ITO 22 (1)(7), MUMBAI V. M/S ILLUMINATION ENTERPRISES, MUMBAI

ITA 6711/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7938 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 133(6); 143(1); 22; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) SMC BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO. 6711 /MUM/201 9 ( A.Y. 2010 - 11 ) INCOME TAX OFFICER 22 ( 1) ( 7 ) ROOM NO. 120 , 1 ST FLOOR PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012 V. M /S. ILLUMINATION ENTERPRISES 3, PUSHPAGANDHA APPASAHEB MARATHE MARG PRABHADEVI, MUMBAI - 400025 PAN: AAAFI6464Q ( A PPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY SHRI SANJAY J. SETHI DATE OF HEARING : 1 4 .07.2021 DATE OF PRONOUNCEMENT : 14 .07.2021 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 33 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 08.08.2019 FOR THE A.Y. 2010 - 11 IN RESTRICTING THE ADDITION @ 2 5 % AS AGAINST @ 40 % MADE BY THE ASSESSING OFFICER. 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE ENGAGED IN BUSINESS OF SPECIALIZATION OF LIGHTING SYSTEMS, FILED RETURN OF INCOME ON 25.09.2010 DECLARING INCOME OF . 16,23,480 / - FOR THE A.Y . 2010 - 11 AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER 2 ITA NO. 6711/MUM/2019 (A.Y. 2010 - 11) M/S. ILLUMINATION ENTERPRISES RECEIVED INFORMATION FROM THE DGIT (INV.,) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT (INV.,), MUMBAI THAT THE ASSES SEE HAS AVAILED ACCOMMODATION ENTRIES FROM VARIOUS PARTIES AS REFERRED IN THE ASSESSMENT ORDER WHO ARE SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED T O PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THE PARTIES MENTIONED IN THE ASSESSMENT ORDER. IN RESPONSE A SSESSEE FURNISHED COPY OF LEDGER ACCOUNT ALONG WITH COPIES OF PURCHASE INVOICES AND COPIES OF BANK STATEMENTS AND SUBMITTED THAT THE PURCHASES M ADE ARE GENUINE. ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES AS SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE. 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NO N - GENUINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER THAT TH E ASSESSEE FAILED TO PRODUCE THE PARTIES IN SUPPORT OF ITS CLAIM THAT PURCHASES ARE GENUINELY MADE FROM THE PARTIES. ASSESSING OFFICER 3 ITA NO. 6711/MUM/2019 (A.Y. 2010 - 11) M/S. ILLUMINATION ENTERPRISES OBSERVED THAT THE NOTICES ISSUED U/S. 133(6) OF THE ACT TO THE PARTIES ARE RE TURNED UNSERVED WITH A REMARK LEFT AND NOT KNOWN AND THE ASSESSEE HAS NOT PRODUCED THE PARTIES BEFORE THE ASSESSING OFFICER . THEREFORE, ASSESSING OFFICER TREATED 40 % OF THE ALLEGED BOGUS PURCHASES OF . 1,32,359 / - FOR THE A.Y . 2010 - 11 AS NON - GENUINE . ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDE NCES AND VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO @ 25 % AS AGAINST @ 40 % MADE BY THE ASSESSING OFFICER. 4. IN SPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT . THEREFORE, I PROCEED TO DISPOSE OFF THIS APPEAL ON MERITS ON HEARING THE LD.DR. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), I FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS IN THE ASSESSMENT ORDER RESTRICTED THE ADDITION TO 25 % OF THE NON - GENUINE PURCHASES OF . 1,32,359 / - , WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 6. I HAVE CAREFULLY GONE THROUGH THE ABOVE SUBMISSIONS MADE BY THE APPELLANT AND THE FACTS MENTIONED IN THE ASSESS MENT ORDER. A SUM OF RS. 52,944/ - BEING 40% OF PURCHASE OF RS. 1,32,359 - HAS BEEN DISALLOWED ON THE BASIS OF INFORMATION FROM THE SALES TAX DEPARTMENT AND FOR THE REASON THAT THE PARTIE S WERE NOT FOUND IN EXISTENCE BY THE POSTAL AUTHORITIES TO SERVE NOTICE UNDER SECTION 4 ITA NO. 6711/MUM/2019 (A.Y. 2010 - 11) M/S. ILLUMINATION ENTERPRISES 133(6) . THE ASSESSEE HAS FILED COPY OF BILLS AND BANK STATEMENTS ETC. BUT FAILED TO PRODUCE THE PARTIES. IN VIEW OF ABOVE, THE PURCHASED FROM THE 3 PARTIES ARE HELD AS BO GUS PURCHASE. 6.1 HOWEVER, CONSIDERING THE TOTALITY OF FACTS, I AM OF TH E VIEW THAT ADDITION OF 40% OF PURCHASE IS NOT JUSTIFIED AS THE SAME IS ON HIGHER SIDE. IT IS A FACT THAT THE QUANTITY AND RATE OF PURCHASE COULD NOT BE VERIFIED AS THE REAL SUPPLIERS ARE NOT KNOWN AND THE PARTIES WHO ISSUED BILLS WERE ALSO NOT FOUND TRACEABLE. THE APPELLANT HAS ALSO FAILED TO PRODUCE THE PARTIES. IN SUCH A SITUATION, CERTAIN PERCENTAGE OF PURCHASE SHOULD DEFINITELY BE DISALLOWED WHICH WILL BE EQUIVALENT TO ADDITIONAL P ROFIT EARNED BY THE ASSESSEE ON ACCOUNT OF OBTAINING BILLS FROM HAWALA PARTY AND PURCHASING GOODS FROM GREY MARKET. CONSIDERING THE TOTALITY OF FACTS, I FIND IT FAIR TO SUSTAIN ADDITION OF 25 % OF PURCHASE FROM HAWALA PARTIES. IN VIEW OF ABOVE, ADDITION OF RS. 33,090/ - BEING 25% OF RS. 1,32,359/ - IS SUSTAINED AND BALANCE ADDITION OF RS. 19,854/ - IS HEREBY DELETED. 6. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A ) IN RESTRICTING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 2 5% OF THE PURCHASES . GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONO UNCED IN THE VIRTUAL COURT ON 14 .07.2021. SD/ - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 14 / 07 / 2021 GIRIDHAR, SR.PS 5 ITA NO. 6711/MUM/2019 (A.Y. 2010 - 11) M/S. ILLUMINATION ENTERPRISES COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM