ITO 10(1)(3), MUMBAI V. IVT VALVES PVT. LTD., MUMBAI

MA 744/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5533 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER MA NO.744/M/2018 (ARISING OUT OF ITA NO.4126/M/2017) ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER- 10(1)(3), ROOM NO.25B, GR. FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. IVT VALVES PVT. LTD., PLOT NO.1-4, LOYALKA LANE, OPP. AZIZ COMPOUND, KHAIRANI ROAD, SAKINAKA, ANDHERI (E), MUMBAI 400 072 PAN: AABC17006E (APPELLANT) (RE SPONDENT) ITA NO.4126/M/2017 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER- 10(1)(3), ROOM NO.25B, GR. FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. IVT VALVES PVT. LTD., PLOT NO.1-4, LOYALKA LANE, OPP. AZIZ COMPOUND, KHAIRANI ROAD, SAKINAKA, ANDHERI (E), MUMBAI 400 072 PAN: AABC17006E (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI RAJEEV GUBGOTRA, A.R. DATE OF HEARING : 23.08.2019 DATE OF PRONOUNCEMENT : 09.09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: BY VIRTUE OF THIS MISCELLANEOUS APPLICATION, THE R EVENUE SEEKS THE RECTIFICATION OF TRIBUNAL ORDER DATED 19. 07.2018 PASSED IN ITA NO.4126/M/2017. MA NO.744/M/2018 (ARISING OUT OF ITA NO.4126/M/2017) M/S. IVT VALVES PVT. LTD. 2 2. THE LD. A.R. POINTED OUT THAT IN PARA 27 THE TRI BUNAL HAS DISMISSED THE APPEAL OF THE REVENUE BY HOLDING THAT THE AO HAS MADE DISALLOWANCE @ 12.5% OF THE PURCHASES WHICH WA S HELD TO BE REASONABLE BY LD. CIT(A). 3. THE LD. D.R. POINTED OUT THAT THE SAID OBSERVATI ON OF THE TRIBUNAL IS WRONG TO THE EXTENT THAT THE AO HAS MA DE ADDITION @100% OF THE BOGUS PURCHASES WHEREAS THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCH ASES BY FOLLOWING THE DECISION OF M/S. NIKUNJ EXIMP ENTERPR ISES PVT. LTD. (2015) 372 ITR 619. THE LD. D.R., THEREFORE P RAYED THAT THE SAID ANOMALY MAY KINDLY BE RECTIFIED BY AMENDING TH E SAID ORDER. 4. THE LD. A.R., HOWEVER, WAS NOT PRESENT AT THE TI ME OF HEARING THEREFORE, THE MA IS BEING DISPOSED OF AFTE R CONSIDERING THE MERITS OF THE CASE AND AFTER HEARING THE LD. D. R. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE MATE RIAL ON RECORD AND FOUND THAT THE TRIBUNAL WHILE PASSING TH E ORDER HAS WRONGLY AND INADVERTENTLY STATED THAT AO HAS MADE T HE DISALLOWANCE @ 12.5% OF THE BOGUS PURCHASES WHICH W AS HELD TO BE REASONABLE BY LD. CIT(A). WE OBSERVE THAT THE A O HAS MADE ADDITION @ 100% OF THE BOGUS PURCHASES WHICH WAS RE DUCED TO 12.5% BY LD. CIT(A) BY FOLLOWING THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXI MP ENTERPRISES PVT. LTD. (SUPRA). THEREFORE, WE FIND THAT THERE IS A MISTAKE APPARENT IN THE ORDER WHICH NEEDS TO BE REC TIFIED. MA NO.744/M/2018 (ARISING OUT OF ITA NO.4126/M/2017) M/S. IVT VALVES PVT. LTD. 3 ACCORDINGLY, THE OPERATIVE PARA OF THE TRIBUNAL IS SUBSTITUTED BY NEW AND AMENDED PARA AS UNDER: 2.7 IF THE RATIO LAID DOWN BY HON'BLE JURISDICTION AL HIGH COURT IN THE AFORESAID CASE OF M/S NIKUNJ EXIMP. ENTERPRISES PVT. LTD. (( SUPRA)) IS ANALYZED WITH THE FACTS OF THE PRESENT APPEAL, WE FIND THAT THE ADDITION WA S MADE BY THE LD. ASSESSING OFFICER ON THE PLEA THAT THE ASSESSEE COULD NOT SUB STANTIATE THE PURCHASES MADE FROM SUPPLIERS WHO WERE FOUND SUSPICIOUS DEALERS BY THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA AND ON THE BASIS OF INVESTIGAT ION WING INFORMATION. THESE SUPPLIERS WERE NOT PRODUCED BEFORE THE LD. ASSESSIN G OFFICER AND EVEN CONFIRMATION WAS NOT FILED. ADMITTEDLY, THERE CANNO T BE ANY SALE WITHOUT PURCHASES AND EVEN IN THE CASES OF TRADERS, THE SUPPORTING DO CUMENTS ARE FICTITIOUS AND SOME PROFIT HAS TO BE ANALYZED. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS OBSERVED THAT THE ASSESSEE INFLATED EXPENSES BY TAK ING BOGUS BILLS OF PURCHASES. THE LD. ASSESSING OFFICER MADE DISALLOWANCE AT THE RATE OF 12.5% OF THE PURCHASES, WHICH WAS HELD TO BE REASONABLE BY THE LD. COMMISSI ONER OF INCOME TAX (APPEAL). HOWEVER, WE ALSO DO NOT FIND JUSTIFICATION TO INTER FERE WITH THE SAME. THUS, THE APPEAL OF THE REVENUE IS DISMISSED AND UPHELD THE CONCLUSION DRAWN BY THE FIRST APPELLATE AUTHORITY. 6. IN THE RESULT, THE ORDER OF THE TRIBUNAL STANDS MODIFIED AND MISCELLANEOUS APPLICATION OF THE REVENUE IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 09.09.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.