TOPNOTCH CHEMICALS P.LTD, NAVI MUMBAI V. ITO WD 8(3)(2), MUMBAI

ITA 6553/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0890 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-11-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: DR P DANIEL
• Keywords: Bogus purchase; Revised return; Reassessment proceedings
• Section: 69C; 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 65 53 / MUM/20 1 6 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. TOPNOTCH CHEMICALS PVT. LTD., PLOT NO. C - 116, TTC INDUSTRIAL AREA, THANE - BELAPUR, PAWANE VILLAGE, NAVI MUM BAI VS. ITO WD 8(3)(2), MUMBAI PAN/GIR NO. AAACT3865F APPELLANT ) .. RESPONDENT ) ITA NO. 6554/ MUM/20 16 TO ITA 6556/MUM/2016 ( ASSESSMENT YEAR : 2009 - 10 TO 2011 - 12 ) M/S. MITOOL EQUIPMENTS PVT. LTD., PLOT NO. E - 25, MIDC INDUSTRIAL AREA, ADDL. AMBERNATH ANANAT NAGAR AMBERNATH (E) VS. ITO WD 1(2), KALYAN PAN/GIR NO. AADCM8841P APPELLANT ) .. RESPONDENT ) ASSESSEE BY DR. P. DANIEL REVENUE BY MS. BEENA SANTOSH DATE OF HEARING 18 / 04 /201 7 DATE OF PRONOUNCEME NT 26 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A) - 14, MUMBAI DATED 30/09/2016 AND CIT(A) 2, THANE, DATED 30/09/2016 RESPECTIVELY FOR THE A.Y.2009 - 10, 2010 - 11 AND 2011 - 12 IN THE MATTER OF OR DER PASSED U/S.143(3) R.W.S 147 OF THE IT ACT. 2. COMMON GRIEVANCE OF ASSESSEE RELATES TO CONFIRMING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO THE E XTENT OF 100% OF SUCH PURCHASES. ITA NO. 6553/MUM/2016 ITA NOS.6554/MUM/2016 TO ITA NO.6556/MUM/2016 M/S. TOPNOTECH CHEMICALS PVT. LTD., & M/S. MITOOL EQUIPMENTS PVT. LTD., 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. BRIEFLY FAC TS OF THE CASE ARE THAT IN THIS CASE THE RETURNS OF INCOME, DECLARING INCOME OF RS 2,31,890/ - (IN A.Y. 2009 - 10), RS 4,07,350/ - (IN A.Y.10 - 11) & RS. 5,43 , 070/ - (IN A.Y. 11 - 12) WERE TILED ON 22.09.2009, 27/09/2010 & 29/09/2011, RESPECTIVELY. DURING A YR 2009 - 1 0, A REVISED RETURN DECLARING SAME INCOME I.E. RS 2,31,890/ - WAS FILED ON 04.10.2009. SUBSEQUENTLY, INFORMATION FROM THE SALES TAX DEPARTMENT WERE RECEIVED BY THE AO THAT THE ASSESSEE HAD BOOKED THE BOGUS PURCHASES, THEREFORE, THE CASES OF THE A SSESSEE WER E RE-OPENED, AFTER RECORDING NECESSARY REASONS/SATISFACTION AND THE NOTICES U/S 148 OF THE ACT, WERE ISSUED AND SERVED UPON THE ASSESSEE. IN COMPLIANCE TO THE NOTICES ISSUED THE ASSESSEE STATED THAT THE REVISED RETURN FILED ON 04.10.2009 AN D ORIGINAL RETUR NS FILED FOR A Y R 2010 - 11 AND 2011 - 12, MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE. THE ASSESSEE IS MANUFACTURER OR CABLE REELING DRUMS, CABLE DRAG CHAIN AND COLLECTOR COLUMN. THE RE - ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT , WERE FINALIZE D ON 03.03.2014 A YR 2009 - 10) AND 18.03.2015 (A YR 2010 - 1 1 ) AND 19.03.2015 (A YR 2011 - 12) AT TOTAL INCOME OF RS 7,21,574/ - , RS. 25,77.270/ - & 17,21,700/ - AFTER MAKING THE ADDITIONS OF RS.4,89,684/ - RS.21,69,923 & RS.12,85,743/ - RESPECTIVELY ON ACCOUNT OF B OGUS PURCHASES. 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ENTIRE ADDITION ON ACCOUNT OF BOGUS PURCHASES BY DISREGARDING ASSESSEES PLEA TO UPHOLD ONLY PROFIT ELEMENT INVOLVED IN SUCH PURCHASES WHICH WAS ALLEGED TO BE AVOIDED. ITA NO. 6553/MUM/2016 ITA NOS.6554/MUM/2016 TO ITA NO.6556/MUM/2016 M/S. TOPNOTECH CHEMICALS PVT. LTD., & M/S. MITOOL EQUIPMENTS PVT. LTD., 3 6. ASSESSEE IS IN FURTHE R APPEAL BEFORE US AGAINST THE ABOVE ORDER S OF CIT(A). 7. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD I FOUND THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED IN ASSESSEES CASE BY ISS UANCE OF THE NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE IN REPLY TO THE SAID NOTICE STATED THAT THE ORIGINAL/REVISED RETURN FILED BY HIM MAY BE TREATED AS RESPONSE TO THE NOTICE UNDER SECTION 148. THE ASSESSMENT WAS REOPENED TO VERIFY THE PURCHASES MADE FROM VARIOUS PARTIES ON THE BASIS OF INVESTIGATION CARRIED BY SALES TAX DEPARTMENT. THE A. O . HAS ALSO RELIED ON STATEMENTS OF PERSONS WHOSE CROSS EXAMINATION HAS NOT BEEN PROVIDED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDING FOR A.Y.200 9 - 10 THE A.O. ASKED THE ASSESSEE TO SUBSTANTIATE PURCHASE OF THE GOODS FROM THE FOLLOWING PARTIES. SR. NO. NAME OF THE PARTY AMOUNT IN RS. 1 SHANTINATH CORPORATION 15,444/ - 2 NAVDEEP TRADING CORPORATION 10,192/ - 3 N.B. ENTERPRISES 32,398/ - 4 PAYAL ENTERPRISES 2,01,540/ - 5 SHEETAL TRADING CO., 2,30,110/ - 8. AC CORDING TO THE A. O. AS PER THE INFORMATION RECEIVED FROM THE S ALES TAX DEPARTMENT, THESE PARTIES HAD INDULGED IN ISSUING BILLS WITHOUT ITA NO. 6553/MUM/2016 ITA NOS.6554/MUM/2016 TO ITA NO.6556/MUM/2016 M/S. TOPNOTECH CHEMICALS PVT. LTD., & M/S. MITOOL EQUIPMENTS PVT. LTD., 4 DELIVERY OF ANY GOODS OR MATERIAL. THE A.O. INSPITE OF ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT OR DEPUTING THE WARD INSPECTOR TO FIND OUT THE WHEREABOUTS OF THE SAID PARTIES HAVE S PECIFICALLY ASKED THE ASSESSEE VIDE ORDER SHEET NOTING DATED 0 5/02/2014 TO PRODUCE THE PARTIES TO PROVE THE GENUINENESS OF THE PURCHASES. HENCE NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. HOW EVER, THE A.O. FINALIZED THE ASSESSMENT VIDE ASSESSMENT ORDER DAT ED 03.03.2014 UNDER SECTION 143(3) R.W.S 147 OF THE ACT DET ERM ININ G TOTAL INCOME AT RS.7,21,574 / - BY DISALLOWING OF RS.4 ,89,684/ - UNDER SECTION 69C OF THE ACT. 9. I FOUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON BASIS O F INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THE A.O. ALLEGED THAT THE A SSESSEE HAS OBTAINED BOGUS BILLS FROM TH E ABOVE PARTIES. THE ASSESSEE HAS PURCHASED IRON SHEETS FROM THE ABOVE MENTIONED PARTIES FOR THE CONSIDERATION OF RS.4,89,684/ - . FROM THE DOCUMENTS PLACED ON RECORD I FIND THAT T HE PURCHASED MATERIAL HAS BEEN USED IN THE BUSINESS OF THE ASSESSEE IN MANUFAC TURING CABLE REELING DRUMS AND CABLE DRAG CHAIN. THE SAME WERE SUBSEQUENTLY SOLD TO THE VARIOUS PARTIES AND INCOME RECEIVED FROM THE SAID TRANSACTION WAS OFFERED FOR TAX. THE A SSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE PURCHASE S FURNISHED PURCHASE BILL S, SALES BILLS, BANK STATEMENT, PARTY WISE PURCHASE AND SALES DETAILS BEFORE THE A.O. GROSS PROFIT OF THE IMPUGNED ASSESSMENT YEAR IS IN C ONSONANCE OF THE GROSS PROFIT DECLARED FOR THE EARLIER AND SUBSEQUENT ASSESSMENT YEARS . ITA NO. 6553/MUM/2016 ITA NOS.6554/MUM/2016 TO ITA NO.6556/MUM/2016 M/S. TOPNOTECH CHEMICALS PVT. LTD., & M/S. MITOOL EQUIPMENTS PVT. LTD., 5 10. UNDER THESE FACTS AND CIRC UMSTANCES, RELYING ON THE DECISION OF BOMBAY HIGH COURT IN CASE OF NIK A M EXIMS PVT. LTD., I HOLD THAT ADDITION TO THE EXTENT OF 10% OF SUCH BOGUS PURCHASE WILL SERVE THE PURPOSE, KEEPING IN VIEW THE NATURE OF TRADE BEING CARRIED ON BY THE ASSESSEE VIS - A - VI S OTHER FACTS AND CIRCUMSTANCES OF THE CASE. 11. FACTS AND CIRCUMSTANCES IN ALL THE YEARS ARE PARAMETRIA, THEREFORE, FOLLOWING REASONING GIVEN HEREINABOVE, I DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 10% OF SUCH BOGUS PURCHASES IN ALL THE YEA RS UNDER CONSIDERATION. 12. IN THE RESULT, APPEAL S OF THE ASSESSEE ARE ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 04 /2017 SD/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 2 6 / 04 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//