ITO 8(3)(2), MUMBAI V. SUNCEKOWA TEXPORT P.TLD, MUMBAI

ITA 6629/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9897 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 06-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN SR
• Keywords: Bogus purchase; Additional evidence
• Section: 143(3); 133(6); 68

Judgement Text

ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 6629/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER 8(3)(2) ROAD NO.202 2 ND FLOOR AAYKAR BHAVAN MUMBAI 400 020 / VS. SUNCEKOWA TEXPORT PVT.LTD 302 MANGALYA PREMISES CO-OP SOCIETY LTD BEHIND MARIGOLD RESIDENCY HOTEL MAROL MAROSHI ROAD MAROL NAKA ANDHERI (E) MUMBAI-400 059 ./ ./PAN/GIR NO. AAGCS-0537-D ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : V. JUST IN, SR.AR / DATE OF HEARING : 29/08/2017 / DATE OF PRONOUNCEMENT : 06 /09/2017 ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2010- 11 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-18 [CIT(A)], MUMBAI DATED 18/08/2014 QUA RELIEF PROVIDED TO THE ASSESSEE ON ACCOUNT OF PURCHASES & CASH CREDIT U/S 68. NONE HAS APPEARED ON BEHALF OF ASSESSEE DESPITE NOTICE AND NO ADJOURNMEN T APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE- OFF THE SAME BASED ON MATERIAL AVAILABLE ON RECORD AND AFTER HEARING L D. DEPARTMENTAL REPRESENTATIVE. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN TRADING OF TEXTILES, WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 25/03/2013 AT RS.2,54,14,027/- AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 07/09/2010. THE ASSESSEE REFLECTED TURNOVER OF RS.25.23 CRORES WITH GROSS PROFIT RATE OF 4.52%. 2.2 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICE U/ S 133(6) WAS ISSUED TO THREE PARTIES FROM WHOM PURCHASES TO THE TUNE OF R.2,47,63,242/- WERE MADE BY THE ASSESSEE. HOWEVER, THE SAME WAS RE TURNED BY THE POSTAL AUTHORITIES UN-SERVED. THE SAME WAS CONFRONTED TO THE ASSESSEE, WHO, IN SUPPORT OF PURCHASES TRANSACTIONS, PRODUCED FEW COPIES OF TRANSPORT INVOICES AND CONFIRMATION FROM THREE CRED ITORS. HOWEVER, LD. AO NOTED THAT THE CONFIRMATIONS DID NOT BEAR ANY AD DRESS AND PAN. SINCE, NO FURTHER EVIDENCE COULD BE FURNISHED BY TH E ASSESSEE TO ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 3 SUBSTANTIATE THE PURCHASE TRANSACTIONS DESPITE BEIN G PROVIDED WITH SEVERAL OPPORTUNITIES, LD. AO DISALLOWED THE SAME. THE LD. AO, IN THE ALTERNATIVE, ESTIMATED GP AGAINST THE TOTAL TURNOVE R @2.5%, WHICH AMOUNTED TO RS.63.07 LACS SINCE LD. AO ERRED IN NOT ING THAT THE ASSESSEE REFLECTED NIL GROSS PROFIT DURING THE YEAR. 2.3 THE ASSESSEE SUFFERED ANOTHER ADDITION OF RS.5. 70 LACS AS CASH CREDIT U/S 68 SINCE IT REFLECTED RECEIPT OF CASH LOAN OF RS.5.70 LACS FROM ONE S.K.DEORA BUT COULD NOT FILE ANY DOCUMENTARY EVIDENCES, WHIC H LED THE LD. AO TO ADD THE SAME U/S 68. 3.1 AGGRIEVED, THE ASSESSEE CONTESTED BOTH THE ADDI TIONS WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 18/08/2014 WHERE THE ASSESSEE CONTENDED THAT LD. AO ERRED IN NOTING THAT THE ASSESSEE DID NOT EARN ANY GROSS PROFIT DURING THE YEAR SINCE THE REFLECTED GP RATE WAS 4.52% WHICH WAS QUITE HIGHER IN COMPARISON TO E ARLIER YEARS. THE ASSESSEE ALSO FILED PURCHASE DETAILS & CONFIRMATIONS FROM CREDITORS ETC . TO SUBSTANTIATE THE PURCHASE TRANSACTIONS , AGAINST WHICH REMAND REPORT WAS CALLED FROM THE LD. AO. 3.2 DURING REMAND PROCEEDINGS , THE ASSESSEE SUBMITTED CONFIRMATION OF THE THREE CREDITORS BUT COULD NOT PRODUCE ANY PA RTY FOR VERIFICATION OF PURCHASES. NOTICES U/S 133(6) WAS AGAIN SENT TO THE CREDITORS AT GIVEN ADDRESSES TO CONFIRM THE TRANSACTIONS, HOWEVER, THE SAME WERE AGAIN RETURNED BACK UN-SERVED. THE ASSESSEE ALSO COULD NOT PRODUCE ANY STOCK REGISTER, QUANTITATIVE DETAILS ETC., WHICH LED THE LD. AO TO CONCLUDE THAT MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE TRANSACTIONS AND THE SAID TRANSACTIONS WERE NON-GENUINE AND FROM NON-EXISTENT PARTIES. ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 4 3.3 THE ASSESSEE WHILE ASSAILING THE CONCLUSION DRA WN BY LD. AO PLACED RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS. THE LD.CIT(A), AFTER APPRECIATING THE SAME, NOTED THE SINCE TURNOVER WAS NOT DISPUTED, ENTIRE ADDITION THEREOF WAS NOT JUSTIFIED AN THEREFORE, ES TIMATED THE SAME @5% OF TOTAL PURCHASES WHICH CAME TO RS.12.38 LACS. 3.4 QUA ADDITION OF CASH CREDIT U/S 68, THE ASSESSEE EXPLAI NED THAT LOAN WAS OBTAINED FROM THE SHAREHOLDER DIRECTOR IN AY 2008-09 BUT THE SAME WAS OMITTED TO BE SHOWN AS LOAN IN THE BOOKS, WHICH HAS BEEN CORRECTED BY PASSING A JOURNAL ENTRY IN THE IMPUGNED AY. TO SUPPORT THE SAME, THE ASSESSEE SUBMITTED BANK STATEMENT OF THE DIRECTOR ALONG WITH BALANCE SHEETS FOR PAST THREE YEARS. THE LD.CIT(A) AFTER APPRECIATING THE SAME, RESTRICTED THE ADDITIONS TO RS.2,33,204/- . 3.5 AGGRIEVED BY THE RELIEF PROVIDED TO ASSESSEE AG AINST BOTH THE ADDITIONS, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR], FIRST OF ALL, SUBMITTED THAT THE VERDICT OF THE LD.CIT(A) HAS BEEN ACCEPTED BY THE ASSESSEE AND THE ASSESSEE IS NOT IN FURTHER APPEAL AGAINST THE S AME. PROCEEDING FURTHER, LD. DR CONTENDED THAT THE ASSESSEE COULD N OT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF TRANSACTION AND NOTIC ES ISSUED U/S 133(6) AT THE GIVEN ADDRESSES COULD NOT BE SERVED AND THEREFORE, HIGHER ADDITION WAS JUSTIFIED. OUR ATTENTION IS FURTHER DRAWN TO TH E FACT THAT THE ASSESSEE COULD NOT PRODUCE ANY STOCK REGISTER, QUANTITATIVE DETAILS , DELIVERY CHALLANS ETC. TO SUBSTANTIATE THE PURCHASES AND THEREFORE, FAILED TO DISCHARGE THE ONUS OF PROVING THE PURCHASE TRANSACT IONS. THE RELIEF PROVIDED U/S 68 HAS BEEN ASSAILED ON THE GROUND THA T THE ASSESSEE ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 5 SUBMITTED ADDITIONAL EVIDENCES BEFORE LD.CIT(A) WHI CH WERE NOT APPRECIATED BY LD. AO. 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS A TRADER . THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEE N DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIERS BEFORE LOWER AUTHORITIES AND NOTICES U/S 133(6) SENT AT THE GIVE N ADDRESSES REMAINED UN-SERVED, WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THE ASSESSEE COULD NOT PRODUCE ANY STOCK REGISTER, QUANTITATIVE DETAILS , DELIVERY CHALLANS, INVOICES ETC. TO SUBSTANTIATE THE PURCHASES. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. HOWEVE R, WE FIND THAT THE ESTIMATED ADDITION @5% IS ON THE LOWER SIDE KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS AND THEREFORE, WE ENH ANCE THE SAME TO 8% OF ALLEGED BOGUS PURCHASES, WHICH COMES TO RS.19,81,060/-. THIS GROUND OF REVENUES APPEAL STANDS PARTLY ALLOWED. 6. REGARDING RELIEF PROVIDED U/S 68, WE FIND THAT T HE SAME IS MORE OF A FACTUAL MATTER. THE ASSESSEE SUBMITTED DOCUMENTARY EVIDENCES AND EXPLAINED THE NATURE OF THE TRANSACTION. THE LD. CI T(A) AFTER APPRECIATING THE SAME AND WITH DUE APPLICATION OF MIND RESTRICTE D THE ADDITION TO RS.2,33,204.- WHICH WAS BASED ON FACTS AND THEREFOR E, WE FIND NO ITA NO.6629/M/2014 SUNCEKOWA TEXPORT PRIVATE LIMITED ASSESSMENT YEAR 2010-11 6 REASON TO INTERFERE WITH THE SAME. RESULTANTLY, THI S GROUND OF REVENUES APPEAL STANDS DISMISSED. 7. IN NUTSHELL, THE REVENUES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 09.2017 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. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI