PRIDE STEELS P LTD, MUMBAI V. DCIT CEN CIR 10, MUMBAI

ITA 7709/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2393 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPKANT PRASAD
• Keywords: Bogus purchase; Rejection of books of accounts; Depreciation; Search and seizure; Wrong claim; Accommodation entries
• Section: 133A; 153A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI , , BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. : 7708 /MUM/20 1 4 (ASSESSMENT YEAR: 20 0 8 - 09 ) ITA NO. : 7709 /MUM/20 14 (ASSESSMENT YEAR: 2009 - 10 ) ITA NO. : 7710 /MUM/20 14 (ASSESSMENT YEAR: 2010 - 11 ) M/S PRIDE STEELS PVT LTD, FLAT NO.109, ASHIRWAD BUILDING, AHEMDABAD STREET, MASJID (EAST), MUMBAI - 400 009 PAN: AAACP 2140 B VS DCIT CENT. CIR. 10 , R. NO.108, 1 ST FLOOR, PRATYAKSHKAR BHAVAN, BKC BANDRA, MUMBAI - 400 0 51 (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDE NT BY SHRI DEEPKANT PRASAD /DATE OF HEARING : 19 - 10 - 201 6 / DATE OF PRONOUNCEMENT : 1 9 - 10 - 2016 ORDER PER BENCH : THE AF ORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE AGAINST COMMON IMPUGNED ORDER DATED 1 6 . 1 0 .201 4 , PASSED BY LD. CIT(APPEALS) - 3 7 , MUMBAI FOR THE ASSESSMENT YEAR 2008 - 09, 2009 - 10 AND 2010 - 11. SINCE ISSUE INVOLVED IN ALL 2 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 THE THREE APPEAL ARE COMMON ARISING OUT OF IDENTICAL SET OF FACTS, THEREFORE, THEY ARE BEING DISPOSING OFF BY WAY OF THIS CONSOLIDATED ORDER. 2. AT THE OUTSET, IT IS NOTICED THAT, THE FIRST DATE OF HEARING WAS FIXED FOR 01.08.2006 AND THE ASSESSEE WAS INTIMATED THE DATE OF HEARING T HROUGH NOTIC E ON THE ADDRESS MENTIONED IN FORM NO.36. THEREAFTER, ON 01.08.2016, AGAIN NOTICE WAS SENT THROUGH RPAD FIXING THE DATE OF HEARING FOR 19.10.2016. THE SAID REGISTERED POST WAS SENT ON THE SAME ADDRESS AS MENTIONED IN COLUMN 10 OF FORM NO.36 . HOWEVER , THE S AID RPAD TOO HAS BEEN RETURNED BACK UNSERVED. THUS, IT IS PRESUMED THAT, ASSESSEE HAS EITHER SHIFTED HIS ADDRESS WITHOUT INTIMATING TO THE REGISTRY OR IS NOT INTERESTED IN PROSECUTING I TS APPEAL. ACCORDINGLY, WE ARE PROCEEDING TO DECIDE THE APPEAL ON MERIT S. 3. THE COMMON ISSUE INVOLVED IN ALL THE S E APPEALS IS ESTIMATION OF COMMISSION INCOME @ 3% ON TRANSACTION OF PURCHASE AND SALES. 4. THE BRIEF FACTS, AS NOTED IN THE IMPUGNED ORDER ARE THAT, A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CONDUCTED IN THE CASE OF RUSTOMJEE EVERSHINE GROUP ON 20.10.2010 WHEREIN, CERTAIN DATA AND DOCUMENTS WERE SEIZED BELONGING TO THE ASSESSEE. ACCORDINGLY, NOTICE UNDER SECTION 153A R.W.S. 153C WAS ISSUED ON 26.12.2012 TO THE ASSESSEE, IN RESPONSE TO WHICH ASSESSEE HA S ALSO FILED ITS RETURN OF INCOME. T HE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADE/SUPPLY OF IRON AND STEEL SUCH AS M S PLATE, SHEET, PIPES AND OTHER ALLIED PRODUCTS. A SURVEY WAS CONDUCTED ON THE 3 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 ASSESSEE COMPANY ON 05.12.2012 UNDER SECTION 133A BY THE DDIT(INV.), UNIT 1(4), MUMBAI , DURING THE COURSE OF WHICH C ERTAIN BILLS OF PURCHASE AND SALES AND OTHER INFORMAT IO N WAS GATHERED. IT WAS FOUND THAT THE ASSESSEE COMPANY ALONG WITH ITS SISTER CONCERN, M/S PAWAN JYOTI STEELS PRIVATE LIMI T ED WAS TAKING ACCOMM ODATION ENTRIES IN THE NATURE OF BOGUS PURCHASES FROM SUSPICIOUS HAWALA TRADERS, WHO WERE KNOWN IN THE MARKET OF HAVING INDULGED IN PROVIDING ONLY ACCOMMODATION ENTRIES. IN THE SEARCH PROCEEDINGS OF RUSTOMJEE GROUP, IT WAS FOUND THAT THE ASSESSEE COMPANY A LONG WITH ITS SISTER CONCERN M/S PAWAN JYOTI STEELS PRIVATE LIMITED HAD ISSUED ACCOMMODATION BIL LS TO RUSTOMJEE GROUP. THE BILL INVOICES WERE FOUND TO BE UNSIGNED. THE ORDER N O. W AS MENTIONED AS VERBAL. WHERE EVER, THE ORDER NOS. WAS MENTIONED, THEY WERE NUMBERED SERIALLY AND THEREAFTER BILLS WERE PREPARED AT ONE GO. NONE OF THE VOUCHERS WERE SUPPORTED BY GOODS RECEIPT OR DELIVERY CHALLAN S OR ANY OTHER TRANSPORT DOCUMENTS. THE ACCEPTANCE OF ACCOMMODATION BILL WAS ADMITTED BY SHRI HEMANT CHOKSHI OF RUSTOMJ EE GROUP IN THE STATEMENT RECORDED ON 20.10.20010. THE RELEVANT EXTR A CT OF THE STATEMENT HAS BEEN INCORPORATED IN THE ASSESSMENT ORDER. AT THE TIME OF SURVEY, STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED UNDER SECTION 131 AT THE PREMISES OF THE ASSESSEE - COMPANY, WHEREIN HE ADMITTED THAT, HE WAS INVOLVED IN GIVING ACCOMMODATION BILLS TO RUSTOMJEE GROUP. HOWEVER, IT WAS ALSO STATED THAT FOR THE OTHER PARTIES, THE ASSESSEE WAS CARRYING OUT GENUINE AND ACTUAL TRANSACTIONS. THE ASSESSING OFFICE R HAD FURTHER NOTED THAT, ASSESSEE COMPANY ALONG WITH THE SISTER CONCERN, HAD ADMITTED THAT, THEY HAVE PROVIDED ACCOMMODATION ENTRIES TO THE TUNE OF RS.1.29 CRORES. SINCE ASSESSEE WAS UNABLE TO GIVE 4 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 CORRECT DETAILS OF DELIVERY OF GOODS AND OTHER DETAILS, H E THEREFORE, REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE NET PROFIT REPORT OF 2.5% , THAT IS, 2% ON THE ACCOMMODATION SALES AND 3% FOR OTHER SALES RIGHT FROM ASSESSMENT YEAR 2008 - 09 TO 2010 - 11. THE LD. CIT ( A) AFTER NOTING DOWN THE FOLLOWING FACTS OBSE RVED AND HELD AS UNDER: - 4.5 THE POSITION EMERGING FROM THE COPIES OF THE PROFIT & LOSS ACCOUNT AND BASED ON THE ASSESSMENT ORDERS IS TABULATED BELOW: PARTICULARS AY 2005 - 06 2006 - 07 2007 - 08 2008 - 09 SALES 56,542,240 59,948,599 181,638,984 241,977,049 OTHER INCOME - 1,000 25,626 - PURCHASE S /COGS 55,662,891 58,938,498 176,898,810 235,898,931 GROSS PROFIT 879,349 1,010,101 4,740,174 6,078,118 GP % OF SALES 1.56 1.68 2.61 2.51 NET PROFIT 26,086 120,927 211,560 202,221 NP % OF SALES 0.05 0.20 0.12 0.0 8 ENHANCEMENT AS PER AO 1,387,470 1,377,563 4,329,415 6,371,346 NP AS PER AO 1,413,556 1,498,714 4,540,975 6,573,567 NP AS % OF SALES AS PER AO 2.5% 2.50% 2.50% 2.72% PARTICULARS AY 2009 - 10 2010 - 11 2011 - 12 SALES 235,882,382 242,114,182 264,862,070 OTHER INCOME 90,361 7,116 327,248 PURCHASE S /COGS 232,720,740 236,987,400 258,844,013 GROSS PROFIT 3,161,642 5,126,782 6,018,057 GP % OF SALES 1.34 2.12 2.27 NET PROFIT 234,474 830,050 2,210,428 NP % OF SALES 0.14 0.34 0.46 ENHANCEMENT AS PER AO 5,840,943 5,345,978 5,260,673 NP AS PER AO 6,165,417 6,176,028 6,471,101 NP AS % OF SALES AS PER AO 2.61% 2.55% 2.44% 4.6 . IT HAS BEEN CONTENDED THAT STATEMENT MADE BY PERSONNEL OF RUSTOMJEE GROUP DOES NOT STATE THAT THE TRANSACTIONS ARE NOT GENUINE. IT IS SEEN THAT THE DIRECTOR OF KEYSTONE REALTORS PVT LTD SHRI BOMAN IRANI OF RUSTOMJEE GROUP IN HIS VARIOUS STATEMENTS RECORDED INCLUDING THAT ON 21/10/2010 HAS CLEARLY ADMITTED THAT NO MATERIAL WAS RECEIVED FROM TH E APPELLANT COMPANY AND ITS SISTER CONCERN AND THEREFORE HAS ADMITTED ITS FALSE CLAIM OF EXPENDITURE TO THE EXTENT OF RS.1.92 CORES. EVEN SHRI GOVARDHAN SHAH OF THE 5 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 APPELLANT HAS ADMITTED AS MUCH BY HIS DETAILED DEPRECIATION OF MODUS OPERANDI. HENCE THIS C ONTENTION OF APPELLANT IS CONTRARY TO FACTS AND IS REJECTED. 4.7 IT HAS BEEN CONTENDED THAT THE IMPUGNED TRANSACTIONS WITH RUSTOMJEE GROUP IS FOR AY 2008 - 09 TO AY 2010 - 11 AND HOW CAN THAT BE EXTRAPOLATED TO EARLIER AND SUBSEQUENT ASSESSMENT YEARS AND TO TRANSACTIONS OTHER THAN THAT WITH RUSTOMJEE GROUP. I FIND THAT THE ASSESSING OFFICER HAS CLEARLY BROUGHT THE PARTIES WHO HAVE GIVEN HAWALA BILLS WITHOUT ANY GENUINE TRANSACTIONS. THE APPELLANT HAS SHOWN PURCHASES FROM THESE PARTIES ISSING HAWALA BILLS. F URTHER, THE TOTAL PURCHASES FROM THESE PARTIES FAR EXCEEDS THE TRANSACTIONS WITH RUSTOMJEE GROUP. DESPITE BEING 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 WERE NOT PRESENTED BEFORE 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 TRANSACTIONS. 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 MADE. IN SUCH CIRCUMSTANCES, THE LOGICAL INFERENCE I S 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 TRANSACTIONS ARE RIGHTLY HELD TO BE IN THE NATURE OF PR OVIDING ACCOMMODATION BILLS BY THE ASSESSING OFFICER. 4.8 BEFORE ME IT WAS ARGUED THAT NO BANKS 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 6 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 ASSESSEE. IN THE PRESENT CASE, THE RETURN IS BASED ON AUDITED ACCOUNTS BUT THE APPELLANT IS UNABLE TO SUBSTANTIATE ITS ACCOUNTS BY PRODUCING BOOKS AND BASIC RECORDS. IT IS ADMITTED FACT THAT THE PURCHA SES 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. 6. AFTER HEARING THE LD. DR AND ON PERUSAL OF THE FINDING GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT, NEI THER BEFORE THE CIT(A) NOR BEFORE US THERE IS ANY REBUTTAL OF THE FINDING OF FACT ARRIVED AT ON THE BASIS OF APPRAISAL OF FACTS AND MATERIAL GATHERED . EVEN FOR THE APPLICATION OF NET PROFIT RATE, THE ASSESSEE HAS BEEN UNABLE TO GIVE ANY COMPARABLE TRANSACT ION OR ANY OTHER MATERIAL FACT TO DEMONSTRATE THAT NET PROFIT RATE ESTIMATED BY THE ASSESSING OFFICER IS EITHER HIGH OR EXCESSIVE. THUS, IN ABSENCE OF ANY CONTRARY MATERIAL, WE HAVE NO OPTION BUT TO AFFIRM THE ORDER OF THE CIT(A) . A CCORDINGLY, THE ORDER OF CIT(A) IS AFFIRMED AND RESULTANTLY, GROUNDS RAISED IN ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER, 2016. SD/ - SD/ - ( ) ( ) ( RAJESH KUMAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 1 9 TH OCTOBER, 2016 . 7 M/S PRIDE STEELS PVT LTD ITA S NO. : 7708 TO 7710 /MUM/201 4 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3 ) THE CI T ( APPEAL ) 3 7 , MUMBAI. 4 ) THE CIT - CENTRAL - I , MUMBAI 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) \ COPY TO G UARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS