED GP OF 8.58% IN THE OVERALL BUSINESS OF THE ASSESSEE. FINAL LY, LD. AR SUBMITTED THAT THE ASSESSEE SHOULD BE GRANTED THE CREDIT OF VAT PAID BY THE ASSESSEE. LD. AR ALSO REFERRED TO THE SERIES OF DECISIONS WHEREIN THE ADDITION HAS BEEN SUSTAINED @ 2% TO 12.5%. LD. AR FURTHER SUBMITTED THAT SINCE THE ASSESSEE HAS ALR EADY RETURNED REASONABLE GP ON ALL THE PURCHASES INCLUDING THE SO - CALLED BOGUS PURCHASES, THE ORDER OF CIT(A) SHOULD BE REVERSED AND A REASONABLE DECISION SHOULD BE MADE AFTER PROCEEDING WITH THE RATE OF VAT APPLICABLE TO THE ASSESSEE. 7. PER CONTRA , LD. D R RELIED ON THE ORDER OF CIT(A) AND ARGUED THAT EVEN THE NOTICE U/S.136 OF THE ACT WAS NOT SERVED ON THE ASSESSEE, THUS, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION IN THE HANDS OF THE ASSESSEE. ITA NO .6354 / 1 7 5 8. NOW, AFTER CONSIDERING THE ARGUMENTS OF THE RIVAL PARTI ES AND FACTUAL MATRIX OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION MADE BY THE CIT(A) @12.5% ON BOGUS PURCHASES IS ON THE HIGHER SIDE AS THE APPLICABILITY OF VAT IS 4% IN THE INSTANT CASE. IN SUCH SCENARIO, THE GENERAL PRESUMPTION IS THAT THE ASSESSEE MIGHT HAVE MADE THE PURCHASES FROM THE GREY MARKET T HEREBY MAKING SAVINGS OF VARIOUS EXPENSES INCLUDING VAT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT, IT WOULD BE REASONABLE IN THE FACTS OF THE PRESENT CASE IF THE BOGUS PURCHASES ARE BROUGHT TO TAX @6%. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO APPLY THE RATE OF 6% ON THE BOGUS PURCHASES AS AGAINST 12.5% CONFIRMED BY THE CIT(A). 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 / 12 /201 8 . SD/ - ( RAM LAL NEGI ) S D/ - (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 31 / 12 /2018 . . / PRAKASH KUMAR MISHRA , S R.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TR UE COPY//