ANMOL KNIT WEARS LTD., MUMBAI V. ITO 12 (1)(2), MUMBAI

ITA 6858/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8643 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 271(1)(c); 69C; 142(1); 14A; 133(6); 143(2); 32

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNAL(VIRTUALCOURT) ABENCH, MUMBAI BEFORESHRI SHAMIMYAHYA, HON'BLEACCOUNTANT MEMBERAND SHRI PAVAN KUMARGADALE, HON'BLEJUDICIAL MEMBER ITA.NO.6858/MUM/2019(A.Y. 2010-11) ANMOLKNITWEARS LTD., 304,AMANSOLTAIRECHSL CHANDAVARKAR ROAD BORIVALI (W), MUMBAI -400092 PAN: AADCA0645F V. INCOME TAX OFFICER12(1)(1) AAYAKAR BHAVAN,M.K.ROAD MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEEBY : NONE DEPARTMENT BY : SHRIBRAJENDRAKUMAR DATEOF HEARING : 08.07.2021 DATEOF PRONOUNCEMENT : 12.07.2021 ORD ER PER PAVAN KUMARGADALE .JM. 1. THE ASSESSEE HAS FILED THE APPEAL AGAINST ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 20, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)]PASSEDU/S.143(3)AND SECTION250OFTHE INCOME TAX ACT,1961 (FOR SHORTACT) 2. ASSESSEE HAS RAISEDFOLLOWINGGROUNDS IN ITS APPEAL:- 2 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) ANMOL KNIT WEARS LTD., G#1 ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE ASSESSING OFFICER HAS ERRED IN MAKING AN ADDITION OF RS.28,41,127/- U/S 69C OF THE INCOME TAX ACT AND THE REASONS ASSIGNED FOR DOING SO WERE WHOLLY IRRELEVANT AND NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND NOT IN ACCORDANCE WITH PROVISIONS OF INCOME TAX ACT,1961 ANDRULES MADE THEREUNDER. G#2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN INITIATING THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT, WHICH WERE WHOLLY WRONG, IRRELEVANT, AND NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AS NO INCOME IS CONCEALED. 3. THE BRIEF FACTS ARE THAT, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF TEXTILE FABRICS. THE ASSESSEE HAS FILED THE RETURN OF INCOME ELECTRONICALLY FOR A.Y.2010-11 ON 1 4 . 1 0 . 2 0 1 0 D E C L A R I N G A T O T A L L O S S O F . 3 1 , 6 2 , 1 2 0 / - . T H E R E T U R N O F I N C O M E WAS PROCESSED U/S.143(1) OF THE ACT, SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED. IN COMPLIANCE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAILS AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER ON PERUSAL OF THE FINANCIAL STATEMENTS F O U N D T H A T T H E A S S E S S E E H A S M A D E P U R C H A S E S O F . 1 0 . 3 2 . 0 6 . 7 9 8 / - A N D THE ASSESSING OFFICER HAS CALLED FOR THE INFORMATION IN RESPECT OF PURCHASE PARTIES. THE ASSESSEE HAS FILED THE SUBMISSIONSON 26.01.2012 BUT THE ASSESSING OFFICER TO CROSS VERIFY AND CHECK THE GENUINENESS OF THE PURCHASES HAS ISSUED NOTICE U/S.133(6) OF THE ACT ON THE FIFTEEN PARTIES AND MOST OFTHE NOTICES WERE RETURN UNSERVED.FURTHER,ASSESSING 3 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) ANMOL KNIT WEARS LTD., OFFICER REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS IN RESPECT OF GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER HAS CONSIDERED THE INFORMATION IN RESPECT OF PARTIES WHO HAVE FURNISHED DETAILS AFTERWARDS. FINALLY, THE ASSESSING OFFICER ON A PERUSAL OF THE FACTS/ DETAILS FOUND THAT IN RESPECT OF THE PURCHASES FROM THE THREE PARTIES A G G R E G A T I N G T O . 2 8 , 4 1 , 1 2 7 / - T H E R E I S N O C O M P L I A N C E A N D M A D E A D D I T I O N U/S. 69C OF THE ACT. THE A.O. ALSO MADE DISALLOWANCE U/S. 14A OF THE A C T O F R S . 1 6 7 0 / - A N D A S S E S S E D T O T A L L O S S O F . 3 , 1 9 , 3 2 3 / - A N D P A S S E D T H E ORDER U/S.143(3)OF THE ACTDATED05.03.2013. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED THE APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) IN THE APPELLATE PROCEEDINGS CONSIDERED THE GROUNDS OF APPEAL, FINDINGS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE AND HAS FINALLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE ASSESSEES APPEAL. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HONBLETRIBUNAL. 5. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. THE LD.DR EMPHASIZED THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE PURCHASES IN RESPECT OF 3 PARTIES AND LD.CIT(A) HAS 4 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) ANMOL KNIT WEARS LTD., COORECTLY CONFIRMED THE ADDITION AND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SOLE DISPUTED ISSUE IS IN RESPECT OF ADDITION OF BOGUS PURCHASES MADE BY THE A.O. AND CONFIRMED BY THE LD.CIT(A). WE FIND ON PERUSAL OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MADE ADDITION U/S. 69C OF THE ACT OF TOTAL PURCHASES IN RESPECT OF THREE PARTIES WHERE THERE IS NO COMPLIANCE TO THE NOTICES U/S. 133(6) OF THE ACT. WHEREAS THE ASSESSEE HAS MADE BOGUS PURCHASES FROM THE DEALERS AND IN TURN IT PROVIDES SAVINGS TO THE ASSESSEE IN NONPAYMENT OF STATE TAXES. WE CONSIDERED THE FACTS AND CIRCUMSTANCES AND THE DECISIONS OF THE HONBLE TRIBUNAL IN THE IDENTICAL CASES AND THE JUDICIAL PRECEDENCE WERE ESTIMATING THE PROFIT ELEMENT EMBEDDED @ 12.5% OF DOUBTFUL/ BOGUS PURCHASES AND WAS ACCEPTED. WE FIND THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE SALES BUT MADE 100% ADDITION OF PURCHASES. WE RELY ON THE RATIO OF DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. NIKUNJ EXIMP (216 TAXMAN.COM 171). ACCORDINGLY, WE RESTRICT THE ADDITION TO THE EXTENT OF 12.5% OF THE BOGUS PURCHASES AND MODIFY THE LD.CIT(A) ORDER SUSTAINING THE ADDITION @ 12.5% OF PURCHASES ANDPARTLY ALLOWTHEGROUNDSOF APPEALOF THEASSESSEE. 5 ITA.NO. 6858/MUM/2019 (A.Y. 2010-11) ANMOL KNIT WEARS LTD., 7. IN THERESULT,THEAPPEAL FILEDBY THE ASSESSEE ISPARTLYALLOWED. ORDERPRONOUNCEDON ASPERRULE34(4)OF ITATRULESBYPLACING THE PRONOUNCEMENTLISTIN THE NOTICEBOARD. SD/- SD/- ( SHAMIM YAHYA ) ( PAVAN KUMAR GADALE) ACCOUNTANTMEMBER JUDICIALMEMBER MUMBAI / DATED12/07/2021 GIRIDHAR,SR.PS COPY OFTHEORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A),MUMBAI. 4. CIT 5. DR,ITAT,MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT.REGISTRAR) ITAT MUMBAI