AKSHAET ENGINEERING & CONSTRUCTION SERVICES P.LTD, MUMBAI V. ITO 9(1)(2), MUMBAI

ITA 889/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2475 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 69C; 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 889/MUM/2018 (ASSESSMENT YEAR: 2010-11) M/S . AKSHAET ENGINEERING & CONSTRUCTION SERVICES P. LTD 204, INDO SAIGON IND. ESTATE MAROL NAKA, ANDHERI (E) MUMBAI 4000059 VS. INCOME TAX OFFICER - 9(1)(2) AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AABCA2082Q APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI S.K. BEPARI DATE OF HEARING: 26.09.2018 DATE OF PRONOUNCEMENT: 14.11.2018 O R D E R PER SAKTIJIT DEY, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-16, MUMBAI DAT ED 30.10.2017AND IT RELATES TO A.Y. 2010-11. 2. THE ISSUE IN DISPUTE IN THE PRESENT APPEAL IS RESTR ICTED TO ADDITION OF ` 3,35,062/- ON ACCOUNT OF NON-GENUINE PURCHASES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A CO MPANY, IS ENGAGED IN FABRICATION, ENGINEERING AND TRADING IN ALUMINIU M PRODUCTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED IT S RETURN OF INCOME ON 20.09.2010 DECLARING TOTAL INCOME OF ` 4,61,370/-. INITIALLY THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SE CTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER 'THE ACT'). SUBSE QUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), MUMBAI A ND SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT PURCHASE S WORTH ` 26,80,492/- CLAIMED TO HAVE BEEN MADE FROM THREE PA RTIES ARE NOT ITA NO. 889/MUM/2018 AKSHAET ENGINEERING & CONSTRUCTION SERVICES P. LTD 2 GENUINE, AS SUCH PARTIES HAVE BEEN IDENTIFIED AS HA VALA OPERATORS, THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT UNDE R SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN T HE AO CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE CONCERNED PARTIES, THE ASSESSEE COULD PRODUCE A FEW DOCUMENTA RY EVIDENCES LIKE PURCHASE BILLS, BANK STATEMENT SHOWING PAYMENT TOWA RDS PURCHASES MADE, ETC. HOWEVER, THE ASSESSEE NEITHER COULD FURN ISH TRANSPORT DETAILS AND DELIVERY CHALLANS TO PROVE THE ACTUAL DELIVERY OF GOODS NOR THE ASSESSEE COULD PRODUCE CONCERNED PARTIES BEFORE THE AO. SINC E, THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE AO TO THE CO NCERNED PARTIES RETURNED UNSERVED BY THE POSTAL AUTHORITIES, THE AO OBSERVED THAT EVEN THE IDENTITY OF THE SELLING DEALERS COULD NOT BE ESTABL ISHED. IN THE AFORESAID FACTS AND CIRCUMSTANCES THE AO PROCEEDED TO TREAT T HE NON-GENUINE PURCHASES OF ` 26,80,492/- AS UNEXPLAINED EXPENDITURE OF THE ASSES SEE UNDER SECTION 69C OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF THE SAID ADDITION THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A ), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE F ACTS AND MATERIAL ON RECORD AND IN THE LIGHT OF THE RATIO LAID DOWN IN V ARIOUS JUDICIAL PRECEDENTS, HELD THAT THE AO HAVING NOT DOUBTED THE CONSUMPTION /SALES OF GOODS PURCHASED, THE ENTIRE PURCHASES MADE BY THE ASSESSE E CANNOT BE DISALLOWED BUT THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. ACCORDINGLY, HE DIRECTED T HE AO TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE PURCHASES MADE FROM TH E HAWALA OPERATORS. 4. WHEN THE APPEAL WAS CALLED FOR HEARING NO ONE WAS P RESENT FOR THE ASSESSEE IN SPITE OF NOTICE OF HEARING ISSUED THROU GH REGISTERED POST. IN VIEW OF THE AFORESAID, I PROCEED TO DISPOSE OF THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REP RESENTATIVE (D.R.) AND AFTER PERUSING THE MATERIAL ON RECORD. 5. AS COULD BE SEEN FROM THE FACTUAL MATRIX OF THE CAS E, NEITHER BEFORE THE AO NOR BEFORE THE LEARNED CIT(A) THE ASSESSEE C OULD ESTABLISH THE GENUINENESS OF THE PURCHASES MADE FROM THE CONCENTR ED PARTIES THROUGH ITA NO. 889/MUM/2018 AKSHAET ENGINEERING & CONSTRUCTION SERVICES P. LTD 3 PROPER DOCUMENTARY EVIDENCES. FURTHER, EVEN BEFORE ME ALSO THE ASSESSEE HAS NOT PRODUCED ANY MATERIAL TO PROVE THE GENUINEN ESS OF THE PURCHASES MADE. HOWEVER, AS RIGHTLY OBSERVED BY THE LEARNED C IT(A), THE AO HAS NOT DOUBTED THE SALES EFFECTED BY THE ASSESSEE. THEREFO RE, AS A NATURAL COROLLARY IT HAS TO BE ASSUMED THAT IN THE ABSENCE OF PURCHASES MADE, THE ASSESSEE COULD NOT HAVE EFFECTED THE SALES. IN THES E CIRCUMSTANCES, ONLY THE PROFIT ELEMENT EMBEDDED IN THE NON-GENUINE PURC HASES CAN BE CONSIDERED FOR ADDITION TO PREVENT LEAKAGE OF REVEN UE. ADMITTEDLY, THE LEARNED CIT(A) HAS RESTRICTED THE ADDITION MADE TO THE PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASE BY ESTIMATING THE SA ME AT 12.5%. THE ESTIMATION OF PROFIT AT 12.5% AS MADE BY THE CIT(A) , IN MY VIEW, BEING REASONABLE NEEDS NO INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2018. SD/ - (SAKTIJIT DEY) JUDICIALMEMBER MUMBAI, DATED: 14 TH NOVEMBER, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -16, MUMBAI 4. THE PR.CIT- 9, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.