BHAWANI SINGH RATHORE, MUMBAI V. ASST CIT CIR 24(1), MUMBAI

ITA 7365/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0640 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN LD
• Assessee Lawyers: BHUPENDRA SHAH LD
• Keywords: Bogus purchase; Tax effect; Reassessment proceedings
• Section: 69C; 143(3); 133(6); 147; 69; 148

Judgement Text

ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.7365/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) BHAWANI SINGH RATHORE 1009/B-WING ADITYA VARDHAN,CHANDIWALI ANDHERI(E), MUMBAI-400 059 / VS. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 24(1) 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 012 ! ./ ./ PAN/GIR NO.ADYPR-3619-R ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) REVENUE BY : V. JENARDHANAN, LD.DR ASSESSEE BY : BHUPENDRA SHAH,LD.AR / DATE OF HEARING : 06/02/2018 / DATE OF PRONOUNCEMENT : 09 /02/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1 THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT Y EAR [AY] 2009-10 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-39 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-39/IT-473/ACIT-24(1)/15-16 DATED 2 ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 19/10/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS U/S 69C ON ACCOUN T OF ALLEGED BOGUS PURCHASES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE 24( 1), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 16/03/2015. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN TRADING OF BUILDING MATERIAL & CIVIL CONTRACTS UNDE R PROPRIETORSHIP CONCERNS NAMELY BHAWANI ENTERPRISES, JAGDAMBA CONSTRUCTION & KARNI TRANSPORT WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY AT RS.1,91,34,370/- AFTER ADDIT ION OF CERTAIN BOGUS PURCHASES FOR RS.16,90,859/-. THE ORIGINAL RETURN WAS FILED B Y THE ASSESSEE ON 29/09/2009 AT RS.1,69,89,970/- WHIC H WAS ASSESSED U/S 143(3) AT RS.1,74,43,510/-. 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION), MUMBAI 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.63,48,699/- FROM SEVEN SUCH PARTIES. CONSEQUENTLY, STATUTORY NOTICE U/S 148 DATED 06/03/2014 WAS ISSUED TO THE ASSESSEE WHICH WAS FOL LOWED BY NOTICES U/S 143(2) AND 142(1). 2.3 DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE, INTER-ALIA, PLEADED THAT THE PURCHASES WERE GENUINE AND SUBMITTED PURCHASE INVOICES, LEDGER EXTRACTS, PAYMENT DETAILS ETC. HOWEVER, NOTICES ISSUED U/S 133(6) TO SIX PARTIES TO CONFIRM THE PURCHASE TRANSACTIONS REMAIN ED UN-SERVED AND ONE 3 ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 PARTY NAMELY AYUSHI ENTERPRISES DENIED HAVING MADE ANY TRANSACTION WITH THE ASSESSEE. THE ASSESSEE ALSO COULD NOT TO PRODUC E ANY SUPPLIERS TO SUBSTANTIATE THE PURCHASES WHICH LED THE LD. AO TO TREAT THE SAID PURCHASES AS BOGUS PURCHASES. FINALLY, AFTER CONSIDERING THE ASSESSEES NATURE OF BUSINESS, THE ADDITIONS WERE ESTIMATED U/ S 69C @25% OF ALLEGED BOGUS PURCHASES WITH RESPECT TO SIX PARTIES AGGREGATING TO RS.62,10 ,453/- AND FULL ADDITION AMOUNTING TO RS.1,38,246/- WITH R ESPECT TO AYUSHI ENTERPRISES , THE AGGREGATE OF WHICH CAME TO RS.16,90,859/-. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 19/10/20 16 WHERE LD. CIT(A) WHILE PLACING RELIANCE ON CERTAIN JUDICIAL PRONOUNC EMENTS, RESTRICTED THE ESTIMATED DISALLOWANCE TO 12.5% OF GROSS PURCHASES MADE FROM ALL SEVEN PARTIES WHICH CAME TO RS.7,93,587/-. STILL AGGRIEVE D, THE ASSESSEE IN IS FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE [ AR] DREW ATTENTION TO THE FACT THAT GROSS PROFIT DECLARED BY THE ASSESSEE IN THIS YEAR WAS HIGHER THAN THE IMMEDIATELY PRECEDING YEAR AND THE ASSESSEE PAID VAT TWICE AND FURTHER THE ADDITIONS COULD NOT BE MADE U /S 69C. RELIANCE HAS BEEN PLACED IN THE ORDER OF THIS TRIBUNAL RENDERED BY SMC BENCH IN ITO VS. KARSAN NANDU [77 TAXMANN.COM 275 30/11/2016]. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] STRESSED THE POINT THAT THE ASSESSEE FAILED TO PRODUCE EVEN SINGLE SUPPLIER TO CONFIRM T HE TRANSACTIONS AND THE SAID SUPPLIERS WERE NON-EXISTENT AND THEREFORE, THE STAND OF LD. CIT(A) WAS 4 ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 QUITE JUSTIFIED. OUR ATTENTION IS FURTHER DRAWN TO THE FACT THAT THE ASSESSEE DESERVES FULL DISALLOWANCE ON FACTUAL MATRIX, HOWEV ER, THE REVENUES APPEAL GOT DISMISSED DUE TO LOW TAX EFFECT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITY. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROU GH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM ANY OF THE IMPUGNED SIX SUPPLIERS AND ONE SUPPLIER COMPLETELY DENIED HAVING MADE ANY TRANSACTION WITH THE ASSESSEE. THE PERUSAL OF THE TAX AUDIT REPORT REVEALS THAT THE ASSESSEE WAS NOT MAINTAINING STOCK RECORDS. THE ASSESSEE WAS UNABLE TO SUBSTANTIATE DELIVERY OF MATERIAL BY PRODUCTION OF DELIVERY CHALLANS / TRANSPORT RECEIPTS. ALL THESE FACTORS CAST SERIOUS DOUBT ON ASSESSEES CLAIM. 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 ELEMENT EARNED BY ASSESSEE AGA INST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VALUE ADDED TAX [VAT] AGAINST SUCH BOGUS PURCHASES, WHICH LOWER AUTHORITI ES HAVE RIGHTLY DONE SO. SO FAR AS THE RELIANCE OF THE LD. AR ON THE CIT ED CASE LAW IS CONCERNED, WE FIND THAT THE SMC BENCH OF TRIBUNAL IN THAT CASE, AS AN ALTERNATIVE PROPOSITION, OBSERVED THAT INVOCATION OF SECTION 69 C WAS ON WRONG FOOTING. 5 ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 HOWEVER, THE SAID OBSERVATIONS ARE MADE ON PECULIAR FACTUAL MATRIX AND COULD NOT BE APPLIED AS A UNIVERSAL PRINCIPLE. WE H AVE ALREADY OBSERVED THAT THE PURCHASES REFLECTED BY THE ASSESSEE WERE I N GRAVE DOUBT AND THE ASSESSEE MISERABLY FAILED TO PROVE THE SAME. THIS F ACT LEADS US TO THE LOGICAL CONCLUSION THAT SINCE THE ASSESSEE WAS ENGA GED IN TRADING ACTIVITIES, THE GOODS MUST HAVE BEEN SOURCED BY THE ASSESSEE FROM SOMEWHERE ELSE, THE SOURCE OF INVESTMENT OF WHICH R EMAINED UNEXPLAINED. THE STATED FACT IS FURTHER SUBSTANTIATED BY THE FAC T THAT ONE PARTY COMPLETELY DENIED HAVING MADE ANY TRANSACTION WITH THE ASSESSE E. THEREFORE, FINDING THE STAND OF LOWER AUTHORITIES QUITE FAIR AND REASO NABLE, WE DISMISS ASSESSEES APPEAL. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH FEBRUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR A GGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED:09.02.2018 SR.PS:-THIRUMALESH 6 ITA NO.7365/MUM/2016 BHAWANI SINGH RATHORE ASSESSMENT YEAR 2009-10 ! '# $ / COPY OF THE ORDER FORWARDED TO : 1. 12345 / THEAPPELLANT 2. 9:45 / THERESPONDENT 3. >?> @AB123C / THECITBAC 4. >?> @A / CIT CONCERNED 5. JKLM39ANO>?123P1NO?Q / DRITATMUMBAI 6. MSTU/ GUARDFILE / BYORDER !/ ! BDY./ASSTT. REGISTRARC '!8 '9:;< / ITAT< MUMBAI