ITO 23 (3)(6), MUMBAI V. M/S R A INDUSTRIAL METALS, MUMBAI

ITA 6758/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1911 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANOOP
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries; Set aside
• Section: 69C; 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 6758/MUM/2019 (ASSESSMENT YEAR 2010-11) ITO - 23(3)(6) ROOM NO.608, 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400 021 VS. R.A. IN DUSTRIAL METALS 185, 2 ND FLOOR, BULLION EXCHANGE BUILDING SHEIK MEMON STREET ZAVERI BAZAR, MUMBAI-400 002 PAN : AAAFR4672H ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI VIMAL PUNMIYA DEPARTMENT BY SHRI ANOOP DATE OF HEARING 18 .05 .2021 DATE OF PRONOUNCEMENT 01.07 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-29 DATED 30.08.2019 AND PERTAINS TO ASSESSMENT YEAR 20 10-11. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.10,76,146/- MA DE U/S. 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE ADDITION WAS MADE ON THE BASIS OF SPECIFIC INFORMATION FROM THE SALES -TAX DEPARTMENT THAT THE ASSESSEE WAS INVOLVED IN AVAILING ACCOMMODATION ENTRIES OF B OGUS PURCHASES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE ORIGINAL RETURN OF INCOME FOR AY 2010-11 ON 15.10.2010 DECLARING TOTAL INCOME AT RS.2,53,130/-. IN THIS CASE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WIN G OF SALES TAX DEPARTMENT, MUMBAI WHO HAD IDENTIFIED CERTAIN ACCOMMODATION ENT RY PROVIDERS/BOGUS SUPPLIERS AND THE BENEFICIARIES WHO HAD UTILIZED THE SERVICES OF THESE BOGUS ENTRY PROVIDERS AND R.A.INDUSTRIAL METALS 2 AS PER THE INFORMATION RECEIVED DURING THE YEAR UND ER CONSIDERATION, THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FOR PURCHASES FROM 12 A CCOMMODATION ENTRY PROVIDERS BASED ON THIS INFORMATION, IT WAS FOUND THAT ASSESS EE HAS OBTAINED BOGUS BILLS FROM BOGUS SUPPLIERS. ACCORDINGLY, THE ASSESSMENT W AS RE-OPENED U/S147 BY ISSUING NOTICE U/S.148 DATED 25.03.2013. THE ASSESSMENT WAS COMPLETED U/S143(3) R.W.S 147 OF THE IT ACT DETERMINING TOTAL INCOME AT RS. 14,93 ,477/- ON 31.01.2014 AFTER MAKING ADDITION OF RS.10,76,146/- BY CALCULATING THE PEAK AFTER MERGING THE ACCOUNTS OF ALL THE BOGUS PARTIES FROM WHOM THE PURCHASES MADE DURI NG THE YEAR U/S.69C OF THE INCOME TAX ACT, 1961 BEING 'UNEXPLAINED EXPENDITURE ' AND ADDITION @ 0.50% ON RS.3,28,40,379/- I.E. RS.1,64,202/- IN ORDER TO EQU ALIZE THE G.P. IN RESPECT OF TAINTED AND NON TAINTED PURCHASES AS WELL AS VARIATION OF G P. 4. UPON ASSESSEES APPEAL LD.CIT(A) DELETED THE AD DITION QUA THE GROUND RAISED BY FOLLOWING THE ITAT DECISION IN ASSESSEES OWN CASE. THE LD.CIT(A) HAS HELD AS UNDER:- THIS ISSUE HAS COME UP IN THE APPELLANT'S OWN CASE FOR EARLIER ASSESSMENT YEAR I.E. A.Y.2009-10 AND THE HON'BLE ITAT BENCH 'D' VIDE ORD ER NO. ITA NO 1850/MUM/2015 DATED 12.06.2017 HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. THE DECISION OF THE HON'BLE ITAT OF IT'S ORDER DATE D 20/11/2009 IS REPRODUCED AS UNDER:- '8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE MATERIAL PLACE BEFORE US INCLUDING THE IMPUGNED ORDERS AND CASE LA W RELIED UPON BY THE ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE REVENUE H AS RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE IS ONE OF BENEFICIARY OF THE TRANSACTIONS BY HAWALA OPERATORS WHO PROVIDED A CCOMMODATION ENTRIES TO THE ASSESSEE AND THAT THE PURCHASES FROM THE SAID PARTI ES WERE NOT CONFIRMED AS THE NOTICE ISSUED U/S. 133(6) OF THE ACT WERE RETURNED UNSERVE D. WHEREAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS PRODUCED VARIOUS BOOKS OF ACCOUNTS CORROBORATING TH E FACT THAT THE MATERIAL WAS ACTUALLY PURCHASED AND SOLD, PAYMENTS WERE MADE THROUGH BANK ING CHANNEL, STOCK TALLY REGISTER SHOWING RECEIPTS AND ISSUES OF MATERIALS AND BILLS THEREOF, RECONCILIATION .OF SALES AND PURCHASES AND DELIVERY CHALLAN ETC. IN OUR VIEW, IT IS SETTLED LEGAL POSITION THAT ONCE THE ASSESSEE HAS FILED ALL THE NECESSARY DETAILS BEFORE THE AO, IT IS FOR THE AO TO DISPROVE THE R.A.INDUSTRIAL METALS 3 EVIDENCES SUBMITTED BY THE ASSESSEE AND POINT OUT FURTHER DEFECTS IN THE BOOKS OF ACCOUNT BEFORE MAKING ADDITION ON ACCOUNT OF BOGUS PURCHASES. IN THE INSTANT CASE BEFORE US, THE WHOLE CONCLUSION HAS BEEN DRAWN BY T HE '' -; REVENUE AUTHORITIES MERELY ON CONJECTURES, SURMISES AND PRESUMPTION THAT THE A SSESSEE MIGHT HAVE TAKEN '' THE HAWALA ENTRIES FROM THE HAWALA OPERATORS AND THE CA SH SO GENERATED WAS USED FOR MAKING PURCHASES FROM THE GRAY MARKET. HOWEVER, NO CONCRETE FINDINGS WITH THE NECESSARY EVIDENCES WERE GIVEN BY THE AUTHORITIES F OR MAKING THE ADDITION/ENHANCEMENT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ARE N OT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE FAA THAT THE ADDITION AS MADE BY THE A O AMOUNTING TO RS.58,89,729/- U/S. 69C WAS CORRECT WITH THE FURTHER ENHANCEMENT BY RS .25,10,887/- BY THE LD-CIT(A). ACCORDINGLY. WE SET ASIDE THE ORDER OF THE LD.CIT(A ) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE ADDITIONS . 4.2.4 THIS ISSUE HAS BEEN CLEARLY HELD BY THE HONB LE ITAT IN THE APPELLANTS OWN CASE FOR EARLIER YEAR I.E. 2009-10. THEREFORE, RESPECTFU LLY FOLLOWING THE JUDGMENT OF THE JURISDICTION ITAT THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED . 5. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL B EFORE US. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. 6. WE FIND THAT IN ASSESSEES OWN CASE ITAT IN SIM ILAR FACTS HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. BUT, LD. DR HAS REFERRED TO CAS E LAWS THAT AT LEAST DIFFERENCE OF G.P. OF NORMAL PURCHASE AND BOGUS PURCHASE SHOULD B E ADDED. HOWEVER, ON THE FACTS OF THE CASE, WE CONSIDER IT APPROPRIATE TO FOLLOW T HE ITAT ORDER IN ASSESSEES OWN CASE AND UPHOLD THE ORDER OF LD.CIT(A). 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 01.07.2021 SD/- SD/- (AMARJIT SINGH) (SHAMIM YAH YA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/07/2021 SR.PS. THIRUMALESH COPY OF THE ORDER FORWARDED TO : R.A.INDUSTRIAL METALS 4 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) ITAT, MUMBAI