ACIT - 19(2), MUMBAI V. JATIN ENTERPRISES, MUMBAI

ITA 708/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9892 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase
• Section: 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH F MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 708 / MUM/ 2 0 1 7 ( / ASSESSMENT YEAR: 2 0 09 - 10 ) ASSTT.COMMISSIONER OF INCOME TAX - 19(2), ROOM NO.207, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400007 / VS. M/S JATIN ENTERPRISES, 31 ST SAVITA SADAN, 1 ST PARSIWADA, V P ROAD, MUMBAI - 400004 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : A AAF J4667N ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI T A KHAN / ASSESSEE BY : NONE / DATE OF HEARING : 22 .8. 2017 / DATE OF PRONOUNCEMENT : 6 . 9 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS APPEAL BY THE REVENUE PERTAINING TO ASSESSMENT YEAR 20 09 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 30 , MUMBA I, DATED 8. 11 .201 6 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED 2 ITA NO. 708 /MUM/201 7 BY THE ASSESSING OFFICER DATED 2 5 .3.201 5 UNDER SECTION 143(3) R.W.S.147 OF THE ACT. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE AP PEARED BEFORE THIS TRIBUNAL WHEN THE APPEALS WERE NOT CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEA LS OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD.DR. 2 . THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE ADDITION MADE BY THE AO OF RS. 1,00,15,634/ - MADE FROM TWO PARTIES AND SUSTAINING GP ONLY TO THE EXTENT OF 12.5% OF THE SAID HAWALA PURCHASES BY T HE LD.CIT(A) . 3 . FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 8.10.2010 DECLARING TOTAL INCOME OF RS. 33,08,300/ - , WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE AO AFTER RECEIV ING THE I NFORMATION FROM THE DGIT(INV), GOVERNME NT OF MAHARASHTRA THAT THE ASSESSEE HAS AVAILED HAWALA ENTRIES OF BOGUS PURCHASES TO THE TUNE OF RS.1,00,15,634/ - FROM TWO PARTIES, REOPENED THE ASSESSMENT PROCEEDING VIDE NOTICE DATED 20.2.2014 ISSUED U/S 148 OF THE ACT WHICH WAS COMPLIED WITH BY T HE ASSESSEE BY FILING A RETURN OF INCOME DATED 22.5.2014 DECLARING THE SAME INCOME AS DECLARED IN THE ORIGINAL RETURN OF INCOME. 3 ITA NO. 708 /MUM/201 7 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THE PARTIES SO ALLEGED. FINALLY, THE AO FRAME D THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT BY ADDING THE TOTAL AMOUNT OF BOGUS PURCHASE S OF RS.1,00,15,634/ - ASSESSING TH E INCOME AT RS.1,33,23,935/ - . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING 12.5% OF THE BOGUS PURC HASES TOWARDS GP BY OBSERVING AND HOLDING AS UNDER : 7.11 IN THE PRESENT CASE, THE MOTIVE BEHIND OBTAINING BOGUS BILLS, THUS, APPEARS TO BE INFLATION OF PURCHASE PRICE SO AS TO SUPPRESS TRUE PROFITS. IN ORDER TO ESTIMATE AS TO WHAT COULD BE THE GP, WHICH THE APPELLANT HAS SUPPRESSED WHICH WAS EMBEDDED IN THE ALLEGED PURCHASES. APPELLANT IN HIS SUBMISSIONS STATED THAT THE GROSS PROFIT RANGING BETWEEN 7% TO 8% HAS BEEN DECLARED BY HIM FOR PAST MANY YEARS WHICH HAS BEEN ACCEPTED BY THE - DEPARTMENT. WITH THE ADDITION THE RATIO IS GOING UP TO 14%, WHICH IS ABSURD, IT IS STATED BY THE APPELLANT. 7.12 THE APPELLANT IN THE WRITTEN SUBMISSIONS PLEADS FOR DELETING THE ENTIRE ADDITION BASED ON SEVERAL CASE LAWS OF HON'BLE HIGH COURT/ TRIBUNAL, INCLUDING IN THE CASE OF NIKUNJ EXIMP ENTERPRISES (P) LTD VS. CIT 216 TAXMAN 171 (BOMBAY HIGH COURT)TO SUGGEST THAT NO ADDITION COULD BE MADE ON ACCOUNT OF DISALLOWANCE OF BOGUS PURCHASES. HAVING GONE THROUGH THE OTHER CASE LAWS, IT IS SEEN THAT IN NONE OF THOSE CASES SO MUCH OF INVESTIGATION WAS DONE INCLUDING THOSE BY ANOTHER GOVERNMENT AUTHORITY, VIZ., MAHARASHTRA SALES TAX AUTHORITY BEFORE WHOM AFFIDAVITS WAS FILED STATING THAT ONLY BOGUS BILLS WERE SUPPLIED WITHOU T DELIVER Y OF GO ODS. IN THE CASE BEFORE THE 4 ITA NO. 708 /MUM/201 7 HON'BLE BOMBAY H IGH COURT IN NIKUNJ EXIMP (SUPRA), THE SU PLIERS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND FROM THE JUDGMENT IT APPEARS THAT IT WAS NOT A CASE OF THE SUPPLIERS BEING NON - EXISTENT. HOWEVER, IN THE PRESENT CASE IN APPEAL, THE ALLEGED SUPPLIER HAS BEE N FOUND TO BE NON - EXISTEN T. THIS IS NOT MERELY A CASE WHERE THE SUPPLIER HAS FAILED TO APPEAR BEFORE TH E ASSESSING OFFICER. HENCE, THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT RELIE D UPON BY THE APPELLANT WOULD BE OF NO HELP. IN FAD, IN A LATER DECISION I N NIKU NJ EXIMP (2014) 48 TAXMANN.COM 20 (BOM), HON'BLE BOMBAY HIGH COURT ON THE VER Y SAME ISSUE OF OBTAINING BOGUS BILLS DISMISSED THE ASSESSEE'S WRIT PETITION FILED AGAINST NOTICE U/S. 148. THE OTHER CASES CITED IN THE SUBMISSIONS ARE ALS O DISTINGUISHABL E TO THE PRESENT CASE, IN VIEW OF THE FACT THAT THE APPELLANT MISERABLY FAILED TO PROVE THE GENUINENESS OF SUCH PURCHASES WITH CONCLUSIVE EVIDENCES, THOSE CASE LAWS CITED ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 7.13 CONSIDERING THE FACTS O F THE PRESENT CASE WHICH ARE SIMILAR TO THE FACTS OF THE CASE OF CIT VS. SIMIT SHETH (SUPRA), AND RESPECTFULLY FOLLOWING THE DECISION IN THAT CASE, AO IS DIRECTED TO RESTRICT THE ADDITION @ OF 12.5% OF THE NON - GENUINE PURCHASE OF RS.1,00,15,634/ - , MADE F ROM THE TWO PARTIES. 4 . NOW, THE REVENUE BEING AGGRIEVED BY THE ORDER OF LD.CIT(A) IS IN APPEAL BEFORE US . 5 . WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELO W. WE FIND THAT IN THIS CASE, THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE PURCHASES BEFORE THE AO WHO MADE TOTAL DISALLOWANCE/ ADDITION WHICH WAS REDUCED TO 12.5% BY THE FAA IN THE APPELLATE AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE. THE F ACTS ARE THAT THE ASSESSEE HAS AVAILED THE BOGUS PURCHASES MADE FROM THE HAWALA 5 ITA NO. 708 /MUM/201 7 DEALERS AND WITHOUT PURCHASE OF THESE MATERIALS PHYSICALLY WHICH MAY HAVE BEEN PURCHASED FROM THE GREY MARKET THEREBY MAKING SAVING OF VAT AND INCIDENTAL OTHER TAXES. IN THE SIMILAR SITUATION, THE CO - ORDINATE BENCH ES OF THE TRIBUNAL HA VE APPLIED 12.5% OF THE P URCHASES MADE FROM HAWALA DEALERS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE REVENUE HAS FAILED TO BRI NG ON RECORD ANYTHING CONTRARY TO THE FINDINGS OF THE FAA. RESULTANTLY, APPEAL OF THE REVENUE FAILS. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH SEPT , 2017. S D SD ( / MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 6TH SEPT .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBA I 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI