ITO 27 (2)(1), MUMBAI V. KVK ENGINEERING WORKS, MUMBAI

ITA 6356/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8549 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.6356/MUM/2018(A.Y.2010-11) INCOME TAX OFFICER -27(2)(1) TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI ...... APPELLA NT VS. M/S. KVK ENGINEERING WORKS, 301/B WING, GANGA ESTATE, SION TROMBAY ROAD, BEHIND ATUR PARK CHEMBER, MUMBAI 400 071 PAN:AAAFK 2044C ..... RESPONDENT APPELLANT BY : SHRI KUMAR PADMAPANI BORA RESPONDENT BY : NONE DATE OF HEARING : 03/12/2019 DATE OF PRONOUNCEMENT : 15/01/2020 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER COMMISSIONER OF INCOME TAX (APPEALS)-25, MUMBAI (IN SHORT THE CIT( A)) DATED 02/08/2018 FOR THE ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS ENGAGED IN BUSINESS OF MANUFACTURING AUTOMOBILE AND MACHINE RY SPARES. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THAT THE ASSESSEE HAS INDULGED IN PROCURING BOGUS PURCHASE BILLS AGGREGATING TO RS.12 ,64,172/- FROM HAWALA DEALERS 2 ITA NO.6356/MUM/2018(A.Y.2010-11) THE ASSESSING OFFICER REOPENED THE ASSESSMENT. IN REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS MADE B OGUS PURCHASES FROM FOLLOWING PARTIES:- NAME OF THE PARTY AMOUNT (IN RS.) NIDDISH IMPEX P.LTD. 384020 MAHAVIR SALES CORPORATION 182624 ROHIT ENTERPRISES 235508 TULSIANI TRADING PVT. LTD. 371280 KUMAR ENTERPRISES 907740 TOTAL 12,64,172 THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE AFORESAID BOGUS PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 25/01/2016 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE FIRST APPELLATE AUTHORITY AFTER EXAMINING THE FACTS AND VARIOUS DECISIONS RESTRICTED THE ADDITION TO 12.5% OF THE A LLEGED BOGUS PURCHASES. AGAINST THE FINDINGS OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. NOTICE OF THE APPEAL WAS SENT TO THE ASSESSEE TH ROUGH RPAD, WHICH WAS DULY SERVED. DESPITE SERVICE OF NOTICE NONE APPEARED TO REPRESENT THE ASSESSEE BEFORE THE TRIBUNAL ON THE DATE OF HEARING. HENCE, THE APPEAL WAS TAKEN UP FOR HEARING ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND W ITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESENTATIVE. 4. SHRI KUMAR PADMAPANI BORA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. THE LD. DEPARTMENTA L REPRESENTATIVE SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE THE SUPPLIERS AND TRANSPORTERS. THE ASSESSEE FAILED TO DISCHARGE HIS ONUS IN PROVING GENUINENESS 3 ITA NO.6356/MUM/2018(A.Y.2010-11) OF THE TRANSACTIONS. THE ASSESSEE HAS OBTAINED BOG US PURCHASE BILLS FROM THE DECLARED HAWALA DEALERS. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DEPART MENTAL REPRESENTATIVE AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS PURPORTEDLY OBTAINED BOGUS PURCHASES BILLS AGGREGATING TO RS.1 2,64,172/- FROM SUSPICIOUS DEALERS. THE ASSESSEE IS ENGAGED IN THE BUSINESS O F MANUFACTURING AUTOMOBILE MACHINERY SPARES. THE REVENUE HAS NOT RAISED ANY D OUBT OVER SALES DECLARED BY THE ASSESSEE. WITHOUT INPUTS THERE CANNOT BE MANUFACTUR E/SALES. THUS, THE ENTIRE PURCHASES CANNOT BE HELD TO BE BOGUS. APPARENTLY, ASSESSEE HAS MADE PURCHASES FROM GREY MARKET AND HAS PROCURED BOGUS PURCHASE BILLS FROM HAWALA DEALERS. UNDER SUCH CIRCUMSTANCES ONLY THE PROFIT EMBEDDED I N SUCH SALES AGAINST THE ALLEGED BOGUS PURCHASES SHOULD BE BROUGHT TO TAX. WE FIND THAT THE CIT(A) HAS ESTIMATED PROFIT @12.5% OF THE ALLEGED BOGUS PURCHASES. THE CIT(A) HAS BASED HIS ESTIMATION BY PLACING RELIANCE ON THE DECISIONS RENDERED BY TH E HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH IN INCOME TAX APPEAL N O.533 OF 2012 DECIDED ON 16/11/2016 AND IN THE CASE OF CIT VS. BHOLANATH PO LY FAB (P) LTD IN INCOME TAX APPEAL NO.63 OF 2012 DECIDED ON 23/10/2012. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER, HENCE, THE SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMIS SED BEING DEVOID OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDA Y , THE 15 TH DAY OF JANUARY, 2020. SD/- SD/- (R.C.SHARMA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 15 /01/2020 VM , SR. PS(O/S) 4 ITA NO.6356/MUM/2018(A.Y.2010-11) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI