PAWAN JYOTI STEELS P.LTD, MUMBAI V. DCIT CEN CIR 10, MUMBAI

ITA 7701/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0090 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 01-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Bogus purchase; Search and seizure; Corroborative evidences; Accommodation entries
• Section: 143(3); 142(1); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 7699 /7700 AND 7701 /MUM/2014 ( / ASSESSMENT YEA R : 2006 - 07 ,2007 - 08 AND 200 8 - 09 ) M/S PAWAN JYOTI STEELS PVT LTD, 2 - A, ASHIRWAD BUILDING, AHMEDABAD STREET, MASJIT (E), MUMBAI - 4000098 / VS. ASSTT. COMMISSIONER OF INCOME TAX OFFICER - CC - 10 ROOM NO.108, 1 ST FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUM BAI - 400051 ./ PAN : AABCP4763D ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : NONE /R E SPONDENT BY : SHRI ALOK JOHRI / DATE OF HEARING : 1 4.6.2017 / DATE OF PRONOUNCEMENT : 21. 6 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A) - 37 , MUMBAI , DATED 16.10.2014 , PERTAINING TO THE ASSESSMENT YEAR S 20 06 - 07 TO 2008 - 09 WHICH IN TURN HA VE ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 153C OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE, WE HAVE CLUBBED THESE APPEALS TOGETHER, 2 ITA NO.7699 TO 7701/MUM/2014 HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS COMBINE ORDER FOR THE SAKE OF CONVENIENCE. 2. DESPITE SERVICE OF NOTICE THROUGH RPAD, THE ASSESSEE DID NOT APPEAR BEFORE THIS TRIBUNAL ON THE VARIOUS DATES, THEREFORE, WE PROCEED TO DECIDE THE APPEALS EX - PARTE ON MERIT AFTER HEARING THE LD.DR AND ON THE BASIS OF MATERIAL AVAILABLE BEFORE US. 3 . TH ESE THREE APPEALS RELATES TO THE THREE DIFFERENT YEARS AND THE COMMON ISSUE INVOLVED IN ALL THESE APPEALS IS PERTAIN TO ESTIMATION OF COMMISSION INCOME AT THE RATE OF 2 .5% OVE R AND ABO V E THE RETURN INCOME OFFERED IN THE RETURN OF INCOME. SINCE FACTS OF ALL THE APPEALS ARE COMMON EXCEPT FIGURES, WE WILL FIRST DEAL WITH THE APPEAL BEARING ITA NO.7699/MUM/2014. 3 . A SEARCH ACTION U /S 132(1) OF THE INCOME TAX ACT, 1961 WAS UNDERTAKEN BY ADD.DIT(INV) UNIT - II, MUMBAI IN THE CASE OF RUSTOMJEE - EVERSHINE GROUP ON 20.10.2010 WHEREIN CERTAIN PAPERS/CO MPUTERS DATA FOUND AND SEIZED FROM T HE PREMISES WHICH WERE BELONGING TO THE ASSESSEE . ACCORDINGLY, FOLLOWING THE DUE PROCEDURE U/S 153A AND 153C OF THE ACT THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE AND ALSO THE RETURN OF INCOME FOR THE A SSESSMENT YEAR 2006 - 07. IN RESPONSE TO THE ABOVE NOTICE THE ASSESSEE DECLARED INCOME OF RS.1,58,354/ - WHICH WAS SAME AS 3 ITA NO.7699 TO 7701/MUM/2014 RETURNED U/S 1 39(1) OF THE ACT. THEREFORE, THE PROCEEDINGS WERE FOLLOWED U/S 143(2) AND 142(1) OF THE ACT. THE ASSESSEE COMPANY WERE ENGAGED IN THE BUSINESS OF TRADING/SUPPLY OF IRON - STEEL AND VARIOUS PRODUCTS SUCH AS M S PLATE, SHEET, PIPES - MS, SS SEAMLESS, RODS, TMT BAR, ANGLES, CHANNELS, BEAMS, FLANGES , NUT BOLTS AND ALLIED PRODUCTS. ON THE BASIS OF INFORMATION BY DDIT(INV), UNIT - I(4), THE AO FOUND THAT THE ASSESSEE ALONG WITH ITS SISTER CONCERN M/S PRIDE STEELS INDUSTRIES WERE TAKING ACCOMMODATION ENTRIES I N THE NATURE OF BOGUS PURCHASES F ROM SUSPICIOUS HAWALA TRADERS, WHO WERE KNOWN IN THE MARKET TO HAVING INDULGED IN PROVIDING MERELY ACCOMMODATION ENTRIE S ONLY . THE AO ON THE BASIS OF SAID INFORMATION ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AT RS.18, 74,430/ - VIDE ORDER DATED 28.3.2013 PASSED UNDER SECTION 143(3) R.W.S.153C OF THE ACT BY MAKING ADDITION OF RS.17,16,075/ - BEING NET PROFIT AT THE RATE OF 2.5% ON TOTAL SALES. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE F IRST APPELLATE AUTHORITY, WHO IN TURN DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 4.7. IT HAS BEEN CONTENDED THAT THE IMPUGNED TRANSACTIONS WIT H RUSTOMJEE GROUP IS FOR AY 2008 - 09 TO AY 2010 - 11 AND HOW CAN THAT BE EXTRAPOLATED T O EARLIER AND SUBSEQUENT ASSESSMENT YEARS AND TO TRANSACTIONS OTHER THAN THAT WIT H RUSTOMJEE GROUP. I FIND THAT THE ASSESSING OFFICER HAS CLEARLY BROUGHT THE PARTIES WH O HAVE GIVEN HAWALA BILLS WITHOUT ANY GENUINE TRANSACTIONS. THE APPELLANT HAS SHOW N PUR CHASES FROM THESE PARTIES ISSUING HAWALA BILLS. FURTHER, THE TOTAL PURCHASES FRO M THESE PARTIES FAR EXCEEDS THE TRANSACTIONS WITH RUSTOMJEE GROUP. DESPITE BEIN G CONFRONTED BY THESE FACTS, THE APPELLANT HAS BEEN UNABLE TO REBUT THE SAME BEFORE THE ASSESSING OFFICER. NOTHING IS PRESENTED BEFORE ME EITHER. LASTLY, THE EVIDENCES TO ESTABLISH GENUINENESS OF OTHER SALE AND PURCHASE TRANSACTIONS 4 ITA NO.7699 TO 7701/MUM/2014 WAS NOT PRESENTED BEF ORE ME NOR THE ASSESSING OFFICER. THE ONLY PLEA TAKEN IS THAT THE BOOKS OF ACCOUNTS WERE IMPOUNDED BY THE SALES TAX AUTHORITIES. EVEN AFTER 3 YEARS OF SALES TAX ACTION , WHY APPELLANT COULD NOT GATHER INFORMATION TO PROVE ANY GENUINENESS OF TRANSACTIONS AS IS CLAIMED IS NOT EXPLAINED. IT WOULD KNOW AT LEAST SOME PARTIES WITH WHOM IT HAD REGULAR TRANSACT IONS. CONFIRMATIONS FROM SUCH PARTIES COULD HAVE BEEN OBTAINED. IT COULD HAVE OBTAINED INFORMATION FROM ITS BANK 'STATEMENTS FROM ITS BANKERS AND RECONSTRUCTED DETAILS OF PURCHASE AND SALES TRANSACTIONS, IF THEY WERE INDEED GENUINE. NO SUCH EFFORTS WERE MA DE. IN SUCH CIRCUMSTANCES, THE LOGICAL INFERENCE IS THAT THE APPELLANT DID NOT HAVE ANY GENUINE TRANSACTIONS AND IS MERELY USING THE ACTION BY THE SALES TAX AUTHORITY AS A RUSE TO EXPRESS HELPLESSNESS. THE CONTENTION OF THE APPELLANT IS REJECTED. THE TRANS ACTIONS ARE RIGHTLY HELD TO BE IN THE NATURE OF PROVIDING ACCOMMODATION BILLS BY THE ASSESSING OFFICER. 4.8. BEFORE ME IT WAS ARGUED THAT NO BOOKS WERE PRODUCED BEFORE ASSESSING OFFICER SO HOW CAN THE BOOKS BE REJECTED. SECTION 145(3) SPEAKS OF SITUATION WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. IN THE PRESENT CASE, THE RETURN IS BASED ON AUDITED ACCOUNTS, BUT THE APPELLANT IS UNABLE TO SUBSTANTIATE ITS ACCOUNTS BY PRODUCING BOOKS A ND BASIC RECORDS. IT IS ADMITTED FACT THAT THE PURCHASES ARE BOGUS AS IS SALES. THUS, NO FAULT CAN BE FOUND IN THE ACTION OF ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS OF THE APPELLANT. IN THE RESULT, APPEALS FOR A.YS. 2005 - 06 TO 2008 - 09 ARE DI SMISSED . 4 . DURING THE COURSE OF HEARING BEFORE US, THE LD. DR REITERATED THE FACTS OF THE CASE AND PLACED A COPY OF DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PAWAN JYOTI STEELS P LTD V/S DCIT IN ITA NOS.7702 TO 7704/MUM/2014 (AY - 2009 - 10 TO 2011 - 12) DATED 24.3.2017 AND ALSO THE DECISION RENDERED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S PRIDE STEELS PVT LTD V/S ACIT IN ITA NOS.7707/MUM/204 AND 7711/MUM/2014 (AY - 2007 - 08 AND 2011 - 12) DATED 19.10.2016 , THE D ECISION IN ITA NO.7708 TO 7710 /MUM/2014 (AY - 2008 - 09 TO 2010 - 11) 5 ITA NO.7699 TO 7701/MUM/2014 DATED 19.10.2016 AND STATED THAT THE ISSUE RAISED BY THE ASSESSEE IN THESE APPEALS ARE COVERED AGAINST ASSESSEE BY THESE DECISION OF THE TRIBUNAL. THE LD. DR SUBMITTED THAT FACTS BEING SAM E IN BOTH THE CASES AND HENCE BY APPLYING THE SAME PRECEDENT, THE APPEALS FILED BY THE ASSESSEE BE DISMISSED AND THAT OF THE ORDER PASSED BY THE AO BE CONFIRMED. 5. WE HAVE HEARD THE LD.DR AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF THE TRIBUNAL RELIED UPON BY THE REVENUE. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IN THESE APPEALS ARE COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNA L IN ASSESSEES OWN CASE . FOR THE SAKE OF CONVENIENCE, WE REP RODUCE THE OPERATIVE PART OF THE TRIBUNAL DECISION AS UNDER : 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD. THE LEARNED DR HAS SUBMITTED THAT THOUGH THERE WERE SPECIFIC INFORMATION AVAILABLE BEFORE THE AO ON THE BASIS OF INCRIMINATI NG MATERIAL FOUND AS A RESULT OF SEARCH AND SURVEY ACTION INDICATING THAT ASSESSEE HAS INDULGED IN BOGUS PURCHASES AND SALES TRANSACTIONS, NEITHER DURING THE ASSESSMENT PROCEEDINGS NOR BEFORE THE CIT(A), ASSESSEE HAS PRODUCED SUPPORTING EVIDENCES TO PROVE THE CONTRARY. THEREFORE, THE ASSESSEE HAVING FAILED TO PROVE THAT THE PURCHASE AND SALES TRANSACTIONS ARE GENUINE, THE ADDITION MADE ON ESTIMATION IS JUSTIFIED. ON A PERUSAL OF THE IMPUGNED ASSESSMENT ORDER AND FIRST APPELLATE ORDER WE HAVE NOTICED THAT IN THE COURSE OF SEARCH AND SEIZURE OPERATION IN RUSTOMJEE GROUP COMPANIES AS WELL AS SURVEY CONDUCTED IN CASE OF THE ASSESSEE INCRIMINATING MATERIALS WERE FOUND INDICATING BOGUS PURCHASES MADE BY THE ASSESSEE BY WAY OF ACCOMMODATION ENTRIES OBTAINED FROM CE RTAIN HAWALA DEALERS. IN THE COURSE OF PROCEEDINGS BEFORE THE DEPARTMENTAL AUTHORITIES, THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT THE ALLEGATION OF THE DEPARTMENT ON ACCOUNT OF BOGUS PURCHASES FROM HAWALA DEALERS. BEFORE US ALSO THE ASSESSEE HAS NEITHER APPEARED 6 ITA NO.7699 TO 7701/MUM/2014 NOR PRODUCED ANY EVIDENCE TO CONTROVERT THE ALLEGATION OF THE DEPARTMENTAL AUTHORITIES. IN AFORESAID VIEW OF THE MATTER THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE ADDITIONS MADE ON ACCO UNT OF BOGUS PURCHASES FOR ALL THE ASSESSMENT YEARS ARE SUSTAINED. 6 . FACTS BEING IDENTICAL IN BOTH THE YEARS OF THE ASSESSEE, WE, THEREFORE FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, UPHOLD THE ORDER OF LD .CIT(A) BY DISMISSING THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THE YEARS IN APPEAL. DURING THE COURSE OF HEARING NO MATERIAL CONTRARY WAS BROUGHT BEFORE THE TRIBUNAL EITHER BY WAY OF PERSONAL APPEARANCE OR BY WRITTEN DOCUMENTS SO AS TO COMPEL US T O TAKE A DIFFERENT VIEW THAN THE VIEW SO TAKEN BY THE TRIBUNAL IN EARLIER YEARS. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 IS DISMISSED. 8. SINCE ISSUE INVOLVED IN REMAINING TWO APPEALS IS COMMON AS THAT OF ASSESSMENT YEAR 2006 - 07, THE VIEW TAKEN THEREIN WOULD ALSO MUTATIS MUTANDY APPLY TO THE APPEALS FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AND HENCE DISMISSED. 9 . IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON 21ST JUNE , 2017. SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21. 6 .2017 7 ITA NO.7699 TO 7701/MUM/2014 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPE LLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI