PANKAJ ENTERPRISES, MUMBAI V. INCOME TAX OFFICER 32(2)(5), MUMBAI

ITA 909/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0365 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Opportunity of being heard; Tangible material
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 909 / MUM . /2018 ( ASSESSMENT YEAR : 2012 13 ) PANKAJ ENTERPRISES 46 A, GANJAWALA APARTMENT NO.2 S.V. ROAD, BORIVALI (WEST) MUMBAI 400 092 PAN AAAFP2176J . APPELLANT V/S INCOME TAX OFFICER WARD 32(2)(5), MUMBAI . RESPONDENT ITA NO.910/MUM./2018 ( ASSESSMENT YEAR : 2010 11 ) PANKAJ ENTERPRISES 46 A, GANJAWALA APARTMENT NO.2 S.V. ROAD, BORIVALI (WEST) MUMBAI 400 092 PAN AAAFP2176J . APPELLANT V/S INCOME TAX OFFICER WARD 32(2)(5), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 10.09.2018 DATE OF ORDER 12.09.2018 O R D E R A FORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE CHALLENGING TWO SEPARATE ORDERS, BOTH DATED 16 TH JANUARY 2018, PASSED BY THE 2 PANKAJ ENTERPRISES LEARNED COMMISSIONER (APPEALS) 44, MUMBAI, FOR THE ASSESSMENT YEAR S 2010 11 AND 2012 13. 2 . WHEN THE APPEALS WERE CALLED FOR HEARING, NO ONE WAS PRE SENT ON BEHALF OF THE ASSESSEE IN SPITE OF SERVICE OF HEARING NOTICE ISSUED THROUGH REGISTERED POST , WHICH IS EVIDENT FROM THE POSTAL ACKNOWLEDGMENT KEPT ON RECORD. EVEN, THE ASSESSEE HAS NOT FILED ANY APPLICATION SEEKING ADJOURNMENT OF THE APPEALS. IN VIE W OF THE AFORESAID, I PROCEED TO DISPOSE OF THE APPEALS EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. ITA NO.910/MUM./2018 ASSESSMENT YEAR 2010 11 3 . THE ONLY DISPUTE IN THE PRESENT APPEAL RELATES TO DISALLOWANCE SUSTAINED @ 12.5% OF BOGUS PURCHASES OF ` 21,41 , 058. 4 . BRIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF SUPPLY OF BUILDING MATERIALS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2010, DECLARING TOTAL INCOME OF ` 3,56,050. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV ), MUMBAI, AS WELL AS THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT CERTAIN PURCHASES SHOWN BY THE ASS ESSEE FROM SOME PARTIES ARE NOT GENUINE , SINCE , THE CONCERNED PARTIES HAVE BEEN IDENTIFIED AS HAWALA 3 PANKAJ ENTERPRISES OPERATORS PROVIDING ACCOMMODATION BILLS WITHOUT ACTUAL DELIVERY OF GOODS, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURI NG THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAVING FOUND THAT PURCHASES MADE FROM FIVE PARTIES AMOUNTING TO ` 1,68,67,058, ARE NOT GENUINE AS PER THE INFORMATION OF THE SALES TAX DEPARTMENT , CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES. THOUGH, THE ASSESSEE FILED HIS SUBMISSIONS STATING THAT THE PURCHASES MADE ARE GENUINE, HOWEVER, THE ASSESSING OFFICER REJECTING THE SUBMISSIONS OF THE ASSESSEE HELD THAT PURCHASES EFFEC TED FROM THE FIVE PARTIES IDENTIFIED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT ARE NOT GENUINE. FURTHER, HE NOTICED THAT WHILE COMPLETING ASSESSMENT IN ASSESSEES OWN CASE FOR THE IMPUGNED ASSESSMENT YEAR UNDER SECTION 143(3) OF THE ACT, ALREADY AN A MOUNT OF ` 1,58,40,515, WAS ADDED. HOWEVER, WHILE MAKING SUCH ASSESSMENT, SOME AMOUNT OF PURCHASES MADE FROM FOUR OF THE PARTIES AGGREGATING TO ` 21,41,058 WAS OMITTED. ACCORDINGLY, HE ADDED BACK THE AMOUNT TO THE INCOME OF THE ASSESSEE WHILE COMPLETING TH E ASSESSMENT. 5 . BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, THE LEARNED COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 12.5% OF ` 21,41,058, WHICH WORKED OUT TO ` 2,67,632. 4 PANKAJ ENTERPRISES 6 . I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN, ON THE BASIS OF SPECIFIC INFORMATION RECEIV ED FROM THE DGIT (INV.), MUMBAI AND THE SALES TAX DEPARTMENT, MA HARASHTRA GOVERNMENT, THE ASSESSING OFFICER FOUND THAT CERTAIN PURCHASES SHOWN TO HAVE BEEN MADE BY THE ASSESSEE WERE NOT GENUINE. THEREFORE, HE PROCEEDED TO RE OPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THUS, IT IS A FACT ON RECORD THAT THE ASSESSI NG OFFICER HAD TANGIBLE MATERIAL IN HIS POSSESSION TO ENTERTAIN A PRIMA FACIE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THAT BEING THE CASE, RE OPENING OF ASSESSMENT YEAR UNDER SECTION 147 OF THE ACT IS VALID. 7 . AS REGARDS THE MERITS OF THE ADDITIONS SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS), NOTABLY, NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE COULD CONCLUSIVELY PROVE THE GENUINENESS OF THE PURCHASES MADE THROUGH PROPER DOCUMENTARY EVIDENCES INCLUDING DELIVERY CHALLANS TO INDICATE PHYSICAL DELIVERY OF GOODS TO THE ASSESSEE. EVEN NO CONFIRMATION FROM THE CONCERNED PARTIES WAS FILED. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE HAS BEEN ABLE T O ESTABLISH THE GENUINENESS OF THE PURCHASES. THEREFORE, IN MY CONSIDERED OPINION, ESTIMATION OF PROFIT @ 12.5% OF THE BOGUS PURCHASES AS HAS BEEN DONE BY THE 5 PANKAJ ENTERPRISES LEARNED COMMISSIONER (APPEALS) IS FAIR AND REASONABLE, HENCE, DOES NOT CALL FOR ANY INTERFERENCE. GROUNDS RAISED ARE DISMISSED. 8 . IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ITA NO. 909 /MUM./2018 ASSESSMENT YEAR 201 2 1 3 9 . GROUND NO.1, RELATES TO ADDITION OF ` 12,85,735, UNDER SECTION 41(1) OF THE ACT. 10 . BRIEF FACTS ARE, FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH SEPTEMBER 2012, DECLARING TOTAL INCOME OF ` 3,17,280. IN COURSE OF THE ASSESSMENT PROCEEDINGS, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THAT SOME PARTIES ARE PROVIDING ACCOMMOD ATION BILLS AND SOME OF THE SUNDRY CREDITORS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE APPEARING IN THE LIST OF HAWALA DEALERS IDENTIFIED BY THE SALES TAX DEPARTMENT , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF TH REE SUNDRY CREDITORS , NAMELY , BHAWANI TRAD E LINK, DARSHAN SALES CORPORATION AND DEEP ENTERPRISES , AGGREGATING TO ` 12,85,735. FURTHER, THE ASSESSING OFFICER FOUND THAT BEFORE THE SALES TAX AUTHORITIES, THE ABOVE MENTIONED PARTIES HAVE CATEGORICALLY ACCEPTED THAT THEY HAVE NOT DONE AN Y BUSINESS ACTIVITY NOR THERE WAS ACTUAL DELIVERY OF GOODS TO THE PURCHASING PARTIES. ON THE BASIS OF THE 6 PANKAJ ENTERPRISES AFORESAID INFORMATION, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH CONFIRMATION S FROM THE CONCERNED PARTIES. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT HE WAS UNAWARE OF THE ADDRESS OR WHEREABOUTS OF THE CONCERNED PARTIES AND, HENCE, WILL NOT BE ABLE TO PRODUCE THEM. THUS, AS A RESULT OF FAILURE OF THE ASSESSEE TO EITHER FURNISH CONFIRMATIONS FROM SUNDRY CREDITORS OR PRODUCE THEM , THE ASSESSING OFFICER TREATED THE AMOUNT OF ` 12,85,735 AS CESSATION OF LIABILITY UNDER SECTION 41(1) OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). HOWEVER, THE LEARNED COMMISSIONER (APPEALS) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 11 . I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT, THE AMOUNT OF ` 12,85,735 ADDED BY THE ASSESSING OFFICER REPRESENTS CREDIT AMOUNT APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE RELATING TO THREE PARTIES MENTIONED HEREIN BEFORE. WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF TRANSACT ION ENTERED WITH THEM EITHER BY PRODUCING THEM OR FURNISHING CONFIRMATION S , THE ASSESSEE WAS UNABLE TO DO SO. HOWEVER, BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS PRODUCED SOME EVIDENCE INDICATING PAYMENT MADE TO CONCERNED PARTIES WHICH WAS REJECTED BY 7 PANKAJ ENTERPRISES THE LEARNED COMMISSIONER (APPEALS). IN MY VIEW, ASSESSEES CLAIM THAT THE LIABILITY RELATING TO SUNDRY CREDITORS WERE SUBSEQUENTLY DISCHARGED NEEDS TO BE EXAMINED PROPERTY AND ASSESSEE DESERVES AN OPPORTUNITY TO PROVE SUCH FACT THROUGH PROPER AND AUTHENTIC DOCUMENTARY EVIDENCE. IF THE ASSESSEE IS ABLE TO ESTABLISH THE EXISTENCE OF LIABILITY IN THE IMPUGNED ASSESSMENT YEAR THROUGH PROPER EVIDENCE , NO ADDITION UNDER SECTION 41(1) OF THE ACT CAN BE MADE. THEREFORE, I RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 12 . IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED ADDITION OF ` 4,21,517. 13 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT OUT OF THE TOTAL PURCHASES SHOWN IN THE BOOKS OF ACCOUNT , PURCHAS ES WORTH ` 42,15,178, WAS FROM UNREGISTERED DEALERS THROUGH CASH PAYMENT AND NOT SUPPORTED BY PROPER BILLS OR INVOICES , DISAL LOWED 10% OF THE SAID PURCHASES AND MADE ADDITION OF ` 4,21,517. THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER WAS ALSO SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) . 14 . I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT FROM THE FACTS ON RECORD, 8 PANKAJ ENTERPRISES NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE COULD PRODUCE PROPER DOCUMENTAR Y EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES MADE FROM UNREGISTERED DEALERS THROUGH CASH PAYMENT , EXCEPT , SELF MADE VOUCHERS . N O PROPER BILLS OR INVOICES COULD BE PRODUCED BY THE ASSESSEE. IN THE AFORESAID CIRCUMSTANCES, DISALLOWANCE OF 10% OUT OF THE PURCHASES MADE FROM THE UNREGISTERED DEALERS IS FAIR AND REASONABLE, HENCE, REQUIRES TO BE SUSTAINED. GROUND RAISED IS DISMISSED. 15 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 16 . T O SUM UP, ASSESSEES APPEAL IN ITA NO.910/MUM. /2018 IS DISMISSED AND ITA NO.909/MUM./2018 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12.09.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 12.09.2018 9 PANKAJ ENTERPRISES COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI