DELTA DYE CHEM INDUSTRIES, MUMBAI V. ITO WD 31(1)(4), MUMBAI

ITA 6767/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1153 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2016
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: KEYUSI DESAI
• Keywords: Bogus purchase; Opportunity of cross examination; Accommodation entries
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 6767 / MUM/20 1 6 ( ASSESSMENT YEAR : 2009 - 10 ) M/S. DELTA DYE CHEM INDUSTRIES, GALA NO.46, BLDG. NO.5 GROUND FLOOR, NEW ASHIRWAD INDUSTRIAL GOREGAON (W) 400 104 VS. ITO WD 31(1)(4), MUMBAI 400 020 PAN/GIR NO. AAAFD1490P APPELLANT ) .. RESPONDENT ) ASSESSEE BY MS. KEYUSI DESAI REVENUE BY MS. BEENA SANTOSH DATE OF HEARING 27 / 04 /201 7 DATE OF PRONOUNCEME NT 27 /04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 42, MUMBAI DATED 22/08/2016, FOR THE A.Y.2009 - 10, IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.147 OF THE IT ACT. 2. THE ONLY GRIEVANCE OF ASSES SEE RELATES TO ADDITION UPHELD BY CIT(A) ON ACCOUNT OF BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN ITS ORDER, AO OBSERVED THAT INFORMATION WAS RECEIVED IN THIS OFFICE FROM THE SALES TAX DEPARTMENT, MUMBAI/ DGIT(INV), MU M BAI THAT THERE ARE SOME HAWALA DEALERS, WHO WERE INVOLVED IN ISSUING OF BOGUS BILLS TO THE BEN EFICIARIES,' THE LIST OF THE HAWALA DEALERS, IS ALSO AVAILABLE ON THE OFFICIAL WEBSIT E OF SALES TAX DEPARTMENT; GOVERNMENT OF MAHARASHTRA. ITA NO. 6767/MUM/20 16 M/S. DELTA DYE CHEM INDUSTRIES 2 WWW.MAHAVAT.GOV.IN REGARDI NG SUSPICIOUS PAR TIES WHO ARE ONLY PROVIDING ACCOMMODATION EN TRIES WITHOUT DOING ANY ACTUAL B USINESS. A S PER INFORMATION FROM THE ABOVE AGENCY, AO FOUND THAT THE ABOVE SAID ASSES S EE HAS RECEIVED ACCOMMODATION ENTRIES FROM SUSPICIOUS PARTIES ( HAWALA DEALERS) AMOUNT ING TO RS.1,01,96, 836/ - . IN THE VIEW OF THESE FACTS PROCEEDINGS U/S 147 OF THE ACT WERE I N ITIATED , AFTER RECORDIN G REASONS THEREOF, AND NOTICE U/S 148 DATED 06/02/2014 ISSUED AND SERVED ON THE ASSESSEE. 4. AO OBSERVED THAT ASSESSEE HAS DEC LARED GP @ 17.24%. TAKING INTO CONSIDERATION THE NATURE OF BUSINESS OF THE ASSESSEE, AO MADE ADDITION BY APPLYING FURTHER GP OF 19.5% ON THE BOGUS PURCHASE OF RS.1,01,96,836/ - . 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH A SSESSEE IS IN FURTHER APPEAL BEFORE US. 6. I HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE AO HAS MENTIONED IN HIS ORDER THAT SINCE THE ASSESSEE HAS NOT PROVIDED STOCK STATEMENT AND ENTR IES OF THE SAID PURCHASES, THE ONLY INEVITABLE CONCLUSION TO BE DRAWN IS THAT THE ASSESSEE MUST HAVE MADE THESE PURCHASES FROM OPEN MARKETS FROM SOME OTHER PARTIES BEST KNOWN TO HIM. I FOUND THAT ASSESSEE VIDE ITS SUBMISSION DATED 06/02/2015 HAS SUBMITTED FULL QUANTITATIVE RECONCILIATION STATEMENT OF ALL ITEMS PURCHASED FROM THE ABOVE SPECIFIED PARTIES SHOWING THE QUANTITATIVE DETAILS OF PURCHASES, SALE, USAGE AND STOCK. I ALSO FOUND ITA NO. 6767/MUM/20 16 M/S. DELTA DYE CHEM INDUSTRIES 3 THAT FOLLOWING DOCUMENTS WERE SUBMITTED BY THE ASSESSEE TO SHOW THAT THESE PURCHASES FROM THE SPECIFIED PARTIES ARE GENUINE. 1. COPY OF PURCHASE INVOICE COPY WITH SALES TAX REGISTRATION NUMBER OF THE PARTY. 2. BANKS STATEMENTS SHOWING PAYMENTS MADE TO THESE PARTIES BY ACCOUNT PAYEE CHEQUES. 3. BALANCE CONFIRMATION FROM THE PA RTIES ALONGWITH THEIR PAN NO. 4. RECONCILIATION STATEMENT SHOWING QUANTITATIVE DETAILS OF PURCHASES FROM THESE PARTIES AND ITS CORRESPONDING SALES / USAGE OF MATERIAL / STOCK. 5. VAT AUDIT REPORT OF SUPPLIERS FILED UNDER THE MAHARASHTRA VAT ACT. 2005 IN FORM NO.704. 7. IT WAS ALSO CONTENTION OF LEARNED AR THAT JUST ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND ON THE BASIS OF STATEMENT OF ANY PARTY WITHOUT ACTUALLY VERIFICATION AND PUTTING ON RECORD AND WITHOUT GIVING AN OPPORTUNITY OF CROSS EXAMINATION, THE PURCHASES FROM SUCH SUSPECTED PARTIES CANNOT BE CONSIDERED AS BOGUS PURCHASES. THE THIRD PARTY INFORMATION OR EVIDENCE SHOULD NOT BE THE SOLE BASIS FOR CONCLUSION OF A MATTER. THE SATISFACTION OF THE AO HIMSELF IS OF THE PRIME IMP ORTANCE WHILE MAKING ASSESSMENT OF AN INCOME AND THESE DUTIES CANNOT BE PERFORMED BY SUBSTITUTING THE SATISFACTION OF SOMEONE ELSE AND ADDITIONS MADE MERELY ON THE BASIS OF OBSERVATIONS OF SALES TAX DEPARTMENT, WITHOUT CONDUCTING INDEPENDENT ENQUIRIES WAS NOT JUSTIFIED. THE AO HAS NOT PRODUCED ANY PROOF TO SHOW THAT THESE PURCHASES FROM THE SPECIFIED PARTIES ARE BOGUS PURCHASES. 8. IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE VIS - - VIS, NATURE OF AS SESSEES BUSINESS, 9 I DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 12.5% OF THE GP OF ITA NO. 6767/MUM/20 16 M/S. DELTA DYE CHEM INDUSTRIES 4 SUCH BOGUS PURCHASES IN PLAC OF 19.5% AS ESTIMATED BY THE AO. I DIRECT ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUN CED IN THE OPEN COURT ON THIS 27 / 04 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 27 / 04 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPO NDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//