ANJ TURNKEY PROJECTS PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 12(1)(1), MUMBAI

ITA 6889/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8783 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Keywords: Bogus purchase
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD , JM ITA NO S . 6889/MUM/2017 & 3076 /MUM/ 2018 (ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 ) ANJ TURNKEY PROJECTS PRIVATE LIMITED C/O. JAYESH SANGHRAJKA & CO LLP CHARTERED ACCOUNTANTS UNIT NO. 405 - 408, HIND RAJASTHAN CENTRE, D. S. PHALKE ROAD, DADAR (E), MUMBAI - 400 014 VS. DCIT - 12(1)(1), AAYAKAR BHAWAN, MUMBAI PAN/GIR NO. AAHCA 0115 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI MARGAV SHUKLA RESPONDENT BY : SHRI SATISHCHANDRA RAJORE DATE OF HEARING : 18.12.2018 DATE OF PRONOUNCEMENT : 27.12 .2018 O R D E R PER SHAMIM YAHYA, A. M.: TH E S E ARE APPEAL S BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI (LD.CIT(A) FOR SHORT) DATED 29.09.2017 AND PERTAINS TO THE ASSESSMENT YEARS (A.Y.) 2010 - 11 AND 2011 - 12 RESPECTIVELY. 2. THE COMMON ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN SUSTAINING 12.5% ADDITION ON ACCOUNT OF BOGUS PURCHASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE RECEIVED INFORMATION OF HAVING OBTAINED BOGUS PURCHASE FROM THE SALES TAX DEPARTMENT AS UNDER: A.Y. 2010 - 11 RS.23,84,037/ - A.Y. 2011 - 12 RS.10,63,350/ - 2 ITA NO S . 6889/MUM/2017 & 3076/MUM/2018 4. THE ORDER FOR THE A.O. MAKING THE ADDITION FOR A.Y. 2011 - 12 READS AS UNDER: 5.2.1 DURING THE RELEVANT P.Y. , THE APPELLANT CLAIMED TO HAVE MADE PURCHASES FROM THE FOLLOWING PARTIES. THE PURCHASES MADE FROM THE PARTIES ALLEGED ARE AS UNDER - SR. NO. NAME OF PARTY AMOUNT 1 M/S. UNIQUE SALES CORPORATION 4,99, 725/ - 2 M/S. SAI ENTERPRISES 5,63,625/ - TOTAL 10,63,350 / - 5.2 2 THE AO LEARNT FROM THE SALES TAX DEPARTMENT THAT THE APPELLANT HAD OBTAINED BOGUS PURCHASE BILLS FROM CERTAIN PARTIES. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE APPELLANT SUBMITTED COPY OF BILLS, DELIVERY CHALLANS, PURCHASE ORDER AND EXTRACT OF BANK STATEMENT REFLECTING THE PAYMENT MADE TO ABOVE MENTIONED PARTIES. 5.2 3 THE AO HELD THAT THE APPELLANT DID NOT FURNISH COMPLETE DETAILS TO ESTABLISH THAT THE DELIVERY OF THE GOODS ACTUALLY TO OK PLACE. THE AO FOUND THAT THE APPELLANT WOULD NOT PRODUCE THE RELEVANT ENTRY IN THE INWARD REGISTER. THE AO ALSO HELD THAT THE DELIVERY CHALLAN PRODUCED WAS NOT CORROBORATIVE BY ANY OTHER OF EVIDENCE. THE AO HELD THAT THE APPELLANT DID NOT FOLLOW THE VAR IOUS KEY AND STANDARD OPERATING PROCEDURE WAS NORMALLY FOLLOWED IN THE CASE OF REGULAR AND GENUINE PURCHASES.BUT, IN THE ASSESSMENT ORDER, THE AO HELD THAT THE PURCHASES OF RS. BOGUS AND DISALLOWED THE PURCHASES. 5. UPON THE ASSESSEE S APPEAL, THE LD. C IT (A) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE BOGUS PURCHASE. HENCE, THE LD. CIT(A) SUSTAINED THE FOLLOWING DISALLOWANCES: A.Y. 2011 - 12 RS.1,32,919/ - A.Y. 2012 - 13 RS.2,98,005/ - 6. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE SALES IN THIS CASE HAVE NOT BEEN DOUBTED. HENCE, HE PLEADED THAT ON THE TOUCH STONE OF THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CAS E OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) , NO 3 ITA NO S . 6889/MUM/2017 & 3076/MUM/2018 DISALLOWANCE WAS TO BE DONE. HE FURTHER SUBMITTED THAT DISALLOWANCE HAS BEEN DONE IN THIS CASE ON ACCOUNT OF PROFIT EARNED ON BOGUS PURCHASES @ 12.5%. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ALREADY DISCLOSED SUFFICIENT GROSS PROFIT OF 15.99% MORE THAN THE AMOUNT OF 12.5%. HENCE, HE PLEADED THAT NO DISALLOWANCE IS NECESSARY. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) RELIED UPON THE ORDERS OF THE LD. CIT(A). 9. UPON CAREFUL CONSIDERATION, WE FIND THAT THE LD. CIT(A) IN THIS CASE HAS SUSTAINED 12.5% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE. WE NOTE THAT S ALES HAVE NOT BEEN DOUBTED. THE REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF THE LD. CIT(A). WE NOTE THAT THIS DISALLOWANCE IS DONE TO TAX THE PROFIT EARNED BY THE ASSESSEE ON THE BOGUS PURCHASE. HENCE, IN OUR CONSIDERED OPINION, THOUGH 12.5% DISALLOWANCE IS TO BE SUSTAINED, BUT THE GROSS PROFIT ALREADY DISCLOSED BY THE ASSESSEE, NEEDS TO BE REDUCED TO A VOI D DOUBLE JEOPARDY TO THE ASSESSEE. DOUBLE JEOPARDY , IN OUR CONSIDERED OPINION, IS NOT SUSTAINABLE IN LAW. ACCORDINGLY, WE HOLD THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE AND THE GROSS PROFIT ALREADY DECLARED SHOULD BE REDUCED THERE FROM . SINCE THE GROSS PROFIT DECLARED IS MORE THAN 12.5%, NO DISALLOWANCE IS FURTHER CALLED FOR. 10. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 27.12.2018 SD/ - SD/ - ( RAVISH SOOD ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 27.12.2018 4 ITA NO S . 6889/MUM/2017 & 3076/MUM/2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI