NATIONAL METAL INDUSTRIES, MUMBAI V. INCOME TAX OFFICER 18(2)(4), MUMBAI

ITA 6668/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7466 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: MAHESH KUMAR JAIN
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/ SHRI R.C. SHARMA ( A M) & RAVISH SOOD ( J M) I.T.A. NO. 6668 /MUM/20 17 (ASSESSMENT YEAR 20 09 - 10 ) M/S. NATIONAL METAL INDUSTRIES SHOP NO. 11, 284 CHANDRA MAHAL, THAKURDWAR CORNER, JSS ROAD, G IRGAON MUMBAI - 400 002. PAN AAAFN4092R VS. ITO 18(2)(4) MUMBAI. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 6669/MUM/2017 (ASSESSMENT YEAR 2009 - 10) SHRI KHAYALILAL N. JAIN PROP. M/S. NEW DHANLAXMI METAL CORPORAITON, 284 CHANDRAMAHAL, SHOP NO. 11 THAKURDWAR MUMBAI - 400 002. PAN : AAEPJ8128Q VS. ITO 18(2)(4) MUMBAI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI MAHESH KUMAR JAIN DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 24 . 4 . 201 8 DATE OF PRONOUNCEMENT 25 . 4 . 201 8 O R D E R PER BENCH : - THESE ARE APPEALS FILED BY THE DIFFERENT ASSESSEES AGAINST THE ORDER OF THE LEARNED CIT(A) FOR A.Y. 2009 - 10, IN THE MATTER OF ORDER PASSED U/S. 143(3) READ WITH SECTION 147 OF THE I.T. ACT. 2. COMMON GROUND HAS BEEN RAISED IN BOTH THE APPEALS, WHICH PE RTAINS TO UPHOLDING THE ADDITION OF 12.5% ON THE ALLEGED BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACT IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y.2009 - 10 ON 21.08.2009 DECLARING A TOTAL INCOME OF RS.2,98,371/ - . SUBSEQUENTLY, THE AO RECEIVED SHRI KHAYALILAL N. JAIN & M/S. NATIONAL METAL INDUSTRIES 2 INFORMATION FROM THE DGIT(LNV.), MUMBAI WHO IN TURN RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT ABOUT SOME PARTIES WHO WERE PROVIDING HAWALA ENTRY/ACCOMMODATION ENTRIES FOR PURCHASES. THE INFORMATION IN POSSESSION OF THE AO WAS THAT THE APPELLANT HAS AVAILED OF ACCOMMODATION ENTRIES FOR PURCHASES FROM 4 PARTIES, NAMELY MANIBHADRA TRADING CO. RS.2,51,736/ - , SHAKTI TRADING CO - RS.3,63,787/ - , HARI OM TRADERS RS. 12,89,960/ - AND MAYUR ENTERPRISES RS.18,04,18 2 - TOTALING TO RS.37,09,665/ - . ON THE BASIS OF THIS INFORMATION, THE AO ISSUED NOTICE U/S.148 WHICH WAS SUBSEQUENTLY FOLLOWED BY NOTICE U/S.142(1) AND 143(2) AND COMPLETED THE ASSESSMENT U/S.143(3) R.W.S.147 ON 27.03.2015 , WHEREIN ADDITION WAS MADE TO THE TUNE OF 12.5% OF ALLEGED BOGUS PURCHASES . 4. BY THE IMPUGNED ORDER, THE LEARNED CIT(A) UPHOLD THE REASSESSMENT. WITH REGARD TO MERIT OF ADDITION, THE LEARNED CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD INFORMATION THAT THE ASSESSEE HAD MADE PURCHASES FROM THE ABOVE MENTIONED FOUR PARTIES TO THE TUNE OF RS.37,09,6657 - AND THAT THESE PARTIES WERE INVOLVED IN PROVIDING MERE ACCOMMODATION ENTRIES WITH NO GENUINE TRANSACTIONS. IN ORDER TO VERIFY THE GENUINENESS OF THE PURCHASES CLAIMED BY THE APPELLANT FRO M THESE PARTIES, THE AO ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR EXAMINATION, WHICH THE ASSESSEE FAILED TO DO SO. THE AO FURTHER ISSUED NOTICES U/S.133(6) TO THESE PARTIES AS PER THE ADDRESSES GIVEN BY THE ASSESSEE, BUT THE SAME WERE RETURNED UNSERVED BY THE POSTAL AUTHORITY WITH THE REMARK, NOT KNOWN' OR 'LEFT'. THE AO HELD THAT SINCE THE ASSESSEE HAS PROVIDED COPY OF INVOICES, BANK ACCOUNT STATEMENT AND SUBSEQUENT SALES, THE ONLY INEVITABLE CONCLUSION TO BE DRAWN IS THAT THE ASSESSEE MUST HAVE MADE T HESE PURCHASES FROM OPEN MARKETS FROM SOME PARTIES BEST KNOWN TO HIM. IT WAS FURTHER HELD THAT AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE PURCHASES, THE BOOKS OF ACCOUNT U/S. 145(3) CANNOT BE ACCEPTED AND AFTER REJECTING THE SAME AND FOLLOWING THE DECISION OF CIT VS. SIMIT P. SHETH AND ALSO DECISION OF M/S. BHOLENATH POLY FAB P. LTD PROCEEDED TO ESTIMATE THE GP @12.5% ON THESE PURCHASES AND MADE AN ADDITION OF RS.4,63,708/ - . SHRI KHAYALILAL N. JAIN & M/S. NATIONAL METAL INDUSTRIES 3 5. AGAINST THE ABOVE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WAS ARGUED BY LEARNED AR THAT ALL THE NECESSARY DOCUMENTS/ DETAILS RELATING ALLEGED BOGUS PURCHASES, BILLS FOR PURCHASES, LEDGER ACCOUNT COPY, DETAILS OF PAYMENT THROUGH BANKING CHANNELS IN SUPPORT AND NO CASH TRANSACTION BETWEEN THE ASSESSEE AND SUPPLIERS. THE ASSESSEE ALSO SUBMITTED THE QUANTITY DETAILS OF OPENING STOCK, PURCHASES, SALES AND CLOSING STOCK FOR EACH COMMODITY. BESIDES SUBSTANTIAL AMOUNT OF SALES MADE BY US THE SAME ITEMS AND SUCH SALES COULD NOT BE BOGUS, H ENCE ABOVE PURCHASES ARE NOT BOGUS. 7. ON THE OTHER HAND, IT WAS ARGUED BY LEARNED DR THAT THE ASSESSING OFFICER, VERY REASONABLY ESTIMATED THE PROFIT IN RESPECT OF BOGUS PURCHASES AT THE RATE OF 12.5%. SHE FURTHER ARGUED THAT THE ASSESSEE HAS GIVEN ALL T HE OPPORTUNITY TO PROVE THE GENUINENESS OF PURCHASES. THE ASSESSING OFFICER HAS ALSO ISSUED NOTICES U/S. 133(6) OF THE ACT TO THESE SUPPLIERS AS PER THE ADDRESS GIVEN BY THE ASSESSEE BUT THE SAME WERE RETURNED UNSERVED BY THE POSTAL AUTHORITY WITH THE REMA RKS NOT KNOWN OR LEFT. UNDER THESE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT AND VERY REASONABLY ESTIMATED THE PROFIT IN RESPECT OF SUCH ALLEGED BOGUS PURCHASES AT 12.5%. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADER AND COMMISSION AGENT IN S.F. COPPER WIRE AND ALL OTHER NON - FERROUS METAL. ON GETTING INFORMATION FROM THE SALES TAX DEPARTMENT AND ITS INVESTIGATION WING, THE ASSESSING OFFICER REOPENED THE ASSESSMENT AND ASKED THE ASSESSEE TO PROVE GENUINENESS OF PURCHASES. THE ASSESSING OFFICER ALSO ISSUED NOTICES U/S. 133(6) OF THE ACT AND ALSO ASKED THE ASSESSEE TO PRODUCE THESE PAR TIES FOR EXAMINATION, THE ASSESSEE FAILED TO DO SO. UNDER THESE FACTS AND CIRCUMSTANCES, THE LOWER AUTHORITIES HA VE VERY SHRI KHAYALILAL N. JAIN & M/S. NATIONAL METAL INDUSTRIES 4 REASONABLY ESTIMATED GP ON SUCH ALLEGED BOGUS PURCHASES AT 12.5%. NOTHING WAS PLACED BY LEARNED AR SO AS TO PERSUADE US TO DEVIATE FROM THE FINDINGS AND CONCLUSION OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS PASSED BY THE LOWER AUTHORITIES. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 25 . 4 .201 8 . SD/ - SD/ - (RAVISH SOOD ) ( R.C. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 25 / 0 4 / 20 1 8 C OPY 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// ( SENIOR P RIVATE S ECRETARY ) ITAT, MUMBAI