ITO WARD 6 (3)(3), MUMBAI V. J.K.SWITCHGEARS & KABLE PVT. LTD., MUMBAI

ITA 7058/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6382 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 7058 //20 19 (. . 2009-10 ) ITA NO.7058/MUM/2019 (A.Y.2009-10) . 7059 //20 19 (. . 2010-11 ) ITA NO.7059MUM/2019 (A.Y.2010-11) ITO-6(3)(3), ROOM NO. 524, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. ...... ' / APPELLANT VS. J.K. SWITCHGEARS & KABLE PVT. LTD. 124, 2 ND FLOOR, NARAYAN DHURU STREET, NAGDEVI, MUMBAI-400003. PAN: AABCJ0422H . .... (*/ RESPONDENT ' +/ APPELLANT BY : MS. SMITA VERMA (* +/ RESPONDENT BY : NONE , / DATE OF HEARING : 03/05/2021 , / DATE OF PRONOUNCEMENT : 16/07/2021 / ORDER PER VIKAS AWASTHY, J.M: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, MUMBAI [HE REINAFTER REFERRED TO AS THE CIT(A)] FOR THE ASSESSMENT YEARS (AY) 2009-10 & 2010-11, RESPECTIVELY. 2 . 7058 //20 19 (. .2009-10 ) ITA NO.7058/MUM/2019 (A.Y.2009-10) . 7059 //20 19 (. .2010-11 ) ITA NO.7059/MUM/2019 (A.Y.2010-11) BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 20.0 8.2019. SINCE, THE ISSUE RAISED IN BOTH THE APPEALS IS IDENTICAL. THESE APPE ALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS COMMON ORDER. ITA NO. 7058/MUM/2019 (AY-2009-10) 2. MS. SMITA VERMA REPRESENTING THE DEPARTMENT SUBM ITTED THAT DURING THE PERIOD RELEVANT TO AY UNDER APPEAL, THE ASSESSE E HAS OBTAINED ACCOMMODATION ENTRIES TO THE TUNE OF RS. 1,45,829/- FROM DEALERS ENGAGED IN PROVIDING BOGUS BILLS. THE NAME OF SAID DEALERS APP EAR IN THE LIST OF HAWALA OPERATORS DECLARED BY THE SALES TAX DEPARTMENT, GOV ERNMENT OF MAHARASHTRA. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE AFOREMENTIONED DEALERS A ND PURCHASES MADE FROM THEM. THE NOTICES ISSUED UNDER SECTION 133(6) OF TH E INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] TO THE SUSPI CIOUS DEALERS WERE RECEIVED BACK UNSERVED FROM THE POSTAL AUTHORITIES, NO CONFI RMATIONS FROM THE SAID DEALERS NOR ANY DOCUMENTARY EVIDENCE TO PROVE TRAIL OF GOODS WERE FURNISHED BY THE ASSESSEE. THUS, THE ASSESSING OFFICER (AO) M ADE ADDITION OF ENTIRE UNPROVED PURCHASES. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) RESTRICTED THE DISALLOWANCE IN RESPECT OF BOGUS PURCHASES TO RS. 1 8,229/- BY ESTIMATING PROFIT MARGIN ON SUCH PURCHASES AT 12.5%. THE REVENUE IS I N APPEAL AGAINST THE RELIEF GRANTED BY THE CIT(A). THE LD. DEPARTMENTAL REPRESE NTATIVE (DR) PRAYED FOR RESTORING 100% DISALLOWANCE MADE BY AO ON BOGUS PUR CHASES. 4. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF THE AUTHORITIES BELOW EXAMINED. UNDISPUTEDLY, THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS IN PROVING GENUINENESS OF THE DEALERS AND THE PURCHASE S MADE FROM THEM. AT THE 3 . 7058 //20 19 (. .2009-10 ) ITA NO.7058/MUM/2019 (A.Y.2009-10) . 7059 //20 19 (. .2010-11 ) ITA NO.7059/MUM/2019 (A.Y.2010-11) SAME TIME, IT IS OBSERVED THAT THE AO HAS ACCEPTED SALES TURNOVER DECLARED BY THE ASSESSEE. UNDER SUCH CIRCUMSTANCES, ENTIRE ALLE GED BOGUS PURCHASES CANNOT BE DISALLOWED. IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH SUSPICIOUS TRANSACTION THAT CAN BE BROUGHT TO TAX. ( RE: PCIT VS. PARAMSHAKTI DISTRIBUTORS PVT. LTD. IN INCOME TAX APPEAL NO. 413 OF 2017 DECIDED ON 15.07.2019 ). THE AO HAS ERRED IN MAKING ADDITION OF THE ENTIR E ALLEGED BOGUS PURCHASES. IN FIRST APPELLATE PROCEEDINGS, THE CIT( A) AFTER EXAMINING THE FACTS OF THE CASE AND CONSIDERING VARIOUS DECISIONS RENDE RED BY THE HONBLE HIGH COURTS AND DIFFERENT BENCHES OF THE TRIBUNAL RESTRI CTED THE ADDITION TO 12.5% OF ALLEGED BOGUS PURCHASES. I SEE NO INFIRMITY IN T HE ORDER OF CIT(A), HENCE, THE SAME IS UPHELD AND APPEAL OF THE REVENUE IS DISMISS ED, SANS MERIT. ITA NO. 7059/MUM/2019 (AY-2010-11) 5. THE LD. DR SUBMITTED THAT THE FACTS IN AY 2010-1 1 ARE IDENTICAL TO THE APPEAL FOR AY 2009-10, EXCEPT FOR THE QUANTUM OF BO GUS PURCHASES. 6. THE ASSESSEE IN AY 2010-11 HAS ALLEGEDLY OBTAINE D BOGUS PURCHASE BILLS AGGREGATING TO RS. 12,74,894/- FROM SUSPICIOUS DEAL ERS. THE AO FOR SIMILAR REASONS TO AY 2009-10 DISALLOWED ENTIRE ALLEGED BOG US PURCHASES. IN FIRST APPELLATE PROCEEDINGS, THE CIT(A) UPHELD THE FINDIN GS OF AO TO THE EXTENT OF ASSESSEES INVOLVEMENT IN OBTAINING BOGUS PURCHASE BILLS, HOWEVER, THE CIT(A) RESTRICTED THE ADDITION TO 12.5% OF ALLEGED BOGUS P URCHASES. SINCE, THE FACTS IN IMPUGNED AY ARE PARI MATERIA TO THE FACTS IN AY 2009-10, THE FINDINGS FOR UPHOLDING THE IMPUGNED ORDER WOULD MUTATIS MUTANDIS APPLY TO THE PRESENT APPEAL. THE APPEAL OF REVENUE IS DISMISSED FOR PARI TY OF REASONS. 4 . 7058 //20 19 (. .2009-10 ) ITA NO.7058/MUM/2019 (A.Y.2009-10) . 7059 //20 19 (. .2010-11 ) ITA NO.7059/MUM/2019 (A.Y.2010-11) 7. TO SUM UP, THE APPEAL OF REVENUE FOR AY 2009-10 & 2010-11 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 16 TH DAY OF JULY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 1/ DATED: 16/07/2021 SK, PS ( 2 ( 2 ( 2 ( 2 COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. (* / THE RESPONDENT. 3. 3 ( )/ THE CIT(A)- 4. 3 CIT 5. ( , . . . , / DR, ITAT, MUMBAI 6. 7 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI