BHAGARAM L. CHAUDHARY, PALGHAR V. ITO WD 1, PALGHAR

ITA 7170/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9553 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 7170 /MUM/ 201 6 (ASSESSMENT YEAR 20 09 - 1 0 ) I.T.A. NO. 7171/MUM/2016 (ASSESSMENT YEAR 2011 - 12) BHAGRAM L. CHAUDHARY (PRO. OF M/S. GAUTAM ELECTRICALS) 07, N EW GAUTAM ELECTRONICS MAHAVIR SHRSTI BUILDING NAVAPUR ROAD, BOISAR W DISTRICT PALGHAR 401501. PAN : AGWPC9361L VS. ITO WARD 1 PALGHAR ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. CHAITEE LONDHE DEPARTMENT BY SHRI S.K. BEPARI DATE OF HEARING 1 3 .9. 201 7 DATE OF PRONOUNCEMENT 13 . 9 . 201 7 O R D E R BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD CIT(A) - 3, THANE AND THEY RELATE TO THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12. BOTH THE APPEALS WERE HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. IN BOTH THE YEARS, THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES. 2. I HEARD THE PARTIES AND PERUSE D THE RECORD. THE ASSESSEE IS A DEALER IN ELECTRICAL GOODS. CONSEQUENT TO THE INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THAT CERTAIN PARTIES (CALLED HAWALA PARTIES) ARE INDULGING IN PROVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MA TERIALS, THE REVENUE EXAMINED THOSE DETAILS. IT WAS NOTICED THAT THE ASSESSEE HEREIN HAVE PURCHASED GOODS DURING THE YEARS UNDER CONSIDERATION FROM THE PARTIES LISTED AS HAWALA BHAGRAM L. CHAUDHARY 2 PARTIES. THE AGGREGATE AMOUNT OF PURCHASES MADE BY THE ASSESSEE FROM SUCH DEA LERS WAS RS.5,11,182/ - AND RS.8,22,763/ - RESPECTIVELY DURING THE YEARS RELEVANT FOR AY 2009 - 10 AND 2011 - 12. HENCE THE AO REOPENED THE ASSESSMENTS OF BOTH THE YEARS. 3. THE AO ISSUED NOTICES U/S 133(6) OF THE ACT TO THOSE PARTIES, BUT THEY WERE RETURNE D BACK UNSERVED BY THE POSTAL AUTHORITIES. THE ASSESSEE WAS ASKED TO PRODUCE THOSE PARTIES, BUT THE ASSESSEE ALSO FAILED TO PRODUCE THEM. THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER ON THE PLEA THAT IT IS DEALING IN NUMEROUS ITEMS. HENCE THE AO DISALLO WED ENTIRE AMOUNT OF PURCHASES REFERRED ABOVE IN THE RESPECTIVE YEARS. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THESE APPEALS BEFORE THE TRIBUNAL. 4. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS DECLARED G.P RATE OF AROU ND 7% IN BOTH THE YEARS. SHE FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED COPIES OF ALL PURCHASE BILLS AND PAYMENT DETAILS. SHE FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT MAINTAIN STOCK REGISTER DUE TO THE FACT THAT HE WAS DEALING IN NUMEROUS ITE MS AND IT WOULD BE DIFFICULT TO MAINTAIN DAY TO DAY STOCK REGISTER FOR ALL ITEMS. SHE FURTHER SUBMITTED THAT THE ASSESSEE HAS ACTUALLY SOLD THOSE GOODS AND HENCE THE G.P RATE WAS DECLARED AT CONSISTENT LEVEL. SHE ALSO SUBMITTED THAT THE TURNOVER OF THE A SSESSEE WAS MORE THAN ONE CRORE AND THE ALLEGED BOGUS PURCHASES FORM A SMALL PORTION ONLY. ACCORDINGLY SHE SUBMITTED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ENTIRE AMOUNT OF ALLEGED BOGUS PURCHASES. 5. THE LD D.R, ON THE CONTRARY, PLACE D RELIANCE ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF NK PROTEINS LTD VS. DCIT (SLP TO CC NO.769 OF 2017 DATED 16 - 01 - 2017) AND SUBMITTED THAT THE HONBLE SUPREME COURT HAS CONFIRMED DISALLOWANCE OF ENTIRE AMOUNT OF BOGUS PURCHASES. BHAGRAM L. CHAUDHARY 3 6. I HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. I HAVE GONE THROUGH THE FACTS AVAILABLE IN THE CASE OF N.K.PROTEINS LTD (SUPRA) AND NOTICE THAT, IN THAT CASE, THE REVENUE CONDUCTED SEARCH IN THE HANDS OF THAT ASSESSEE AND FOUND THE BLANK SIGNED CH EQUE BOOKS AND VOUCHERS OF NUMBER OF CONCERNS AT ITS PREMISES. THIS FACT, IN MY VIEW, SHOWS THAT THE ASSESSEE BEFORE THE HONBLE SUPREME COURT WAS OPERATING ALL THE ACCOUNTS OF THE CONCERNS, WHICH FACTOR ESTABLISHED BOGUS NATURE OF THE PURCHASES. IN THE INSTANT CASE, THE FACTS ARE TOTALLY DIFFERENT, I.E., THE ASSESSEE PURCHASED GOODS FROM THIRD PARTIES, WHO HAVE BEEN IDENTIFIED AS HAWALA DEALERS BY SALES TAX DEPARTMENT. EXCEPT AVAILABILITY OF PURCHASE BILLS, WHICH THE ASSESSEE CONTENDS AS GENUINE, NO OT HER DOCUMENT/EVIDENCE WAS FOUND TO SUSPECT THE GENUINENESS OF PURCHASES. 7. AT THE SAME TIME, AN IMPORTANT FACT THAT IS REQUIRED TO BE NOTED THAT THE SUPPLIERS TO THE ASSESSEE COULD NOT BE TRACED AND THE ASSESSEE ALSO COULD NOT OBTAIN CONFIRMATION LE TTERS FROM THEM AND ALSO COULD NOT PRODUCE THEM. FURTHER, THESE SUPPLIERS HAVE ADMITTED THAT THEY HAVE PROVIDED ONLY ACCOMMODATION BILLS WITHOUT SUPPLYING MATERIALS. 8. THE CASE OF THE ASSESSEE IS THAT IT IS DEALING IN A NUMBER OF ITEMS AND HENCE H E COULD NOT MAINTAIN STOCK REGISTER. BY SUBMITTING THAT HE HAS DECLARED GROSS PROFIT RATE AT A CONSISTENT FIGURE OF AROUND 7%, THE ASSESSEE HAS CONTENDED THAT THE SAME WOULD SHOW THAT THE ASSESSEE HAS ACTUALLY SOLD THE GOODS. 9. HAVING HEARD RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ASSESSEES PLEA FOR DELETING THE ENTIRE ADDITION CANNOT BE ACCEPTED, SINCE THE ASSESSEE COULD NOT PRODUCE THE SUPPLIER/COULD NOT FURNISH CONFIRMATION LETTERS AND FURTHER THE ASSESSEE HAS FAILED TO MAINTAIN STOCK REGIS TER IN ORDER TO PROVE THE RECEIPT AND SALE OF MATERIALS. I NOTICE THAT THE ASSESSEE HAD DECLARED G.P RATE OF 9.42%, BHAGRAM L. CHAUDHARY 4 WHICH HAS FALLEN TO 7.87% IN AY 2009 - 10 AND TO 7.47% IN AY 2011 - 12. THE FALL IN THE G.P RATIO, IN A WAY, SUPPORTS THE CASE OF REVENUE THAT THE ASSESSEE MIGHT HAVE INFLATED PURCHASES IN ORDER TO REDUCE THE PROFITS. AT THE SAME TIME, THERE IS ALSO MERIT IN THE SUBMISSION OF THE ASSESSEE THAT HE COULD NOT MAINTAIN STOCK REGISTER AS HE DEALT WITH NUMEROUS ITEMS OF ELECTRICAL GOODS. I ALSO NOTI CE THAT THE TURNOVER OF THE ASSESSEE HAS INCREASED YEAR AFTER YEAR AND THE SAME MAY ALSO BE A REASON FOR THE FALL IN THE RATE OF G.P. 10. HENCE, ON A CONSPECTUS OF THE MATTER, I AM OF THE VIEW THAT IT MAY NOT BE JUSTIFIABLE TO DISALLOW ENTIRE AMOUNT OF PURCHASES. IN MY VIEW, THE ISSUE BEFORE ME COULD BE RESOLVED BY MAKING ESTIMATE OF THE PROFIT THAT COULD HAVE BEEN MADE BY THE ASSESSEE. ACCORDINGLY I AM OF THE VIEW THAT THIS ISSUE COULD BE PUT TO REST BY ESTIMATING THE PROFIT FROM THESE ALLEGED BOGUS PURCHASES AT 30% OF THE VALUE OF ALLEGED BOGUS PURCHASES. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS UNDER CONSIDERATION AND DIRECT THE AO TO SUSTAIN THE ADDITION TO THE EXTENT OF 30% OF THE VALUE OF ALLEGED BOGU S PURCHASES. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 3 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 1 3 / 9 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI BHAGRAM L. CHAUDHARY 5 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI