DCIT , CIRCLE -12(1)(1), MUMBAI V. ASWATHI INDUSTRIES LTD., MUMBAI

ITA 6403/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3760 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Capital asset; Depreciation
• Section: 143(3); 133(6); 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 6403 //2019 (. . 2011-12 ) ITA NO.6403/MUM/2019 (A.Y.2011-12) DCIT CIRCLE-12(1)(1), R. NO. 128C, 1 ST FLOOR, AAYAKAR BHAVAN,CHURCHGATE, MUMBAI- 400020 ...... ) / APPELLANT VS. M/S ASWATHI INDUSTRIES LTD. A-001/002, APEKSHA ENCLAVE, MAHAVIR NAGAR, DAHANUKAR WADI, KANDIVALI (W), MUMBAI-400067. PAN: AACCA0541R ..... *,/ RESPONDENT ) -/ APPELLANT BY : MS. SMITA VERMA *, -/ RESPONDENT BY : NONE . / DATE OF HEARING : 04/05/2021 . / DATE OF PRONOUNCEMENT : 21/05/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-20, MUMBAI [HEREINAFTER REF ERRED TO AS THE CIT(A)] DATED 13.06.2019 FOR THE ASSESSMENT YEAR (AY) 2011- 12. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRA DING OF ENGINEERING EQUIPMENTS AND ALLIED PRODUCTS. ON THE BASIS OF INF ORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, ASSESSME NT IN THE CASE OF ASSESSEE 2 . 6403 //2019 (. .2011-12 ) ITA NO.6403/MUM/2019 (A.Y.2011-12) WAS RE-OPENED FOR AY 2011-12. AS PER THE INFORMATIO N RECEIVED, THE ASSESSEE HAS ALLEGEDLY OBTAINED BOGUS PURCHASE BILLS FROM M/S AS IAN STEEL AMOUNTING TO RS. 25,74,000/- IN RESPECT OF PURCHASE OF MACHINERY. DU RING ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED COPY OF INVOICES, COPY OF LR FOR TRANSPORTATION OF MACHINERY, PHOTOGRAPHS OF MACHINE PURCHASED AND INS TALLED AT FACTORY, DETAILS OF THE CHEQUE THROUGH WHICH PAYMENT WAS MADE TO THE SU PPLIER OF MACHINERY, SCHEDULED TO THE BALANCE-SHEET INDICATING ADDITION OF THE ASSETS IN THE BLOCK AND THE ASSESSEES CLAIM OF DEPRECIATION. THE AO AFTER EXAMINING THE DOCUMENTS FURNISHED BY THE ASSESSEE DISALLOWED 12.5% OF ALLEG ED BOGUS PURCHASES AND MADE ADDITION OF RS. 3,21,750/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 10.12.2018 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE DOCUMENTS ON RECORD AND THE FACTS OF THE CASE CONCURRED WITH THE FINDINGS OF THE AO TO THE E XTENT OF INFLATED COST OF MACHINERY I.E. RS. 3,21,750/- AND DIRECTED THE AO T O REDUCE THE SAID AMOUNT FROM THE TOTAL COST OF MACHINERY AND ALLOW DEPRECIATION ON THE REMAINING AMOUNT. AGAINST THE PART RELIEF ALLOWED BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. MS. SMITA VERMA REPRESENTING THE DEPARTMENT VEHE MENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDI NGS OF THE CIT(A). THE LD. DR POINTED THAT THE CIT(A) HAS ERRED IN ALLOWING DEPRE CIATION ON THE MACHINERY. 4. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF AUTH ORITIES BELOW EXAMINED. IN THE PRESENT CASE, THE ASSESSEE HAS PURCHASED CAP ITAL ASSET FROM ALLEGED HAWALA OPERATOR. IN ASSESSMENT PROCEEDINGS, THE AO DISALLO WED 12.5% FROM THE TOTAL COST 3 . 6403 //2019 (. .2011-12 ) ITA NO.6403/MUM/2019 (A.Y.2011-12) OF THE CAPITAL ASSET AND MADE ADDITION OF RS. 3,21, 750/-.UNDISPUTEDLY, THE ASSESSEE FAILED TO SUBSTANTIATE GENUINENESS OF THE SUPPLIER OF THE MACHINERY. THE ASSESSEE COULD NEITHER FURNISH CORRECT ADDRESS OF T HE SUPPLIER FOR THE SERVICES OF NOTICE UNDER SECTION 133(6) NOR ANY CONFIRMATION WA S FILED BY THE ASSESSEE FROM THE SUPPLIER. THE AO DISALLOWED 12.5% FROM THE TOTA L COST OF THE MACHINERY AS INFLATED PURCHASES. IN OTHER WORDS, THE AO ACCEPTED THAT THE MACHINERY WAS INDEED PURCHASED ALBEIT THE COST OF MACHINERY WAS I NFLATED. ONCE HAVING ACCEPTED THE FACT OF PURCHASE OF MACHINERY, THE ASS ESSEE WAS ENTITLED TO DEPRECIATION ON THE SAME. THE CIT(A) AFTER EXAMININ G THE FACTS HAS RIGHTLY DIRECTED THE AO TO RE-COMPUTE DEPRECIATION ON THE M ACHINERY AFTER REDUCING INFLATED COST. I FIND NO ERROR IN THE IMPUGNED ORDE R. THE IMPUGNED ORDER IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 21 ST DAY OF MAY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3/ DATED: 21/05/2021 SK, PS * 4 * 4 * 4 * 4 COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *, / THE RESPONDENT. 3. 5 ( )/ THE CIT(A)- 4. 5 CIT 5. * , . . . , / DR, ITAT, 4 . 6403 //2019 (. .2011-12 ) ITA NO.6403/MUM/2019 (A.Y.2011-12) MUMBAI 6. 9 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI