SANJAY MISHRIMAL MEHTA, MUMBAI V. ACIT CIR. - 2, THANE, THANE

ITA 6460/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0961 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR TIWARI LD
• Assessee Lawyers: JITESH BHAGERIA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA.NO.6460/MUM/2016 SANJAY MISHRIMAL MEHTA ASSESSMENT YEAR-2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.6460/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) SANJAY MISHRIMAL MEHTA 202, MAA ENCOR OPP. PURNIMA HOSPITAL DAULAT NAGAR, ROAD NO.8 BORIVALI(E), MUMBAI-400 066 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2 THANE ! ./ ./PAN/GIR NO. ADUPM-0256-H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : JITESH BHAGERIA, LD.AR RE VENUE BY : RAM KUMAR TIWARI, LD. DR / DATE OF HEARING : 13/12/2017 / DATE OF PRONOUNCEMENT : 10/01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-1 [CIT(A)], MUMBAI, APPEAL NO.275/15-16 DATED 20/07/2016 ON LEGAL GROUNDS AS WELL AS ON MERITS. GROUND NO.1 WHICH CONTEST ITA.NO.6460/MUM/2016 SANJAY MISHRIMAL MEHTA ASSESSMENT YEAR-2009-10 2 VALIDITY OF REASSESSMENT PROCEEDINGS U/S 148 HAS BE EN WITHDRAWN BY LD. COUNSEL FOR ASSESSEE [AR] DURING HEARING BEFORE US AND HENCE THE SAME STANDS DISMISSED AS BEING NOT PRESSED. THE SOLE SURVIVING GROUND CONTEST ESTIMATED ADDITIONS AGAINST CERTAIN ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE. THE ASSESSMENT FOR IMPUGNED A Y WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2, THANE [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 05/03/2015. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE E BEING RESIDENT INDIVIDUAL ENGAGED AS CIVIL WORK CONTRACTORS WAS ASSESSED U/S 143(3) READ WITH SECTION 147 AT RS.90,90,170/- AFTER SOLE ADDITION OF CERTAI N ALLEGED BOGUS PURCHASES FOR RS.40,26,370/- AS AGAINST RETURNED INCOME OF RS.50,63,802/- FILED BY THE ASSESSEE. STATUTORY NOTICES U/S 143(2) AND 147 WERE DULY SERVED ON THE ASSESSEE. THE ORIGINAL RETURN OF INCOME WAS PROCESSED U/S 143(1). THE ASSESSEE REFLECTED NET PROFIT OF 3.4% AGAINST GROSS TURNOVER OF RS.15.12 CRORES. 2.2 DURING REASSESSMENT PROCEEDINGS, PURSUANT TO RE CEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS, IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.4,02,63,696/- FROM NINETEEN SUCH PARTIES. THE ASSESSEE DEFENDED T HE PURCHASES ON THE GROUND THAT THE MATERIAL WAS CONSUMED IN THE CO NTRACT WORK UNDERTAKEN BY THE ASSESSEE. HOWEVER, NOT CONVINCED, LD. AO ESTIMATED NET PROFIT RATE OF 6% IN ASSESSEES LINE OF BUSINES S AND CONSEQUENTLY, DISALLOWED 10% OF ALLEGED BOGUS PURCHASES WHICH CAM E TO RS.40.26 LACS. ITA.NO.6460/MUM/2016 SANJAY MISHRIMAL MEHTA ASSESSMENT YEAR-2009-10 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH OUT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 20/07/2 016 WHERE LD. CIT(A) NOTED THE ASSESSEE COULD NOT FILE EVIDENCE O F TRANSPORTATION OF THE PURCHASED GOODS TO HIS SITE AND THE ASSESSEE FA ILED TO PRODUCE ANY OF THE SUPPLIER TO CONFIRM THE TRANSACTIONS. FINALL Y, AFTER CONSIDERING ASSESSEES VARIOUS SUBMISSIONS AND UPON FACTUAL MAT RIX. LD. CIT(A) CONFIRMED THE STAND OF LD. AO. AGGRIEVED, THE ASSES SEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AR REITERATING THE CONTENTIONS AS RAISED BEFORE LOWER AUTHORITIES, CONTESTED THE ESTIMATION MADE BY LOWER AUTHORITIES WHEREAS LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTENDED THAT THE ESTIMATION WAS QUITE FAIR AND REASONABLE. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN CIVIL CONTRACT WORK AND THE CONTRACT WORK WAS DULY CERTIFIED BY THE MUNICIPAL AUTHORITIES. THE SALES T URNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND T HE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY C ONFIRMATION FROM ANY OF THE IMPUGNED NINETEEN SUPPLIERS AND COULD NO T PROVE DELIVERY OF MATERIAL, WHICH CAST SERIOUS DOUBT ON ASSESSEES CL AIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE , WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTI ONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VALUE ADDED TAX [VAT] AGAINST ITA.NO.6460/MUM/2016 SANJAY MISHRIMAL MEHTA ASSESSMENT YEAR-2009-10 4 SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DONE SO. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE CAR RIED OUT THE MAJOR WORK ON SUB-CONTRACT BASIS (MORE THAN 88% OF GROSS TURNOVER) AND ALREADY REFLECTED NET PROFIT RATE OF 3.39%, WE REDUCE THE ESTIMATION OF ADDITION TO 5% OF ALLEGED BOGUS PURCHASES WHICH COMES TO RS.20,13,185/-. THE ORDERS OF LOWER AUTHORITIES STA ND MODIFIED TO THAT EXTENT. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY,2018 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGAR WAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10.01.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. $&. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI