TARUN PRINTING WORKS P.LTD, MUMBAI V. ITO 8(3)(1), MUMBAI

ITA 6961/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1016 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-11-2016
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: RASHMIKANT C MOD I; RASHMI MODI
• Keywords: Reopening of assessment; Bogus purchase
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 6961 /MUM/ 201 6 (ASSESSMENT YEAR 20 11 - 1 2 ) M/S. TARUN PRINTING WORKS PVT. LTD. 1 ST FLOOR TAKARSHI JIVRAJ MARG SEWREE WEST MUMBAI - 400 015. VS. ITO 8(3)(1) AAYA KAR BHAVAN M.K. ROAD MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCT2286P ASSESSEE BY SHRI RASHMIKANT C. MODI & RASHMI MODI DEPARTMENT BY MISS BHARTI SINGH DATE OF HEARING 3 . 5. 201 7 DATE OF PRONOUNCEMENT 3 .5 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30 - 09 - 2016 PASSED BY LD CIT(A) - 14, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2011 - 12. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS.23,95,088/ - RELATI NG TO ALLEGED BOGUS PURCHASES. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF UNDERTAKING GARMENT ON JOB WORK BASIS. THE REVENUE RECEIVED THE INFORMATION FROM SALES TAX DEPARTMENT THAT CERTAIN DEALERS HAVE PROVIDED ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING GOODS. ON FURTHER EXAMINATION, THE REVENUE NOTICED THAT THE ASSESSEE HEREIN HAS PURCHASED GOODS FROM FOLLOWING PERSONS, WHO WERE LISTED AS HAWALA DEALERS BY THE SALES TAX DEPARTMENT: - (A) M/S SUN ENTERPRISES - 12,14,194 (B) M/S AS CENT ENTERPRISES - 11,80,894 M/S. TARUN PRINTING WORKS PVT. LTD. 2 THE AGGREGATE AMOUNT OF PURCHASES WAS RS.23,95,088/ - . THE ASSESSEE FURNISHED THE COPIES OF BILLS, DELIVERY CHALLANS AND PAYMENT DETAILS TO THE AO. HOWEVER, THE AO NOTICED THAT THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER AND COULD NOT PRODUCE TRANSPORT CHALLANS. FURTHER NOTICES ISSUED BY THE AO U/S 133(6) WERE RETURNED UNSERVED. THE WARD INSPECTOR ALSO COULD NOT LOCATE THE PARTIES. WHEN THESE INFORMATIONS WERE CONFRONTED, THE ASSESSEE STATED THAT THE TRANSACTIONS HAVE BEEN CLOSED BY MAKING PAYMENTS BY WAY OF CHEQUES AND IT HAS FURNISHED LATEST AVAILABLE ADDRESS. IT WAS SUBMITTED THAT THE GOODS WERE SUPPLIED AT THE DOOR STEPS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ABOVE SAID TWO PARTIES HAVE FAILED TO PAY VAT T AXES AND HENCE THEY HAVE BEEN LISTED AS HAWALA DEALERS. SINCE THEY HAVE FAILED TO PAY THE TAXES, THE ASSESSEE WAS CONSTRAINED TO PAY THE VAT TAX. IT WAS SUBMITTED THAT THE GOODS, WHICH ARE IN THE NATURE OF CONSUMABLES, HAVE BEEN FULLY CONSUMED IN THE PRI NTING BUSINESS. 3. THE AO CALLED FOR THE BANK ACCOUNT COPIES BOTH THE PARTIES CITED ABOVE AND NOTICED THAT THEY HAVE WITHDRAWN CASH AFTER ENCASHING THE CHEQUES ISSUED BY THE ASSESSEE. ACCORDINGLY THE AO TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF PURCHASE TRANSACTIONS AND ACCORDINGLY DISALLOWED THE ENTIRE AMOUNT OF PURCHASES. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL. 4. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE GARMENT PRINTING BUSINESS ON JOB WORK BASIS. SINCE THE GOODS PURCHASED FROM THE ABOVE SAID PARTIES ARE IN THE NATURE OF CONSUMABLES, IT HAS BEEN SUBMITTED THAT THEY HAVE BEEN CONSUMED IN THE PRINTING BUSINESS. SINCE THE GOODS ARE NOT MEAN T FOR RESALE, IT WAS SUBMITTED THAT THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER. WITH REGARD TO THE NON - AVAILABILITY OF TRANSPORT RECEIPTS, IT WAS SUBMITTED THAT THE GOODS WERE SUPPLIED BY THE ABOVE SAID PARTIES TO THE M/S. TARUN PRINTING WORKS PVT. LTD. 3 DOOR STEPS OF THE ASSESSEE. I FIND THAT THE ABOVE SAID EXPLANATIONS OF THE ASSESSEE TO BE REASONABLE. I NOTICE THAT THE ASSESSEE HAS FURNISHED COPIES OF BILLS, DELIVERY CHALLANS AND PAYMENT DETAILS. I NOTICE THAT THE ASSESSING OFFICER HAS NOT COMMENTED UPON THESE EVIDENCES. INSTEAD, HE HAS GIVEN MORE IMPORTANCE ABOUT THE FACT THAT THE NOTICES ISSUED TO THE ABOVE SAID PARTIES HAVE BEEN RETURNED BACK. I NOTICE THAT THE TRANSACTIONS OF THE ASSESSEE HAS TAKEN PLACE IN THE YEAR 2010 AND THE ENQUIRY IS BEING CONDUCTED IN 2014, I.E., ALMOST AF TER EXPIRY OF FOUR YEARS. HENCE THE ASSESSEE HAS PLEADED THAT IT HAS GIVEN THE LAST AVAILABLE ADDRESS TO THE AO. I NOTICE THAT THE AO DID NOT TAKE EFFORTS TO FIND OUT THE PRESENT ADDRESSES OF THE ABOVE SAID PARTIES FROM THE SALES TAX DEPARTMENT, WHO WOUL D HAVE BEEN IN A POSITION TO SUPPLY THE SAME. THE AO HAS ALSO FAILED TO SHOW THAT THE ASSESSEE COULD HAVE CARRIED OUT THE JOB PRINTING WORKS, WITHOUT CONSUMING THE MATERIALS COVERED BY THE ALLEGED BOGUS PURCHASES. THERE IS NO EVIDENCE TO SHOW THAT THE PA YMENT MADE TO THE ASSESSEE BY WAY OF CHEQUES HAVE FLOWN BACK TO THE ASSESSEE. THE NET PROFIT RATIO DECLARED BY THE ASSESSEE WORKED OUT TO 1.62%, 4.27% AND 4.66% RESPECTIVELY IN ASSESSMENT YEARS 2009 - 10, 2010 - 11 AND 2011 - 12. THUS, DURING THE YEAR UNDER CO NSIDERATION, THE NET PROFIT RATE HAS MORE THAN DOUBLED. THE LABOUR CHARGES RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WERE RS.3.22 CRORES AND IN THE IMMEDIATELY PRECEDING YEAR, IT WAS RS.2.87 CRORES. THE COST OF GOODS SOLD DECLARED BY THE ASSESSEE WAS AROUND 50% IN BOTH THE YEARS. 5. HENCE, IN MY VIEW, THESE PURCHASES CANNOT BE ALTOGETHER TREATED AS BOGUS IN NATURE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE ASSESSEE HAS NOT CONVINCINGLY PROVED THE CONSUMPTION DETAIL S, I AM OF THE VIEW SOME ADDITION MAY BE MADE TO COVER UP THE REVENUE LEAKAGES, IF ANY. I NOTICE THAT THE ASSESSEE HAS DECLARED NET PROFIT IN THE RANGE OF 4%. ACCORDINGLY I AM OF THE M/S. TARUN PRINTING WORKS PVT. LTD. 4 VIEW THAT THE ADDITION MAY BE RESTRICTED TO 4% OF THE ALLEGED BOGUS PU RCHASES AND THE SAME WOULD PUT THIS ISSUE AT REST. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO RESTRICT THE ADDITION TO 4% OF THE ALLEGED BOGUS PURCHASES. 6. THE ASSESSEE HAS ALSO CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT. SINCE I HAVE DISPOSED OF THE ISSUE URGED ON MERITS, I DO NOT FIND IT NECESSARY TO ADJUDICATE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COUR T ON 3 . 5 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 3 / 5 / 20 1 7 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// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI