ITO 4(1)(4), MUMBAI V. ENCRICH RD INFRA PROJECTS P.LTD, MUMBAI

MA 176/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5068 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 12-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 133(6); 44AB; 145(3)

Judgement Text

M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) M.A. No. 176/Mum/2021 (Arising out of M.A. No.37/MUM/2019) Assessment Year: 2012-13 Income Tax Officer, Ward 4(1)(3) Room No. 637A, 6 th Floor, Ayakar Bhavan, Mumbai -400020 Vs. M/s Enrich RD Infraprojects Pvt. Ltd. 30, Gopal Bhavan, 2 nd Floor, 199, Princes Street, Mumbai - 400002 PAN No. AADCR7020F Respondent Appellant Assessee by : Mr. Nishit Gandhi, AR Revenue by : Mr. Mehul Jain, DR Date of Hearing : 04/03/2022 Date of pronouncement : 04/03/2022 ORDER PER OM PRAKASH KANT, AM: By way of this miscellaneous application, the revenue is seeking rectification in the order passed by the Tribunal in M.A No. 37/Mum/2019, dated 11/01/2021 (which arose out of ITA No. 3219/Mum/2017 dated 6/8/2018 for assessment year 2012-13). M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 2 2. The ld. Departmental Representative drawn our attention to the application filed and submitted that in ITA No. 3219/Mum/2017, the revenue raised the ground is under: “On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.1,26,85,525/- (being 8% of the total gross receipts during the year) without appreciating the facts that the Assessing Officer had pointed out the defect in the books of accounts wherein bogus purchases from two accommodating parties viz. M/s Tuff Enterprises and M/s DPK Electrosales India Pvt. Ltd., have been recorded. 3. The Ld. D.R further drawn our attention to finding of the Tribunal, which is reproduced as under: “5. Having heard the rival submissions and perusing the material on record, we observe that identical issue has been decided by the co-ordinate bench of the Tribunal in ITA No.3190/M/2017 for A.Y. 2010-11 wherein the co-ordinate bench has decided the issue as under: “7. We have carefully heard the rival contentions and perused relevant material on record. So far as rejection of books of accounts and estimation of income @8% is concerned, we find the stand of Ld. CIT(A) quite logical one since the accounts of the assessee were duly audited u/s 44AB of the Income Tax Act and Audit Report in Form 3CA was available on record. Further, the assessee produced relevant registers & statements etc. during remand proceedings. Therefore, the rejection of books was not justified. Moreover, there was no basis to adopt net profit rate of 8% by Ld. AO. Extending the same logic to income being reflected by the assessee from trading division, the disallowance of loss of Rs.15.15 Lacs as computed by Ld. AO was also not justified without there being any material on record to controvert the financial results reflected by the assessee. Resultantly, Ground No.1 of revenue's appeal stands dismissed. 8. So far as the addition against alleged bogus purchases is concerned, we find strength in the argument of the revenue that the assessee miserably failed to substantiate the purchases and mere payment through banking channels was not sufficient to prove the genuineness of the purchases particularly when notices issued u/s 133(6) elicited no response and the assessee could not produce any of the supplier to confirm the transaction. The onus casted upon assessee, in this regard, in our opinion, has remained unsubstantiated. From the order of first appellate authority, we note that the supplier namely Uttam Engineering denied having made any transaction with the assessee company since the name of the assessee was changed consequent to merger with another entity. However, the assessee, in the remand proceedings, filed purchase bills, account balance confirmation, bank statement etc. from M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 3 the said supplier to substantiate the same. Hence, upon factual matrix, the argument advanced by Ld. AR, in this regard, is plausible one and addition to that extent deserves to be deleted. However, on the balance alleged bogus purchases of Rs.16,39,801/- made by assessee from remaining two parties, we estimate addition @12.5% which comes to Rs.2,04,975/- . Resultantly, Ground No. 2 stands partly allowed. Ground No. 3 is supporting ground whereas Ground No. 4 is general in nature and hence, do not require further elaborations. 9. Finally, the revenue's appeal stands partly allowed in terms of our above order.” 6. We, therefore, respectfully following the decision of coordinate Bench as above, direct the AO to delete the addition of Rs.1,26,85,525/- and instead make addition @ 12.5% on the amount of total bogus purchases. 7. In the result, the appeal of the assessee is partly allowed.” 4. Against the above finding of the Tribunal, the assessee came up by way of miscellaneous application requesting that there was no ground in the year under consideration by the revenue regarding addition in respect of bogus purchase and only issue agitated in ground raised was of deletion of Rs.1,26,85,525, which was determined by applying profit rate of 8% on gross turnover of the assessee. Therefore according to the assessee, the addition of bogus purchase was not required to be adjudicated by the Tribunal, following order of the Tribunal in immediately preceding assessment year. 5. After hearing, both the parties, the Tribunal in order dated 11/01/2021 in miscellaneous application No. 37/Mum/2019 rectified this finding in para nine of the order of the Tribunal dated 06/08/2018 in ITA No. 3219/Mum/2017 for assessment year 2012-13. The relevant finding of the Tribunal in miscellaneous application (supra) is reproduced as under: “4. After hearing the rival parties and perusing the material on record, we observe that the Revenue has raised ground against deletion of addition by the CIT(A) without appreciating the facts of the case and the facts pointed out by M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 4 the Assessing Officer in the books of account, wherein bogus purchases from hawala parties have been recorded. The said ground is reproduced hereunder: “4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,26,85,525/- (being 8% of the total gross receipts during the year) without appreciating the facts that the Assessing Officer had pointed out the defect in the books of accounts wherein bogus purchases from two accommodating parties viz. M/s. Tuff Enterprises and M/s. DPK Electrosales India Pvt. Ltd. have been recorded.” 5. We further note that the Revenue has challenged the deletion of addition on the ground that the CIT(A) has not appreciated the facts of the case in the right perspective and has challenged the order on account of reversing the rejection of books of account under Section 145(3) of the Act and nowhere the quantum of addition has been challenged. However, in para 6 of the impugned order of the Tribunal we have erroneously given a direction to add 12.5% of the total bogus purchases. Para 6 and 7 of the Tribunal order is reproduced as under :- “6. We, therefore, respectfully following the decision of co-ordinate Bench as above, direct the AO to delete the addition of Rs.1,26,85,525/-, and instead make addition @ 12.5% on the amount of total bogus purchases. 7. In the result, the appeal of the assessee is partly allowed.” 6. In view of the above facts and circumstances, we are inclined to rectify para 6 and 7 of our said order, which may be read as under :- “6. We, therefore, respectfully following the decision of co-ordinate Bench as above, direct the Assessing Officer to delete the addition of Rs.1,26,85,525/-.” 6. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The revenue in its miscellaneous application is insisting on retaining the finding of the Tribunal on the issue of addition in respect of the bogus purchases held by the Tribunal at the rate of 12.5% of the amount of bogus purchases from two parties. We find that assessing officer made addition at the rate of 8% on the gross turnover amounting to ₹.1,26,85,525/-. Alternatively the assessing officer also made addition of ₹.92,11,422/-at the rate of 12.5% on the bogus purchases from the two parties. The Ld. CIT(A) deleted the main addition of Rs.1,26,85,525/-and also deleted the M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 5 alternative addition at the rate of 12.5% of the bogus purchases from two parties. It is undisputed that the revenue in the grounds raised before the Tribunal in ITA No. 3219/M/2017 only contested the addition of Rs.1,26,85,525/-and did not contest the alternative addition at the rate of 12.5% of the bogus purchases made from two parties. In such circumstances, on being pointed out by the assessee, the Tribunal has rectified its mistake apparent from record and removed the finding on the issue of alternative addition at the rate of 12.5% of the bogus purchases. We do not find any mistake in the above finding of the Tribunal and therefore contention raised by the revenue in the present miscellaneous application are rejected. 7. The issue raised by the assessee whether miscellaneous application can be filed against order of the Tribunal in miscellaneous application is thus rendered academic only and therefore we are not adjudicating on the same. 8. The miscellaneous application filed by the revenue is accordingly dismissed. Order pronounced in the open court on 04.03.3022 Sd/- Sd/- (Kavitha Rajagopal) (Om Prakash Kant) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 04.03.2022 PS: Rohit M.A. No. 176/Mum/2021 A.Y. 2012-14 ITO, Ward 4(1)(3) VS. M/s Enrich RD Infraprojects Pvt.Ltd. 6 आदेश की े /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. संबंिधत आयकर आय / The CIT(A) 4. आयकर आय ( ) / Concerned CIT 5. िवभ ग य िति िध, आयकर य िधकरण, हमद ब द / DR, ITAT, Mumbai 6. ग फ ई / Guard file. आदेशानुसार/BY ORDER, स ािपत ित //True Copy// ( Asst. Registrar) ITAT, Mumbai