SHASWAT HOMES, MUMBAI V. ACIT CIR 3, KALYAN

ITA 7325/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0579 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 13-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 147; 148; 2

Judgement Text

ITA.NO.7325/MUM/2016 SHASHWAT HOMES ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.7325/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) SHASHWAT HOMES A-16, 4 TH FLOOR AWANTIKA CO-OP HOUSING SOCIETY GAWANPADA MULUND (EAST), MUMBAI 400 081 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE 3 RANI MANSION / ZOZWALA COMPLEX MURBAD ROAD KALYAN (WEST) 421 301 ! ./ ./PAN/GIR NO. AAZFS-7695-C ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : V.JENARDHANAN, LD. DR / DATE OF HEARING : 31/01/2018 / DATE OF PRONOUNCEMENT : 07/02/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-1 [CIT(A)], THANE, APPEAL NO.177/15-16 DATED 27/09/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, KALYAN [AO] U /S 143(3) READ WITH ITA.NO.7325/MUM/2016 SHASHWAT HOMES ASSESSMENT YEAR-2011-12 2 SECTION 147 OF THE INCOME TAX ACT, 1961 ON 10/03/2015. NONE IS PRESENT FOR ASSESSEE DESPITE NOTICE AND NO ADJOURNMENT APPL ICATION IS ON RECORD. THEREFORE, WE PROCEED TO DISPOSE-OFF THE SAME ON TH E BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMEN TAL REPRESENTATIVE [DR]. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION AGAINST CERTAIN ALLEGED BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED AS BUILDERS & DEVELOPERS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY AT RS.1,19,63,760/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.68,52,504/-. THE ORIGINAL RETURN WAS FILED ON 27/09/2011 AT RS.51,11,260/- WH ICH 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 PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.68,52,504/- FROM FOUR SUCH PARTIES. CONSEQUENTLY , STATUTORY NOTICE U/S 148 DATED 27/05/2013 WAS ISSUED TO THE ASSESSEE WHI CH WAS FOLLOWED BY NOTICES U/S 143(2) AND 142(1). 2.3 DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE, INTER-ALIA, PLEADED THAT THE PURCHASES WERE GENUINE SINCE THE PAYMENTS WERE THROUGH BANKING CHANNELS AND THE SUPPLIERS HAD VALID REGIST RATION UNDER VAT AT THE TIME OF PURCHASES. HOWEVER, NOT CONVINCED, LD. AO NOTED THAT THE SAID SUPPLIERS, BEFORE SALES TAX AUTHORITIES, ADMIT TED TO BE INDULGING IN THE ACTIVITY OF BOGUS BILLING WITHOUT CARRYING OUT ANY ACTUAL SALE OR PURCHASES. THE LD. AO FURTHER NOTED THAT THE ASSESS EE FAILED TO FILE THE ITA.NO.7325/MUM/2016 SHASHWAT HOMES ASSESSMENT YEAR-2011-12 3 CONFIRMATION OF ACCOUNTS OR TRANSPORTATION DETAILS EVIDENCING MOVEMENT OF GOODS AND THEREFORE, THE PURCHASES WERE NOT GENU INE. FINALLY, THE PURCHASES WERE DISALLOWED AND ADDED TO THE INCOME O F THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/09/2 016 WHERE LD. CIT(A) AFTER APPRECIATING THE FACTUAL MATRIX CONFIR MED THE STAND OF LD. AO. AGGRIEVED, THE ASSESSEE IN IS FURTHER APPEAL BE FORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] RELIED ON THE STAND OF LOWER AUTHORITIES AND POINTED OUT THAT THE ASSESSEE MISERABLY FAILED TO PROVE THE STATED PURCHASE TRANSACTIONS AND THEREFOR E, THE ADDITIONS WERE QUITE FAIR AND JUSTIFIED. 5. WE HAVE CAREFULLY HEARD THE CONTENTIONS AND PERU SED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED AS BUILDER & DEVELOPERS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE A ND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOCUMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT SUBSTANTIATE DELIVERY OF MATERIAL IN ANY MANNER AND COULD NOT PROVIDE SATISFACTORY DETAILS OF CONSUMPTION OF RAW MATERIAL BEFORE LOWER AUTHORITIES. FURTHER, THE ASSESSEE FAILED TO PRODUC E ANY OF THE FOUR SUPPLIERS TO CONFIRM THE TRANSACTIONS AND THESE SUP PLIERS, BEFORE SALES TAX AUTHORITIES, ADMITTED TO BE INDULGING IN THE AC TIVITY OF BOGUS BILLING WITHOUT CARRYING OUT ANY ACTUAL SALE OR PURCHASE. A LL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SU CH A SITUATION, THE ITA.NO.7325/MUM/2016 SHASHWAT HOMES ASSESSMENT YEAR-2011-12 4 ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR P ROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL I N THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHAS ES. KEEPING IN VIEW THE OVERALL FACTUAL MATRIX AND GROSS PROFIT RATE OF SEVERAL YEARS AS EXTRACTED BY LD. CIT(A) ON PAGE NO. 5 OF THE IMPUGN ED ORDER, WE ESTIMATE THE ADDITIONS @12.5% OF ALLEGED BOGUS PURCHASES OF RS.68,52,504/- WHICH COMES TO RS.8,56,563/- AND DEL ETE THE BALANCE ADDITIONS OF RS.59,95,941/-. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH FEBRUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR A GGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07. 02.2018 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI