PATEL ENGINEERING LTD, MUMBAI V. DCIT CC 3(4) CEN RG 3, MUMBAI

MA 243/MUM/2023

AI Insights

The case revolves around a Miscellaneous Application by M/s. Patel Engineering Ltd. seeking rectification of an order passed by the Income Tax Appellate Tribunal, Mumbai, concerning the assessment year 2009-10. The original dispute involved the disallowance of certain purchases deemed non-genuine, which the assessee argued were used for projects eligible for deduction under section 80IA of the Income Tax Act. The Tribunal had previously directed the Assessing Officer to verify the nature of these transactions and their eligibility for deductions. The assessee's application contended that the Tribunal's directions were misinterpreted, leading to an incorrect application of the law regarding the telescoping benefit of deductions. However, the Tribunal found no error in its original order and dismissed the application.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123751 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-09-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 13-07-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 153A; 80IB; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J”, MUMBAI BEFORE SHRI VIKAS AWASTHY, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 243/MUM/2023 [ARISING OUT OF ITA NO. 2758/MUM/2017 (A.Y: 2009-10)] M/s. Patel Engineering Ltd., Patel Estate Road Jogeswari (W) Mumbai - 400102 PAN: AAACP2567L v. DCIT – Central Circle – 3(4) Central Range -3 Room No. 1915, 19 th Floor Air India Building, Nariman Point Mumbai – 400 021 Appellant Respondent Assessee Represented by : Shri Anjuj Kisnadwala Department Represented by : None Date of conclusion of Hearing : 14.07.2023 Date of Pronouncement : 13.09.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application assessee is seeking for rectification in the order passed by the Tribunal in ITA.No.2758/Mum/2017 dated 31.10.2022 for the A.Y. 2009-10. MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 2 2. At the time of hearing, Ld. AR of the assessee submitted that in the original appeal ITA.No. 2758/Mum/2017 which is filed by the department against order passed by Ld.CIT-57, Mumbai wherein Ld.CIT(A) has decided the issue under consideration granting of telescoping benefit in favour of the assessee. However, the ITAT while considering the ground raised by the revenue has observed as under: - “49. Considered the rival submissions and material placed on record, we observe from the record that the assessee during search proceedings itself disclosed the fact that the assessee had utilized the funds generated from the non genuine transactions entered with the Karma Ispat and the same was disallowed by the authorities. This being the case, the source is already disclosed is the contention of the Assessee. However, we observe that the statement given during search are general in nature without their being any material to support their statement. We are in agreement with the submissions of the Ld DR that the assessee has to submit detailed cash statement etc to substantiate that the cash generated out of bogus purchases are utilized specifically in land purchase. Mere general statement cannot be considered as discharge of onus of proof. We are in agreement with the submissions of the Ld DR that the assessee has to demonstrate the availability of the funds at the time of investment made in the Land, further, the assessee cannot try to cover up two non genuine transactions with this submissions, first they arranged non genuine purchase without proper reasons particularly when they know that the profit generated out of the projects are eligible for deduction u/s 80IB still they arranged bogus bills and second payment of funds for land in cash. Therefore, The Assessing Officer is directed to verify the respective purchases from the Karma Ispat and if it is disallowed in the year of purchase and now claimed as deduction u/s 80IB then this transaction can be allowed as source are already disclosed otherwise, the addition can be sustained. We modify the directions given by the first appellate authority in this regard. Accordingly, the ground raised by the revenue is allowed for statistical purpose.” 3. With the above observation he submitted that there is mistake apparent on record that the bench has directed the Assessing Officer to MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 3 verify the respective purchases from the Karma Ispat and if it is disallowed in the year of purchase and now claimed as deduction u/s. 80IB (in fact 80IA) then this transaction can be allowed as source are already disclosed otherwise, the addition can be sustained. 4. Further, he brought to our notice that in the Ld.CIT(A) order Ld.CIT(A) has already directed the Assessing Officer to verify and allow the telescoping benefit to the assessee. However, if any amount is considered for either deduction or enhanced deduction u/s. 80IA(4) telescoping of the amount of bogus purchases is not allowed into Port land expenses, as this amounts to double deduction. This aspect has to be verified by the Assessing Officer before allowing the telescoping benefit. 5. With the above submissions he submitted that even the bench has observed that they did not intend to allow the double benefit to the assessee, however, the direction given to the Assessing Officer is not as per the fact on record. He submitted that bogus purchases entered into with M/s. Karma Ispat do not pertain to the project eligible for deduction u/s 80-IA of the Act. Therefore, he submitted that ITAT has erred by observing that Assessee has arranged non-genuine purchases knowingly MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 4 that profit generated out of projects is eligible for deduction u/s 80-IA of the Act and he reiterated that assessee has never claimed deduction u/s.80-IA of the Act in respect of these bogus purchases entered into with M/s. Karma Ispat. 6. On the other hand, Ld. DR agreed that double benefit should not be granted. However, he agreed that Ld.CIT(A) has remitted the same issue to the file of the Assessing Officer to verify the purchases of Karma Ispat. However, he objected that the cash element should not be allowed to claim as benefit to the assessee as applied for claiming the expenditure as genuine. 7. Considered the rival submissions and material placed on record, we observe from the record that assessee is claiming deduction u/s. 80IA of the Act from A.Y. 2006-07 onwards. Therefore, assessee has claimed deduction u/s.80IA(4) for the current Assessment Year also. As per the computation sheet submitted before us assessee has declared profit as per the Profit and Loss Account of ₹.1,74,33,84,883/- and after adjustment determined the income under the head “income from business” of ₹.1,70,47,99,228/- and claimed deduction u/s. 80IA of the Act of ₹.1,49,69,72,460/-. At the same time, we also observe from the MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 5 computation of total income that assessee has added the purchases debited to the Profit and Loss Account as under: - Sl.No Particulars Amount 1. BMC Water Tunnel 1,85,51,613/- 2. JIGAON 1,50,28,793/- 3. Ghatghar RCC Dam 4,53,51,339/- 4. Panvel 7,03,17,827/- 5. Koyn 3,50,11,101/- The total purchases disallowed by the assessee comes to ₹.18,42,60,673/- for the computation and return of income filed u/s. 153A of the Act and same amount was also considered by the Assessing Officer which includes M/s. Karma Ispat Ltd., purchase value of ₹.11,07,88,159/- which is under consideration. 8. However, we observe that the disallowance of purchases offered by the assessee only after search operation. When the assessee claimed the deduction u/s. 80IA(4) in the original return of income the purchases from M/s.Karma Ispat Ltd., was part of the expenditure claimed for the project. From the above observation, it is clear that the assessee is claiming deduction u/s. 80IA from A.Y. 2006-07 and this year also assessee has claimed deduction u/s. 80IA of the Act. With these facts on record, now, assessee claims that the bogus purchases entered with M/s. Karma Ispat Ltd., do not pertain to purchase eligible for deduction u/s. 80IA of the Act MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 6 is contrary. The assessee has reversed the purchases only after search proceedings and it was disallowed only in assessment completed u/s.143(3) r.w.s. 153A of the Act. Now, claiming that the cash portion available with the assessee is out of bogus purchases cannot be accepted. Therefore, in our considered view the findings given in Para No. 49 is just and proper and in our considered view the direction of the Ld.CIT(A) to the Assessing Officer to verify the claim does not alter the findings given in our discussion in above said Para No. 49. Therefore, we do not see any reason to entertain the Miscellaneous Application filed by the assessee. Accordingly, Miscellaneous Application filed by the assessee is dismissed. 9. In the result, Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the open court on 13 th September, 2023. Sd/- Sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 13/09/2023 Giridhar, Sr.PS MA.No. 243/MUM/2023 M/s. Patel Engineering Ltd., Page No. 7 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum