TIMEX ART DECOR PRIVATE LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 11(3)(1), MUMBAI

ITA 7293/MUM/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6145 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 22-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONIDR
• Assessee Lawyers: PRATEESH JAIN SHRI MANI JAIN
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMB AI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.7293/MUM/2017 & 7294/MUM/2017 ( ASSESSMENT YEARS: 2009-10 & 2010-11 ) M/S TIMEX ART DCOR PRIVATE LIMITED #102, OPP: GREAT SANT JANABAI ROAD, VILE PARLE(E), MUMBAI-400057 VS. ACIT-11(3)(1) MUMBAI PAN/GIR NO. AACCT2857K APPELLANT .. RESPONDENT ITA NO.880/MUM/2018 ( ASSESSMENT YEAR: 2010-11 ) ACIT-11(3)(1) MUMBAI VS. M/S TIMEX ART DCOR PRIVATE LIMITED #102, OPP: GREAT SANT JANABAI ROAD, VILE PARLE(E), MUMBAI-400057 PAN/GIR NO. AACCT2857K APPELLANT .. RESPONDENT ASSESSEE BY SHRI. PRATEESH JAIN/ SHRI. MANI JAIN REVENUE BY SHRI. VIJAY KUMAR SONI-DR DATE OF HEARING 07 /0 8 /201 9 DATE OF PRONOUNCEME NT 18 / 10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS BY THE ASSESSEE AND ONE APPEAL BY THE REVEUNE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICA L ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) -18, MUMBAI, B OTH DATED 25/09/2017 AND THEY PERTAIN TO ASSESSMENT YEARS (AY ) 2009-10 AND ITA NO.5275 &5276/MUM/2018 M/S. AQUAPURE AGENCIES 2 2010-11. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD T OGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GROU NDS OF APPEAL FOR BOTH ASSESSMENT YEARS. THE REVEUNE HAS A LSO CHALLENGED ORDER OF THE CIT(A) FOR ASST. YEAR 2010-11. THE ONL Y ISSUE TAT CAME UP FOR OUR CONSIDERATION FROM ASSESSEE AS WELL AS R EVEUNE APPEAL FOR BOTH ASSESSMENT YEARS IS ADDITION TOWARDS ALLEG ED BOGUS PURCHASES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO NEED TO REPRODUCE GROUNDS OF APPEALS FILED BY THE A SSESSEE AS WELL AS THE REVEUNE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFAC TURING AND TRADING IN PLYWOOD, DECORATIVE LAMINATES AND OTHER WOOD PRODUCTS, HAS FILED ITS RETURN OF INCOME FOR AY 2009-10 AND 2 010-11 ON 9-9- 2009 AND 9-9-2010, DECLARING TOTAL INCOME OF RS. 14 ,88,250/- AND RS. 58,18,450/- RESPECTIVELY. THEREAFTER, THE CASES HAVE BEEN REOPENED U/S 147, ON THE BASIS OF INFORMATION RECEI VED FROM DGIT, INVESTIGATION, MUMBAI, AS PER WHICH SALES TAX AUTHO RITIES OF GOVERNMENT OF MAHARASHTRA HAD TAKEN ACTIONS AGAINST NUMBER OF HAWALA DEALERS, WHO HAD ISSUED BOGUS PURCHASE BILLS TO VARIOUS PARTIES IN MUMBAI. AS PER LIST OF BENEFICIARIES, T HE ASSESSEE IS ONE OF THE BENEFICIARY, WHO HAD TAKEN ACCOMMODATION BIL LS OF BOGUS PURCHASES FROM FIVE PARTIES AS LISTED BY THE AO IN PARA 2 OF HIS ASSESSMENT ORDER FOR RS. 6,84,18,540/- FOR A.Y. 200 9-10 AND TWO PARTIES AS LISTED BY THE AO IN PARA 5 OF HIS ASSESS MENT ORDER FOR A.Y. 2010-11 FOR RS. FOR RS. 8,62,71,335/-. THE CASES H AVE BEEN ITA NO.5275 &5276/MUM/2018 M/S. AQUAPURE AGENCIES 3 SELECTED FOR SCRUTINY AND THE ASSESSMENT FOR BOTH A SSESSMENT YEARS HAVE BEEN COMPLETED U/S. 143(3).R.W.S. 147 OF THE I .T.ACT, 1961 ON 27/03/2015 AND 30/12/2015 AND DETERMINED TOTAL INCO ME OF RS. 1,09,89,930/- AND RS. 1,66,02,370/- RESPECTIVELY, A FTER MAKING ADDITIONS OF 12.50% PROFIT ON ALLEGED BOGUS PURCHAS ES FROM ABOVE PARTIES AND MADE ADDITIONS OF RS. 85,52,317 FOR A.Y . 2009-10 AND RS. 1,07,83,917 FOR A.Y. 2010-11/-. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESEE P REFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSE HAS FILED ELABORATE WRITTEN SUBMISSIONS, ON THE ISSUE. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE L D.CIT(A) ARE THAT PURCHASE FROM THE ABOVE PARTIES IS GENUINE, WH ICH ARE SUPPORTED BY NECESSARY EVIDENCES, INCLUDING PURCHAS E BILLS, BANK STATEMENTS, LEDGER CONFIRMATION AND VAT AUDIT REPOR T OF THE PARTIES SPECIFYING THE VAT AMOUNT IN RESPECT OF THE PURCHAS ES AND QUANTITATIVE DETAILS OF GOODS TRADED. THEREFORE, NO ADDITIONS COULD BE MADE ON THE BASIS OF INFORMATION RECEIVED FROM THIR D PARTY. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO, ON ANALYSIS OF INFORMATION COLLECTED DURI NG THE COURSE OF SEARCH AND ALSO BY FOLLOWING THE DECISION OF HONBL E GUJARAT HIGH COURT, IN THE CASE OF CIT VS. SIMITH P. SHETH (356 ITR 451) SCALED DOWN PROFIT ESTIMATED BY THE AO FROM 12.50% TO 8.80 % ON ALLEGED BOGUS PURCHASES FOR BOTH ASSESSMENT YEARS. 5. WE HAVE HEARD RIVAL CONTENSTIONS OF BOTH PARTIES , PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDER S OF THE AUTHORITIES BELOW ALONG WITH CASE LAWS CITED BY BOT H SIDES. WE FIND THAT THE LD. AO HAS MADE ADDITION TOWARDS 12.50% PR OFIT ON ALLEGED ITA NO.5275 &5276/MUM/2018 M/S. AQUAPURE AGENCIES 4 BOGUS PURCHASES, ON THE GROUND THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES OF BOGUS PURCH ASE BILLS ISSUED BY HAWALA DEALERS. ACCORDING TO THE LD. AO, ALTHOUG H ASSESEE HAS FILED CERTAIN BASIC EVIDENCES, BUT FAILED TO FILE F URTHER EVIDENCE IN THE BACKDROP OF CLEAR FINDING BY THE SALES TAX DEPARTME NT, GOVT. OF MAHARASHTRA THAT THOSE PARTIES ARE INVOLVED IN PROV IDING ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF GO ODS. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE INVESTIGATION CONDU CTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AS PER WHICH NOTI CE ISSUED U/S 133(6) TO THE PARTIES WERE RETURNED UN-SERVED BY TH E POSTAL AUTHORITIES. THEREFORE, HE CAME TO THE CONCLUSION T HAT PURCHASE FROM THE SAID PARTIES IS BOGUS IN NATURE. IT IS CONTENTI ONS OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT PURCHASE FROM THE ABOVE PARTIES ARE SUPPORTED BY NECESSARY EVIDENCES. IT HAS FURNISHED ALL POSSIBLE EVIDENCES, INCLUDING BOOKS OF ACCOUNTS, STOCK DETAI LS AND BANK STATEMENT TO PROVE PAYMENT AGAINST SAID PURCHASES H AVE BEEN MADE THROUGH PROPER BANKING CHANNELS. 6 HAVING CONSIDERED ARGUMENTS OF BOTH SIDES AND ALS O, MATERIAL AVAILABLE ON RECORD, WE FIND THAT BOTH THE SIDES HA S FAILED TO PROVE THE CASE IN THEIR FAVOUR WITH NECESSARY EVIDENCES. ALTHOUGH, ASSESSEE HAD FILED CERTAIN BASIC EVIDENCES, BUT FAI LED TO FILE FURTHER EVIDENCES TO CONCLUSIVELY PROVE PURCHASES TO THE SA TISFACTIONS OF THE LD.AO. AT THE SAME TIME, THE LD. AO HAD ALSO FAILE D TO TAKE THE INVESTIGATION TO A LOGICAL CONCLUSION BY CARRYING O UT NECESSARY ENQUIRES, BUT HE SOLELY RELIED UPON INFORMATION RE CEIVED FROM INVESTIGATION WING, WHICH WAS FURTHER SUPPORTED BY INFORMATION RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT. UND ER THESE CIRCUMSTANCES, IT IS DIFFICULT TO ACCEPT ARGUMENTS OF BOTH THE SIDES. ITA NO.5275 &5276/MUM/2018 M/S. AQUAPURE AGENCIES 5 FURTHER, VARIOUS HIGH COURTS AND TRIBUNALS HAD CONS IDERED AN IDENTICAL ISSUE IN LIGHT OF INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTMENT AND HELD THAT IN CASE PURCHASES CLAIMS T O HAVE MADE FROM ALLEGED HAWALA DEALERS , ONLY PROFIT ELEMENT E MBEDDED IN THOSE PURCHASES NEEDS TO BE TAXED, BUT NOT TOTAL PURCHASE FROM THOSE PARTIES. THE HONBLE GUJARAT HIGH COURT, IN THE CAS E OF CIT VS SIMITH P.SHETH 356 ITR 451 HAD CONSIDERED A SIMILAR ISSUE AND HELD THAT AT THE TIME OF ESTIMATION OF PROFIT FROM ALLEGED BOGUS PURCHASES NO UNIFORM YARDSTICKS COULD BE ADOPTED, BUT IT DEPENDS UPON FACTS OF EACH CASE. THE ITAT, MUMBAI, IN NUMBER OF CASES HAD CONSIDERED AN IDENTICAL ISSUE AND DEPENDING UPON FACTS OF EACH CASE, HAD DIRECTED THE LD.AO TO ESTIMATE PROFIT OF 2% TO 12.5 0% ON ALLEGED BOGUS PURCHASES. IN THIS CASE, CONSIDERING THE NATU RE OF BUSINESS OF THE ASSESSEE THE LD. AO HAS ESTIMATED 12.50% PROFIT , WHEREAS THE LD.CIT(A) HAS SCALED DOWN ADDITION TO 8.80% PROFIT ON TOTAL ALLEGED BOGUS PURCHASE. ALTHOUGH, BOTH AUTHORITIES HAVE TAK EN DIFFERENT RATE OF PROFIT FOR ESTIMATION OF INCOME FROM ALLEGED BOG US PURCHASE, BUT NO ONE COULD SUPPORT SAID RATE OF GROSS PROFIT WITH NECESSARY EVIDENCES OR ANY COMPARABLE CASES. IN THIS CASE, TH E ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND TRADING IN PLAYWO OD AND OTHER WOOD PRODUCTS. THE ASSESSEE HAD DECLARED 3.70% GROS S PROFIT IN REGULAR BOOKS OF ACCOUNTS INCLUDING ON ALLEGED BOGU S PURCHASES. FURTHER, THE ASSESSEE CLAIMS THAT THE ITAT, MUMBAI BENCH IN CASE OF VAISHALI PRAKASH MUNI VS. ITO, IN ITA NO. 379/MU M/2018 HAD CONSIDERD AN IDENTICAL ISSUE AND CONSIDERING FCATS HAS DIREDTED THE AO TO ESTIMATE 2% PROFIT ON ALLEGED BOGUS PURCHASES . THE ASSESSEE FURTHER CLAIMS THAT FACT OF ITS CASE IS IDETICAL TO FACTS OF CASE CONSIDERED BY THE TRIBUNAL IN CASE OF VAISHALI PRAK ASH MUNI VS. ITO(SUPRA) AND HENCE REQUESTED TO ESTIMATE 2% PROFI T ON ALEGED ITA NO.5275 &5276/MUM/2018 M/S. AQUAPURE AGENCIES 6 BOGUS PURCHASES. WE, THEREFORE, CONSIDERING FACTS A ND CIRCUMSTANCES OF THIS CASE AND CONSISTENT WITH VIEW TAKEN BY THE CO- ORDINATE BENCH IN NUMBER OF CASES, INCLUDING IN THE CASE OF VAISHALI PRAKASH MUNI VS. ITO (SUPAR) DIRECT THE LD.AO TO ES TIMATE 2% PROFIT ON ALLEGED BOGUS PURCHASES. ACCORDINGLY, WE DIRECT THE AO TO REDUCE ADDITIONS TO 2% PROFIT ON ALLEGED BOGUS PURC HASES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASST. YEARS 2009-10 AND 2010-11 ARE PARTLY ALLOWED AND APPEAL F ILED BY THE REVEUNE FOR A.Y. 2010-11 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18/10/ 2019 SD/- ( SANDEEP GOSAIN ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 18/10/2019 THIRUMALESH SR.PS 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//