Thakur Infraprojects Pvt. Ltd., Raigad V. Income-tax Officer,

ITA 700/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7386 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Assessee Lawyers: HARI KRISHAN
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.700/PUN/2015 / ASSESSMENT YEAR : 2010-11 THAKUR INFRAPROJECTS PVT. LTD., PLOT NO.265/1, OM SADNIKA, URAN ROAD, PANVEL DISTRICT, RAIGAD. PAN : AACCT6451F. . / APPELLANT V/S INCOME TAX OFFICER, WARD 4, PANVEL. . / RESPONDENT ASSESSEE BY : SHRI HARI KRISHAN REVENUE BY : SHRI DR. VIVEK AGGARWAL. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A)-2, THANE DT.25.04 .2013 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE A GOVERNMENT REGISTERED CONTRACTOR, CRUSHING PLANT OWNER. ASSESSEE / DATE OF HEARING : 20.09.2017 / DATE OF PRONOUNCEMENT: 29.09.2017 2 ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 24.08.2010 DECLARING TOTAL INCOME OF RS.10,67,69,240/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMEN T WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.26.03.2013 AND T HE TOTAL INCOME WAS DETERMINED AT RS.11,47,46,770/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE L D.CIT(A), WHO VIDE ORDER DT.16.03.2015 (IN APPEAL NO.093/THN/2013-14) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUND : THE LD.CIT(A) HAS ERRED IN LAW AND FACTS BY CONFIR MING DISALLOWANCE OF 50% I.E., RS.2710018/- OF ALLEGED B OGUS PURCHASES EXPENSES AGGREGATING RS. 54200035/- WHERE AS ITAT MUMBAI BENCH SUSTAINED 12.5% DISALLOWANCE OR ADDITI ON IN A CASE OF SIMILAR FACTS DECIDED IN 2014. THE LD.CIT(A ) SHOULD HAVE FOLLOWED THE DECISION OF ITAT WHILE DECIDING THE APPEAL 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, IT W AS NOTICED THAT AMAR TRADING CORPORATION, BHADRA CORPORAT ION AND NISHIL TRADING WERE PROVIDING BOGUS BILLS TO SEVERAL BENEFIC IARIES. AS PER THE INFORMATION RECEIVED, ASSESSEE HAD ALSO OBTAINE D BOGUS PURCHASE BILLS AGGREGATING TO RS.54,20,035/- (THE DET AILS OF WHICH ARE LISTED AT PARA 4.3 OF THE ASSESSMENT ORDER). TH E ASSESSEE WAS SHOW CAUSED AND ASKED TO FURNISH THE DET AILS OF THE TRANSACTIONS WITH THOSE PARTIES AND ALSO SHOW CAUSED AS TO WHY THE PURCHASES NOT BE TREATED AS BOGUS. THE ASSESSEE SUBMITTED THAT THE PURCHASES WERE NOT BOGUS AND THAT AFTER VE RIFICATION OF THE MATERIAL RECEIVED FROM THOSE PARTIES, THE PAYMENTS HA VE BEEN MADE BY CROSS CHEQUES. THE SUBMISSIONS OF THE ASSESSEE WAS NOT 3 FOUND ACCEPTABLE TO THE AO FOR THE REASON THAT THE INFO RMATION OF BOGUS PURCHASES WAS BASED ON THE FINDINGS OF SALES TAX DEPARTMENT AND THAT ASSESSEE HAD ALSO NOT SUBSTANTIA TED ITS CLAIM BY FURNISHING STOCK REGISTER AND MATERIAL INWARD REGIST ER. THE AO ACCORDINGLY TREATED THE PURCHASES AGGREGATING TO RS.54,20,035/- AS BOGUS AND DISALLOWED THE SAME. AGGRIEVE D BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD .CIT(A), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER : (XIV) CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION THAT, IT WOULD BE REASONABLE TO DISALLOW 50% AS INFLATED PURCHASES ON THE TOTAL BOG US PURCHASES FOR WANT OF PROPER STOCK REGISTER NOT MAI NTAINED AT THE WORK SITE AND ALSO THE ELEMENT OF PURCHASES MAD E FROM THE GREY MARKET CANNOT BE RULED OUT. IN THE CASE OF M/S.RAJESH BUILDERS VS. DCIT RANGE-22(2), A.Y.2005- 06 IN ITA NO.3980/MUM/2009 DTD.13.10.2010 HELD 'THAT THE RELIEF OF 50% GRANTED BY THE CIT(A) APPEARS ON THE HIGHER SIDE, RESTRICTION OF DISALLOWANCE TO 75% AS AGAINST 50% BY THE CIT(A), IN OUR OPINION, WILL BE JUSTIFIED.' HOWEVER , IN THE CASE OF APPELLANT, THE ESTIMATION HAS BEEN ADOPTED AT 50 % AS IT HAS BEEN SUBSTANTIATED AS EXPLAINED ABOVE, THEREFOR E, THE DISALLOWANCE HAS BEEN RESTRICTED TO 50% OF THE ALLE GED BOGUS PURCHASES. IN VIEW OF THE ABOVE STATED FACTS, THE INFLATED PURCHASES HAS BEEN ARRIVED AT 50% OF THE TOTAL BOGU S PURCHASES WHICH WORKS OUT TO RS.(54,20,035/50) = 27,10,018/- AND THE SAME IS ADDED TO THE TOTAL INCO ME OF THE APPELLANT. THEREFORE, THE APPELLANT GET RELIEF OF RS. (54,20,035 - 27,10,018) = 27,10,018/-.. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APP EAL BEFORE US. 4. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT AO HAD RELIED ON THE STATEMENTS RECORDED AT THE BACK OF THE ASSESSEE AND NO OPPORTUNITY OF CROSS-EXAMINATION WAS GIVEN TO THE ASSES SEE. HE 4 FURTHER SUBMITTED NO FINDING HAS BEEN GIVEN BY THE AO TO SHOW THAT THE PURCHASES WERE NOT GENUINE AND THE DISALLOWAN CE HAS BEEN MADE MERELY ON THE BASIS OF REPORT OF SALES TAX DEPARTMENT . HE FURTHER SUBMITTED THAT THE ASSESSEE WAS ALSO NOT GIV EN TIME TO FURNISH THE DETAILS BECAUSE THE ASSESSEE WAS ASKED TO FU RNISH THE DETAILS ON 12.03.2013 AND THE ASSESSMENT WAS COMPLETED ON 18.03.2013. HE THEREFORE SUBMITTED THAT NO ADDITION IN T HE PRESENT CASE IS CALLED FOR. AS AN ALTERNATIVE SUBMISSION, HE SUBMITTED THAT THE ADDITION UPHELD TO THE EXTENT OF 50% OF BOGUS PURCHASES BY LD.CIT(A) IS ON A HIGHER SIDE AND THE ADDITION MAY BE RESTRICTED TO 10% OF THE BOGUS PURCHASES. LD.D.R. ON THE OTHER HAND, SUBMITTED THAT NO STOCK REGISTER WAS MAINTA INED BY THE ASSESSEE AND IN SUCH A SITUATION, THE AO WAS FULLY JU STIFIED IN MAKING THE DISALLOWANCE. HE THUS SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. IT IS AN UNDISPUTED FACT THAT THE ADDITION WAS MADE BY THE AO ON THE BASIS OF THE INFORMATION RECEIVED BY HIM FROM THE SALES TAX DEPARTMENT THAT THE PARTIES FROM WHOM ASSESSEE HAD PU RCHASED THE MATERIALS WERE IN THE BUSINESS OF PROVIDING BOGUS BILLS TO VARIOUS PARTIES. IT IS ALSO A FACT THAT ON THE AFORESAID BILLS, AO DISALLOWED THE ENTIRE PURCHASES MADE BY THE ASSESSEE. W HEN THE MATTER WAS CARRIED BEFORE LD.CIT(A) IT WAS INTER-ALIA CONT ENDED THAT THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF A CTION BY SALES TAX DEPARTMENT AND THAT THERE WAS NO EVIDENCE OF ANY CAS H 5 BEING RETURNED BACK BY THE AFORESAID DEALERS TO THE ASS ESSEE. LD.CIT(A) AFTER TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE AND THE FACTUAL ASPECT RESTRICTED THE DISALLOWA NCE TO THE EXTENT OF 50% OF THE BOGUS PURCHASES AND THUS GRANTED A RELIEF OF RS.27,10,018/-. BEFORE US, LD.A.R. HAS MADE AN ALTERNATIVE SUBMISSION THAT THE ADDITION IF MADE TO THE EXTENT OF 10% OF BOGUS PURCHASES AS AGAINST 50% MADE BY LD.CIT(A) WOULD BE ACCEPTABLE TO HIM. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND MORE SO WHEN THE BOOKS OF ACCOUNTS HAVE NOT BEEN REJECTED BY AO U/S 145(3) OF THE ACT, WE ARE OF THE VIEW THAT TH E ALTERNATIVE SUBMISSION MADE BY THE ASSESSEE BE ACCEPTED . WE ACCORDINGLY RESTRICT THE DISALLOWANCE OF THE BOGUS PURCHA SES TO THE EXTENT OF 10% OF SUCH BOGUS PURCHASES I.E., ADDITION IS RESTRICTED TO THE EXTENT OF RS.5,42,000/-. THUS, THE GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 29 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 29 TH SEPTEMBER, 2017. YAMINI 6 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, THANE. CIT-2, THANE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.