DCIT CIR 6(2)(1), MUMBAI V. CHANDRA BHAGAT PHARMA P LTD, MUMBAI

ITA 7116/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9835 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: BHARAT S DESAI LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO7116/MUM/2016 CHANDRA BHAGAT PHARMA PVT.LTD ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 7116/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(2)(1) ROOM NO.563 AAYKAR BHAVAN M.K.ROAD MUMBAI -400 020 / VS. CHANDRA BHAGAT PHARMA PVT.LTD 323-F BHAGAT BHAVAN DR.B.A.ROAD MATUNGA(E) MUMBAI -400 019 ! ./ ./PAN/GIR NO. AACCC-1056-D ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : BHARAT S.DESAI, LD. AR REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 17/08/2017 / DATE OF PRONOUNCEMENT : 23/08/2017 ITA NO7116/MUM/2016 CHANDRA BHAGAT PHARMA PVT.LTD ASSESSMENT YEAR 2009-10 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2009- 10 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12 [CIT(A)], MUMBAI DATED 19/09/2016 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN BOGUS PURCHASES OF RS.52,98,561/-. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF PHARMACEUTICALS PRODUCTS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 26/03/2015 AT RS.86,17,761/- AFTER ADDITION OF BOGUS PURCHASES FOR RS.52,98,561/-. THE ORIGINAL RETURN WAS FILED AT RS .33,19,200/- ON 18/09/2009, WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.52,98,561/- FROM A CONCERN NAMELY FAIR CHEM . CONSEQUENTLY, NOTICE U/S 148 DATED 07/03/2014 WAS ISSUED WHICH WAS FOLLO WED BY STATUTORY NOTICES U/S 142(1)/143(2). 2.3 TO CONFIRM THE PURCHASE TRANSACTIONS, NOTICE U/ S 133(6) WAS ISSUED TO THE ALLEGED BOGUS SUPPLIER, HOWEVER, THE SAME WAS RETURNED BACK UN- SERVED WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE PRODUCED PURCHASES INVOICES AND CONTENDED THAT THE PURCHASES WERE GENUINE ITA NO7116/MUM/2016 CHANDRA BHAGAT PHARMA PVT.LTD ASSESSMENT YEAR 2009-10 3 SINCE PAYMENTS WERE THROUGH BANKING CHANNELS. HOWEV ER, NOT CONVINCED, LD. AO TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 19/09/2016 AND PRODUCED LEDGER EXTRACTS, SALE & PURCHASES BILLS, DELIVERY CHALLANS , DETAILS OF SUPPORTING VOUCHERS AND BANK STATEMENTS ETC. THE LD. CIT(A) PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS, DELETED THE ADDITI ONS, AGAINST WHICH THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW OU R ATTENTION TO THE FACT THAT NOTICE U/S 133(6) SENT TO THE SUPPLIE R WAS RETURNED BACK UNCLAIMED AND THE ASSESSEE COULD NOT ESTABLISH DELI VERY / CONSUMPTION OF MATERIAL BEFORE LD. AO AND THEREFORE, THE ADDITI ONS WERE JUSTIFIED. THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIED ON THE ASSESSEE AND MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFI CIENT TO PROVE THE SAME SINCE NO CONFIRMATION ETC. WAS FILED BY THE AS SESSEE BEFORE LOWER AUTHORITIES. 5. PER CONTRA, LD. REPRESENTATIVE FOR ASSESSEE [AR] CONTENDED THAT THE TURNOVER WAS ACCEPTED AND BOOKS WERE NOT REJECT ED. THE ACCOUNTS WERE DULY AUDITED AND THE ASSESSEE WAS IN POSSESSIO N OF PRIMARY PURCHASE DOCUMENTS AND THEREFORE, LD. CIT(A), AFTER DUE APPLICATION OF MIND, RIGHTLY DELETED THE SAME. ALTERNATIVELY, OUR ATTENTION IS DRAWN TO THE FACT THAT THE ASSESSEE MADE SIMILAR PURCHASES F ROM THE SAME PARTY IN IMMEDIATELY SUCCEEDING AY I.E. 2010-11, WHERE TH E LD. AO HAS MADE ITA NO7116/MUM/2016 CHANDRA BHAGAT PHARMA PVT.LTD ASSESSMENT YEAR 2009-10 4 ADDITION ONLY TO THE EXTENT OF 12.5% AND THEREFORE, SIMILAR VIEW MAY BE TAKEN IN THE MATTER. 6. HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASES. THE SALES TURNOVER ACHIEVED BY T HE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS W ERE THROUGH BANKING CHANNELS. ON THE OTHER HAND, THE ASSESSEE M ADE PURCHASES FROM A SUPPLIER IN MORE THAN ONE AY BUT COULD NOT P RODUCE ANY CONFIRMATION ETC. FROM THE SAME TO SUBSTANTIATE THE PURCHASES. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POS SIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES. THE REVENUE IN THE IMMEDIATELY SUCCEEDIN G YEAR ACCEPTED ADDITION OF 12.5% AND THEREFORE, WITHOUT DELVING MU CH DEEPER INTO THE ISSUE, WE RESTRICT THE IMPUGNED ADDITIONS TO 12.5% OF BOGUS PURCHASES OF RS.52,98,561/- WHICH COMES TO RS.6,62,320/-. 7. RESULTANTLY, THE REVENUES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 08.2017 SR.PS:- THIRUMALESH ITA NO7116/MUM/2016 CHANDRA BHAGAT PHARMA PVT.LTD ASSESSMENT YEAR 2009-10 5 ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. $'. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI