SANJAY TRACON PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 3(2)(1), MUMBAI

MA 847/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6109 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI P K BANSAL, VP & SHRI PAWAN SINGH, JM M A NO.847/MUM/2017 (ARISING OUT OF ITA NO. 5785/MUM/2016 ASSESSMENT YEAR : 2009-10) M/S. SANJAY TRACON PVT LTD., KAMALA BHAWAN, SAHAR ROAD, OPP. GARWARE, ANDHERI (E), MUMBAI 400 069. PAN AAKCS0394J VS. DCIT 13(2)(1) MUMBAI (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI MANI JAIN RESPONDENT BY : MS N HEMALATHA DATE OF HEARING : 05 .0 1 .201 8 DATE OF PRONOUNCEMENT : 5 .0 1 .201 8 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS MISCELLANEOUS APPLICATION, FILED BY THE ASSES SEE, ARISES OUT OF ORDER OF THIS TRIBUNAL, DATED 06.09.2017, IN ITA NO .5785/MUM/2016. 2. IN THE MISCELLANEOUS APPLICATION THE ASSESSEE HA S POINTED OUT THAT THERE HAS BEEN A MISTAKE IN THE ORDER OF THE TRIBUN AL IN PARA 4, WHILE CONFIRMING THE DISALLOWANCE OF BOGUS PURCHASES @12. 5% AND GOT ENHANCED BY STATING THAT THE APPLICABLE RATE OF VAT WILL BE AROUND 12%. IN FACT DURING THE COURSE OF HEARING OF APPEAL, THE COUNSEL OF THE ASSESSEE HAS POINTED OUT THAT THE APPLICABLE RATE OF VAT IS 4% AND NOT 12%. AN AFFIDAVIT IN THIS REGARD WAS ALSO FILED BY THE COUNSEL WHO APPEARED BEFORE U S. HE HAS STATED ON A MA NO.418/MUM/2016 MR. RUDOLF PETER DSA 2 QUERY FORM THE BENCH THAT THE MATERIAL PURCHASED BY THE ASSESSEE BEARS VAT @4%. THUS, THERE IS A MISTAKE OF FACT COMMITTED BY THIS TRIBUNAL, WHICH HAS AFFECTED THE FINDING UNDER PARA 4 OF ITS ORDER. 3. THE LEARNED DR, ON THE OTHER HAND. RELIED OF THE TRIBUNAL AND CONTENDED THAT THERE IS NO MISTAKE APPARENT ON RECO RD. 4. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME ALONG WITH THE ORDER OF THIS TRIBUNAL. WE NOTED TH AT UNDER PARA 4 OF ITS ORDER, THE TRIBUNAL WHILE CONFIRMING THE ADDITION @ 12.5% ON THE PURCHASES OF ` 7,11,99,762/- HAS OBSERVED AS UNDER: 4. THE LEARNED DR BEFORE US VEHEMENTLY RELIED ON T HE ORDERS OF THE AUTHORITIES BELOW. IN OUR VIEW IF THE TRANS ACTION IS NOT VERIFIABLE THE ONLY TAXABLE AMOUNT IS THE TAXABLE I NCOME COMPONENT THEREIN AND NOT THE ENTIRE TRANSACTIONS. IF THE ASS ESSEE HAD PROCURED BILLS FROM SOME PARTIES AND PURCHASES HAVE NOT BEEN MADE FROM THESE PARTIES BUT FROM SOME OTHER PARTIES THE ASSES SEE WOULD HAVE SAVED VAT. THE HON'BLE BOMBAY HIGH COURT IN THE CAS E OF CIT VS. HARIRAM BHAMBHANI IN ITA NO. 313 OF 2013 DECIDED ON 04.02.2015 ALSO HELD THAT THE REVENUE IS NOT ENTITLED TO TREAT THE ENTIRE SALE CONSIDERATION TO TAX, BUT ONLY THE PROFIT ATTRIBUTA BLE TO THE TOTAL UNRECORDED SALE CONSIDERATION ALONE CAN BE SUBJECT TO TAX. THE CIT(A) WAS NOT CORRECT IN LAW IN CONFIRMING THE ENT IRE ADDITION OF ` .1,85,00,000. THE PROFIT SO ESTIMATED BY THE ASSES SING OFFICER IS ON THE HIGHER SIDE AS THE PROFIT MADE OUT OF THE SALE OF THESE PURCHASES HAVE ALREADY BEEN REPORTED BY THE ASSESSEE. SO THE ONLY PROFIT WHICH THE ASSESSEE WOULD HAVE EARNED IS ON VAT MUST BE ADDED TO THE INCOME OF THE ASSESSEE. SINCE ALL THESE PURCHA SES MADE ARE LOCAL PURCHASES AND THE APPLICABLE RATE OF VAT WILL BE AROUND 12%, WE, ARE THEREFORE, OF THE VIEW THAT THE DISALLOWANC E ON ACCOUNT OF BOGUS PURCHASES MAY BE RESTRICTED TO 12.5% OF SAID PURCHASES. WE ACCORDINGLY, PARTLY ALLOW THE GROUND OF APPEAL TAKE N BY THE ASSESSEE WITH A DIRECTION TO SUSTAIN THE ADDITION @12.5% ON THE PURCHASES OF ` 7,11,99,762/-. MA NO.418/MUM/2016 MR. RUDOLF PETER DSA 3 FROM THE SAID PARAGRAPH, IT IS APPARENT THAT WHILE RESTRICTING THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES @12.5%, THE FINDING O F THE TRIBUNAL GOT AFFECTED WITH THE FACT THAT ON PURCHASES MADE BY TH E ASSESSEE THE APPLICABLE RATE OF VAT IS AROUND 12%, WHILE WE NOTED FROM THE AFFIDAVIT OF THE ASSESSEES COUNSEL THAT THE APPLICABLE RATE OF VAT ON THE PURCHASES IN THE CASE OF THE ASSESSEE IS 4% AND NOT 12%. THIS, IN O UR OPINION, IS A MISTAKE OF FACT, WHICH HAS ENHANCED THE FINDING OF THE TRIBUNA L IN SUSTAINING THE DISALLOWANCE TO 12.5%. WE, THEREFORE, IN THE INTER EST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, DECIDED TO RECALL THE ORDER OF THIS TRIBUNAL 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF JANUARY, 2018. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 5 TH JANUARY, 2018 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP L IC ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, SMC BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI