MICROPLUS POLYMES P.LTD, MUMBAI V. ITO WD 2(2)(3), MUMBAI

ITA 838/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0018 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MATHURIA
• Keywords: Bogus purchase
• Section: 69C; 143(3)

Judgement Text

MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 838 /MUM/2017 ( / ASSESSMENT YEAR: 2011 - 12 ) MICROPLUS POLYMERS P. LTD. 42, MODI STREET, ROOM NO. 316, FORT, MUMBAI - 400 001 / VS. THE INCOME TAX OFFICER WARD 2(2)(3), MUMBAI - 400 020 ./ ./ PAN/GIR NO. A AECM3574E ( /APPELLANT ) : ( / RESPONDENT) / APPELLANT BY : SHRI M.S. MATHURIA, A.R. / RESPONDENT BY : SHRI SAURABH KUMAR RAI, D.R / DATE OF HEARING : 22 /08/2017 / DATE OF PRONOUNCEMENT : 30 /08/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE PRESENT APPEAL IS DIRECTED AGAINST T HE ORDER PASSED B Y THE CIT(A) - 5, MUMBAI, DATED 18.11.2016 , WHICH IN ITSELF ARISES FROM THE ASSESSMENT FRAMED BY THE A.O U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 25.02.2014 . THE ASSESSEE MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 2 ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: - (1) ON THE FACTS AND IN LAW, LEARNED CIT(APPEALS) HAS ERRED IN SUSTENANCE OF 1 ADDITIO N TO THE EXTENT OF RS.2,33,872/ - U/S. 69C OF THE INCOME TAX ACT, 1961. (2) THE APPELLANT CRAVE LEAVE TO ADD, TO ALTER AND/OR AMEND THE FOREGOING GROUND AND TO MAKE NEW OR ADDITIONAL SUBMISSIONS AT THE HEARING F THE APPEAL AS WELL AS TO SUBMIT FRESH DOCUMENTS AND INFORMATION AS ADVISED . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF P OLYMER MATERIALS HAD FILED ITS RETURN OF INCOME FOR A.Y 2011 - 12 ON 30.09.2011, DECLARING TOTAL INCOME AT RS. NIL. THE RETURN OF INCOME OF THE ASSESSEE WAS PROCESSED AS SUCH U/S. 143(1). THE A.O WAS IN RECEIPT OF INFORMATION FROM THE OFFICE OF THE DGIT(INV. ) THAT THE ASSESSEE HAD MADE BOGUS PURCHASES FROM CERTAIN PARTIES WHICH HAD BEEN IDENTIFIED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, AS UNDER: - VAT NO. NAME OF THE HAWALA OPERATOR BILL AMOUNT (RS.) 27350730769V REALTY SALES INDIA P. LTD. 18,70,977/ - 27830724712V NANDKISHORE SALES AGENCY 19,08,770/ - TOTAL 37,79,747/ - THE A.O ON THE BASIS OF THE AFORESAID INFORMATION REOPENED THE CASE OF THE ASSESSEE U/S. 147 OF THE ACT. 3. THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED THAT THE AFORESAID PARTIES IN THEIR RESPECTIVE STATEMENT S RECORDED BY THE SALES TAX DEPARTMENT HAD CONFIRMED THAT THEY WERE ENGAGED IN THE BUSINESS OF PROVIDING BOGUS BILLS. THE A.O IN ORDER TO VERIFY THE GENUINENESS AND VERACITY OF THE PURCHASES MADE BY THE MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 3 ASSESSEE FROM THE AFORESAID PARTIES , THEREIN CALLED UPON IT TO PLACE ON RECORD EVIDENCE IN RESPECT DELIVERY OF GOODS, VIZ . DELIVERY CHALLANS, TRANSPORT RECEIPTS/ LORRY RECEIPTS, RELEVANT E NTRIES IN THE STOCK REGISTER, PROOF OF PAYMENT ETC. THE ASSESSEE IN COMPLIANCE TO THE AFORESAID DIRECTIONS PLACED ON RECORD OF THE A.O THE COPY OF THE LEDGER ACCOUNT S AND INVOICES PERTAINING TO THE PURCHASES UNDER CONSIDERATION, AS WELL AS TOOK SUPPORT OF THE FACT THAT THE PAYMENTS OF THE PURCHASE CONSIDERATION TO THE RESPECTIVE PARTIES IN RESPECT OF THE GOODS UNDER CONSIDERATION WAS MADE BY CHEQUES. HOWEVER, THE A.O BEING OF THE VIEW THAT AS THE ABOVEMENTIONED PARTIES HAD ADMITTED THAT THEY WERE INVOLVED IN THE ACTIVITY OF PROVID ING BOGUS BILLS AND HAD NOT CARRIED OUT ANY GENUINE SALES, THEREFORE, H ELD A CONVICTION THAT THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE DID NOT CARRY ANY EVIDENTIARY VALUE. THE A.O OBSERVED THAT THE ASSESSEE WHO DESPITE SPECIFI C DIRECTIONS HAD NOT PLACED ON RECORD THE DELIVERY CHALLANS, TRANSPORT RECEIPTS/LORRY RECEIPTS, RELEVANT RECEIPTS IN THE STOCK REGISTER ETC, NOR PRODUCED THE PARTIES FOR NECESSARY EXAMINATION , HAD THUS FAILED TO PROVE THE GENUINENESS OF THE PURCHASE TRANSA CTIONS AND DISCHARGE THE ONUS AS WAS CAST UPON HIM . IT WAS FURTHER OBSERVED BY THE A.O THAT THOUGH THE ASSESSEE HAD CLAIMED THAT PAYMENTS WERE MADE AGAINST THE AFORESAID PURCHASE TRANSACTIONS, HOWEVER , NOTHING WAS PLACED ON RECORD TO PROVE THAT THE SAME WE RE MADE THROUGH BANKING CHANNEL. THE A.O THUS BEING OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION IT COULD SAFELY BE CONCLUDED THAT THE CLAIM OF THE ASSESSEE THAT IT HAD MADE PURCHASES FROM THE AFORESAID PARTIES REMAINED UNS UBSTANTIATED. THE A.O FURTHER OBSERVED THAT THERE WAS NOTHING AVAILABLE ON RECORD FROM WHERE IT COULD GATHERED THAT THE MATERIAL WHICH WAS SHOWN TO HAVE BEEN PURCHASED FROM THE AFORESAID BOGUS SUPPLIERS , HAD ACTUALLY BEEN RECEIVED AND USED IN ITS BUSINESS. THE A.O THUS CONCLUDED THAT THE ASSESSEE HAD NOT MADE ANY GENUINE MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 4 PURCHASES TRANSACTIONS FROM THE ABOVEMENTIONED HAWALA PARTIES. THE A.O THEREAFTER PROCEEDED WITH AND WORKED OUT THE PEAK INVESTMENT OF RS. 19,80,626/ - MADE BY THE ASSESSEE IN RESPECT OF THE AFORESAID BOGUS PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE U/S 69C OF THE ACT. 4. THE ASSESSEE BEING AGGRIEVED WITH THE ADDITION MADE BY THE A.O CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THAT BEFORE THE CIT(A) IT WAS AVERRED BY THE ASSESSEE THAT THOUGH IT HAD MADE PURCHASES FROM REALTY SALES P. LTD, HOWEVER, NO PURCHASES WERE MAD E FROM M/S NANDKISHORE SALES AGENCY. THE ASSESSEE FURTHER IN ORDER TO SUPPORT THE GENUINENESS OF THE PURCHASES MADE FROM M/S REALTY SALES INDIA P. LTD. , T HEREIN SUBMITTED THAT IT HAD FURNISHED PAN, CIN, COPY OF LEDGER ACCOU NT, COPIES OF TAX INVOICES, COPIE S OF THE CHEQUES ISSUED BY THE ASSESSEE IN FAVOUR OF THE SAID SUPPLIER CONCERN, VIZ. M/S. REALTY SALES INDIA P. LTD. THE ASSESSEE IN ORDER TO DRIVE HOME ITS AFORESAID CONTENTION , FURTHER SUBMITTED THAT THE COPIES OF ITS BANK STATEMENT WAS FURNISHED WITH TH E A.O, WHICH THEREIN REVEALED THAT THE RESPECTIVE PAYMENT S WERE MADE VIDE CHEQUES DRAWN ON THE SAID BANK ACCOUNT OF THE ASSESSEE. IT WAS FURTHER AVERRED BY THE ASSESSEE THAT THE MATERIAL PURCHASE D FROM M/S. REALTY SALES INDIA P. LTD (SUPRA) W AS CONSUMED F OR PRODUCTION OF THE POLYMER MATERIAL. THE ASSESSEE IN THE BACKDROP OF ITS AFORESAID AVERMENTS SUBMITTED THAT THE A.O HAD WITHO U T MAKING PROPER INQUIRY AND FAILING TO APPRECIATE THE FACTS OF T HE CASE IN THE RIGHT PERSPECTIVE WRONGLY MADE THE ADDITION OF RS .19,08,770/ - U/S. 69C IN THE HANDS OF THE ASSESSEE. THE CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE THAT IT HAD ONLY MADE PURCHASES OF RS. 18,70,977/ - FROM M/S. REALTY SALES INDIA P. LTD, WHILE FOR NO PURCHASES WERE MADE FROM M/S. NANDKISHORE SALES AGENCY . T HE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE , THEREIN TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT GUJARAT IN THE CASE OF SIMIT S. SETH (2013) 356 ITR 451 MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 5 (GUJ) AND OBSERVED THAT NOW WHEN THE SALES OF THE ASSESSEE HAD BEEN ACCEPTED BY THE A.O, THEREFORE, ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES COULD ONLY HAVE BEEN ADDED AS THE INCOME OF THE ASSESSEE. THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS RESTRI CTED THE ADDITION IN THE HANDS OF THE ASSESSEE ONLY IN RESPECT OF THE PROFIT ELEMENT EMBEDDED IN THE SAID PURCHASE TRANSACTIONS, WHICH WAS ESTIMATED BY HIM AT 12.5% OF THE PURCHASES OF RS.18,70,977/ - (SUPRA) MADE BY THE ASSESSEE FROM M/S. REALTY SALES INDI A P. LTD (SUPRA). THE CIT(A) THUS ON THE BASIS OF HIS AFORESAID OBSERVATIONS UPHELD THE ADDITION TO THE EXTENT OF RS.2,33,872/ - (I.E. 12.5% OF RS.18,70,977/ - ) IN THE HANDS OF THE ASSESSEE . 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US. THAT THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAD WRONGLY SUSTAINED AN ADDITION OF RS.2,33,872/ - BY ATTRIBUTING THE SAME TO THE PROFIT ELEMENT EMBEDDED IN THE PUR CHASES MADE BY THE ASSESSEE FROM M/S REALTY SALES INDIA P. LTD. (SUPRA). THE LD. A.R THUS ASSAILED THE ADDITION OF 12.5% OF THE VALUE OF PURCHASES MADE BY THE ASSESSEE FROM THE AFOREMENTIONED PART Y, VIZ. M/S REALTY SALES P. LTD. THE LD. A.R IN SUPPORT OF H IS CONTENTION RELIED ON THE JUDGMENT OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF YUNUS HAJI IBRAHIM FAZALWALA VS. ITO (2016) 240 TAXMAN 198 (GUJ). IT WAS THUS SUBMITTED BY THE LD. A.R THAT NO ADDITION IN THE BACKDROP OF THE FACT S INVOLVED IN THE CASE WAS LIABLE TO BE SUSTAINED BY THE CIT(A). PER CONTRA, THE LD. D.R REL IED ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT IT REMAINS AS A MATTER OF FACT THAT AS PER MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 6 THE INFORMATION GATHERED BY THE S ALES TAX DEPARTMENT, IT STOOD ESTABLISHED THAT M/S. REALTY SALES INDIA P. LTD, (SUPRA) WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS BILLS. THE AFORESAID FACTUAL POSITION FURTHER STANDS FORTIFIED FROM THE VERY FACT THAT THE AFORESAID CONCERN, VIZ. M/S. REALTY SALES INDIA P. LTD. (SUPRA) HAD IN THE STATEMENT RECORDED BY THE SALES TAX DEPARTMENT CONFIRMED THE FACT THAT IT WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS BILLS. THOUGH WE ARE NOT OBLIVIOUS OF THE FACT THAT A MERE STATEMENT OF THE AFORESAID PARTY WOULD NOT HAVE SUFFICED DRAWING OF ADVERSE INFERENCES AS REGARDS THE GENUINENE SS OF THE PURCHASES TRANSACTIONS MADE BY THE ASSESSEE FROM THE SAID LATTER CONCERN, BUT HOWEVER, SUCH A STATE OF AFFAIRS OF THE AFORESAID CONCERN UNDOUBTEDLY RAISED SERIOUS DOUBTS AS REGARDS THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE FROM THE SA ID CONCERN. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTUAL POSITION, A VERY HEAVY ONUS WAS CAST UP ON THE ASSESSEE TO SUBSTANTIATE THAT IT HAD MADE GENUINE PURCHASES FROM THE AFOREMENTIONED CONCERN, VIZ. M/S REALTY SALES INDIA P . LTD. WE FIND THAT DESPITE BEING AFFORDED SUFFICIENT OPPORTUNITY BY THE A.O, THE ASSESSEE NEITHER PLACED ON RECORD THE SPECIFIC DOCUMENT S AS WERE CALLED FOR BY THE LA TTER TO VERIFY THE VERACITY OF THE PURCHASE TRANSACTION S UNDER CONSIDERATION, NOR PRO DUCE D THE SAID PARTIES FOR EXAMINATION BEFORE THE A.O. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE FACT THAT THE AFORESAID CONCERN, VIZ. M/S REALTY SALES INDIA P. LTD. H AD BEEN HELD BY THE S ALES TAX DEPARTMENT AS A CONCERN INVOLVED IN THE BUSINESS OF ISSUING BOGUS BILLS, COUPLED WITH THE FACT THAT NO IRREBUTABLE MATERIAL DESPITE SUFFICIENT OPPORTUNITY WAS EVER PLACED ON RECORD BY THE ASSESSEE TO DISPROVE THE AFORE SAID ALLEGATION OF HAVING MAD E BOGUS PURCHASES, AND ON THE CONTRARY PROVE THE GENUINENESS AND VERACITY OF THE PURCHASES MADE BY THE ASSESSEE FROM THE SAID CONCERN, THEREFORE, THE A.O WAS LEFT WITH NO OTHER ALTERNATIVE MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 7 BUT TO HOLD THAT THE ASSESSEE HAD NOT CARRIED OUT ANY GENUINE PURCH ASES FROM THE SAID CONCERN. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD ALREADY TAKEN A LIBERAL VIEW AND HAD CONCLUDED THAT THE ASSESSEE HAD PURCHASED THE GOODS, THOUGH NOT FROM THE AFORESAID CONCERN, I.E. M/S. REALTY SALES INDIA P. LTD, BUT FROM TH E OPEN/GREY MARKET , AND THUS HAD RESTRICTED THE ADDITION TO THE EXTENT OF THE PROFIT ELEMENT INVOL VED IN MAKING OF SUCH PURCHASES FROM THE OPEN MARKET. WE HAVE ALSO DELIBERATED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF YUNUS HAZI IBRAHIM FAZALWALA (SUPRA) , AND ARE OF THE CONSIDERED VIEW THAT THE SAME IS DISTINGUISHABLE ON FACTS . WE FIND THAT UNLIKE THE CASE OF THE ASSESSEE BEFORE US, IN THE CASE BEFORE THE HONBLE HIGH COURT THE PARTY FROM WHOM THE SAID ASSESSEE HAD MADE PURCHASES OF THE GOODS HAD NEVER ADMITTED THAT IT WAS ENGAGED IN THE BUSINESS OF PROVIDING BOGUS BILLS AND HAD NOT CARRIED OUT ANY GENUINE SALES. WE THUS ARE OF THE VIEW THAT THE CASE LAW RELIED UPON BY THE ASSESSEE BEING DISTINGUISHABLE ON FACTS WOULD THUS NOT BE O F ANY ASSISTANCE TO THE LD. A.R. WE ARE FURTHER OF THE CONSIDERED VIEW THAT AS IN THE PRESENT CASE THE ASSESSEE HAD NOT ONLY FAILED TO DISCHARGE THE ONUS AS REGARDS THE GENUINENESS OF THE SOURCE OF THE PURCHASES SO MADE BY HIM, I.E. AS CLAIMED BY HIM TO HA VE BEEN MADE FROM M/ S . REALTY SALES INDIA P. LTD. (SUPRA), BUT HOWEVER , HAD EVEN FAILED TO DISLODGE THE ALLEGATION THAT IT HAD ONLY PROCURED BO GUS PURCHASE BILL S FROM THE SAID CONCERN. WE ARE OF THE CONSIDERED VIEW THAT IN THE TOTALITY AND CONJOINT PERUSAL OF THE AFORESAID FACT S, THE CIT(A) HAD MOST REASONABLY RESTRICTED THE ADDITION TO 12.5% OF THE VALUE OF THE BOGUS PURCHASES MADE BY THE ASSESSEE FROM THE AFORESAID CONCERN. WE FIND NO REASON TO DISLODGE THE WELL REASON ED OBSERVATION S OF THE CIT(A) , AND BE ING OF THE CONSIDERED VIEW THAT NO INDULGENCE IS CALLED FOR ON OUR PART, THUS DECLINE TO TAKE A DEPARTURE FROM THE VIEW MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 8 AS HAD BEEN ARRIVED AT BY THE CIT(A). WE THUS UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE . 7. THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 .08.2017 SD/ - SD/ - ( RAJENDRA ) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 30 .08.2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI MICROPLUS POLYMERS P. LTD. ITA NO. 838/MUM/2017 9