DCIT 11(2)(2), MUMBAI V. SIDDHARTH PRAFUL MEHTA, MUMBAI

ITA 6417/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6302 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM / I .T.A. NO. 6417 /MUM/201 9 ( / ASSESSMENT YEAR: 20 08 - 09 ) DCIT - 11(2)(2) ROOM NO.421, 4 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020 . / VS. SIDDHARTH PRAFUL MEHTA 167/2, VISHAL VILLA, ROAD NO.5, SHIVAJI PARK, MAHIM (W), MUMBAI - 400016. ./ ./ PAN/GIR NO. : AEXPM2847Q ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 05 / 0 7 /20 2 1 /DATE OF PRONOUNCEMENT: 07 /07 / 20 21 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 10 . 0 7 .201 9 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 3 MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 08 - 09 . 2 . THE REVEN UE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 125% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM THE BOGUS ENTITIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE LD. CIT(A) REVENUE BY : SHRI SANJAY J. SETHI ( D R) ASSESSEE BY: SHRI PRATEEK JAIN ITA NO. 6417 /M UM /201 9 A.Y.20 08 - 09 2 HIMSELF HAS ACKNOWLEDGED THE IMPUGNED ORDER THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES IN RELATION WITH BOGUS PURCHASE S FROM ALL THE FIVE PARTIES?' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 12.5% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM THE BOGUS ENTITIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS ENTERED INTO WITH THE TWO BOGUS ENTITIES AS IT HAS FAILED TO PRODUCE BOTH THE PART IES BEFORE THE AUTHORITIES BE IT ASSESSING OFFICER OR THE FIRST APPELLATE AUTHORITIES?' 3 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 12.5% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM THE BOGUS ENTITIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THE FACT THAT HON ME APEX COURT IN THE CASE OF M/S KACHWALA GEMS V/S JCIT (2006) 206 CTR (SC) 585, 288 ITR 1 0 (SC), HAS HELD THAT PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SUFFICIENT TO ESTABLISH THE GENUINENESS OF PURCHASES, THEREBY MAKING THE ASSESSEE CONTENTION MADE BEFORE AND ACCEPTED BY THE LD. C1T(A), INSIGNIFICANT THAT THE TRANSACTION WERE UNDERTAKEN THROUGH BANKING CHANNEL?' 4. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 12.5% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM THE BOGUS ENTI TIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THE FACT THAT HONBLE CALCUTTA HIGH COURT HAS HELD IN THE CASE OF CIT VS. PRASHANT (P) (1994) 1231 (CAL) ITA NO. 6417 /M UM /201 9 A.Y.20 08 - 09 3 20, THAT EVEN PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT AND IT WOULD NOT MAKE AN OTHERWISE NON - GENUINE TRANSACTION GENUINE?' 5. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A). WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 12.5% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM BOGUS ENTITIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THAT ON SIMILAR ISSUE 'C' BENCH OF HONBLE ITA T MUMBAI IN THE CASE OF PRATIBHA PIPES & STRUCTURAL LIMITED VS. DCIT CEN. CIR - 17 & 28 MUM BAI IN ITA NO. 3874, 3875, 3876/MUM/2015 & 7120/MUM12016 DATED 10 04.2019 HAS UPHELD THE DECISION OF ASSESSING OFFICER MAKING 100% ADDITION TOWARDS BOGUS PURCHASES WHILE RELYING UPON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF NK PROTIENS LIMITED (SU PRA)?' 6. 'WITHOUT PREJUDICE TO THE ABOVE, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION UP TO THE EXTENT OF 5% AS AGAINST 12.5% MADE BY THE ASSESSING OFFICER IN RESPECT OF PURCHASES FROM THE BOGUS ENTITIES AS THE SUPPRESSED PROFITS EMBEDDED IN SUCH PURCHASES, WITHOUT APPRECIATING THE FACT THAT ON SIMILAR ISSUE IN THE CASE OF VIJAY PROTEIN LTD. VS. CIT IN INCOME TAX REFERENCE NO. 139 OF 1996 WITH TAX APPEAL NO. 243 OF 2002, THE HONB LE GUJARAT HIGH COURT HAS SUSTAINED ADDITION OF 25% OF THE ALLEGED BOGUS PURCHASES MADE BY THE TRIBUNAL IN THE CASE.? ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 10 .0 2 .20 09 DECLARIN G A TOTAL INCOME TO THE TUNE OF RS . 40,28,633 / - FOR THE A.Y.2008 - 09 . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION ITA NO. 6417 /M UM /201 9 A.Y.20 08 - 09 4 RECEIVED FROM THE SALES TAX AUTHORITIES IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKEN THE BOGUS PURCH ASE ENTRY OF RS. 75,15,480/ - FROM THE FOLLOWING FIVE PARTIES: - SR. NO. NAME OF THE PARTIES WHO HAVE ISSUED BOGUS BILLS TO THE ASSESSEE AMOUNT OF SUCH BOGUS BILLS (IN RS.) 1 DHARMESH TRADING CO. 486200 2 JAIN CORPORATION 1146617 3 OM ENTERPRISES 1502263 4 SUPREME ENTERPRISES 591760 5 YASH IMPEX 3788640 TOTAL 75,15,480 THE NOTICE WAS GIVEN AND AF TER THE REPLY OF THE ASSESSEE, T HE AO RAISED THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASE . THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.49,68,070/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRIC TED THE ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASE BUT THE REVENUE WAS NOT SATISFIED, THEREFORE, FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASE ON THE BASIS OF THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE FO R THE A.Y.2009 - 10 & 2010 - 11 BEARING ITA. NO. 2447 & 2446/MUM/2015 DATED 20.09.2017. THE FINDING OF THE CIT(A) IS HEREBY REPRODUCED AS UNDER.: - 8. I HAVE CAREFULLY GONE THROUGH THE FINDINGS GIVEN IN THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS OF THE AP PELLANT ON THE ISSUE AND MATERIAL AVAILABLE ON RECORD. THE INFORMATION ABOUT THE 5 ITA NO. 6417 /M UM /201 9 A.Y.20 08 - 09 5 PARTIES WHO HAVE ISSUED BILLS FOR PURCHASE TO THE ASSESSEE CLEARLY REVEAL THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS. THE SALES TAX DEPARTMENT HAD CONDUCTED D ETAILED INVESTIGATION/ENQUIRIES AGAINST THE HAWALA SUPPLIERS. NOTICES U/S 133(6) ISSUED TO ONE PARTY WAS RETURNED UNSERVED AND NO REPLY WAS RECEIVED FROM OTHERS. THE APPELLANT COULD NOT FURNISH EVIDENCE OF ACTUAL TRANSPORTATION AND DELIVERY. THE PARTIES WE RE NOT PRODUCED BEFORE THE AO. THEREFORE, IT IS LOGICAL TO CONCLUDE THAT THE GOODS WERE PURCHASED FROM SOME OTHER PARTIES AND ONLY BILLS WERE OBTAINED FROM THE 5 PARTIES UNDER CONSIDERATION. 9. AS DISCUSSED ABOVE, THIS IS A CLEAR CUT CASE OF BOGUS PURCHASE AND THE ADDITIONAL PROFIT ELEMENT EMBEDDED IN SUCH PURCHASE NEEDS TO BE ADDED TO THE TOTAL INCOME OF THE APPELLANT. THE AO HAS ESTIMATED ADDITIONAL PROFIT @12.5 % OF PURCHASE AMOUNT. I HAVE GONE THROUGH THE ORDER OF THE ITAT IN CASE OF APPELLANT ITSELF FO R AY 2009 - 10 & 2010 - 11 DATED 20.09.2017 WHEREIN THE ITAT HAS SUSTAINED ADDITION @ 5 % OF BOGUS PURCHASE IN THE IDENTICAL FACTS TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE WAS DEALING IN PRODUCTS OF REPUTED COMPANIES WHOSE RATES ARE STANDARDIZED ON E BUT THERE IS POSSIBILITY THAT THE ASSESSEE MIGHT HAVE SAVED VAT TAX FROM SUCH PURCHASES. AS THE FACTS INVOLVED IN PRESENT APPEAL ARE IDENTICAL TO THE FACTS IN APPEAL FOR AY 2009 - 10 & 2010 - 11, RESPECTFULLY FOLLOWING THE DECISION OF THE [TAT, THE ADDITION TO THE EXTENT OF 5% OF BOGUS PURCHASE IS HEREBY SUSTAINED AND THE BALANCE ADDITION IS DELETED. THE GROUNDS ARE PARTLY ALLOWED. 5. SINCE THE ISSUES IS SQUARELY COVERED BY THE DECISION OF THE HONBLE ITAT IN THE ASSESSEES OWN CASE FOR THE A .Y.2009 - 10 & 201 0 - 11 B EARING ITA. NO.2447 & 2446/MUM/2015 DATED 20.09.2017, THEREFORE, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS QUITE JUSTIFIABLE AND IS NOT LIABLE TO BE INTERFERED WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE AFFIRM THE ITA NO. 6417 /M UM /201 9 A.Y.20 08 - 09 6 FINDING OF THE CIT(A) ON THIS ISSUE AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 07 / 202 1 SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 07 / 07 / 2021 VIJAY PAL SINGH ( SR. P.S. ) / 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