DCIT 15(3)(2), MUMBAI V. SAVANI CONSTRUCTIN CO. P.LTD, MUMBAI

ITA 6597/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5822 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ARUNKUMAR SINGH
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6597/MUM/2017 ASSESSMENT YEAR: 2010-11 DCIT 15(3)(2) ROOM NO.451, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI- 400020 VS. M/S SAVANI CONSTRUCTION CO.PVT.LTD. 21, SOTTA BUVANN, LT ROAD MULUND (EAST) MUMBAI-400 081 PAN AAJCS4567L (REVENUE) (ASSESSEE) CROSS OBJECTION NO.363/MUM/2018 (ARISING OUT OF ITA NO.6597/MUM/2017) ASSESSMENT YEAR: 2010-11 M/S SAVANI CONSTRUCTION CO.PVT.LTD. 21, SOTTA BUVANN, LT ROAD MULUND (EAST) MUMBAI-400 081 PAN AAJCS4567L VS. DCIT 15(3)(2) ROOM NO.451, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI- 400020 (ASSESSEE) (REVENUE) REVENUE BY : SHRI CHOUDHARY ARUN KUMAR SINGH ASSESSEE BY : SHRI RYAN SALDANHA DATE OF HEARING :09.04.2019 DATE OF PRONOUNCEMENT : 12 .04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER 1. THE REVENUE BY WAY OF THIS APPEAL IS CHALLENGING THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-24 HEREINAFTER 2 IT A NO.6597/MUM/2017 C.O. NO.363/MUM/2018 CALLED [CIT(A)], MUMBAI, IN APPEAL NO.CIT(A)-24/IT O-15(3)(2)/IT- 233/2016-17 DATED 31/08/2017. THE ASSESSMENT FOR I MPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX O- 15(3)(2), MUMBAI [AO] U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT,1961 ON 27/03/2015.THE REVENUE HAS RAISED THE F OLLOWING GROUNDS IN ITS APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION OF RS. 67,82,266 /- ON ACCOUNT OF BOGUS PURCHASES TO ONLY 12.5% OF THE SUCH BOGUS PURCHASES , WITHOUT GIVING ANY FINDINGS AS TO HOW 12.5% HAS BEEN WORKED OUT AND AL SO IGNORING THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS ON IT TO ESTA BLISH DURING THE ASSESSMENT PROCEEDINGS, THE GENUINENESS OF PURCHASE WHICH WERE MADE THROUGH BOGUS PARTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF BOG US PURCHASES TO ONLY 12.5% OF THE BOGUS PURCHASE, WITHOUT APPRECIATING THE RAT IO OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF N.K.PROTI ENS LTD., WHEREIN IT HAS BEEN HELD THAT IN THE EVENT OF BOGUS PURCHASES, THE ADDITION OF WHOLE OF SUCH PURCHASES IS REQUIRED TO BE MADE AND THIS DECISION HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT IN SLP NO. CC NO. 769 OF 2017 , BY DISMISSING THE SLP OF THAT ASSESSEE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A), MUMBAI ON THE ABOVE DIRECTIONS BE SET-ASIDE AND THAT OF THE ASSESSING O FFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY O F THE AFORESAID GROUNDS OR ADD A NEW GROUND OF APPEAL , WHICH MAY BE NECESSARY , AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) RESTRICTING TO 12.50% OF THE TOTAL BOGUS PU RCHASE BY CIT(A) AS AGAINST THE 100% ADDITION MADE BY THE AO OF RS. 67,52,266/-. AT THE OUT SET THE LD LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THE PRESENT AP PEAL OF ESTIMATION OF PROFIT ON BOGUS PURCHASES @ 12.5% IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH IN ASSE SSEES OWN CASE IN ITA NO.6233/MUM/2016 AY 2009-10 AND OTHERS WHEREIN THE HONBLE BENCH AS HELD THAT THE APPLICATION OF GP @ 12.5% 3 IT A NO.6597/MUM/2017 C.O. NO.363/MUM/2018 BY LD. CIT(A) IS REASONABLE AND PROPER. THE LD. AR THEREFORE SUBMITTED BEFORE THE BENCH THAT THE APPEAL FILED BY THE REVENUE MAY KINDLY BE DISMISSED AS THE LD. CIT(A) HAS DIREC TED TO THE AO TO APPLY GP OF @12.5% IN ORDER TO BRING TO TAX THE PROFIT ELEMENT ON THE BOGUS PURCHASES. THE LD. DEPARTMENTAL REPRES ENTATIVE (LD. DR IN SHORT) ON THE OTHER HAND RELIED ON THE GROUNDS OF APPEAL BY SUBMITTING THAT THE PRINCIPLE OF THE RESJ UDICATA IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS AND THUS EACH YEAR AN INDEPENDENT YEAR. THE LD DR THEREFORE SUBMITTED TH AT THE PRESENT APPEAL MAY BE DECIDED INDEPENDENTLY AND G P HIGHER THAN 12.5% MAY KINDLY BE DIRECTED TO BE APPLIED ON THE BOGS PURCHASES. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT IN THE EARLIER Y EAR UNDER SIMILAR FACTS, THE COORDINATE BENCH HAS DECIDED THE ISSUE IN ITA NO. 6233/ MUM/2016 AY 2009-10 WHEREIN THE COORDINA TE BENCH HAS UPHELD THE ORDER OF CIT(A) DIRECTING THE ADDITION TO BE MADE AT @12.5% OF BOGUS PURCHASE. THE RELEVANT PARA IS PRODUCED BELOW:- 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AN PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, ON THE BASIS OF INFORMATI ON OBTAINED FROM THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER HAS TREATED T HE PURCHASES CLAIMED TO HAVE BEEN MADE FROM 11 PARTIES AS BOGUS AND ADDED T HEM BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, AS OBSERVED BY THE LD. CI T(APPEALS), THE AO HAS NOT DISPUTED THE SALES/CONSUMPTION OF MATERIAL PURC HASED BY THE ASSESSEE. THAT BEING THE CASE, THE LOGICAL CONCLUSION WOULD B E, THE ASSESSEE MIGHT HAVE PURCHASED SUCH GOODS/MATERIALS FROM SOME OTHER SOUR CE AND TO REGULARIZE SUCH TRANSACTIONS HAS OBTAINED ACCOMMODATION BILLS. IN VIEW OF THE AFORESAID FACTS, WE AGREE WITH THE LD. CIT(A) THAT ONLY PROF IT ELEMENT EMBEDDED IN ALLEGED BOGUS PURCHASES CAN BE CONSIDERED FOR ADDIT ION. KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE, WE A RE OF THE OPINION THAT ESTIMATION OF PROFIT AT 12.5% BY THE LEARNED COMMIS SIONER (APPEALS) IS 4 IT A NO.6597/MUM/2017 C.O. NO.363/MUM/2018 REASONABLE AND PROPER. THEREFORE, WE UPHOLD THE SAM E BY DISMISSING THE GROUNDS RAISED BOTH BY THE REVENUE AND ASSESSEE IN THEIR APPEAL/CROSS OBJECTION. 4. WE ,THEREFORE, RESPECTFULLY FOLLOWING THE SAME H OLD THAT THE ESTIMATION OF GP BY CIT(A) AT 12.5% IS REASONABLE AND PROPER. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSE D. CO.NO.363/MUM/2018 THE ASSESSEE HAS ALSO FILED CO CHALLENGING THE REO PENING OF ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. THE LD. AR DURING THE HEARING DID NOT PRESS THE ISSUE RAISED BY WAY OF THIS CROSS OBJECTION AND ACCORDINGLY THE CO FILED BY THE ASSE SSEE IS DISMISSED. THE APPEAL OF THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 12 TH APRIL, 2019. SD/- SD/- (MAHAVIR SINGH) (RAJES H KUMAR) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED : 12 TH APRIL, 2019 * THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI