KANAK STEEL INDIA, MUMBAI V. INCOME TAX OFFICER - WARD 18(2)(1), MUMBAI

ITA 911/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0198 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 911 / MUM . /2018 ( ASSESSMENT YEAR : 20 1 1 1 2 ) KANAK STEEL INDIA JAGRUTI NIWAS, 2 ND FLOOR PLOT NO.70, KALBADEVI MUMBAI 400 002 PAN AAHFK4294K . APPELLANT V/S INCOME TAX OFFICER WARD 18(2)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI VIMAL PUNAMIYA REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 1 0 .09.2018 DATE OF ORDER 19.09.2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 7 TH NOVEMBER 2017 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 29 , MUMBAI, FOR THE ASSESSMENT YEAR 20 11 12 . 2 . GROUNDS NO.1 TO 4 ARE NOT PRESSED, HENCE, DISMISSED. 3 . IN GROUND NO.5, THE ASSESSEE HAS CHALLENGED ADDITION OF ` 1,15,990 ON ACCOUNT OF BOGUS PURCHASES. 4 . BRIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS A DEALER IN FERROUS AND NON FERROUS METALS. FOR THE ASSESSMENT YEAR UNDER 2 KANAK STEEL INDIA DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 3 RD SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 6,01,684. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SUBSEQUENTLY, ON THE BASIS OF INFORMATION REC EI VED FROM THE DGIT (INV.), MUMBAI, THAT PURCHASES MADE OF ` 9,27,923 FROM M/S. VINAYAK STEEL (IMPEX), IS NOT GENUINE, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOU ND THAT AS REPORTED BY THE DGIT (INV.), MUMBAI, THE SALES TAX DEPARTMENT, MAHARASHTRA GOVERNMENT, HAS FOUND THAT M/S. VINAYAK STEEL (IMPEX), IS A HAWALA OPERATOR PROVIDING ACCOMMODATION BILLS AND THE ASSESSEE IS A BENEFICIARY OF SUCH ACCOMMODATION BILL PRO VIDED BY THE SAID PARTY. HE, THEREFORE, CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE FROM THE SAID PARTY. THOUGH , THE ASSESSEE CLAIMED THE PURCHASES TO BE GENUINE BY PRODUCING THE PURCHASE INVOICE, LEDGER ACCOUNT COPY AND BANK STATEMENT, HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE. ACCORDINGLY, HE TREATED THE PURCHASES MADE BY THE ASSESSEE FROM M/S. VINAYAK STEEL (IMPEX) AS NON GENUINE. HOWEVER, CONSIDERING THE FACT THAT ASSESSEE HAS REFL ECTED THE PURCHASES IN THE BOOKS OF ACCOUNT AND WITHOUT SUCH PURCHASES SALES COULD NOT HAVE BEEN EFFECTED, THE ASSESSING OFFICER RESTRICTED THE ADDITION TO 12.5% 3 KANAK STEEL INDIA BEING THE PROFIT ELEMENT EMBEDDED IN NON GENUINE PURCHASE OF ` 9,27,923. ACCORDINGLY, HE QUANT IFIED THE ADDITION AT ` 1,15,990. 5 . THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, THE ASSESSEE WAS UNSUCCESSFUL. 6 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. THE ONLY SUBMISSI ON MADE BY THE LEARNED A.R. IS THAT THE ASSESSEE HAS PAID VAT OF ` 37,117, ON THE ALLEGED BOGUS PURCHASES OF ` 9,27,922. THEREFORE, EVEN IF THE PROFIT ELEMENT ON THE ALLEGED BOGUS PURCHASES IS ESTIMATED AT 12.5% BUT THE VAT AMOUNT PAID BY THE ASSESSEE SHO U LD BE REDUCED FROM SUCH PROFIT . 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). 8 . HAVING CONSIDERED RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ASSESSEE SHOULD GET THE BENEFIT OF VAT PAID ON THE PUR CHASES HELD TO BE NON GENUINE BY THE AS SESSING OFFICER. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO VERIFY THE PAYMENT OF VAT BY THE ASSESSEE AND REDUCE IT FROM THE ADDITION MADE OF ` 1,15,990 AND SUSTAIN ADDITION TO THE EXTENT OF THE BALANCE AMOUNT. THIS GROUND IS PARTLY ALLOWED. 9 . IN GROUND NO.6, THE ASSESSEE HA S CHALLENGED LEVY OF INTEREST UNDER VARIOUS PROVISIONS OF THE ACT. 4 KANAK STEEL INDIA 10 . HAVING CONSIDERED RIVAL CONTENTIONS, I AM OF THE VIEW THAT LEVY OF INTEREST IS MANDATORY AND CONSEQUENTIAL. SUFFICE TO SAY, INTEREST UNDER SECTION 234C OF THE ACT HAS TO BE CHARGED ON THE BASIS OF INCOME RETURNED BY THE ASSESSEE. 11 . GROUND NO.7, BEING PRE MATURE AT THIS STAGE AND GROUND NO.8 BEING GENERAL IN NATURE IS DISMISSED. 12 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO W ED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 19.09.201 8 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