ASST CIT 15(1)(2), MUMBAI V. BHARAT WIRES ROPES LTD, MUMBAI

ITA 96/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8680 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JENDARDHANAN
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

ITA.NO.96/MUM/2016 BHARAT WIRES ROPES LIMITED ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.96/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) ASSISTANT COMMISSIONER OF INCOME TAX 15(1)(2) ROOM NO.483-A,4 TH FLOOR AAYKAR BHAVAN,M.K.ROAD MUMBAI - 40 0 020 / VS. BHARAT WIRES ROPES LIMITED 524/525 THE CORPORATE CENTRE NIRMAL LIFESTYLE LBS MARG, MULUND(WEST) MUMBAI - 400 080 ! ./ ./PAN/GIR NO. AABCB-2180-N ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : V.JENDARDHANAN, SR. DR / DATE OF HEARING : 23/10/2017 / DATE OF PRONOUNCEMENT : 25/10 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011- 12 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF IN COME-TAX (APPEALS)- ITA.NO.96/MUM/2016 BHARAT WIRES ROPES LIMITED ASSESSMENT YEAR-2011-12 2 24 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-22/DCIT(OSD)10(3)/IT 332/13- 14 DATED 15/10/2015 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX (OSD)-10(3) [AO], MUMBAI U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 27/02/2014. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE AND THEREFORE LEFT WITH NO OPTION, WE PROCEED TO DECIDE THE APPEAL ON THE BASIS OF DOCUMENTS AVAILABLE ON RECORD AND AFTER HE ARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF WIRE & WIRE ROPES WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 27/02/20 14 AT RS.5,55,04,010/- AS AGAINST RETURNED INCOME OF RS.2 ,13,86,708/- FILED BY THE ASSESSEE ON 22/09/2011. THE ASSESSEE HAS SUFFER ED SOLE ADDITION OF RS.2,66,19,848/- ON ACCOUNT OF CERTAIN BOGUS PURCHASES AND SAME IS THE SOLE SUBJECT MATTER OF THIS APPEAL. 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIAR Y OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.2,66,19,848/- FROM TWO SUCH PARTI ES. THE ASSESSEE CONTENDED THAT THE PURCHASES WERE MADE FRO M REGULAR SUPPLIERS AND THE SAME WERE DULY SUPPORTED BY INVOI CES AND PAYMENTS WERE THROUGH BANKING CHANNELS. HOWEVER, NOT CONVINC ED, LD. AO TREATED THE SAME AS BOGUS PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ITA.NO.96/MUM/2016 BHARAT WIRES ROPES LIMITED ASSESSMENT YEAR-2011-12 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 15/10/2 015 WHERE THE LD. CIT(A) NOTED THAT TRANSPORTATION DETAILS ON THE INV OICES WERE NOT AVAILABLE AND THE ASSESSEE FAILED TO PRODUCE ANY PA RTY FOR CONFIRMATION OF ACCOUNTS. AT THE SAME TIME, LD. AO DID NOT DOUBT ED THE ASSESSEES TURNOVER AND THEREFORE, THE ADDITION, WHICH COULD B E MADE WAS TO ACCOUNT FOR ELEMENT OF SUPPRESSED PROFIT EMBEDDED I N SUCH PURCHASE TRANSACTIONS. FINALLY, PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS, LD. CIT(A) RESTRICTED THE IMPUGNED ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEND ED THAT THE ASSESSEE MISERABLY FAILED TO PROVE THE PURCHASE TRA NSACTIONS BY PRODUCING THE SUPPLIERS AND THEREFORE, LD. CIT(A) E RRED IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE AND FURTHER POSS ESSION OF INVOICES AND PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFICIENT TO PROVE THE PURCHASE TRANSACTIONS. 5. WE HAVE CAREFULLY HEARD THE CONTENTIONS AND PERU SED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN MATERIAL INTENSIVE BUSINESS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD N OT PRODUCE ANY CONFIRMATION FROM THE IMPUGNED SUPPLIERS WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH ITA.NO.96/MUM/2016 BHARAT WIRES ROPES LIMITED ASSESSMENT YEAR-2011-12 4 COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME TO BE QUI TE FAIR & REASONABLE, WE DISMISS REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER,2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 25.10.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI