NAVKAR AGENCIES, MUMBAI V. ACIT 21(1),

ITA 6763/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0349 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries; Onus to prove
• Section: 142(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L , BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY , J M & SHRI G. MANJUNATHA , A M ITA NO. 6 763 / MUM/20 1 6 & 6764/MUM/2016 ( ASSESSMENT YEAR : 2009 - 10 & 2011 - 12 ) M/S. NAVKAR AGENCIES V/7, VIREESHWAR CHAYA TEJPAL ROAD, VILE PARLE (E) MUMBAI VS. ACIT 21(1), MUMBAI PAN/GIR NO. AACFN3354L APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI BHARAT KUMAR REVENUE BY SHRI M .V.RAJGURU DATE OF HEARING 16 / 08 /201 7 DATE OF PRONOUNCEME NT 16 /08 /201 7 / O R D E R PER G. MANJUNATHA (A.M) : THESE ARE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS PASSED BY THE COMMISSIONER OF APPEALS - 37, MUMBAI DATED 26/08/2016 , FOR THE ASSESSMENT YEAR 2009 - 10 AND 2011 - 12. SINCE , THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THESE APPEALS WERE CLUBBED , HEARD TOGETHER AND DISPOSED OF F, BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE BRIEF FACTS EXTRACTED FROM ITA NO.6763/MUM/2016 ARE THAT THE ASSESSEE IS A PARTNERSH IP FIRM ENGAGED IN THE BUSINESS OF DEALING IN GENERAL MEDICINES AND OTHER ITEMS FILE D ITS RETURN OF INCOME FO R THE A.Y.2009 - 10 ON 29/09/2009, DECLARING TOTAL INCOME OF RS.38,05,220/ - . ITA NO. 6763/MUM/2014 & 6764/MUM/2016 M/S. NAVKAR AGENCIES 2 THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961. SUBSEQU ENTLY , THE CASE HAS BEEN REOPENED U/S. 147 OF THE INCOME TAX ACT, 1961 FOR THE REASON THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT ON THE GROUND THAT ASSESSEE HAS PURCHASED GOODS FROM CERTAIN PARTIES WHO WERE INVOLVED IN PROVIDING ACCOMMODATIO N ENTRIES WITHOUT ACTUAL DELIVERY OF GOODS AS PER THE LIST PREPARED BY THE MAHARASHTRA , SALES TAX DEPARTMENT. ACCORDINGLY , PROCEEDINGS U/S.147 WERE INITIATED BY ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT, 1961. THEREAFTER, THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICE S U/S.143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 WERE ISSUED. IN RESPONSE TO THE NOTICE S , THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAILS AS CALLED FOR. 3. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO JUSTIFY PURCHASES MADE FROM THE FIVE PARTIES LISTED BY THE MAHARASHTRA SALES TAX DEPARTMENT A S HAWALA OPERATORS. THE AO , BASED ON THE INFORMATION FURNISHED BY ASSESSEE ISSUED NOTICES U/S.133(6), HOWEVER, SUCH NOTICES HAVE BEEN RETURNED UNSERVED BY THE POST AL AUTHORITIES WITH A REMARK NO SUCH PARTIES ARE AVAILABLE IN THE GIVEN ADDRESS. FURTHER, T HE AO REQUESTED THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE ORDER SHEET NOTE DATED 20/03/2014 TO FILE CONFIRM ATION LETTER FROM THE SAID PARTIES AND ALSO PRODUCE THE PARTIES IN PERSON TO VERIFY THE PURCHASE TRANSACTIONS. THE ASSESSEE NEITHER FILED CONFIRMATION LETTERS NOR PRODUCED THE PARTIES IN PERSON. THEREFORE, THE AO OPINED THAT THE ITA NO. 6763/MUM/2014 & 6764/MUM/2016 M/S. NAVKAR AGENCIES 3 PURCHASES MADE FROM THE SAI D PARTIES ARE BOGUS IN NATURE AND ACCORDINGLY MA D E ADDITIONS OF RS.29,87,686/ - BEING TOTAL PURCHASE MADE FROM THE ABOVE SAID PARTIES AS UNEXPLAINED EXPENDITURE U/S.69C OF THE INCOME TAX ACT, 1961. AGGRIEVE D BY THE ASSESSMENT ORDER, THE ASSESSEE PREPARED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE NEITHER APPEARED NOR FILED ANY IN FORMATION TO JUSTIFY PURCHASES MADE FROM THE SAID PARTIES. THEREFORE, THE CIT(A) FOR THE DETAILED DISCUSSION IN HIS ORDER DATED 26/08/2016 DISMISSED THE APPEAL FILE D BY THE ASSESSEE. AGGRIEVED BY THE SAID APPELLATE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ONLY ISSUE CAME UP FOR OUR CONSIDE RATION IS THAT DISALLOWANCE MADE BY THE AO TOWARDS BOGUS PURCHASE U/S.69C OF THE INCOME TAX ACT 1961. THE AO DISALLOWED PURCHASES FROM CERTAIN PARTIES ON THE GROUND THAT THE SAID PARTIES ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GOODS. ACCORDING TO AO, THE LIST PRE PARED BY THE MAHARASHTRA SALES TAX DEPARTMENT COUPLED WITH FURTHER ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS PROVES THAT PURCHASES MADE FROM THE SAID PARTIES ARE BOGUS IN NATURE. THE AO FURTHER OBSERVED THAT NOTICES ISSUED U/S.133(6) OF THE ACT , WERE RETURNED UNSERVED WITH A REMARK NO SUCH PARTIES ARE AVAILABLE IN THE GIVEN ADDRESS AND ALSO ASSESSEE FAILED TO FILE ANY CONFIRMATION LETTER FROM THE PARTIES. ALL THESE FACTS UNDOUBTEDLY PROVE THAT THE ASSESSEE HAS FAILED TO ITA NO. 6763/MUM/2014 & 6764/MUM/2016 M/S. NAVKAR AGENCIES 4 PROVE THE PU RCHASES FROM THE SO CALLED PARTIES ARE GENUINE IN NATURE, ACCORDINGLY MADE ADDITIONS U/S.69C OF THE INCOME TAX ACT 1961. 5 . THE AO HAS MADE ADDITIONS ON THE GROUND THAT THE ASSESSEE HAS NOT DISCHARGED ITS INITIAL ONUS TO PROVE THE PURCHASES FROM THE SAID P ARTIES. NO DOUBT, THE LIST PREPARED BY THE MAHARASHTRA SALES TAX DEPARTMENT INDICATES THAT THE SAID PARTIES ARE HAWALA OPERATORS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF THE GOODS. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION LETTER FROM THE PARTIES. ALL THESE FACTS CLEARLY SHOW THAT ASSESSEE HAS NOT DISCHARGED ITS INITIAL BURDEN TO PROVE THE PURCHASES. AT THE SAME TIME, THE ASSESSEE HAS FURNISHED CERTAIN DETAILS INCLUDING PURCHASE BILLS AND PA YMENT PROOF TO PROVE THE PURCHASES AS GENUINE. WE FURTHER OBSERVED THAT THE AO HAS COME TO THE CONCLUSION THAT THE PURCHASE FROM THE SAID PARTIES ARE BOGUS IN NATURE MERELY ON THE BASIS OF LIST PREPARED BY THE MAHARASHTRA SALES TAX DEPARTMENT WITHOUT CON DUCTING ANY FURTHER ENQUIRIES WITH REGARD TO INCORRECTNESS OF SALES DECLARED BY THE ASSESSEE AND QUANTITATIVE DETAILS OF GOODS TRADED BY THE ASSESSEE. NO ADVERSE COMMENTS HAVE BEEN MADE ON BOOKS OF ACCOUNTS AND STOCK DETAILS. UNDER THESE FACTS, WHAT NEEDS TO BE TAXED IS ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES , BUT NOT TOTAL PURCHASES MADE FROM ALLEGED HAWALA OPERATORS. THE CO - ORDINATE BENCH OF ITAT, MUMBAI IN THE CASES OF BOGUS PURCHASES HAS TAKEN CONSISTENT VIEW AND IN SUCH CASES DIRECTED THE AO TO ESTIMATE NET PROFIT OF 12.5% ON TOTAL ALLEGED BOGUS PURCHASES ITA NO. 6763/MUM/2014 & 6764/MUM/2016 M/S. NAVKAR AGENCIES 5 FROM THE SAID PARTIES. THIS FACT HAS BEEN BROUGHT TO THE NOTICE OF BOTH THE COUNSELS. THE LEARNED COUNSEL FOR THE ASSESSEE AND LEARNED DR HAVE ACCEPTED FOR ESTIMATION OF NET PROFIT OF 12.5% ON T OTAL BOGUS PURCHASES. THEREFORE, KEEPING IN VIEW OF THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE FACT THAT BOTH THE PARTIES HAVE AGREED FOR ESTIMATION OF NET PROFIT O N TOTAL ALLEGED BOGUS PURCHASES, WE DIRECT THE AO TO ESTIMATE NET PROFIT OF 12.5% ON TOTAL PURCHASE MADE FROM THE SAID PARTIES. WE, ORDERED ACCORDINGLY. 6 . THE FACTS AND ISSUES INVOLVED IN ITA NO.6764/MUM/2016 ARE IDENTICAL TO ITA NO.6763/MUM/2016. THEREFORE, FOR THE DETAILED DISCUSSION IN THE PR ECEDING PARAGRAPH IN ITA NO.6763 /MUM/2016, WE DIRECT THE AO TO ESTIMATE NET PROFIT OF 12.5% ON TOTAL BOGUS PURCHASES FROM THE SAID PARTIES. 7 . IN THE RESULT APPEAL S FILED BY THE ASSESSEE IN ITA NO.6763 /MUM/2016 & ITA NO.6764/MUM/2016 ARE PARTLY ALLOWED. O RDER PRONOUNCED IN T HE OPEN COURT ON THIS 16 / 08 /2017 S D/ - ( SAKTIJIT DEY ) S D/ - ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 16 / 08 /201 7 KARUNA SR. PS ITA NO. 6763/MUM/2014 & 6764/MUM/2016 M/S. NAVKAR AGENCIES 6 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//