TRIVENI CONSTRUCTIONS, MUMBAI V. ACIT CC 2, MUMBAI

MA 530/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4901 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 23-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Bogus purchase; Set aside
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) MA NO. 530/MUM/2019 (ITA NO. 3778/MUM/2017) ASSESSMENT YEAR: 2010 - 11 & MA NO. 531/MUM/2019 (ITA NO. 3779/MUM/2017) ASSESSMENT YEAR: 2012 - 13 M/S TRIVENI CONSTRUCTIONS, 1, GROUND FLOOR, BALAJI BUSINESS PARK, PLAT NO. 3 & 5, SURVEY NO. 785, MAROL, ANDHERI (EAST) - 400053 . VS. DCIT - 25(1), MUMBAI, KAUTILYA BHAVAN, G BLOCK BANDRA KURLA COMPLEX, MUMBAI - 400051. PAN NO. AAFFT0913L APPELLANT RESPONDENT MA NO. 532/MUM/2019 (ITA NO. 3781/MUM/2017) ASSESSMENT YEAR: 2012 - 13 M/S TRIVENI HOMES, 1, GROUND FLOOR, BALAJI BUSINESS PARK, PLAT NO. 3 & 5, SURVEY NO. 785, MAROL, ANDHERI (EAST) - 400053. VS. DCIT - 25(1), MUMBAI, KAUTILYA BHAVAN, G BLOCK BANDRA KURLA COMPLEX, MUMBAI - 400051. PAN NO. AAFFT1576R APPELLANT RESPONDENT MA NO. 533/MUM/2019 (ITA NO. 3783/MUM/2017) ASSESSMENT YEAR: 2012 - 13 M/S TRIVENI CONSTRUCTIONS & ORS. MA NOS. 530/MUM/2019 & ORS. 2 M/S TRIVENI REALTIES , 1, GROUND FLOOR, BALAJI BUSINESS PARK, PLAT NO. 3 & 5, SURVEY NO. 785, MAROL, ANDHERI (EAST) - 400053. VS. DCIT - 25(1), MUMBAI, KAUTILYA BHAVAN, G BLOCK BANDRA KURLA COMPLEX, MUMBAI - 400051. PAN NO. AAFFT1575N APPELLANT RESPONDENT MA NO. 534/MUM/2019 (ITA NO. 3785/MUM/2017) ASSESSMENT YEAR: 2012 - 13 M/S TRIVENI SPACES, 1, GROUND FLOOR, BALAJI BUSINESS PARK, PLAT NO. 3 & 5, SURVEY NO. 785, MAROL, ANDHERI (EAST) - 400053. VS. DCIT - 25(1), MUMBAI, KAUTILYA BHAVAN, G BLOCK BANDRA KURLA COMPLEX, MUMBAI - 400051. PAN NO. AAFFT2023D APPELLANT RESPONDENT ASSESSEE BY : MR. RUSHABH MEHTA , AR REVENUE BY : MR. AMIT PRATAP SINGH, SR. DR DATE OF HEARING : 22/11/2019 DATE OF PRONOUNCEMENT: 19 /02/2020 ORDER PER N.K. PRADHAN, A.M. BY MEANS OF THESE MISCELLANEOUS APPLICATIONS (MAS), THE APPLICANT SEEKS RECTIFICATION OF THE ORDER DATED 27.06.2019 PASSED BY THE ITAT E BENCH MUMBAI . AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE OFF THESE MAS THROUGH A CONSOLIDATED ORDER. THE MAIN GROUND IS COVERED IN THE CASE OF M/S TRIVENI CONSTRUCTIONS FOR THE ASSESSMENT YEAR (AY) 2010 - 11 AND WE DIS CUSS IT BELOW. M/S TRIVENI CONSTRUCTIONS & ORS. MA NOS. 530/MUM/2019 & ORS. 3 2. BEFORE US, THE LD. COUNSEL FOR THE APPLICANT REFERS TO THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, WHICH WAS RECEIVED IN THE REGISTRY ON 23.09.2019. IT IS STATED BY HIM THAT THE PRESENT MA IS ONLY WITH REGARD TO GROUND NO. 1 TO 3 OF TH E APPEALS FILED BY THE ASSESSEE BEFORE THE TRIBUNAL AND THEREAFTER DECIDED BY THE TRIBUNAL IN THE ORDER DATED 27.06.2019. IT IS STATED THAT THE SAME RELATES TO ALLEGED BOGUS PURCHASES AND THE TRIBUNAL FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MOHOMMAD HAJI ADAM & CO. (ITA NO. 1004 OF 2016) , SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECTED THE ASSESSING OFFICER (AO) TO RESTRICT THE ADDITION LIMITED TO THE EXTENT OF GP RATE ON DISPUTED PURCHASES AT THE SAME RATE OF OTHER GENUINE PURCHASES. IT IS STATED THAT THE ABOVE DECISION WAS NEITHER RELIED UPON BY THE APPELLANT NOR BY THE LD. DR AND ALSO THE FACTS IN THE PRESENT CASE IS DISTINGUISHABLE FROM THE ABOVE DECISION AS THE ASSESSEE HEREIN IS A BUILDER WHEREAS THE ASSESSEE IN THE ABOVE DECISION WAS A TRADER OF FABRICS. IT IS STATED THAT APPELLANT BEING A BUILDER, PURCHASES VARIOUS ITEMS, SUCH AS CEMENT, STEEL ETC. FOR CARRYING OUT ITS CONSTRUCTIONS ACTIVITIES AND SALES CANNOT BE IDENTIFIED AGAINST EACH PURCHASE AND CONSEQUENTL Y, THE GP RATE ON GENUINE PURCHASES CANNOT BE COMPARED. FURTHER, IT IS STATED THAT THERE IS NO DIRECTION TO THE AO AS TO HOW TO COMPUTE THE GP RATE ON ALLEGED PURCHASES, IN VIEW OF THE PECULIAR FACTS OF THE PRESENT CASE. FURTHER, IT IS STATED THAT THE ADDI TION, IF ANY, SUSTAINED WILL GO TO REDUCE THE WIP, AS THE INCOME IS NOT RECOGNIZED IN THE YEAR UNDER CONSIDERATION IN VIEW OF THE PROJECT COMPLETION METHOD BEING FOLLOWED, IS NOT ADDRESSED AND DISCUSSED IN THE ORDER PASSED BY THE TRIBUNAL. THUS THE LD. COU NSEL SUBMITS THAT THE TRIBUNAL MAY (I) DELETE THE ADDITION OF RS.75,78,066/ - ON ACCOUNT OF ALLEGED BOGUS PURCHASES, BEING IDENTICAL COST PER SQ. FT. OF THE ASSOCIATE CONCERNS PROJECT, BEING IN THE SAME VICINITY; WHEREIN NO M/S TRIVENI CONSTRUCTIONS & ORS. MA NOS. 530/MUM/2019 & ORS. 4 ADDITION OF BOGUS PURCHASES WAS MADE, (II) DIRECT THE AO TO RESTRICT THE ADDITION ON ALLEGED BOGUS PURCHASES WITHIN THE RANGE OF 2% TO 3% AS HELD IN THE CASE OF THE APPELLANTS GROUP CONCERNS I.E. M/S TRIVENI HOMES AND M/S TRIVENI REALTIES, (III) THE ADDITION, IF ANY, SO UPHELD BE REDUCE D FROM THE CLOSING WIP, AS SHOWN IN THE BOOKS AND ACCORDINGLY, BE RE - STATED, (IV) ANY OTHER RELIEF OR SUITABLE DIRECTION WHICH THE BENCH DEEMS FIT. 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITS THAT THERE BEING NO MISTAKE APPARENT FROM RECORD, THE MA BEING DEVOID OF MERIT BE DISMISSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. BRIEFLY STATED, THE FACTS ARE THAT THE AO MADE AN ADDITION OF RS.8,96,98,723/ - IN RESPECT OF PURCHASES TREATING THEM AS BOGUS. IN APPEAL, THE LD. CIT(A) REFERRING TO THE JUDG MENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH V. CIT 356 ITR 451 OBSERVED THAT IN THE SAID CASE, THE TRIBUNAL HAS WORKED OUT THE RATE OF 12.5% AS THE BOGUS PURCHASES HA D RESULTED IN THE SAVINGS OF 10% SALES TAX AND THE BENEFIT OF 2.5 % INDUSTRY MARGIN. APPLYING THE SAID RATIONALE TO THE PRESENT CASE, THE LD. CIT(A) OBSERVED THAT GP OF 6.5% ON HAWALA PURCHASES (INVOLVING VAT OF 4%) AND GP OF 15% ON HAWALA PURCHASES (INVOLVING VAT OF 12.5%) WOULD SUFFICE THE MATTER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. HAVING CONSIDERED THE FACTS OF THE CASE, THE TRIBUNAL RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN M/S MOHOMMAD HAJI ADAM & CO. (SUPRA) SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECTED THE M/S TRIVENI CONSTRUCTIONS & ORS. MA NOS. 530/MUM/2019 & ORS. 5 AO TO RESTRICT THE ADDITIONS LIMITED TO THE EXTENT OF BRIN G ING THE GP RATE ON DISPUTED PURCHASES AT THE SAME RATE OF OTHER GENUINE PURCHASES. ON A PERUSAL OF THE RECORD, WE FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSEL THAT THE ABOVE DECISION OF THE HONBLE BOMBAY HIGH COURT WAS NEITHER RELIED UPON BY THE APPELLANT NOR THE LD. DR. AS MENTIONED EARLIER, CONCLUSION HAS BEEN DRAWN ON THE BASIS OF THE DECISION IN M/S MOHOMMAD HAJI ADAM & CO. (SUPRA). HAVING REGARD T O THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN INVENTURE GROWTH & SECURITIES LTD. V. ITAT (2010) 324 ITR 319 (BOM), THE FINDING ARRIVED AT IN THE IMPUGNED ORDER ON THE BASIS OF THE DECISION IN M/S MOHOMMAD HAJI ADAM & CO. (SUPRA) SHOULD HAVE BEE N BROUGHT TO THE NOTICE OF THE CONCERNED PARTIES. INADVERTENTLY, THE BENCH FAILED TO BRING TO THE NOTICE OF THE PARTIES THE ABOVE DECISION BEFORE PASSING THE SAID ORDER . THIS BEING A MISTAKE APPARENT FROM RECORD, WE RECALL THE ORDER DATED 27.06.2019 PASS ED BY THE ITAT E BENCH, IN THE CASE OF THE ASSESSEE FOR AY 2010 - 11 TO THE LIMITED EXTENT OF DECIDING AFRESH THE ISSUE RELATED TO THE ABOVE DISPUTED PURCHASES. FACTS BEING IDENTICAL, OUR ABOVE DECISION APPLIES MUTATIS MUTANDIS TO OTHER CAPTIONED MISCELLAN EOUS APPLICATIONS. THE REGISTRY IS DIRECTED TO FIX THE CASE S FOR HEARING BEFORE A REGULAR BENCH, AFTER INFORMING BOTH THE PARTIES. 5. IN THE RESULT, THE MAS ARE ALLOWED TO THE EXTENT INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 /02/2020. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; M/S TRIVENI CONSTRUCTIONS & ORS. MA NOS. 530/MUM/2019 & ORS. 6 DATED: 19/02/2020 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( DY./ASSISTANT REGISTRAR ) ITAT, MUMBAI