EVONIK CATALYSTS INDIA PVT. LTD. (ERSTWHILE MONARCH CATALYST PVT. LTD.), THANE V. ACIT CIR. 1, KALYAN, KALYAN

ITA 6429/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8603 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: NARESH KUMAR VARUN SANKHESARA; TEHMTON WADIA
• Keywords: Bogus purchase; Tangible material
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6429/MUM/2016 (ASSESSMENT YEAR: 2008-09) M/S. EVONIK CATALYSTS VS. ACIT , CIRCLE 1 INDIA PVT. LTD. F1/2, MIDC PHASE 1 DOMBIVILI (E) THANE 421203 KALYAN PAN AAACM5013G APPELLANT RESPONDENT APPELLANT BY: SH. NARESH KUMAR, VARUN SANKHESARA & TEHMTON WADIA RESPONDENT BY: SHRI SUMAN KUMAR DATE OF HEARING: 09.11.2017 DATE OF PRONOUNCEMENT: 09.11.2017 O R D E R PER PAWAN SINGH, J.M. THIS APPEAL BY THE ASSESSEE UNDER SECTION 253 OF TH E INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2, THAN E DATED 06.09.2016 FOR A.Y. 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: - 1. GROUND NO. 1: REASSESSMENT PROCEEDING IS BAD I N LAW AND HENCE SHOULD BE QUASHED 1.1 ON THE FACTS AND CIRCUMSTANCES OF ITS CASE AN D THE LAW PREVAILING ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS)-2 ['CIT(A)'] HAS ERRED IN NOT QUASHIN G THE REOPENING OF THE ASSESSMENT BY TREATING SAME AS BAD IN LAW. 1.2 THE APPELLANT SUBMITS THAT THE ORDER PASSED UN DER SECTION 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 ('THE ACT') IS ERRONEOUS, IN EXCESS OF JURISDICTION AND BAD IN LAW . ITA NO.6429/MUM/2016 M/S. EVONIK CATALYSTS INDIA PVT. LTD. 2 2. GROUND NO. 2: DISALLOWANCE OF PURCHASES OF R S. 97,66,198 BY TREATING THE SAME AS UNSUBSTANTIATED PURCHASES 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE DISAL LOWANCE OF THE PURCHASES OF RS. 97,66,198 BY CONSIDERING THE S AME AS UNSUBSTANTIATED PURCHASES AS PER THE PROVISIONS OF SECTION 37 OF THE ACT. 2.2 THE APPELLANT SUBMITS THAT THE AO SHOULD BE DI RECTED TO DELETE THE DISALLOWANCE SO MADE AND RECOMPUTE THE TOTAL IN COME ACCORDINGLY. 3. GROUND NO. 3: LEVY OF INTEREST UNDER SECTION 23 4D OF THE ACT 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) OUGHT TO HAVE DIRECTED THE AO TO DELETE THE INTEREST LEVIED UNDER SECTION 234D OF THE ACT AND R E-COMPUTE THE TAX LIABILITY OF THE APPELLANT ACCORDINGLY. 3. AT THE OUTSET THE LEARNED A.R. OF THE ASSESSEE ARGU ED THAT THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSE ES OWN CASE FOR A.Y. 2007-08. 4. THE LEARNED D.R., AFTER GOING THROUGH THE DECISION OF THE TRIBUNAL IN ITA NO. 6428/MUM/2016 FAIRLY CONCEDED THAT THE GROU NDS OF APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE SUBMISSION OF BOTH PARTIES A ND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. A PERU SAL OF THE ORDER OF THE TRIBUNAL FOR A.Y. 2007-08 REVEALS THAT SIMILAR GROU NDS OF APPEAL WERE RAISED BY THE ASSESSEE AS RAISED IN THE PRESENT APP EAL AND THE COORDINATE BENCH OF THE TRIBUNAL PASSED THE FOLLOWING ORDER: - 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE ISSUE OF RE-OPEN ING OF ASSESSMENT UNDER SECTION 147 OF THE ACT IS CONCERNED, AFTER PE RUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT ACTION INITIATED UNDER SECTION 147 OF THE ACT IS APPROPRIATE, SINCE, THE ASSESSING OFFICE R HAD TANGIBLE MATERIAL IN HIS POSSESSION REVEALING THE FACT OF BO GUS PURCHASE MADE ITA NO.6429/MUM/2016 M/S. EVONIK CATALYSTS INDIA PVT. LTD. 3 BY THE ASSESSEE FROM TWO PARTIES. THEREFORE, WE DIS MISS THE GROUND RAISED BY THE ASSESSEE ON RE-OPENING. HOWEVER, AS F AR AS MERITS OF THE ISSUE IS CONCERNED, IT IS SEEN THAT WHILE THE A SSESSING OFFICER HAS ADDED THE ENTIRE PURCHASES MADE FROM THE PARTIES, T HE LEARNED COMMISSIONER (APPEALS) HAS RESTRICTED THE ADDITION TO 25%. PERUSAL OF THE ASSESSMENT ORDER REVEALS, THOUGH, THE ASSESSEE WAS UNABLE TO PROVE THE ACTUAL DELIVERY OF GOODS AT ITS PREMISES, THEREBY, FAILING TO CONCLUSIVELY PROVE THE FACT THAT GOODS WERE PURCHAS ED FROM THE CONCERNED PARTIES, HOWEVER, IT IS ALSO A FACT THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY ON HIS OW N, BUT HAS RELIED UPON THE INFORMATION OBTAINED FROM SALES TAX DEPARTMENT. MOREOVER, THE ASSESSING OFFICER HAS NOT DISPUTED TH E SALES / CONSUMPTION OF THE ASSESSEE. IN THESE CIRCUMSTANCES , THOUGH, THE ASSESSEE'S CLAIM THAT PURCHASES WERE MADE FROM THE CONCERNED PARTIES IS NOT ACCEPTABLE, AT THE SAME TIME, THE EN TIRE PURCHASES CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. AS F AR AS THE DISALLOWANCE MADE AT 25% OF THE BOGUS PURCHASE BY T HE LEARNED COMMISSIONER (APPEALS), WE ARE OF THE VIEW THAT THE SAME IS ON THE HIGHER SIDE CONSIDERING THE CONSISTENT VIEW ADOPTED BY THE TRIBUNAL IN CASES OF SIMILAR NATURE. IN TUNE WITH THE CONSISTEN T VIEW OF THE TRIBUNAL AS STATED ABOVE, WE RESTRICT THE ADDITION TO 12.5% OF THE ALLEGED BOGUS PURCHASE. SUFFICE TO SAY, THE LEARNED AUTHORISED REPRESENTATIVE HAD NO OBJECTION IF THE ADDITION IS RESTRICTED TO 12.5% OF THE ALLEGED BOGUS PURCHASE. THUS, THE ORDER OF T HE LEARNED COMMISSIONER (APPEALS) IS MODIFIED TO THIS EXTENT. GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED AND GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. WE HAVE CONSIDERING THE DECISION OF THE TRIBUNAL WH EREIN THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL AS RAISED IN THE PRESENT APPEAL. THE COORDINATE BENCH OF THE TRIBUNAL RESTRI CTED THE ADDITION ON ALLEGED BOGUS PURCHASE TO 12.5%. FOLLOWING THE DECI SION OF THE COORDINATE ITA NO.6429/MUM/2016 M/S. EVONIK CATALYSTS INDIA PVT. LTD. 4 BENCH IN ASSESSEES OWN CASE FOR A.Y. 2007-08 THE G ROUND NO.1 IS DISMISSED AND THE GROUND NO.2 IS PARTLY ALLOWED WIT H SIMILAR DIRECTION. 7. GROUND NO.3 RELATES TO LEVY OF INTEREST UNDER SECTI ON 234D OF THE ACT. THE LEVY OF INTEREST IS CONSEQUENTIAL, HENCE, NEEDS NO SPECIFIC ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER, 2017. SD/ - SD/ - (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 9 TH NOVEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -2, THANE 4. THE PR. CIT -2, THANE 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.