M/S BHAWWATI INTERIORS, MUMBAI V. ITO 27 (1)(1), MUMBAI

ITA 6633/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9506 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA VIJAY
• Keywords: Bogus purchase; Principle of natural justice
• Section: 147; 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 6633/MUM/2019 (ASSESSMENT YEAR 2009-10) M/S. BHAGWATI INTERIORS 55/B, WAMAN TUKARAM PATIL MARG, OPP. AMAR CINEMA, NEAR STAR GARAGE GOVANDI EAST MUMBAI-400 088. VS. ITO-27(1)(1) ROOM NO. 401, 4 TH FLOOR, TOWER NO. 6 VASHI RAILWAY STATION COMPLEX NAVI MUMAI-703 ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 6346/MUM/2019 (ASSESSMENT YEAR 2009-10) ITO-27(1)(1) ROOM NO. 401, 4 TH FLOOR, TOWER NO. 6 VASHI RAILWAY STATION COMPLEX NAVI MUMAI-703 VS. M/S. BHAGWATI INTERIORS 55/B, WAMAN TUKARAM PATIL MARG, OPP. AMAR CINEMA, NEAR STAR GARAGE GOVANDI EAST MUMBAI-400 088. (APPELLANT) (RESPONDENT) PAN : AAGFB8358N ASSESSEE BY SHRI PRATEEK JAIN DEPARTMENT BY SHRI CHANDRA VIJAY DATE OF HEARING 16.06.2021 DATE OF PRONOUNCEMENT 01 .0 7 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE AGAINST THE ORDER OF LEARNED CIT(A) DATED 14.6.2019 FOR ASSESSM ENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL OF THE ASSESSEE READ AS UN DER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO G IVE HIS FINDING ON REOPENING THE ASSESSMENT BY INVOKING THE PROVISIONS O F SECTION 147 BY ISSUE OF NOTICE U/S. 148 DATED 17.05.2013 WHICH IS M ERELY DUE TO CHANGE IN OPINION AND THEREFORE IS BAD IN LAW. M/S. BHAGWATI INTERIORS 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE A ND IN LAW THE LD COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISAL LOWING A SUM OF RS. 16,01,674/- BEING 25% OF THE ALLEGED BOGUS PURCHASES AMOUNTING TO RS 64,06,694/- IN AN ARBITRARY MANNER AS PER GROUNDS STA TED IN THE ORDER OR OTHERWISE. 3. THE GROUNDS OF APPEAL OF THE REVENUE READ AS UND ER : (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.48,05,021/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES, WIT HOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE BILLS, VOUCHERS AND OTHER DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM AND WITHOUT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N.K. PROTEINS LTD. WHEREIN IT IS HELD THAT ONCE IT IS PROVED THAT THE PU RCHASES ARE BOGUS THEN ADDITION SHOULD BE MADE ON ENTIRE PURCHAS ES AND NOT ON PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CLT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASES BY DISALLOWING ONLY RS.16,01,673/-BEING @ 25% OF THE BOGUS PURCHASE S AS EVEN THE BASIC ONUS OF PRODUCING DELIVERY CHALLANS, TRANSPOR T BILLS ETC. WAS NOT FULFILLED BY THE ASSESSEE. (III) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTING CONTRACTS OF INTERIOR DESIGNING. THE ASSE SSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEBITED PURCHASE OF RS.6 4,06,694/- FROM M/S. APEX METAL CORPORATION, VINAY TRADING CO., VIJAY LAXMI T RADING CO., VATIKA TRADING CO., UNISTAR CORPORATION, NIRMAN TRADING CO., RAJ INTERNATIONAL, RUBY IMPEX, SHAKTI TRADING CO., SHIVAMANI TRADERS PVT. LTD., UN ISTAR CORPORATION AND VATIKA TRADING CO. WHOSE TIN MATCHED WITH THE INFOR MATION RECEIVED FROM THE SALES TAX DEPARTMENT REGARDING BOGUS PARTIES WITH W HOM THE ASSESSEE HAD MADE PURCHASES. ON THE BASIS OF INFORMATION RECEIVE D FROM THE INVESTIGATION WING OF INCOME TAX DEPARTMENT, MUMBAI, IT WAS FOUND THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS TOTAL AMOUNTING TO RS .64,06,694/-FROM THE ABOVE PARTIES WHICH WERE STATED TO BE HAWALA OPERA TORS. LD. AO, ONGOING THROUGH THE SUBMISSIONS AND CONTENTIONS OF THE ASSE SSEE CONCLUDED THAT THE ASSESSEE FAILED TO PROVE WITH SUPPORTING DOCUMENTAR Y EVIDENCES THAT THE M/S. BHAGWATI INTERIORS 3 MATERIAL WAS ACTUALLY DELIVERED IN ITS PREMISES AND ALSO FAILED TO FILE EVIDENCES OF DELIVERIES TO ESTABLISH THAT THE MATERIAL WAS CO NSUMED FOR BUSINESS ACTIVITIES. ALSO THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION FROM THE ABOVE PARTY THAT HAD ACTUALLY SOLD AND DELIVERED MATERIAL TO THE ASSESSEE COMPANY. THE ASSESSING OFFICER ALSO NOTED THAT ASSESSEE DID NOT FURNISH BOOKS OF ACCOUNT. HENCE, THE SUM IN RESPECT OF INVESTMENT MA DE OUT OF UNACCOUNTED MONEY BY THE ASSESSEE FOR PURCHASE OF MATERIALS FRO M THE ABOVE PARTY OF RS.64,06,694/- WERE TREATED AS BOGUS PURCHASES AND ADDED TO THE RETURNED INCOME OF THE ASSESSEE. 5. UPON ASSESSEES APPEAL LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 6.25%. 6. AGAINST THIS ORDER ASSESSEE AND THE REVENUE ARE IN CROSS APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE FIND THAT THE ASSESSEE IN THIS CASE IS NOT ENGAGED INTO TRADI NG ACTIVITY. RATHER IT IS A CONTRACTOR FOR INTERIOR WORK. THE MATERIAL ARE SAID TO HAVE BEEN CONSUMED. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS N OT PRODUCED THE BOOKS OF ACCOUNTS ALONGWITH BILLS, VOUCHERS AND RECEIPTS, CO NSUMPTION OF RAW MATERIAL/GOODS PURCHASED FROM HAWALS PARTIES. LEARN ED CIT(A) PROCEEDED TO DECIDE THE ISSUE FOLLOWING DECISION WHICH IS RENDER ED IN THE CONTEXT OF TRADING CONCERN. HENCE LEARNED CIT(A)S RELIEF IS NOT SUSTA INABLE. HE HAS ALSO NOT CONSIDERED ASSESSING OFFICERS OBSERVATION ABOUT AB SENCE OF BOOKS OF ACCOUNT. MOREOVER ASSESSEE HAS CHALLENGED THE REOPENING ALSO , WHICH LEARNED CIT(A) HAS FAILED TO ADJUDICATE. ACCORDINGLY, IN THE INTER EST OF NATURAL JUSTICE WE REMIT THE ISSUE TO THE FILE OF LEARNED CIT(A). LEARNED CI T(A) IS DIRECTED TO CONSIDER ALL THE ISSUES RAISED BEFORE HIM AND THEREAFTER DECIDE AS PER LAW. NEEDLESS TO ADD THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNIT Y OF BEING HEARD. M/S. BHAGWATI INTERIORS 4 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 1.7.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/07/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI