DCIT , CIRCLE - 6 (1)(2), MUMBAI V. AXIS AD PRINT MEDIA (I) LTD., MUMBAI

ITA 6936/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9329 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Bogus purchase; Accommodation entries
• Section: 250; 147

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 6936/MUM/2019 (ASSESSMENT YEAR 2009-10) DCIT, CIRCLE-6(1)(2) ROOM NO. 506 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. M/S. AXIS AD PRINT MEDIA (I) LTD. 102, VASAN UDYOG BHAVAN, OFF TULSI PIPE ROAD, LOWER PAREL, WEST MUMBAI-400 013. PAN : AAECA6181B (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI PRATEEK JAIN DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 07.07.2021 DATE OF PRONOUNCEMENT 07.07.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 26.7.2019 PERTAINING TO ASSESSMENT YEA R 2009-10. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER :- 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN RESTRICTING THE 100% DISALLOW ANCES MADE BY THE A. O. AND CONFIRMED TO ONLY 6% OF THE BOGUS PURCHASES FROM HAWALA TRADERS M/S. SHUBHALAXMI CORPORATION, WITHOUT APPRECIATING THE FACT T HAT THE PURCHASES ARE MADE FROM PARTIES DECLARED BY MAHARASHTRA GOVT., VAT DEPARTMENT AS HAWALA DEALERS ? 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A L IMITED COMPANY ENGAGED IN THE BUSINESS OF PRINTING AND MANIFOLD COMPUTER STAT IONERY, PACKING MATERIAL AND ADVERTISING. THE RETURN OF INCOME FOR AY 2009-1 0 WAS FILED ON 29.09.2009 DECLARING TOTAL INCOME OF RS.2,58,95,610/- UNDER N ORMAL PROVISIONS OF THE ACT. THE ASSESSING OFFICER RECEIVED INFORMATION FROM DGI T(INV), MUMBAI/SALES TAX DEPARTMENT THAT SOME OF THE DEALERS UNDER MODVAT AC T 2002 INDULGING IN THE PRACTICE OF PROVIDING ACCOMMODATION ENTRIES BY ISSU ING BOGUS PURCHASE M/S. AXIS AD PRINT MEDIA (I) LTD. 2 INVOICES WITHOUT SUPPLYING THE GOODS PHYSICALLY. TH E SAID INFORMATION ALONG WITH LIST OF BENEFICIARIES WAS FORWARDED TO THE INC OME-TAX DEPARTMENT AND WAS ALSO PUT ON THE WEBSITE. AS PER THE SAID LIST, THE ASSESSEE RECEIVED ENTRIES OF BOGUS PURCHASES FOR RS.63,88,026/- FROM SUSPICIOUS DEALERS BY NAME SHUBHALAXMI CORPORATION. AFTER RECORDING THE REASON S AND FOLLOWING DUE PROCEDURE, THE AO REOPENED THE ASSESSMENT U/S 147 O F THE I.T. ACT. REASSESSMENT WAS COMPLETED ON 25.03.2015. THE AO HA S MENTIONED IN THE ORDER THAT AS PER THE INFORMATION FROM THE SALES TA X DEPARTMENT PURCHASES WERE MADE BY THE ASSESSEE FROM A SUSPICIOUS DEALER SHUBHALAXMI CORPORATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE CONTENDED THAT THE PURCHASES WERE GENUINE. AO ISSUED NOTICES U/S 133(6 ) TO THE PARTIES CALLING FOR THE DETAILS, WHICH WERE RETURNED BACK. AO ASKED THE ASSESSEE TO FURNISH ALL THE RELEVANT EVIDENCE TO ESTABLISH THAT GOODS WERE ACTU ALLY SUPPLIED, TO DISCHARGE THE ONUS. IN REPLY, THE ASSESSEE FILED SUBMISSION, DETAILS ETC. BEING NOT SATISFIED WITH THE DETAILS FILED, THE AO HELD THAT THE ASSESSEE FAILED TO PRODUCE THE SUPPLIERS, BROKERS OR TRANSPORTERS IN SPITE OF OPPORTUNITY BEING GIVEN AND CONCLUDED THAT THE PURCHASES FROM SHUBHALAXMI CORPO RATION WERE BOGUS AND NOT GENUINE AND ADDED THE TOTAL PURCHASES AS SUPPRE SSED PROFIT TO THE INCOME RETURNED. 4. UPON ASSESSEES APPEAL LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 6% HOLDING AS UNDER : I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBM ISSIONS OF THE APPELLANT INCLUDING THE CASE LAWS CITED. THE AO HELD IN THE ASSESSMENT ORDER THAT THE APPELLANT PRODUCED THE DETAILS WITH REGARD TO PUR CHASES MADE. ASSESSEE FILED COPIES OF LEDGER ACCOUNT OF PARTIES, P URCHASE BILLS, COPIES OF BANK STATEMENT SHOWING THE EACH AND EVERY PAYMENT FOR PURCHASES. IT IS NOTICED THAT ON ACCOUNT OF NON-PRODUCTION OF SUPPLIER S AND BROKERS, TRANSPORTATION BILLS ETC. THE AO ADDED 100% OF THE AMO UNT AS NON GENUINE PURCHASES. IT IS SEEN THAT MANY BENCHES OF ITAT AND HO N'BLE HIGH COURTS HAVE HELD THAT WHEN PURCHASES ARE SUPPORTED BY SUFFI CIENT DOCUMENTARY EVIDENCES, THEN MERELY BECAUSE OF NON-APPEARANCE BE FORE THE AO, ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE ASSESS EE. FURTHER, THIS IS ALSO NOT CASE IN WHICH THE SIGNED BLANK CHEQUE BOOKS ARE FOUND WITH THE BUYER TO HOLD THAT THE PURCHASES OF MATERIAL WERE NOT A T ALL MADE BUT WAS ENTERED IN THE STOCK TO INFLATE THE RAW MATERIAL. TH EREFORE THE DECISION OF THE M/S. AXIS AD PRINT MEDIA (I) LTD. 3 SUPREME COURT IN THE CASE OF N K PROTEINS LTD 250 TAXM AN 0022(SC) WOULD NOT APPLY TO THE CASE. 5. THEREAFTER LEARNED CIT(A) PLACED RELIANCE UPON S EVERAL CASE LAWS INCLUDING ITAT DECISION IN ASSESSEES OWN CASE AS U NDER :- KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT, MUMBAI IN APPELLANT'S CASE FOR AY 2010-11, THE ADDITION IS RESTRICTED TO 6% O F BOGUS PURCHASES. ACCORDINGLY, 6% OF BOGUS PURCHASES OF RS.63,88,026 COINING TO RS.3,83,282 IS SUSTAINED. THE AO IS DIRECTED TO MODIFY THE ADDITIO N ACCORDINGLY. THE APPELLANT GETS PART RELIEF. 6. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION WE FIND THAT AS SESSEE HAS PROVIDED THE DOCUMENTARY EVIDENCE FOR THE PURCHASE. ADVERSE INFE RENCE HAS BEEN DRAWN DUE TO THE INABILITY OF THE ASSESSEE TO PRODUCE THE SUPPLIERS. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SE TTLED LAW THAT WHEN SALES ARE NOT DOUBTED, HUNDRED PERCENT DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THE RATIONALE BEING NO SALES IS POSSIBLE WITH OUT ACTUAL PURCHASES. THIS PROPOSITION IS SUPPORTED FROM HONOURABLE JURISDICTI ONAL HIGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (IN WRIT PETIT ION NO 2860, ORDER DATED 18.6.2014). IN THIS CASE THE HONOURABLE HIGH COURT HAS UPHELD HUNDRED PERCENT ALLOWANCE FOR THE PURCHASES SAID TO BE BOGU S WHEN SALES ARE NOT DOUBTED. HOWEVER IN THAT CASE ALL THE SUPPLIES WERE TO GOVERNMENT AGENCY. IN THE PRESENT CASE THE FACTS OF THE CASE INDICATE THA T ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THR OUGH THE GREY MARKET GIVES THE ASSESSEE SAVINGS ON ACCOUNT OF NON-PAYMEN T OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. AS NOTED BY LEARNED CIT( A) ITAT IN ASSESSEES OWN CASE FOR EARLIER YEAR HAS RESTRICTED THE DISALLOWAN CE TO 6%, HENCE FOLLOWING THE PRECEDENT WE UPHOLD THE ORDER OF LEARNED CIT(A). M/S. AXIS AD PRINT MEDIA (I) LTD. 4 8. IN THE RESULT THIS APPEAL FILED BY THE REVENUE S TANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7.7.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHA MIM YAHYA) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI; DATED : 07/07/2021 COPY OF THE ORDER FORWARDED TO : 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) PS ITAT, MUMBAI