SHUBH ENTERPRISES, KHARGHAR V. ITO WD 2, NEW PANVEL

ITA 7517/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2086 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: V D PARMAR
• Keywords: Bogus purchase; Additional evidence; Initiation of penalty proceedings
• Section: 40A(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY , JM & SHRI M.BALAGANESH, AM I TA NO. 7517 /MUM/201 6 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. SHUBH ENTERPRISES C/O. SHRI VIGNESH PATEL 401, LOTUS, PLOT NO.6 SECTOR 20, KHAR GAR 410 210 NAVI MUMBAI VS. ITO WD(2) TRIFFED TOWER 2 ND FLOOR, SECTOR 17, KHANDA COLONY NEW PANVEL DIST: RAIGADH PAN/GIR NO. ABIFS3631A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI V.D. PARMAR REVENUE BY SHRI AMIT PRATAP SINGH DATE OF HEAR ING 19 / 09 /2019 DATE OF PRONOUNCEMENT 06 / 12 /2019 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 7517/MUM/2016 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 2, THANE IN APPEA L NO. 158/14 - 15 DATED 29/02/2016 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 19/03/2014 BY THE LD. INCOME TAX OFFICER, WARD - 2, PANVEL (HEREINAFTER REFERRED TO AS LD. AO). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.1,07,64,795/ - ON ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 2 ACCOUNT OF ALLEGED BOGUS PURCHASES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT ASSESSEE IS A PARTNERSHIP FIRM CARRYING O N THE ACTIVITIES OF PROMOTERS AND BUILDERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF PURCHASES MADE BY THE ASSESSEE FROM VARIOUS PARTIES WERE CALLED FOR AND THE SAME WERE DULY SUBMITTED BY THE ASSESSEE. THE LD. AO HAD OBSERVED THAT ON VERIFICATION OF BOOKS OF ACCOUNTS, DOCUMENTS, PURCHASE REGISTER ETC, IT REVEALED THAT THE ASSESSEE HAD MADE PURCHASES FROM THE FOLLOWING PARTIES WHO ARE HAWALA DEALERS FOR WHICH STANDARDI Z ED PROCEDURE S OF MAINTENANCE OF RECORDS FOR PURCHASE AND RECEI PT OF MATERIALS AND THE VARIOUS INTERNAL VERIFICATION PROCESS THAT WERE OTHERWISE FOLLOWED BY THE ASSESSEE IN RESPECT OF GENUINE PURCHASES , WERE NOT FOLLOWED: - M/S. POLARIS SALES AGENCY PVT. LTD RS 30,82,301/ - M/S.NAVODAY TRADE IMPEX PVT LTD RS. 9,60,350/ - M/S.SWASTIK SALES AGENCY PVT LTD RS.10,45,204/ - M/S.JAINEX TRADERS PVT LTD RS.10,02,700/ - M/S.LITTLE WORLD TRADE IMPEX PVT LTD RS.14,37,007/ - M/S.AUTHENTIC ENTERPRISES PVT LTD RS.14,95,001/ - M/S.LINUX SALES AGENCY PVT LTD RS. 5,65.313/ - M/S. REGAL MARBLE (ENTERPRISE) RS. 6,10,000/ - M/S.SHRISHTI MERCANTILE RS. 5,35,000/ - M/S.MANAV IMPEX RS. 13,320/ - M/S.SHREE BAIAJI ELECTRIC & HARDWARE STORES RS . 18,599 TOTAL RS. RS.1,07,64,795/ - 3.1. WE FIND THAT THE LD. AO HAD OBSERVED THAT THE PURCHASE INVOICES FROM THE AFORESAID PARTIES DID NOT BEAR THE STAMP OF RECEIPT OF GOODS BY THE ASSESSEE NOR DO THEY BEAR ANY MARK SUGGESTING THAT GOOD SOUGH T TO BE SUPPLIED THROUGH THESE BILLS WERE ACTUALLY RECEIVED BY THE ASSESSEE. THE LD. AO FURTHER OBSERVED THAT THE DOCUMENTARY PROOFS LIKE DISPATCH ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 3 NOTES, FREIGHT RECEIPTS, DELIVERY CHALLANS ETC. FOR TRANSPORTATION AND DELIVERY OF GOODS BY THE ABOVE REFERRE D PARTIES WERE NOT FURNISHED BY THE ASSESSEE. IN VIEW OF THE AFORESAID FACT S AND IN VIEW OF THE FACT THAT THE SALES TAX DEPARTMENT HAD DECLARED THESE PARTIES AS HAWALA PARTIES ENGAGED IN PROVIDING ACCOMMODATION BILLS WITHOUT ANY ACTUAL DELIVERY OF GOODS, T HE LD AO HAD TREATED THE PURCHASES MADE FROM THESE PARTIES AS BOGUS AND DISALLOWED THE SUM OF RS.107,64,795/ - THEREON. THE ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). 3.2. WE FIND THAT THE LD. AR HAD FILED A PETITION UNDER R ULE 29 OF THE ITAT RULES FOR ADMISSION OF ADDITIONAL EVIDENCES WHICH ARE AS UNDER: - SR. NO DETAILS OF DOCUMENT WITH ITS ENCLOSURES 1 CERTIFICATE OF QUANTITY CONSUMED OF STEEL FROM REGISTERED STRUCTURAL ENGINEER MR K K PATEL 2 COMPARATIVE CHART OF GP AND NP RATE FOR THR EE YEARS 3 OCCUPANCY CERTIFICATES DATED 5 - 08 - 2011 OF CIDCO 4 ASSESSMENT ORDER/ DEVELOPMENT CHARGES 22 - 06 - 2010 OF CIDCO 5 COPY OF LEDGER ACCOUNT M/S KARAN ENTERPRISES 6 COPY OF LEDGER ACCOUNT M/S SHIV TRANSPORT 7 COPY OF LEDGER ACCOUNT M/S GAV DEVI SUPPLIERS 8 COPY OF LEDGER ACCOUNT M/S OM CONSTRUCTION ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 4 3.3. THOUGH THE LD. DR VEHEMENTLY OBJECTED FOR ADMISSION OF THESE ADDITIONAL EVIDENCES, WE FIND THAT SINCE THE EXAMINATION OF THESE ADDITIONAL EVIDENCES WOULD BRING OUT THE TRUE FACTS, HENCE , IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DEEM IT FIT AND APPROPRIATE TO ADMIT THESE ADDITIONAL EVIDENCES AND REMAND THE ISSUE TO THE FILE OF THE LD. AO FOR DENOVO ADJUDICATION IN THE LIGHT OF THESE ADDITIONAL EVIDENCES SUBMITTED. ACCORDINGLY, THE GRO UND NOS.1 & 2 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.18,14,000/ - U/S.40A(3) OF THE ACT ON ACCOUNT OF CA SH PAYMENTS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1 . WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT THE LD. AO ON VERIFICATION OF THE CASH BOOK OF THE ASSESSEE HAD NOTICED THAT ASSESSEE HAD MADE CASH PAYMENTS TO CERTAIN TRANSPORTERS IN EXCESS OF R S.20,000/ - TOTALING TO THE TUNE OF RS.19,14,000/ - WHICH WAS IN GROSS VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE DETAILS OF SAID PAYMENTS ARE RECORDED IN PAGE S 3 & 4 OF THE ASSESSMENT ORDER. THE LD. AO DISALLOWED THE SAME U/S.40A(3) OF THE AC T IN THE ASSESSMENT. WE FIND THAT THE LD. CIT(A) HAD DIRECTED THE ASSESSEE TO FILE CONFIRMATION FROM THE PAYEES TO WHOM CASH WAS PAID TOGETHER WITH COPY OF TRANSPORT BILLS AND NATURE OF ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 5 MATERIALS TRANSPORTED BY THE RESPECTIVE TRANSPORTERS. THE ASSESSEE DID NOT FURNISH THE SAME DESPITE SEVERAL OPPORTUNITIES PROVIDED TO IT BEFORE THE LD. CIT(A). ACCORDINGLY, THE LD. CIT(A) OBSERVED THAT THE GENUINENESS OF THE SAID EXPENDITURE PER SE COULD NOT BE ESTABLISHED BY THE ASSESSEE WITH CREDIBLE DOCUMENTS AND HENCE SU STAINED THE DISALLOWANCE MADE BY THE LD. AO U/S.40A(3) OF THE ACT. 4.2 . WE FIND THAT EVEN BEFORE US, THE ASSESSEE COULD NOT FURNISH DOCUMENTARY EVIDENCES TO ESTABLISH THAT THESE TRANSPORTERS HAD INDEED BEEN ENGAGED BY THE ASSESSEE FOR TRANSPORTATION OF MAT ERIALS FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE LD. AR BEFORE US MERELY PLACED RELIANCE ON THE CASH BOOK OF THE ASSESSEE WHICH ARE ENCLOSED IN PAGES 117 TO 122 OF THE PAPER BOOK FROM WHERE IT COULD BE NOTICED THAT ON EACH DATE PAYMENTS WERE MADE BY THE ASSESSEE TO DIFFERENT TRANSPORTERS IN CASH LESS THAN RS.20,000/ - . BASED ON THIS, THE LD. AR ARGUED THAT THERE IS NO VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT, BUT WE FIND FROM THE PERUSAL OF THE SAID CASH BOOK THAT , ASSESSEE HAD RECEIVED C ASH FROM FLAT OWNERS ON A PARTICULAR DATE AND IMMEDIATELY HAD USED THE SAME FOR MAKING PAYMENTS TO TRANSPORTERS ON A DAILY BASIS LESS THAN RS.20,000 IN CASH AND MOST OF THE TRANSPORTERS NAMES ARE REPEATED DAY BY DAY. IT IS VERY UNLIKELY THAT IN A DYNAMIC BUSINESS ENVIRONMENT THAT THE TRANSPORTER WOULD COME BEFORE THE ASSESSEE TO RECEIVE CASH ON A DAILY BASIS. NORMALLY, ONCE THE MATERIALS ARE DELIVERED, IF ANY , TO THE ASSESSEE, THE TRANSPORTER WOULD INSIST FOR THE PAYMENT AND HE WILL PROCEED FOR THE NEXT ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 6 TR IP AND WOULD NOT WAIT IN THE SAME STATION TO RECEIVE CASH ON A DAILY BASIS LESS THAN RS.20,000/ - . MOREOVER, THE LD. CIT(A) HAD CATEGORICALLY OBSERVED THAT ASSESSEE HAD NOT FURNISHED ANY CONFIRMATION FROM THESE TRANSPORTERS AND HAD ALSO NOT FURNISHED ANY EV IDENCES TO PROVE THAT THESE TRANSPORTERS HAD INDEED RENDERED TRANSPORTATION FACILITIES FOR THE ASSESSEE. ACCORDINGLY, THE GENUINENESS OF EXPENDITURE PER SE IS NOT ESTABLISHED BY THE ASSESSEE IN THE INSTANT CASE. HENCE, WE DO NOT DEEM IT FIT TO INTERFERE IN THE ORDER OF THE LD. CIT(A) SUSTAINING THE DISALLOWANCE. ACCORDINGLY, THE GROUND NO.3 RAISED BY THE ASSESSEE IS DISMISSED. 5 . GROUND NO.4 RAISED BY THE ASSESSEE IS WITH REGARD TO INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT WHICH IS PREMA TURE FOR ADJUDICATION AT THIS STAGE. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 / 12 /201 9 SD/ - ( SAKTIJIT DEY ) SD/ - (M .BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 06 / 12 / 2019 KARUNA , SR.PS ITA NO .7517/MUM/2016 M/S. SHUBH ENTERPRISES 7 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, M UMBAI 6. GUARD FILE. //TRUE COPY//