ROSANA TOOLS, MUMBAI V. ITO 22(3)(2), MUMBAI

ITA 724/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6015 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K GUBGOTRA J
• Keywords: Bogus purchase; Search and seizure; Accommodation entries; Set aside
• Section: 69C; 133(6); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ITA NO.723 & 724/MUM/2019 ( ASSESSMENT YEAR: 2009-10 & 2011-12) M/S ROSANA TOOLS, A-1, KESARBAN, 3 RD ROAD, SANTACRUZ (E), MUMBAI- 400055. VS. I.T.O. 22(3)(2) ROOM NO. 306, PIRAMAL CHAMBER, LALBAUG, MUMBAI- 400012. PAN/GIR NO.AAAFR 5719 F (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY NONE REVENUE BY SHRI R.K. GUBGOTRA (JCIT-DR) DATE OF HEARING 04/02/2020 DATE OF PRONOUNCEMENT 13/02/2020 / O R D E R PER: R.C. SHARMA, A.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 29/06/2018 OF LD. CIT(A)-34, MUMBAI FOR THE A.Y. 2009-10 AND 2011-12 IN THE MATTER OF ORDER PASSED U/S 143(3 ) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN BOTH THESE APPEALS, THE ASSESSEE HAS RAISED C OMMON GROUNDS, THEREFORE, FOR THE SAKE OF CONVENIENCE, GROUNDS TAK EN FOR THE A.Y. 2009- 10 IS REPRODUCED AS UNDER: 1. THE LEARNED INCOME TAX OFFICER ERRED IN ADDING TO THE INCOME OF THE ASSESSEE AN AMOUNT OF RS.2,16,9137- BEING 12.50 % OF THE ALLEGED NON GENUINE PURCHASE OF RS.17,35,301/- ON A CCOUNT OF UNEXPLAINED PURCHASES U/S. 69C AND THE CIT APPEALS ERRED IN CONFIRMING THE ADDITION. TA NO. 723 & 724/MUM/2019 M/S ROSANA TOOLS VS ITO 2 2) YOUR PETITIONER HUMBLY SUBMITS THAT ALL DOCUMEN TS AND EVIDENCES (WITH IN THE CONTROL OF YOUR PETITIONER) SUCH AS CO PIES OF THE PURCHASE BILLS, COPIES OF LEDGER ACCOUNTS OF THE VA RIOUS PARTIES IN THE BOOKS OF YOUR PETITIONER, COPIES OF BANK STATEM ENTS CONFIRMING THE PAYMENTS MADE WERE FURNISHED TO THE LEARNED INCOME TAX OFFICER DURING THE SCRUTINY ASSESSMENT. 3) YOUR PETITIONER HUMBLY SUBMITS THAT ON THE BASI S OF INFORMATION RECEIVED (WHICH CANNOT BE CONFIRMED/AUTHENTICATED) FROM THE INVESTIGATION WING OF THE SALES TAX DEPARTMENT THE LEARNED INCOME TAX OFFICER UNFAIRLY AND UNJUSTLY ADDED TO T HE INCOME OF YOUR PETITIONER U/S. 69C THE AMOUNT OF RS.2,16,913/ - AND THE CIT APPEALS CONFIRMED THE SAME. 4) YOUR PETITIONER PRAYS THAT THE DISALLOWANCE OF RS 2,16,913/- BE DELETED AND/OR SET ASIDE. 5) YOUR PETITIONER PRAYS THAT THE DELAY IN FILING THE APPEAL DUE TO DEMISE OF ONE OF THE PARTNERS (MOTHER OF MANAGING P ARTNER) AND THE ILL HEALTH (DUE TO CANCER) OF THE MANAGING PART NER'S WIFE BE CONDONED AND THE APPEAL BE ADMITTED. 6) YOUR PETITIONER CRAVES LEAVE TO ADD, ALTER, AME ND AND/ OR WITHDRAW ANY/ OR ALL THE ABOVE GROUNDS OF APPEAL. 2. NO BODY APPEARED ON BEHALF OF THE ASSESSEE IN SP ITE OF ISSUE AND SERVICE OF NOTICE, EVEN NO ADJOURNMENT PETITION WAS FILED. ACCORDINGLY, THE BENCH DECIDED TO DISPOSE OFF THE APPEALS AFTER CONSIDERING THE MATERIAL PLACED ON RECORD. 3. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FOUND THAT THE A.O. HAS REOPENED THE ASSESSMENT ON GETTIN G INFORMATION FROM SALES TAX DEPARTMENT REGARDING ASSESSEE TAKING ACCO MMODATION BILLS WITH REGARD TO THE PURCHASES WITHOUT TAKING DELIVER Y OF GOODS. AFTER REOPENING, THE A.O. MADE DETAILED ENQUIRY AND AFTER ISSUANCE OF NOTICE TA NO. 723 & 724/MUM/2019 M/S ROSANA TOOLS VS ITO 3 U/S 133(6) OF THE ACT TO ALL THE SUPPLIERS, THE A.O . OBSERVED THAT THESE PARTIES FROM WHOM THE PURCHASES WERE MADE WERE NOT FOUND AT THE EXISTING ADDRESS GIVEN BY THE ASSESSEE. NOTICE ISSU ED U/S 133(6) OF THE ACT WAS RETURNED UNSERVED. THEREAFTER CONSIDERING T HE NATURE OF ASSESSEES BUSINESS, WHICH WAS NOT SIMPLY TRADER BU T ENGINEER AND CONTRACTOR AND APPLYING THE JUDICIAL PRONOUNCEMENT IN THE CASE OF VIJAY PROTEINS VS CIT, THE A.O. ESTIMATED THE PROFIT @ 12 .5% ON SUCH BOGUS PURCHASES. BY THE IMPUGNED ORDER, THE LD. CIT(A) HA S CONFIRMED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATION. 6.8. IN VIEW OF THE ABOVE, IT IS AN ADMITTED FACT THAT SALES TAX DEPARTMENT HAS CONDUCTED SEARCH AND SEIZURE OPERATI ON AND HAS ESTABLISHED LARGE NUMBER OF COMPANIES/FIRMS/PARTNER SHIP CONCERNS AS HAWALA DEALERS WHO ARE ENGAGED IN ACCOMMODATION ENTRIES WITHOUT ACTUALLY SUPPLYING THE GOODS. THE APPELLANT IS ONE OF THE BENEFICIARY AND HAS RECEIVED SUCH ACCOMMODATION BIL LS FROM 5 OF THE HAWALA OPERATORS TOTALING TO RS. 17,35,301/-. THE A .O. ATTEMPTED TO VERIFY SUCH PARTIES BY MAKING INDEPENDENT ENQUIRIES U/S. 133(6) OF THE I.T. ACT, 1961. ALL THESE VERIFICATION LETTERS CAME WITH THE REMARK 'NOT KNOWN/LEFT'. THE ONUS SHIFTED ON THE APPELLANT PARTICULARLY IN THE BACKGROUND OF FINDING OF SALES TAX DEPARTMENT, MUMB AI. THE APPELLANT FILED CERTAIN DETAILS SUCH AS PURCHASE BI LLS, LEDGER ACCOUNT, BANK STATEMENT ETC. HOWEVER, SOME OF THE SPECIFIC D ETAILS REQUIRED TO ESTABLISH THE GENUINENESS OF PURCHASE SUCH AS EV IDENCE OF TRANSPORTATION OF GOODS, ENTRY OF GOODS IN THE STOC K REGISTER, ONE TO ONE CONSUMPTION PATTERN OF ALLEGED PURCHASE ITEMS, CONFIRMATION FROM THE PARTIES CONCERNED ETC COULD NOT BE SUBMITT ED BEFORE THE A.O.. NOR THE PRINCIPLE OFFICER OF THESE CONCERNS W ERE PRODUCED BEFORE THE A.O. FOR EXAMINATION. HOWEVER, IT IS ALS O A FACT THAT THE TA NO. 723 & 724/MUM/2019 M/S ROSANA TOOLS VS ITO 4 A.O. HAS NOT QUESTIONED THE TOTAL SALE COMPONENT AN D IF THERE IS A SALE, THERE SHOULD BE PURCHASE. THE APPELLANT BEING A TRADING CONCERN, HAS INDULGED IN USING SUCH ACCOMMODATION E NTRY. AS EVIDENT FROM CATENA OF JUDGMENTS ON BOGUS PURCHASES , ONLY THE BENEFIT DERIVED BY USING SUCH ACCOMMODATION ENTRIES HAS TO BE BROUGHT TO TAX. THE ADVANTAGES FROM USING SUCH BOGU S BILLS ARE IN THE FORM OF SAVING VAT, SAVING OF TRANSPORTATION CHARGE S AND VARIOUS TAXES ETC. THE A.O. HAS RIGHTLY DISALLOWED PART OF THE PURCHASES CLAIMED SUCH HAWALA DEALERS. IN THE PRESENT CASE, T HE RATIO OF VIJAY PROTEIN, A MANUFACTURING CONCERN CANNOT BE APPLIED SINCE THE APPELLANT IS A BUSINESS CONCERN DOING TRADING. IN M Y OPINION, THE RATIO OF THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SETH 356 ITR 461 (GUJ.) IS APPLICABLE TO T HE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. HERE, THE HO NBLE COURT HAS HELD THAT DISALLOWANCE OF 12.5% OF THE PURCHASES FR OM SUCH HAWALA DEALERS WILL BE JUSTIFIED BASED ON THE PREMISE THAT THE APPELLANT HAVE DERIVED BENEFIT TO THIS EXTENT BASED ON HIS NATURE OF BUSINESS. IN VIEW OF THE ABOVE THE DISALLOWANCE OF RS. 2,16,913/- BEI NG 12.5% OF BOGUS PURCHASES MADE BY THE A.O. IS JUSTIFIED AND UPHELD. HENCE, THIS GROUND IS DISMISSED. 4. IT IS CLEAR FROM THE ORDERS OF THE LOWER AUTHORI TIES THAT AFTER MAKING DETAILED ENQUIRY, THE A.O. HAS JUST ADDED PR OFIT ELEMENT OF THE SAID BOGUS PURCHASES AT 12.5%. THE LD. CIT(A) HAS D EALT WITH THE ISSUE THREADBARE FROM PAGE 3 TO 24 OF HIS APPELLATE ORDER . THE LD. CIT(A) HAS RECORDED A FINDING THAT ALL THE VERIFICATION LETTER S SENT BY THE A.O. U/S 133(6) OF THE ACT WERE RETURNED BACK WITH THE REMAR K NOT KNOWN/LEFT . THE LD. CIT(A) HAS DECIDED THE ISSUE AFTER CONSIDER ING THE DETAILED WRITTEN SUBMISSIONS DATED 13/06/2018 SO FILED BY TH E ASSESSEE. THE TA NO. 723 & 724/MUM/2019 M/S ROSANA TOOLS VS ITO 5 DETAILED FINDING SO RECORDED BY THE LD. CIT(A) AFTE R CONSIDERING JUDICIAL PRONOUNCEMENTS IN THE CASE OF SIMIT P SETH 356 ITR 461 (GUJ), ARE AS PER MATERIAL ON RECORD WHICH DO NOT REQUIRE ANY INT ERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME. 5. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2020. SD/- (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 13/02/2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//