ASST CIT 5(3)(2), MUMBAI V. SUNRAJ DIAMONDS EXPORTS PLTD, MUMBAI

ITA 6757/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: D Z PATEL; SANJAY PAREKH
• Keywords: Bogus purchase; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 6757 & 6758 / MUM/20 16 ( ASSESSMENT YEAR : 2008 - 09 & 2011 - 12 ) ACIT 5(3)(2) ROOM NO.573, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 VS. M/S. SUNRAJ DIAMONDS EXPORTS PVT. LTD., 1008, 10 TH FLOOR, PANCHRATNA MAMA PARMANAND ROAD, MUMBAI - 400004 PAN/GIR NO. AAACS8050R APPELLANT ) .. RESPONDENT ) ITA NO. 6730 & 6731 /MUM/20 16 ( ASSESSMENT YEAR : 2008 - 09 & 2011 - 1 2 ) M/S. SUNRAJ DIAMONDS EXPORTS PVT. LTD., 1008, 10 TH FLOOR, PANCHRATNA MAMA PARMANAND ROAD, MUMBAI - 400004 VS. ACIT 5(3)(2) ROOM NO.573, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 PAN/GIR NO . AAACS8050R APPELLANT ) .. R ESPONDENT ) REVENUE BY MS. POOJA SWAROOP ASSESSEE BY SHRI D.Z. PATEL & SHRI SANJAY PAREKH DATE OF HEARING 20 / 06 /201 8 DATE OF PRONOUNCEMENT 13 / 08 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE CROSS APPEALS FILED BY REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEARS 2008 - 09 AND 2011 - 12 IN THE MATTER ITA NO. 6757/MUM/2016 AND OTHER APPEALS M/S. SUNRAJ DIAMONDS EXPORTS PVT. LTD., 2 OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT (HEREINAFTER TH E ACT). 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND EXPORT OF DIAMONDS. DURING THE COURSE OF ASSESSMENT U/S.143(3) R.W.S. 147 OF THE ACT THE AO MADE DISALLOWANC E IN RESPECT OF BOGUS PURCHASE @12.5%. BY THE IMPUGNED ORDER THE CIT(A) RESTRICTED THE SAME AT 3%. THE CIT(A) OBSERVED THAT VAT RATE IS 1% AND CUSTOM DUTY IS ABOUT 2%, ACCORDINGLY, HE UPHELD ADDITION TO THE EXTENT OF 3%. AGAINST THIS ORDER OF THE CIT(A) B OTH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 3 . WE FOUND THAT IN THE CASE OF APPEAL S FILED BY THE REVENUE THE TAX EFFECT ARE LESS THAN RS.20 LAKHS, THEREFORE, IN TERMS OF CBDT CIRCULAR NO. NO.3/2018 DATED 11/07/2018 , THESE APPEALS DESERVE TO BE DISM ISSED 4 . IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED. 5 . WITH REGARD TO THE MERIT OF THE ADDITION UPHELD BY CIT(A), IT WAS SUBMITTED BY LEARNED AR THAT ASSESSEE HAD FILED FOLLOWING DOCUMENTS AND INFORMATION BEFORE THE LOWER AUTHORITIES. COPY OF LEDGER ACCOUNT AND CONFIRMATION OF MAYANK IMPEX AND NAZAR IMPEX PVT. LTD. COPIES OF INVOICE CUM DELIVERY CHALLAN ISSUED BY MAYANK IMPEX AND NAZAR IMPEX PVT. LTD. COPIES OF BANK STATEMENT HIGHLIGHTING THE PAYMENT MADE TO - MAYANK IMPEX AND NAZAR IMPEX PVT. LTD. DETAILS OF OPENING STOCK, PURCHASES , SALES AND CLOSING STOCK DETAILS QUANTITY IN CARATS STOCK REGISTER FOR PURCHASES AND CORRESPONDING SALES NAZAR IMPEX PVT. LTD. PURCHASE AGAINST 'H' FORM AND CORRESPONDING EXPORT SALES DOCUMENTS ITA NO. 6757/MUM/2016 AND OTHER APPEALS M/S. SUNRAJ DIAMONDS EXPORTS PVT. LTD., 3 MAYANK I MPEX PURCHASES AND CORRESPONDING SALES DOCUMENTS ASSESSING OFFICER NOT DOUBTED SALES AND ALSO BOOKS OF ACCOUNTS NOT REJECTED BY THE AO. THE SALES TAX DEPARTMENT HAS ALSO ISSUED FORM 'H' WHICH PROVES THAT GOODS HAVE BEEN EXPORTED IN ORDINARY COURSE OF BUSIN ESS. FULL EXPORTS SALES INVOICE DOCUMENTS TAX AUDIT REPORT 3 CD DULY AUDITED BY CA. 6 . LEARNED AR FURTHER CONTENDED THAT SINCE ENTIRE PURCHASES W ERE USED FOR EXPORT, THERE WAS NO VAT IN RESPECT OF THE EXPORT SALE, ACCORDINGLY, CIT(A) WAS NOT JUSTIFIED IN M AKING ADDITION OF 1% ON ACCOUNT OF VAT. 7 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE AO. 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT ASSESSEE IS ENGAGED IN MANUFACTURING AND EXPORT OF DIAMONDS. DURING THE COURSE OF ASSESSMENT, ASSESSEE HAS FILED LEDGER COPY OF MAYANK IMPEX AND NAZAR IMPEX PVT. LTD., ALONG WITH THEIR CONFIRMATION WHICH ARE ALLEGED TO BE BOGUS SUPPLIERS . COPY OF INVOICE CUM DELIVERY CHALLANS, COPY OF BANK STATEMENTS, HIGHLIGHTING PAYMENT MADE TO MAYANK IMPEX AND NAZAR IMPEX PVT. LTD., WERE ALSO FILED. DETAILS OF OPENING STOCK PURCHASES AND SALES AND CLOSING STOCK DETAILS ALONGWITH QUANTITATIVE TALLY IN CARATS. STOCK REGISTER FOR PURCHASE AND CO RRESPONDING SALES IN THE FORM OF EXPORT, PURCHASES AGAINST H FORMS AND CORRESPONDING EXPORT SALES FORMS WERE ALSO FILED. SINCE THERE WAS EX PORT OF THE GOODS ALLEGED TO BE PURCHASED THROUGH BOGUS SUPPLIERS , 1% ADDITION ON ACCOUNT OF VAT IS NOT WARRANTED. ACCORDINGLY, WE MODIFY THE ORDER OF THE CIT(A) TO RESTRICT THE ITA NO. 6757/MUM/2016 AND OTHER APPEALS M/S. SUNRAJ DIAMONDS EXPORTS PVT. LTD., 4 ADDITION TO THE EXTENT OF 2% OF THE BOGUS PURCHASES IN PLACE OF 3% AS UPHELD BY HIM. 9 . IN THE RESULT, APPEALS OF THE REVENUE ARE DISMISSED ON THE ACCOUNT OF TAX EFFECT AND APPEAL S OF ASSESSEE ARE ALLOWED IN PART IN BOTH THE YEARS UNDER CONSIDERATION. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 08 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 08 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//