CAPITAL CONTROLS PRIVATE LIMITED (NOW KNOWN AS CAPCO WATER SOLLUTIONS PRIVATE LIMITED), MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 9(2)(1), MUMBAI

ITA 7433/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1454 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 28-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHI RAM KARTIKEYAN LD
• Assessee Lawyers: HITESH SHAH LD
• Keywords: Bogus purchase; Opportunity of being heard; Accommodation entries; Reassessment proceedings
• Section: 143(3); 133(6); 68; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.7433/MUM/2017 ( / ASSESSMENT YEAR:2009-10) ./ I.T.A. NO.7434/MUM/2017 ( / ASSESSMENT YEAR:2010-11) ./ I.T.A. NO.7435/MUM/2017 ( / ASSESSMENT YEAR:2012-13) CAPITAL CONTROLS PVT.LTD. (NOW KNOWN AS CAPCO WATER SOLUTIONS P.LTD.) 15, A.J. LAXMI INDUSTRIAL ESTATE LINK ROAD, ANDHERI (W) MUMBAI-400 053. / VS. ACIT - 9(2)(1) ROOM NO.601, 6 TH FLOOR AAYKAR BHAVAN, M.K. ROAD CHURCHGATE MUMBAI-400 020. ./ ./PAN/GIR NO. AABCC-1253-B ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : HITESH SHAH- LD. AR RESPONDENT BY : ABHI RAM KARTIKEYAN - LD.DR / DATE OF HEARING : 18/03/2019 / DATE OF PRONOUNCEMENT : 22/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2009- 10, 2010-11 & 2012-13 CONTEST SEPARATE ORDERS OF LD . FIRST APPELLATE AUTHORITIES. SINCE COMMON ISSUES ARE INVOLVED, WE D ISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE & BREVITY. 2 ITA NO. 7433/MUM/2017, AY 2009-2010 2. BY WAY OF THIS APPEAL, THE ASSESSEE CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-16, MUMBAI, [I N SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-16/IT-309/ACIT.9(2) (1)/2015-16 DATED 25/10/2017 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 3.1 FACTS AS EMANATING FROM QUANTUM ASSESSMENT ORDE R DATED 19/03/2015 FOR AY 2009-10 ARE THAT THE ASSESSEE BEI NG RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED IN PRODUCTION & TRADING OF CHLORINATORS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147. THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.226 .52 LACS AFTER SOLE ADDITION ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR RS.111.27 LACS AS AGAINST RETURNED INCOME OF RS.115 .25 LACS FILED BY THE ASSESSEE ON 30/09/2009 WHICH WAS PROCESSED U/S 143(1). 3.2 THE REASSESSMENT PROCEEDINGS GOT TRIGGERED PURS UANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MUMBAI AS WELL AS DGIT (INVESTIGATION), MUMBAI THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES OF PURCHASES AGGREGATING TO RS.111.27 LACS FROM 4 SUSPICIOUS PARTIES WITHOUT OBTAINING ANY MATERIAL / GOODS. CON SEQUENTLY, NOTICE U/S 148 DATED 04/03/2014 WAS ISSUED TO THE ASSESSEE WHI CH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). THE DETAI LS OF SUPPLIERS FROM WHOM SUCH ENTRIES ARE STATED TO HAVE BEEN PROCURED BY THE ASSESSEE HAS ALREADY BEEN EXTRACTED IN PARA-4.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDINGLY, THE ASSESSEE WAS CALLED TO PRO VIDE DOCUMENTARY EVIDENCES IN RESPECT OF PURCHASES MADE FROM 4 PARTI ES INCLUDING DELIVERY CHALLANS & COPIES OF INVOICES. 3 3.3 NOTICES SENT U/S 133(6) TO VARIOUS SUPPLIERS TO CONFIRM THE TRANSACTIONS ELICITED NO SATISFACTORY RESPONSE AND NONE OF THE SUPPLIER RESPONDED TO THE SAME. THE SAID FACT WAS CONFRONTED TO THE ASSESSEE VIDE SHOW-CAUSE NOTICE WITH A DIRECTION TO SUBSTANT IATE THE PURCHASE TRANSACTIONS AND DELIVERY OF MATERIAL. ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BY SUBMITTING THAT THE PURCHASES WERE GENUINE BUT FAILED TO PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACT IONS. THE ASSESSEE ALSO FAILED TO PROVIDE ANY QUANTITY WISE TALLY OF P URCHASE & SALE. SINCE THE ASSESSEE, IN THE OPINION OF LD. AO, FAILED TO D ISCHARGE THE ONUS CASTED UPON HIM TO PROVE THE PURCHASES, DISALLOWED THE ENTIRE PURCHASES. THE STAND OF LD. AO, UPON CONFIRMATION B Y FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER-BOOK, SUBMITTED THAT THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCU MENTS INCLUDING DELIVERY CHALLANS, LOADING CHARGES PAID VOUCHERS & MATERIAL RECEIPT NOTE AND THE PAYMENTS TO SUPPLIERS WERE THROUGH BANKING CHANNELS AND THEREFORE THE DISALLOWANCE WAS NOT JUSTIFIED. THE L D. DR SUBMITTED THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CASTED UP ON HIM TO PROVE THE GENUINENESS OF THE PURCHASES. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. AFTER DUE CONSIDERATIO N OF FACTUAL MATRIX, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE N O SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS INCLUDING DELIVERY CHALLANS AND THE PAYMENTS TO THE VARIOUS SUPPLIERS WAS THROUGH BANKING CHANNELS. THE SALES TURNOVER AC HIEVED BY THE 4 ASSESSEE HAS BEEN ACCEPTED BY THE REVENUE. HOWEVER, AT THE SAME TIME, THE ASSESSEE FAILED TO PRODUCE ANY OF THE PAR TIES TO CONFIRM THE TRANSACTIONS AND NOTICES SENT U/S 133(6) ELICITED N O SATISFACTORY RESPONSE. THE ASSESSEE FAILED TO SUBSTANTIATE THE P URCHASE TRANSACTIONS WITH COGENT DOCUMENTARY EVIDENCES. UNDER THE GIVEN CIRCUMSTANCES, THE ADDITION WHICH COULD BE MADE WAS TO ACCOUNT FOR PRO FIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOG US PURCHASES. THEREFORE, WE ESTIMATE THE IMPUGNED ADDITIONS AT 12 .5% OF ALLEGED BOGUS PURCHASES, WHICH WORKS OUT TO RS.13,90,940/-. THE BALANCE ADDITION STANDS DELETED. THE APPEAL STANDS PARTLY A LLOWED. ITA NO. 7434/MUM/2017, AY 2010-2011 6. IN THIS YEAR, THE ASSESSEE HAS SIMILARLY BEEN SA DDLED WITH ADDITION OF RS.59.24 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE STAND OF LD. AO. FACTS & CIRCUMSTANCES, BEING PARI-MATERIA THE SAME, TAKING THE SAME VIEW, WE RESTRICT THE IMPUGNED ADDITIONS TO 12.5% OF RS.59,2 4,660/- WHICH WORKS OUT TO BE RS.7,40,582/-. THE APPEAL STANDS PARTLY A LLOWED. ITA NO. 7435/MUM/2017, AY 2012-2013 7. IN THIS YEAR, THE ASSESSEE IS AGGRIEVED BY CONFI RMATION OF CERTAIN ADDITIONS U/S 68 FOR RS.90.20 LACS. THE RELEVANT FA CTS ARE THAT DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSE SSEE OBTAINED UNSECURED LOANS AGGREGATING TO RS.90.20 LACS FROM 5 PARTIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PARA 4 OF THE QUANTUM ASSESSMENT ORDER DATED 13/03/2015. THE SAME WERE AD DED U/S 68 FOR WANT OF REQUISITE DETAILS / CONFIRMATIONS ETC. SIMI LAR WAS THE SITUATION 5 BEFORE LD. FIRST APPELLATE AUTHORITY, WHEREIN THE A SSESSEE AGAIN FAILED TO SUBSTANTIATE THE SAME WITH REQUISITE DOCUMENTARY EV IDENCES. 8. THE ONLY PLEA RAISED BY LD. AR, BEFORE US, IS TH AT THE ASSESSEE IS IN A POSITION TO SUBSTANTIATE THE SAME AND THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE RESTORED BACK TO THE FIL E OF LD. AO FOR RE- ADJUDICATION. THE LD. DR POINTED OUT THAT THE ASSES SEE MISERABLY FAILED TO PROVE THE SAME EVEN DURING APPELLATE PROCEEDINGS . 9. KEEPING IN VIEW THE ABOVE SUBMISSIONS, IN THE IN TEREST OF JUSTICE, WE DEEM IT FIT TO RESTORE THE MATTER BACK TO THE FI LE OF LD. AO FOR RE- ADJUDICATION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHO, IN TURN, IS DIRECTED TO SUBSTANTIATE THE TRANSACTIONS. THE APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. CONCLUSION 10. ALL THE APPEAL STANDS PARTLY ALLOWED IN TERMS O F OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22/03/2019 SR.PS, JAISY VARGHESE !'#$ # / 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.