NIRMAN ELECTRONICS P.LTD, MUMBAI V. ITO 10(3)(1), MUMBAI

MA 168/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3670 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-11-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Rectification of order; Accommodation entries
• Section: 254(2); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER M A NO. 168/MUM/2020 (ARISING OUT OF ITA NO.1423/MUM/2017 ASSESSMENT YEAR: 2011-2012) NIRMAN ELECTRONICS PVT. LIMITED, 4 ANNAPURNA SADAN, BEHIND MOONLIGHT SHOPPING CENTRE, ANDHERI KURLA ROAD, ANDHERI (EAST), MUMBAI 400 069. PAN AAACN8193L VS ITO 10 ( 3 )( 1 ), MUMBAI . (APPLICANT) RESPONDENT) APPLICANT BY : SHRI MAHESH SABOO RESPONDENT BY : NONE DATE OF HEARING : 0 6 . 1 1 .20 20 DATE OF PRONOUNCEMENT : 10 . 11 .20 20 O R D E R BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSES SEE SEEKS RECTIFICATION OF MISTAKE U/S. 254(2) OF THE INCOME TAX ACT, IN THE O RDER OF THIS TRIBUNAL, ITA NO. 1423/MUM/2017 FOR ASSESSMENT YEAR 2011-12, DATED 14 .09.2017. 2. NONE APPEARED FOR THE REVENUE. I HAVE HEARD THE COUNSEL FOR THE ASSESSEE AND PERUSED THE RECORDS. I FIND THAT BY WAY OF THI S MISCELLANEOUS APPLICATION, IT IS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT THE ORDER OF THE ITAT NEEDS TO BE RECONSIDERED. THE SUBMISSIONS ARE SUMM ARISED AS UNDER: 1) THE APPELLANT IS A PRIVATE LIMITED COMPANY H AVING ITS PRESENT OFFICE AT 4 ANNAPURNA SADAN, BEHIND MOONLIGHT SHOPPING CEN TRE, ANDHERI KURLA ROAD, ANDHERI (EAST) MUMBAI 400 069 AND IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF ELECTRONIE PARTS AND I S ALSO REGULARLY BEING ASSESSED TO TAX BY ITO WARD 1()(3)(1) AT MUMBAI. 2) AGGRIEVED BY THE ORDER OF CIT(A)-14 DATED 09/ 01/2017, THE AFORESAID APPEAL BEARING NO. ITA/1423/MUM/2017 WAS FILED BEFORE YOUR MA NO.168/MUM/2020 NIRMAN ELECTRONICS PVT. LTD. 2 HONOUR, WHICH WAS DISMISSED VIDE AFORESAID ORDER DA TED 14/09/2017. FT WAS THE OBSERVATION OF THE HON'BLE TRIBUNAL THAT TH E ADDITION MADE @ 12.5% OF THE ALLEGED INGENUINE/HAVALA PURCHASE WAS REASONABLE. HOWEVER IN THE PAST AND SUBSEQUENT TO THE PASSING OF THIS ORDER, THE HIGHERAUTHORITIES AS WELL AS THIS HON'BLE TRIBU NAL HAD HELD IN VARIOUS DECISIONS THAT TO KEEP THE UNIFORMITY ON AL L DECISIONS OF VARIOUS AUTHORITIES, THE ADDITION BE RESTRICTED TO LOWER OF GP DECLARED BY THE APPELLANT IN RESPECT OF BOGUS PURCH ASES AS COMPARED TO GP ON NORMAL PURCHASES. 3) THE APPELLANT RESPECTFULLY SUBMITS BEFORE YOU R HONOUR THAT THE APPELLANT HAD MADE GENUINE PURCHASES AND IS HOLDING ALL DELIVERY PROOF THEREOF AND THAT THE PAYMENT HAD BEEN MADE BY AN AC COUNT PAYEE CHEQUES. THERE IS NO CASH TRAIL ESTABLISHED IN THE INSTANT CASE BY THE AO. THE SALES IS NOT DOUBTED BY THE AO. THE APPELLANT H AD SOLD THESE GOODS TO A PARTY OUTSIDE MAHARASHTRA AND IS IN POSSESSION OF RELEVANT C FORM. THE GP OF THE APPELLANT FOR THE YEAR IS 9.82% AND T HE GP ON THESE ALLEGED HAVALA PURCHASES IS ABOUT 5.33% ONLY. (PURC HASES RS. 85,01,430/- SALES RS. 89,80,450/- GP MARGIN RS. 4,7 9,020/- PERCENTAGE 5.33%) 4) THUS YOUR HONOUR WILL OBSERVE THAT IN SIMILA R SUCH CASES, THE APPROPRIATE RELIEF HAD BEEN GRANTED AND IN ORDER TO KEEP THE UNIFORMITY OF THE VARIOUS DECISIONS IT WOULD BE APPROPRIATE TH AT THIS ORDER BE CALLED AND APPROPRIATE RELIEF TO THE APPELLANT BE GRANTED. 5) A GRAVE UNDUE HARDSHIP AND IRREPARABLE LOSS WOULD B E CAUSED TO THE APPLICANT, BY THE ORDER DATED 14/09/2 017 PASSED IN THE AFORESAID APPEAL. THE APPLICANT THEREFORE RE QUESTS THIS HON'BLE BENCH TO RECONSIDER/RE-CALL THE SAID ORDER, RECONSIDER THE SAME ON FACTUAL ASPECTS, AND DO THE JUSTICE TO THE APPLICANT IN THE MATTER. 6) THE APPLICANT HEREBY REQUESTS THIS HON'BLE B ENCH TO CONDONE THE DELAY, IF ANY, WHICH HAD OCCURRED IN MA KING THIS MISCELLANEOUS APPLICATION. 7) IN VIEW OF WHAT IS STATED ABOVE AND IN THE A FORESAID PREMISES, THE APPLICANT/APPELLANT PRAYS:- THAT THIS HON'BLE BENCH BE PLEASED TO RE-CONSIDER/C ALL BACK ITS ORDER DATED 14/09/2017 AND RE-STORE THE APPEAL BEAR ING NO. ITA NO: 1423/MUM/2017 AND DO THE JUSTICE TO THE APPELLANT. 3. UPON CAREFUL CONSIDERATION, I FIND THAT THE ISSU E WAS ADJUDICATED BY THE TRIBUNAL AS UNDER: MA NO.168/MUM/2020 NIRMAN ELECTRONICS PVT. LTD. 3 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A DEALER AND MANUFACTURER OF ELECTRONIC GOODS LIKE CPU DIGIT AL ANALOG. CONSEQUENT TO THE INFORMATION RECEIVED FROM SALES TAX DEPARTME NT THAT CERTAIN PARTIES (CALLED HAWALA PARTIES) ARE INDULGING IN PR OVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS, THE REVENUE EXAMINED THOSE DETAILS. IT WAS NOTICED THAT THE ASSESSEE HEREIN HAS PURCHASED GOODS DURING THE YEAR UNDER CONSIDERA TION FROM THE PARTIES LISTED AS HAWALA PARTIES AGGREGATING TO RS. 85,01,430/-. HENCE THE AO REOPENED THE ASSESSMENT OF THE YEAR UNDER CONSID ERATION. 3. BEFORE AO, THE ASSESSEE ONLY FURNISHED PURCHASE BILLS, BANK STATEMENTS, LEDGER ACCOUNT COPIES ETC. THE AO ISSUE D SUMMONS U/S 131 OF THE ACT AND THEY WERE RETURNED UNSERVED. HENCE T HE AO ASKED THE ASSESSEE TO PRODUCE THE SUPPLIERS, BUT THE SAME WAS NOT COMPLIED WITH. SINCE THE SALES WAS ACCEPTED BY THE AO, THE ASSESSI NG OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS PURCHASED GOODS FROM GRE Y MARKET AND AVAILED ACCOMMODATION BILLS TO ACCOUNT FOR THE SAME . ACCORDINGLY THE AO TOOK THE VIEW THAT THE PROFIT ELEMENT INVOLVED IN T HE IMPUGNED PURCHASES SHOULD BE ASSESSED, WHICH HE ESTIMATED AT 12.50% OF THE VALUE OF PURCHASES ON THE BASIS OF DECISION OF HONBLE GUJAR AT HIGH COURT RENDERED IN THE CASE OF SMIT P SHAH (356 ITR 451). THE AO ASSESSED THE SAME AND THE LD CIT(A) ALSO CONFIRMED THE SAME. AGG RIEVED, THE ASSESSEE HAS FILED THIS APPEAL.4. THE LD A.R SUBMIT TED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS IN ORDER TO PROVE THE GENUINENESS OF PURCHASES BY FURNISHING COPIES OF PURCHASE BILLS, P AYMENT DETAILS ETC. THE ASSESSEE HAS ALSO PROVED THAT THE SAID GOODS HAVE B EEN SOLD. HE FURTHER SUBMITTED THAT THE APPLICABLE VAT RATE ON MOST OF T HE GOODS WAS ONLY 5%. HE SUBMITTED THAT THE SUPPLIERS HAVE BEEN DECLA RED AS HAWALA DEALERS, SINCE THEY DID NOT PAY THE VAT TAX. HE SUB MITTED THAT THE SAME WOULD NOT MAKE THE PURCHASES NON-GENUINE. ACCORDING LY HE SUBMITTED THAT THE ADDITION CONFIRMED BY LD CIT(A) SHOULD BE DELETED. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE SH OULD HAVE MADE PROFIT ON THE VALUE OF PURCHASES AND HENCE THE LD CIT(A) W AS JUSTIFIED IN ADOPTING THE G.P RATE FOR MAKING ADDITION.5. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD. SINCE THE ASSES SEE HAS PROVED THE SALE OF GOODS, THE AO CHOSE TO ADD THE PROFIT ELEME NT INVOLVED IN THE PURCHASES. THE AO WAS CONSTRAINED TO COME TO THAT C ONCLUSION, SINCE THE IMPUGNED SUPPLIERS HAVE ADMITTED BEFORE THE SALES T AX AUTHORITIES THAT THEY HAVE PROVIDED ONLY ACCOMMODATION ENTRIES. FURT HER SUMMONS ISSUED BY THE AO TO THE SUPPLIERS HAVE BEEN RETURNED BACK AND THE ASSESSEE ALSO COULD NOT OBTAIN CONFIRMATION LETTERS FROM THE M OR PRODUCE THEM BEFORE THE AO. HAD THEY BEEN GENUINE SUPPLIERS, SUC H THINGS WOULD NOT HAVE HAPPENED. HENCE THERE IS MERIT IN THE INFERENC E DRAWN BY THE AO THAT THE ASSESSEE COULD HAVE PURCHASED GOODS FROM T HE GREY MARKET AND OBTAINED THE ACCOMMODATION BILLS TO ACCOUNT FOR THE M. IN THAT CASE, THE AO WAS JUSTIFIED IN ESTIMATING THE PROFIT ELEMENT I NVOLVED IN THE IMPUGNED PURCHASES.6. I NOTICE THAT THE ASSESSEE HA D DECLARED G.P RATE MA NO.168/MUM/2020 NIRMAN ELECTRONICS PVT. LTD. 4 OF 14.23% AND 15.58% DURING THE YEARS RELEVANT FOR AY 2009-10 AND2010-11 RESPECTIVELY. DURING THE YEAR UNDER CONS IDERATION, THE G.P RATE HAS COME DOWN TO 9.82%, A REDUCTION OF ALMOST 6%. I NOTICE THAT THE TURNOVER OF THE ASSESSEE HAS INCREASED FROM RS. 246 LAKHS IN THE IMMEDIATELY PRECEDING YEAR TO RS.426 LAKHS. THE INC REASE IN TURNOVER MAY BE ONE OF THE REASONS FOR THE FALL IN G.P, BUT ANOTHER POSSIBILITY IS THAT THE ASSESSEE MIGHT HAVE INFLATED IMPUGNED PURC HASES ALSO. HENCE I AM OF THE VIEW THAT THERE IS NO MERIT IN THE CLAIM OF THE ASSESSEE. THE TAX AUTHORITIES HAVE ESTIMATED THE PROFIT THAT WOUL D HAVE BEEN MADE BY THE ASSESSEE ON THE VALUE OF ALLEGED BOGUS PURCHASE S @ 12.50% AND IN MY VIEW, THE SAME IS REASONABLE IN THE FACTS AND CI RCUMSTANCES OF THE CASE DISCUSSED ABOVE. ACCORDINGLY I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD CIT(A) AND HENCE UPHOLD THE SAME.7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 4. I FIND THAT THE TRIBUNAL HAS DULY APPRECIATED TH E SUBMISSIONS AND, THEREAFTER, UPHELD THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT BY WAY OF THIS MA ASSESSEE SEEKS A REVIEW OF THE ORDER OF THE TRIBUNAL IN THE GRAB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD. IT IS A SETTLED LAW THAT RE VIEW OF ORDER IN THE GRAB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD IS NO T PERMISSIBLE IN LAW. MOREOVER, IT IS ALSO NOTED THAT THE MA HAS BEEN FILED ON 15.06.2 020 AND THE TRIBUNAL ORDER WAS PASSED ON 14.09.2017 5. IN THE RESULT, THIS MISCELLANEOUS APPLICATION IS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 10 TH NOVEMBER, 2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI, DATED 10 TH NOVEMBER, 2020. SA MA NO.168/MUM/2020 NIRMAN ELECTRONICS PVT. LTD. 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), 4. THE CIT 5. THE DR, SMC BENCH BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI