BHARAV TUBE (INDIA), MUMBAI V. INCOME TAX OFFICER 19(1)(2), Mumbai

MA 592/MUM/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3536 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-07-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 17-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Capital asset; Set aside
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “B” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) MA No. 592/MUM/2019 (ITA No. 3929/MUM/2018) Assessment Year: 2009-10 Bhairav Tube (India), C/o. Nakoda Metal Industries, Room No. 101, 1 st floor, Lakdawala Saphire Centre, 4 th Kumbharwada Lane, Mumbai-400 007. Vs. Income Tax Officer-19(1)(2), Room No. 204, Matru Mandir, Tardeo, Mumbai-400 004. PAN No. AAEFT 1198 E Appellant Respondent Assessee by : None Revenue by : Mr. Manoj Sinha, DR Date of Hearing : 15/07/2022 Date of pronouncement : 15/07/2022 ORDER PER OM PRAKASH KANT, AM By way of this Miscellaneous Application, the assessee is seeking recall of the order of the Tribunal dated 27.05.2019 passed in ITA No. 3929/M/2018 for assessment year 2009-10. 2. Before us, despite notifying for hearing on 11.12.2020, 05.02.2021, 04.06.2021, 03.09.2021, 31.12.2021, 04.02.2022, 04.03.2022, 25.03.2022, 29.04.2022, 24.06.2022 and 1 today, neither anyone attended on behalf of the assessee nor any adjournment was applied. In view of non issued, we were of the opinion that assessee is not interested in prosecuting Miscellaneous Application and th heard ex-parte qua the assessee and after hearing the Ld. Departmental Representative (DR). 3. The Ld. DR drawn Miscellaneous Application and submitted that Tribunal has already allowed relief to the assessee and the estimated addition which sustained by the Ld. CIT(A) @ 15% of the bogus purchases reduced by the Tribunal @ 5% of the bogus purchases as against gross profit of 4.41% declared by the assessee in its books of account. According to Before us, despite notifying for hearing on 11.12.2020, 05.02.2021, 04.06.2021, 03.09.2021, 31.12.2021, 04.02.2022, 04.03.2022, 25.03.2022, 29.04.2022, 24.06.2022 and 1 today, neither anyone attended on behalf of the assessee nor any adjournment was applied. In view of non-compliance of the notices issued, we were of the opinion that assessee is not interested in prosecuting Miscellaneous Application and therefore, same was qua the assessee and after hearing the Ld. Departmental Representative (DR). The Ld. DR drawn our attention to various paras of the Miscellaneous Application and submitted that Tribunal has already assessee and the estimated addition which sustained by the Ld. CIT(A) @ 15% of the bogus purchases reduced by the Tribunal @ 5% of the bogus purchases as against gross profit of 4.41% declared by the assessee in its books of g to the Ld. DR, there is no mistake much less MA No. 592/M/2019 Bhairav Tube (India) 2 Before us, despite notifying for hearing on 11.12.2020, 05.02.2021, 04.06.2021, 03.09.2021, 31.12.2021, 04.02.2022, 04.03.2022, 25.03.2022, 29.04.2022, 24.06.2022 and 15.07.2022 i.e. today, neither anyone attended on behalf of the assessee nor any compliance of the notices issued, we were of the opinion that assessee is not interested in erefore, same was qua the assessee and after hearing the Ld. attention to various paras of the Miscellaneous Application and submitted that Tribunal has already assessee and the estimated addition which was sustained by the Ld. CIT(A) @ 15% of the bogus purchases, has been reduced by the Tribunal @ 5% of the bogus purchases as against gross profit of 4.41% declared by the assessee in its books of Ld. DR, there is no mistake much less apparent mistake, in the order of the Tribunal and therefore, the Miscellaneous Application of the assessee deserved to be dismissed. 4. We have heard submission of the Ld. DR and perused the relevant material on record. In the case, the assessee is a beneficiary of bogus purchases. During assessment proceedings, the assessee filed bogus purchase invoices verifying by way of issue of notice u/s 133(6) of the Income Tax Act, 1961 (in short ‘the Act’) notices sent in the case of all 25 were returned un-served, profit rate @ 15% of such bogus purchases also uphold. The Tribunal in the facts of the case restricted the gross profit on such bogus purchases @ 5% as against gross profit rate 4.41% offered by the finding of the Tribunal “5.1. After considering the facts before us, we observe that in this type of cases, purchases are normally made from the grey market and bills are procured from the hawala operators. Thus, the assessee makes in the order of the Tribunal and therefore, the Miscellaneous Application of the assessee deserved to be dismissed. We have heard submission of the Ld. DR and perused the l on record. In the case, the assessee is a beneficiary . During assessment proceedings, the assessee filed bogus purchase invoices, PAN details etc. however while verifying by way of issue of notice u/s 133(6) of the Income Tax Act, (in short ‘the Act’) notices sent in the case of all 25 served, therefore, the Assessing Officer profit rate @ 15% of such bogus purchases, which the Ld. CIT(A) also uphold. The Tribunal in the facts of the case restricted the gross profit on such bogus purchases @ 5% as against gross profit rate by the assessee in its books accounts. finding of the Tribunal (supra) is reproduced as under: 5.1. After considering the facts before us, we observe that in this type of cases, purchases are normally made from the grey market and bills are procured from the hawala operators. Thus, the assessee makes MA No. 592/M/2019 Bhairav Tube (India) 3 in the order of the Tribunal and therefore, the Miscellaneous Application of the assessee deserved to be dismissed. We have heard submission of the Ld. DR and perused the l on record. In the case, the assessee is a beneficiary . During assessment proceedings, the assessee , PAN details etc. however while verifying by way of issue of notice u/s 133(6) of the Income Tax Act, (in short ‘the Act’) notices sent in the case of all 25 parties therefore, the Assessing Officer applied which the Ld. CIT(A) also uphold. The Tribunal in the facts of the case restricted the gross profit on such bogus purchases @ 5% as against gross profit rate of assessee in its books accounts. The relevant is reproduced as under: 5.1. After considering the facts before us, we observe that in this type of cases, purchases are normally made from the grey market and bills are procured from the hawala operators. Thus, the assessee makes savings by non further notice that the assessee is dealing in Ferrous and Non Metal items, in which profit rate (GP rate) will be normally ranging between 3% to 4% whereas the assessee disclosed the GP rate of 4.41% in the Books of Account. Therefore, we are not in agreement with the conclusion of Ld.CIT(A) in sustaining addition to the extent of 15% of bogus purchases. In the present case we are of the considered opinion that a profit rate of 5% would be reasonab order to bring to tax the various types of savings such as non payment of VAT and others charges. We, therefore, set aside the order of CIT(A) and direct the Assessing Officer to apply rate of 5% on the bogus purchases. 4.1 Therefore, the Tribunal, and the ratio emanating from the various decisions of the Tribunal and Hon’ble High Court on issue to the assessee. Whereas before us, the contention of the assessee in the Miscellaneous Application is that various judgments of the Hon’ble High Court and Tribunal where entire addition have been deleted have not been followed in para 7 of the Miscellaneous Application. The assessee various decisions of the Hon’ble Bombay High Court and Tribunal. non-payment of VAT and other incidental levies. We further notice that the assessee is dealing in Ferrous and Non Metal items, in which profit rate (GP rate) will be normally ranging between 3% to 4% whereas the assessee disclosed the GP rate of 41% in the Books of Account. Therefore, we are not in agreement with the conclusion of Ld.CIT(A) in sustaining addition to the extent of 15% of bogus purchases. In the present case we are of the considered opinion that a profit rate of 5% would be reasonab order to bring to tax the various types of savings such as non payment of VAT and others charges. We, therefore, set aside the order of CIT(A) and direct the Assessing Officer to apply rate of 5% on the bogus purchases.” Therefore, the Tribunal, after considering the facts of the case and the ratio emanating from the various decisions of the Tribunal and Hon’ble High Court on issue-in-dispute has provided the relief to the assessee. Whereas before us, the contention of the assessee in neous Application is that various judgments of the Hon’ble High Court and Tribunal where entire addition have been deleted have not been followed in para 7 of the Miscellaneous Application. The assessee in its Miscellaneous Application cisions of the Hon’ble Bombay High Court and Tribunal. MA No. 592/M/2019 Bhairav Tube (India) 4 payment of VAT and other incidental levies. We further notice that the assessee is dealing in Ferrous and Non-ferrous Metal items, in which profit rate (GP rate) will be normally ranging between 3% to 4% whereas the assessee disclosed the GP rate of 41% in the Books of Account. Therefore, we are not in agreement with the conclusion of Ld.CIT(A) in sustaining addition to the extent of 15% of bogus purchases. In the present case we are of the considered opinion that a profit rate of 5% would be reasonable in order to bring to tax the various types of savings such as non- payment of VAT and others charges. We, therefore, set aside the order of CIT(A) and direct the Assessing Officer to apply rate of 5% after considering the facts of the case and the ratio emanating from the various decisions of the Tribunal dispute has provided the relief to the assessee. Whereas before us, the contention of the assessee in neous Application is that various judgments of the Hon’ble High Court and Tribunal where entire addition have been deleted have not been followed in para 7 of the Miscellaneous in its Miscellaneous Application has cited cisions of the Hon’ble Bombay High Court and Tribunal. First of all, we find that there is nothing on record that all the above decisions which the assessee has mentioned in the Miscellaneous Application were brought to the notice of the Tribunal. Secondly Tribunal has after considering the various decisions, the facts and circumstances of the case particularly ferrous metals, has sustained gross profit @ 5% as reasonable as compared to the gross profit rate of 4.41% disclose assessee. The contention of the assessee of not considering decision of the Co-ordinate Bench on identical issue is without the addition in respect of bogus purchases depends on facts of each case. If assessee consumes those bogus pur manufacturing work entire bogus purchases may be added. Whereas if assessee substantiate that corresponding sales have been made, which means goods have been purchased from one party whereas bills taken from another party and in such cases addition for First of all, we find that there is nothing on record that all the above decisions which the assessee has mentioned in the Miscellaneous Application were brought to the notice of the Tribunal. Secondly Tribunal has after considering the various decisions, the facts and circumstances of the case particularly dealing in ferrous and non has sustained gross profit @ 5% as reasonable as compared to the gross profit rate of 4.41% disclose assessee. The contention of the assessee of not considering decision ordinate Bench on identical issue is without the addition in respect of bogus purchases depends on facts of each assessee consumes those bogus pur manufacturing work or for investment in capital assets entire bogus purchases may be added. Whereas if assessee substantiate that corresponding sales have been made, which means goods have been purchased from one party whereas bills taken from another party and in such cases addition for MA No. 592/M/2019 Bhairav Tube (India) 5 First of all, we find that there is nothing on record that all the above decisions which the assessee has mentioned in the Miscellaneous Application were brought to the notice of the Tribunal. Secondly, the Tribunal has after considering the various decisions, the facts and in ferrous and non- has sustained gross profit @ 5% as reasonable as compared to the gross profit rate of 4.41% disclosed by the assessee. The contention of the assessee of not considering decision ordinate Bench on identical issue is without any basis as the addition in respect of bogus purchases depends on facts of each assessee consumes those bogus purchases in its for investment in capital assets, then the entire bogus purchases may be added. Whereas if assessee substantiate that corresponding sales have been made, which means goods have been purchased from one party whereas bills have been taken from another party and in such cases addition for compensating the gross profit earned by the assessee on purchases made from the persons other than the persons who has issued bills may be considered. There may be different amount of respect of different circumstances record how the facts of the cases mentioned by him in the Miscellaneous Application assessee. In the Miscellaneous Application Ld assessee has also submitted that no notice of the hearing was given to the assessee. We may like to mention that the assessee application for staying the stay petition, the Tribunal found and after no objection of the Ld. DR, the Tribunal heard the parties on the issue-in-dispute of bogus purchases. has heard the assessee on priority after consent of both the parties. Therefore, at this stage, raising the issue by the assessee that no opportunity was granted by the Tribunal is without any basis. compensating the gross profit earned by the assessee on purchases made from the persons other than the persons who has issued bills . There may be different amount of respect of different circumstances. The assessee has not record how the facts of the cases mentioned by him in the Miscellaneous Application, are identical to the facts of the case . In the Miscellaneous Application Ld. Counsel of the assessee has also submitted that no notice of the hearing was given to the assessee. We may like to mention that the assessee for staying recovery of demand. During the hearing of the stay petition, the Tribunal found that issue could be disposed off and after no objection of the Ld. DR, the Tribunal heard the parties dispute of bogus purchases. Actually, the Tribunal has heard the assessee on priority after consent of both the parties. is stage, raising the issue by the assessee that no opportunity was granted by the Tribunal is without any basis. MA No. 592/M/2019 Bhairav Tube (India) 6 compensating the gross profit earned by the assessee on purchases made from the persons other than the persons who has issued bills, . There may be different amount of addition in has not brought on record how the facts of the cases mentioned by him in the are identical to the facts of the case of the . Counsel of the assessee has also submitted that no notice of the hearing was given to the assessee. We may like to mention that the assessee had filed During the hearing of that issue could be disposed off and after no objection of the Ld. DR, the Tribunal heard the parties Actually, the Tribunal has heard the assessee on priority after consent of both the parties. is stage, raising the issue by the assessee that no opportunity was granted by the Tribunal is without any basis. Thus, the contentions of the assessee in part 9 of the Miscellaneous Application are also rejected. 4.2 In view of the above facts and circu prayer of the assessee for recalling the order is rejected and the Miscellaneous Application filed by the assessee is dismissed. 5. In the result, the Miscellaneous Application filed by the assessee is dismissed. Order pronounced in the Court on Sd/- (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 15/07/2022 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. //True Copy// of the assessee in part 9 of the Miscellaneous Application are also rejected. In view of the above facts and circumstances of the case, the prayer of the assessee for recalling the order is rejected and the Miscellaneous Application filed by the assessee is dismissed. In the result, the Miscellaneous Application filed by the assessee is dismissed. ounced in the Court on 15/07/2022. Sd/- KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai MA No. 592/M/2019 Bhairav Tube (India) 7 of the assessee in part 9 of the Miscellaneous mstances of the case, the prayer of the assessee for recalling the order is rejected and the Miscellaneous Application filed by the assessee is dismissed. In the result, the Miscellaneous Application filed by the - OM PRAKASH KANT) MEMBER Sr. Private Secretary) ITAT, Mumbai