VENUS CHEMICALS (INDIA), MUMBAI V. ITO 24(3)(4), MUMBAI

ITA 7625/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9636 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 29-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 7625 /MUM/20 16 (ASSESSMENT YEAR 20 10 - 11 ) I.T.A. NO. 7626/MUM/2016 (ASSESSMENT YEAR 2011 - 12) I.T.A. NO. 7627/MUM/2016 (ASSESSMENT YEA R 2009 - 10) M/S. VENUS CHEMICALS (INDIA) 12 - A, KOTHARI INDUSTRIAL ESTATE OPP. LAGHU UDYOG I.B. PATEL ROAD, GOREGAON EAST MUMBAI - 400 063. PAN : AAGFV8785R VS. ITO 24(3)(4) MUMBAI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAHUL HAKANI DEPARTMEN T BY MS. POOJA SWAROOP DATE OF HEARING 14.8 . 201 7 DATE OF PRONOUNCEMENT 22 .9 . 201 7 O R D E R PER BENCH: - ALL THE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY LD CIT(A) - 42, MUMBAI AND THEY RELATE TO THE A SSESSMENT YEARS 2009 - 10, 2010 - 11 AND 2011 - 12. ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. IN THESE THREE YEARS, THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN GRANTING ONLY P ARTIAL RELIEF TO THE ASSESSEE IN RESPECT OF THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A DEALER IN SYNTHETIC RUBBER AND RUBBER CHEMICALS. CONSEQUENT TO THE INFORMATION RECEIVED FR OM SALES TAX DEPARTMENT THAT CERTAIN PARTIES (CALLED HAWALA PARTIES) ARE INDULGING IN PROVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS, THE REVENUE EXAMINED THOSE DETAILS. IT WAS NOTICED THAT THE ASSESSEE HEREIN HAVE PURCHASED G OODS DURING THE YEARS UNDER CONSIDERATION FROM A PARTY VENUS CHE MICALS (INDIA) 2 NAMED M/S KRISH RUBBER TRADERS, WHO WAS LISTED AS A HAWALA PARTY. THE AGGREGATE AMOUNT OF PURCHASES MADE BY THE ASSESSEE FROM THE SAID DEALER WAS RS.71,71,918/ - , RS.1,88,35,180/ - AND RS.3,17,48,325/ - RESPECTIVELY DURING THE YEARS RELEVANT FOR AY 2009 - 10 AND 2011 - 12. HENCE THE AO REOPENED THE ASSESSMENTS OF ALL THE THREE YEARS. 3. THE AO DIRECTED THE ASSESSEE TO PRODUCE EVIDENCES FOR TRANSPORTATION OF MATERIALS AND PAYMENT OF OCTROI, BUT THE ASSESS EE DID NOT FURNISH THEM. THE AO, THEN DEPUTED HIS INSPECTOR, TO VERIFY THE SUPPLIER. THE INSPECTOR REPORTED THAT M/S KRISH RUBBER TRADERS ALSO DOES NOT HAVE EVIDENCE FOR TRANSPORTATION OF MATERIALS AND PAYMENT OF OCTROI. HE ALSO NOTICED THAT THE SUPPLIER D OES NOT HAVE A GODOWN. THE ABOVE SAID SUPPLIER HAD ADMITTED BEFORE THE SALES TAX AUTHORITIES THAT IT HAD ISSUED ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS. THE AO GAVE A COPY OF THE SAID STATEMENT TO THE ASSESSEE. THEREAFTER, THE A O ISSUED SUMMONS TO THE SUPPLIER AND RECORDED A STATEMENT FROM SHRI ANUJ L ASSAWA, WHO AGAIN REITERATED THE SUBMISSIONS MADE BEFORE THE SALES TAX AUTHORITIES. BEFORE THE AO, THE ASSESSEE COULD NOT FURNISH DELIVERY CHALLANS AND STOCK RECORDS ALSO. HENCE T HE AO HELD THAT THE ASSESSEE HAS NOT MADE PURCHASES FROM THE ABOVE SAID PARTY AND ACCORDINGLY DISALLOWED ENTIRE AMOUNT OF PURCHASES REFERRED ABOVE IN THE RESPECTIVE YEARS. 4. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) DIRECTED THE ASSESEE TO RECONCIL E THE PURCHASES AND SALES BY FILING STOCK DETAILS. THE ASSESSEE FURNISHED THE SAME AND THE SAID DETAILS WERE ALSO FORWARDED TO AO FOR EXAMINATION. IN THE REMAND REPORT, THE AO SUBMITTED THAT THERE WAS NO MISMATCH. HENCE THE LD CIT(A) TOOK THE VIEW THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM SOME OTHER CHANNEL AND NOT FROM M/S KRISH RUBBER TRADERS. ACCORDINGLY, BY PLACING RELIANCE ON HOSTS OF CASE LAW, THE LD CIT(A) TOOK THE VIEW THAT THE DISALLOWANCE OF ENTIRE AMOUNT OF PURCHASES WAS NOT JUSTIFIE D AND ONLY THE PROFIT VENUS CHE MICALS (INDIA) 3 ELEMENT EMBEDDED IN THOSE PURCHASES ALONE CAN BE BROUGHT TO TAX. ACCORDINGLY HE ESTIMATED THE PROFIT ELEMENT AT 12.50% OF THE VALUE OF IMPUGNED PURCHASES AND CONFIRMED ADDITION TO THAT EXTENT. THE ASSESSEE IS AGGRIEVED BY THE DECISIO N OF LD CIT(A) IN PARTIALLY CONFIRMING THE ADDITION IN ALL THE THREE YEARS. 5. WE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS DISALLOWED ENTIRE AMOUNT OF PURCHASES BY PLACING RELIANCE ON THE STATEMENT GI VEN BY THE SUPPLIER BOTH BEFORE THE SALES TAX AUTHORITIES AND BEFORE HIM. THE AO HAS ALSO STATED THAT THE ASSESSEE HAS NOT FURNISHED STOCK DETAILS. HOWEVER, BEFORE LD CIT(A), THE ASSESSEE COULD RECONCILE THE PURCHASES AND SALES AND THE AO ALSO DID NOT FI ND ANY MISMATCH IN THE REMAND PROCEEDINGS. HENCE THE LD CIT(A) HAS TAKEN THE VIEW THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM DIFFERENT CHANNELS AND OBTAINED ACCOMMODATION BILLS FROM THE ABOVE SAID SUPPLIER IN ORDER TO ACCOUNT THOSE PURCHASES. SINC E THE SALES HAS BEEN ACCEPTED, IN OUR VIEW, THE LD CIT(A)S INFERENCE CANNOT BE FOUND FAULT WITH, PARTICULARLY IN VIEW OF THE FACT THAT THE SUPPLIER HAS DENIED SUPPLYING MATERIALS BEFORE THE AO ALSO. 6. SINCE THE PURCHASES HAVE BEEN CORRELATED WITH THE SALES, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN TAKING THE VIEW THAT THE PROFIT ELEMENT EMBEDDED FROM SUCH PURCHASES ALONE CAN BE BROUGHT TO TAX. IN THE INSTANT CASE, THE PURCHASES HAVE BEEN TREATED AS HAVING BEEN MADE FROM UNDISCLOSED SOUR CES. HENCE THE NATURAL INFERENCE IS THAT THE ASSESSEE MIGHT HAVE PROFITED THERE FROM IN THE FORM OF LOWER PRICES AND SAVING OF TAXES. THE LD CIT(A) HAS ESTIMATED THE PROFIT AT 12.50% OF THE VALUE OF IMPUGNED PURCHASES. BEFORE US, THE ASSESSEE COULD NOT F URNISH ANY OTHER MATERIAL IN ORDER TO COMPEL US TO DISTURB THE FINDINGS GIVEN BY LD CIT(A). ACCORDINGLY WE UPHOLD THE ORDERS PASSED BY LD CIT(A) IN ALL THE THREE YEARS. VENUS CHE MICALS (INDIA) 4 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER H AS BE EN PRONOUNCED IN THE COURT ON 22 . 9 .201 7. SD/ - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 22 / 9 / 20 1 7 COPY O F THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI