DCIT 8(3), MUMBAI V. SAR ENGINEERING LTD, MUMBAI

ITA 6954/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2944 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 14-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Tax effect
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 6954/MUM/2014 (ASSESSMENT YEAR:2010-11) THE DY. COMMISSIONER OF INCOME TAX-8(3), ROOM NO.217, AAYAKAR BHAVAN, M. K. MARG, MUMBAI 400 020 APPELLANT VS. M/S. SAR ENGINEERING LTD., C/O ANIL RAGHAVAN, DIRECTOR 404, NEW ARIHANT NIWAS, MANPADA ROAD, DOMBIVLI (E), MAHARASHTRA - 421201 RESPONDENT PAN: AAFCS1836G /BY APPELLANT : SHRI VACHASPATI TRIPATHI, D.R. /BY RESPONDENT : NONE /DATE OF HEARING : 09.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER ITA NO.6954/MUM/14 A.Y. 10-11 [DCIT VS. M/S. SAR ENGINEERING LTD.] PAGE 2 PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-18, MUMBAI, DA TED 15.09.2014 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS: I. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF THE PURCHASES OF RS.33,35,357/- MAD E FROM M/S. NEWZONE MULTRITRADE PVT. LTD. TO 25% I.E. RS.8,33,839/- THEREBY GRANTING A RELIEF OF RS.25,01,518/- IGNORING THE FOLLOWING FACTS:- (A) THAT CRUCIAL DOCUMENTARY EVIDENCES IN THE FORM OF QUANTITY DETAILS / STOCK REGISTER WERE NOT PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. (B) THAT NO ORIGINAL INVOICE, DELIVERY CHALLANS, OCTROI / SALES TAX RECEIPTS, BALANCE SHEETS, BANK STATEMENTS, INCOME TAX RETURNS WERE FURNISHED TO PROVE THE GENUINENESS OF THE PURCHASES?' (C) THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT M/S. NEWZONE MULTRITRADE PVT. LTD. WAS A PROVEN ACCOMMODATION ENTRY PROVIDER AS PER THE FINDINGS MADE BY THE SALES TAX AUTHORITIES IN CONSEQUENCE TO THE INVESTIGATION CARRIED OUT. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RELYING ON THE JUDGEMENT OF THE BOMBAY HIGH COURT IN THE CASE OF M/S NIKUNJ EXIM ENTERPRISES PVT LTD (25 TAXMAN 384) WITHOUT APPRECIATING THE FACT THAT IN THAT CASE THE ASSESSEE HAD FILED ALL THE DETAILS INCLUDING THE QU ANTITY DETAILS, STOCK RECONCILIATION, WHEREAS IN THE CASE UNDER CONSIDERATION, THE STOCK STATEMENT, STOCK REGISTER WERE NEVER PRODUCED HENCE THE RATIO THE SAID JUDGEMENT WAS NOT APPLICABLE?'. ITA NO.6954/MUM/14 A.Y. 10-11 [DCIT VS. M/S. SAR ENGINEERING LTD.] PAGE 3 III. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RELYING ON THE JUDGEMENT OF GUJARAT HIGH COURT IN THE CASE OF CIT VS. BHOLANATH POLY FAB (PVT) LTD. (355 ITR 290) WITHOUT APPRECIATING THE FACT THAT IN THAT CASE THE QUANTIT Y DETAILS I.E STOCK DETAILS, OCTROI RECEIPTS WERE SUB MITTED THEREFORE THE UNDERLYING PRESUMPTION IN THAT CASE W AS THAT THE ENTIRE RECEIPTS WERE NOT UNACCOUNTED AND THEREFORE ONLY THE PROFIT EMBEDDED THEREIN CAN BE BROUGHT TO TAX WHEREAS IN THE CASE OF THE ASSESSEE AS THERE WERE NO ACTUAL PURCHASES MADE FROM THE ABOVE PARTY, THE ENTIRE EXPENSES CLAIMED IN THIS REGARD B Y THE ASSESSEE WERE BOGUS / NON-GENUINE?' IV. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THA T ONLY THE PROFIT ELEMENT OF BOGUS PURCHASES EARNED F ROM M/S. NEWZONE MULTRITRADE PVT, LTD. CAN BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE IGNORING THE DECIS ION BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF J.R. SOLVENT INDUSTRIES (PVT.) LTD. (2012) (22 TAXMANN.COM 115) WHEREIN IT WAS HELD THAT WHERE PURCHASES WERE MADE FROM A NON-EXISTING SELLER, SAM E WOULD BE HELD TO BE BOGUS EVEN IF COMPLETE QUANTITATIVE DETAILS OF PURCHASE WERE AVAILABLE IN THE ASSESSEE'S BOOKS OF ACCOUNT?' V. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECI ATING THE FACT THAT THE DIRECTOR OF THE ASSESSEE-COMPANY, SHRI ANIL RAGHAVAN, HAD ADMITTED IN THE STATEMENT RECORDED U/S 131 OF INCOME TAX ACT DURING THE COURS E OF SURVEY PROCEEDINGS U/S 133A THAT THE PURCHASES MADE FROM M/S. NEWZONE MULTITRADE PVT. LTD. WERE NO T GENUINE BUT MERELY IN THE NATURE OF ACCOMMODATION ENTRY? 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF ASSESSEE BUT HOWEVER THE LD. D.R. FAIRLY ADMITTED T HAT THE TAX EFFECT ON THE IMPUGNED ADDITIONS IS LESS THAN THE L IMIT ITA NO.6954/MUM/14 A.Y. 10-11 [DCIT VS. M/S. SAR ENGINEERING LTD.] PAGE 4 PRESCRIBED BY THE CBDT CIRCULAR OF 10.12.2015 BEARI NG NO. 21 OF 2015. 2.1 WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATE RIAL ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED BY THE REVENUE, WE FIND THAT REVENUE IS AGGRIEVED BY GRANT ING RELIEF TO ASSESSEE AMOUNTING TO RS.25,01,518/- THE TAX EFFECT OF WHICH IS BELOW RS.10 LACS. AS PER THE ANNOUNCEMENT OF CE NTRAL BOARD OF DIRECT TAXES (CBDT) DATED 10.12.2015 (CIRC ULAR NO. 21 OF 2015), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX TR IBUNAL UNLESS THE TAX EFFECT, EXCLUDING INTEREST EXCEEDS RS. 10 L ACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RET ROSPECTIVELY TO THE PENDING APPEALS. IN THE PRESENT CASE, SINCE IT IS AN UNDISPUTED FACT THAT ON THE ADDITIONS WHICH ARE IN DISPUTE, THE TAX EFFECT IS LESS THAN RS. 10 LACS AND IN THE ABSE NCE OF ANY MATERIAL ON RECORD BY THE REVENUE TO DEMONSTRATE TH AT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY EXEMPTION S SPECIFIED IN CLAUSE (8) OF THE AFORESAID CBDT CIRCULAR, WE AR E OF THE VIEW THAT THE MONETARY LIMIT PRESCRIBED BY THE INSTRUCTI ONS OF THE AFORESAID CBDT CIRCULAR WOULD BE APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT AND THEREFORE THE PRESENT APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. HOWE VER, IN CASE THERE IS ANY ERROR IN THE COMPUTATION OF THE TAX EF FECT INVOLVED OR IF FOR ANY REASON, THE AFORESAID CBDT CIRCULAR I S NOT APPLICABLE, IT WOULD BE OPEN TO THE REVENUE TO SEEK REVIVAL OF ITA NO.6954/MUM/14 A.Y. 10-11 [DCIT VS. M/S. SAR ENGINEERING LTD.] PAGE 5 THE APPEAL. IN SUCH CIRCUMSTANCES, WE DISMISS THE APPEALS OF REVENUE WITHOUT EXPRESSING ANY OPINION ON MERITS OF THE CASE. 3. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&