GOVARDHAN P. SHAH, MUMBAI V. DCIT CEN CIR 10, MUMBAI

ITA 7712/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0093 (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: G
• Next Hearing Date: 12-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 26-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS VIDISHA KALRA
• Keywords: Bogus purchase; Search and seizure; Corroborative evidences; Accommodation entries
• Section: 143(3); 142(1); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 7 712 /MUM/2014 ( / ASSESSMENT YEA R : 200 5 - 06 ) SHRI GOVERDHAN P SHAH, A - 30 1, YOGI AVENUE, YOGI NAGAR, BORIVALI(W), MUMBAI - 400091 / VS. ASSTT. COMMISSIONER OF INCOME TAX - 25(2), ROOM NO.108, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051 ./ PAN : BCCPS0554E ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : NONE /R E SPONDENT BY : MRS.VIDISHA KALRA / DATE OF HEARING : 1 4.6.2017 / DATE OF PRONOUNCEMENT : 21. 6 . 201 7 / O R D E R PER RAJESH K UMAR, A. M: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 37 , MUMBAI , DATED 16.10.2014 , PERTAINING TO THE ASSESSMENT YEAR S 20 0 5 - 06 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). DESPITE SERVICE OF NOTICE THROUGH RPAD, THE ASSESSEE DID NOT APPEAR BEFORE THIS TRIBUNAL ON THE VARIOUS DATES, 2 ITA NO. 7712/M UM/2014 THEREFORE, WE PROCEED TO DECIDE THE APPEALS EX - PARTE ON MERIT AFTER HEARING T HE LD.DR AND ON THE BASIS OF MATERIAL AVAILABLE BEFORE US. 2 . THOUGH THE I SSUE INVOLVED IN THIS APPEALS 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. 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 THE AO CALLED FOR THE EXPLANATION FROM THE ASSESSEE AND THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 200 5 - 06 . IN REPLY THE ASSESSEE STATED THAT THE INCOME AS DECLARED U/S 139(1) OF THE ACT BE T AKEN AS INCOME OF THE ASSESSEE . 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 SEAML ESS, 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 ACCOMMOD ATION ENTRIES IN THE NATURE OF BOGUS PURCHASES FOR SUSPICIOUS HAWALA TRADERS, WHO WERE KNOWN IN THE MARKET TO HAVING INDULGED IN PROVIDING MERELY ACCOMMODATION ENTRIES. THE AO ON THE BASIS OF INFORMATION THE AO 3 ITA NO. 7712/M UM/2014 ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AT RS. 9,95,660 / - VIDE ORDER DATED 28.3.2013 PASSED UNDER SECTION 143(3) R.W.S.153C OF THE ACT BY MAKING ADDITION OF RS. 7,22,998/ - 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 FIRST 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 EXTRAPO LATED 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 SH OW N PURCHASES 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 AS SESSING OFFICER. NOTHING IS PRESENTED BEFORE ME EITHER. LASTLY, THE EVIDENCES TO ESTABLISH GENUINENESS OF OTHER SALE AND PURCHASE TRANSACTIONS WAS NOT PRESENTED BEF ORE ME NOR THE ASSESSING OFFICER. THE ONLY PLEA TAKEN IS THAT THE BOOKS OF ACCOUNTS WERE IMP OUNDED 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 T RANSACTIONS. 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 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. TH E TRANSACTIONS 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 SI TUATION 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 4 ITA NO. 7712/M UM/2014 APPELLANT IS UNABLE TO SUBSTANTIATE ITS ACCOUNTS BY PRODUCING BOOKS AND 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. FOUND IN THE ACTION OF ASSESSING OFFICER IN REJECTIN G THE BOOKS OF ACCOUNTS OF THE APP 4.9. HOWEVER, IT IS NOTED THAT FOR AY 2011 - 12, THERE IS NO BU SINESS INCOME SHOWN BY THE APPELLANT. IT HAS NOT PROVIDED DETAILS OF SALES IN ITS PROPRIET ORSHIP CONCERNS. THE AO HAS ESTIMATED THE SALES AND COMPUTED THE BU SINESS INCOME ON THE BASIS OF AVERAGE SALES SHOWN FOR THE PRECEDING THREE YEARS. FROM THE PAPERS FILED IN THE APP ELLATE PROCEEDINGS, IT IS SEEN THAT COPY OF VAT RETURN FILED WITH MAHARASHTRA SALE TAX DEPARTME NT IS FILED. AS PER THIS, THE SALES IS REFLEC TED AT RS 31,80,707 / - IN THE FIRST SIX MONTHS AND RS.54,09,084/ - FOR NEXT SIX MONTHS FOR THIS ASSESSMENT YEAR. IN THE ABSENCE OF A BETTER EVIDENCE REGARDING ACCOMMODATION SALES BILLS ISSUED, THE AO D IRECTED TO CONSIDER THE SALES REFLECTED IN THE VAT R ETURNS BASED ON WHICH THE ADDITION COMES TO RS 214,745/ - SIMILARLY, AS REGARDS AY 2005 - 06, THE DETAILS OF SALES WAS NOT PROVIDED BY THE APPELLANT. IN THE APPELLATE PROCEEDINGS ALSO NO VAT RETURNS ARE PROVIDED. IN THESE CIRCUMSTANCES, NO RELIEF IS GRANTED F OR AY 2005 - 06 WHERE SALES HAS BEEN ESTIMATED. ACCORDINGLY, APPELLANT GETS PARTIAL RELIEF ONLY IN AY 2011 - 12. IN THE RESULT, APPEALS FOR A. Y S. 2005 - 06 TO 2010 - 11 ARE DISMISSED AND AY 2011 - 12 IS PARTLY ALLOWED. . 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 STATED T HAT THE ISSUE RAISED BY THE ASSESSEE IN THESE APPEALS ARE COVERED AGAINST ASSESSEE BY THESE DECISION S OF THE TRIBUNAL. THE LD. DR SUBMITTED THAT FACTS BEING SAME AND HENCE BY APPLYING THE SAME PRECEDENT, T HE APPEAL 5 ITA NO. 7712/M UM/2014 FILED BY THE ASSESSEE BE DISMISSED AN D 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 CO VERED AGAINST THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNA L IN ASSESSEES GROUP CASE . FOR THE SAKE OF CONVENIENCE, WE REPRODUCE THE OPERATIVE PART OF THE TRIBUNAL DECISION AS UNDER (ITA NO.7702/MUM/2014) : 5. WE HAVE HEARD THE LE ARNED 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 INCRIMINATING 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 SALE S 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 SUR VEY CONDUCTED IN CASE OF THE ASSESSEE INCRIMINATING MATERIALS WERE FOUND INDICATING BOGUS PURCHASES MADE BY THE ASSESSEE BY WAY OF ACCOMMODATION ENTRIES OBTAINED FROM CERTAIN 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 NOR PRODUCED ANY EVIDENCE TO CONTROVERT THE ALLEGATION OF THE DEPA RTMENTAL 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 ACCOUNT OF BOGUS PURCHASES FOR ALL THE ASSESSMENT YEARS ARE SUSTAINED. 6 . FACTS BEING IDE NTICAL , WE, THEREFORE FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE AFOREMENTIONED CASE , UPHOLD THE 6 ITA NO. 7712/M UM/2014 ORDER OF LD.CIT(A) BY DISMISSING THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THE APPEAL. DURING THE COURSE OF HEARING NO MATER IAL CONTRARY WAS BROUGHT BEFORE THE TRIBUNAL EITHER BY WAY OF PERSONAL APPEARANCE OR BY WRITTEN DOCUMENTS SO AS TO COMPEL US TO TAKE A DIFFERENT VIEW THAN THE VIEW SO TAKEN BY THE TRIBUNAL IN EARLIER YEARS. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST JUNE , 2017. SD SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21. 6 .2017 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