ITO 6 (3)(1), MUMBAI V. M/S FLP EQUIPMENT PVT LTD., MUMBAI

ITA 7060/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3761 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2021
• 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: 143(3); 133(6); 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 7060 //2019 (. . 2009-10 ) ITA NO.7060/MUM/2019 (A.Y.2009-10) ITO-6(3)(1), R. NO. 503, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI- 400020 ...... ) / APPELLANT VS. M/S FLO EQUIPMENT PVT. LTD., 1/A BHARAT COAL COMPOUND, KALE MARG,BAIL BAZAR, KURLA ANDHERI ROAD, KURLA (W), MUMBAI-400070 PAN: AAACF3464E ..... *,/ RESPONDENT ) -/ APPELLANT BY : MS. SMITA VERMA *, -/ RESPONDENT BY : NONE . / DATE OF HEARING : 04 /05/2021 . / DATE OF PRONOUNCEMENT : 21/05/2021 / ORDER PER VIKAS AWASTHY, J.M: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, MUMBAI [HEREINAFTER REF ERRED TO AS THE CIT(A)] DATED 12.08.2019 FOR THE ASSESSMENT YEAR (AY) 2009- 10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM TH E RECORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING OF PUMPS, VALVES, AUTO CLAVES AND FITTING JOB WORK. THE ASSESSMENT IN THE CASE OF ASSESSEE FOR AY 2009- 10 WAS RE-OPENED ON THE 2 . 7060 //2019 (. .2009-10 ) ITA NO.7060/MUM/2019 (A.Y.2009-10) BASIS OF INFORMATION RECEIVED BY THE OFFICE OF DGIT (INVESTIGATION), MUMBAI FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS INDULGED IN OBTAINING ACCOMMODATION ENTRIES FROM TH E FOLLOWING PARTIES. S.NO. PARTY NAME AMOUNT IN RS. 1. ASIAN METAL INDUSTRIES 1,83,726/- 2. MALBA METAL CORPORATION 63,020/- 3. KUSHAL STEEL CORPORATION 35,19,141/- TOTAL RS. 37,65,437/- DURING ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE S UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) TO THE DEALERS ON THE ADDRESSES FURNISHED BY THE ASSESSEE. THE NOTICE S WERE RECEIVED BACK UNSERVED BY POSTAL AUTHORITY WITH REMARKS LEFT OR NOT KNOWN. FURTHER, THE ASSESSEE FAILED TO PRODUCE NECESSARY DOCUMENTS TO P ROVE TRAIL OF GOODS SUCH AS, TRANSPORT RECEIPT, STOCK REGISTER, GATE PASS, ETC. TO PROVE GENUINENESS OF THE PURCHASES. THE AO MADE ADDITION OF THE ENTIRE ALLEG ED BOGUS PURCHASES. 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 20.03.20 15 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). IN FIRST APPELLATE PROCEEDING, THE CIT(A) O BSERVED THAT THE ASSESSEE HAS MADE CASH PAYMENTS OF RS. 6,86,000/- TO KUSHAL STEE L CORPORATION, THE ASSESSEE FAILED TO EXPLAIN BEFORE THE CIT(A), THE REASONS FO R CASH PAYMENTS. CONSEQUENTLY, 3 . 7060 //2019 (. .2009-10 ) ITA NO.7060/MUM/2019 (A.Y.2009-10) THE CIT(A) MADE ADDITION OF THE ENTIRE PAYMENTS MAD E IN CASH. ON THE REMAINING AMOUNT OF ALLEGED BOGUS PURCHASES, THE CIT(A) RESTR ICTED THE ADDITION TO 12.5%. HENCE, THE PRESENT APPEAL BY THE REVENUE. 4. MS. SMITA VERMA REPRESENTING THE DEPARTMENT VEHE MENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR 100% ADDITION OF THE BOGUS PURCHASES. TO SUPPORT HER CONTENTIONS, THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF N.K. PROTEINS LTD. IN SLP NO. 769 OF 2017. 5. SUBMISSIONS MADE BY LD. DR HEARD, ORDERS OF AUTH ORITIES BELOW EXAMINED. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A ) IN RESTRICTING THE DISALLOWANCE ON BOGUS PURCHASES TO 12.5%. UNDISPUTEDLY, IN ASSES SMENT PROCEEDINGS, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS IN PROVING TH E AUTHENTICITY OF THE DEALERS AND GENUINENESS OF THE PURCHASES. THE HONBLE JURISDICT IONAL HIGH COURT IN CASE OF PCIT VS. PARAMSHAKTI DISTRIBUTORS PVT. LTD. IN ITA NO. 413 OF 2017 DECIDED ON 15.07.2019 HAS HELD THAT IN CASE OF BOGUS PURCHASE TRANSACTIONS, ENTIRE BOGUS PURCHASES CANNOT BE ADDED, IT IS ONLY THE PROFIT EL EMENT EMBEDDED IN THE BOGUS PURCHASE THAT HAS TO BE DISALLOWED. THE CIT(A) HAS ESTIMATED GP AT THE RATE OF 12.5% ON ALLEGED BOGUS PURCHASES. THE CIT(A) HAS FU RTHER OBSERVED THAT FROM ONE OF THE SUPPLIER, THE ASSESSEE HAS MADE CASH PURCHAS ES OF RS. 6,86,000/-. NO SATISFACTORY EXPLANATION HAS BEEN FURNISHED BY ASSE SSEE TO SHOW THE NECESSITY OF MAKING CASH PAYMENT, THE CIT(A) HAS INVOKED THE PRO VISIONS OF RULE 6DD AND MADE ADDITION OF ENTIRE SUCH CASH PAYMENT. 4 . 7060 //2019 (. .2009-10 ) ITA NO.7060/MUM/2019 (A.Y.2009-10) 6. I CONCUR WITH THE FINDINGS OF CIT(A). CONSEQUENT LY, THE IMPUGNED ORDER IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED, SANS MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 21 ST DAY OF MAY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 3/ DATED: 21/05/2021 SK, PS * 4 * 4 * 4 * 4 COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *, / THE RESPONDENT. 3. 5 ( )/ THE CIT(A)- 4. 5 CIT 5. * , . . . , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI