Income Tax Appellate Tribunal - Mumbai
The Dy Citrg-7(2), vs M/S. Supreme Telecommunication P. ... on 14 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "C", MUMBAI
Before Shri P K Bansal, VP & Shri Ram Lal Negi, JM
ITA No.5857/Mum/2003 for A.Y.1995-1996
ITA No.6746/Mum/2004 for A.Y.1996-1997
ITA No.6747/Mum/2004 for A.Y. 1997-1998
ITA No.3928/Mum/2003 for A.Y. 1999-2000
ITA No.3943/Mum/2004 for A.Y. 2000-2001
Dy CIT range 7(2) M/s. Supreme Telecommunications P. Ltd
Mumbai Prabhu Darshan, 230,
Vs. Lady Jamshdji Road, Dadar (W)
Mumbai- 400 028
PAN AAACS9792A
(Appellant) (Respondent)
Appellant By : Shri Rajat Mittal (DR)
Respondent By : Shri Hiro Rai
Date of Hearing : 12.06.2017 Date of Pronouncement :14 .06.2017
ORDER
Per P K Bansal, Vice-President:
These appeals are by the Revenue against different orders of the CIT(A) pertaining to AYs 1995-96, 1996-97, 1997-98, 1999-2000 and 2000-
01. As they pertain to common assessee, they were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. The only ground in A.Ys. 1995-96, 1996-97, 1997-98, 1999-2000 and the first ground of appeal for A.Y. 2000-01 relates to addition being made in 2 Supreme Telecommunications P Ltd.
each of the assessment years on account of bogus purchases being found during the course of search but deleted by the CIT(A), which was as under:
Assessment Disallowance on account of
Year bogus purchases
1995-1996 1,09,37,321
1996-1997 1,32,63,535
1997-1998 1,65,61,475
1999-2000 43,07,175
2000-2001 78,53,068
The facts relating to these are that there was a search u/s. 132 of the I.T Act in the case of the assessee in January 2002. During the course of search operations, certain loose papers and diaries were seized, which contained record of certain payments. From these diaries and papers, it transpires that the assessee had generated unaccounted cash by inflating its purchases. The parties in whose names the bogus purchases and expenditure were booked also included the names of the parties mentioned by the Assessing Officer in each of the assessment years. The Assessing Officer while making block assessment u/s. 158BC made addition in each of the assessment years vide order dated 28.03.2002, but while completing assessment u/s. 143(3), the additions were also made on protective basis in each of the assessment years. Subsequently, the block assessment were set aside by this Tribunal vide its order dated 30.11.2006, as being barred by limitation u/s.158BE of the Act.
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Supreme Telecommunications P Ltd.
3. We have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. The learned DR before us even though vehemently relied on the order of the Assessing Officer, he did not deny the fact that the additions were made by the Assessing Officer on the basis of the material found during the course of the search. It is settled law that when the search is initiated u/s. 132 after 30th of June 1995 but before 1st day of June 2001, the assessment has to be made for the block period under Chapter XIV-B of the Income tax Act, on the basis of the material found during the course of search. The assessment has not to be made on the basis of such material found during the course of search in the regular assessment proceedings. It is not denied that all these additions has been made by the Assessing Officer on the basis of the material found during the course of search. In view of this fact, if any addition has to be made, that has to be made only in the block assessment, which has to be framed under Chapter XIV-B of the Income tax Act, as per the provisions of the IT Act, which were in existence during the aforesaid assessment years. In our view, no addition can be made in the regular assessment. We, therefore, confirm the order of the CIT(A) deleting the said addition in each of the assessment years even though on a different ground. Thus, the appeal for A.Ys 1995-96, 1996-97, 1997-98 and 1999-2000 and ground no.1 for A.Y. 2000-01 stands dismissed.
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Supreme Telecommunications P Ltd.
4. Now only ground no.2 for A.Y. 2000-01 remains for our adjudication, which reads as under:
"On the facts & in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting an amount of Rs.28,55,562/- on account of bogus purchases from M/s. Enes Orion Construction P. Ltd. by relying on the additional evidence in the form of confirmation from the party and PAN without giving opportunity to the Assessing Officer to cross-verify the same."
5. We have heard the rival submissions on this ground and noted that the assessee had made purchases amounting to `.28,55,562 from M/s. Enes Orion Construction P. Ltd. The assessee could not file confirmation from the said party and even the inspector, who was deputed for inquiry, reported that said party was not available at the given address and the address provided by the assessee was of the residential premises. The assessee even though claimed that M/s. Enes Orion Construction P. Ltd was a sub contractor and the payments in question is on account of the services provided by it in respect of cable network project for M/s. Hughes Inspat Ltd. and it does not relate to the purchases but to the expenditure incurred by the assessee. We noted that even the assessee has not given any proof in respect of the tax deducted at source for the work carried out by the parties as sub contractor. Under these facts and circumstances of the case, and the evidences being brought on record in the form of invoices on M/s. Hughes Inspat Ltd and confirmation of the PAN of M/s. Enes Orion Construction P. Ltd, we find it 5 Supreme Telecommunications P Ltd.
appropriate that the addition be reduced to 12.5% of the said amount. As in our opinion even if the assessee would have not the purchases made from M/s. Enes Orion Construction P. Ltd, the assessee would have made purchases from some party as the receipt made by the assessee from M/s. Hughes Inspat Ltd., has not been doubted. The assessee at the most would have made extra saving by way of saving the tax on said purchases/expenditure. We, therefore, reduce the addition of `.28,58,562/- to 12.5% thereof. Thus, this ground is partly allowed.
6. In the result, the appeal of the revenue in ITA No.5857/Mum/2003 for A.Y.1995-1996, ITA No.6746/Mum/2004 for A.Y.1996-1997, ITA No.6747/Mum/2004 for A.Y. 1997-1998 and ITA No.3928/Mum/2003 for A.Y. 1999-2000 are dismissed and the appeal in ITA No.3943/Mum/2004 for A.Y. 2000-2001 is partly allowed.
Order pronounced in the open court on 14th day of June, 2017.
Sd/- Sd/-
(Ram Lal Negi) (P K Bansal)
JUDICIAL MEMBER VICE-PRESIDENT
Mumbai; Dated: 14th June, 2017
SA
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Supreme Telecommunications P Ltd.
Copy of the Order forwarded to :
1. The Appellant.
2. The Respondent.
3. The CIT(A),Mumbai
4. The CIT
5. DR, 'C' Bench, ITAT, Mumbai
BY ORDER,
#True Copy #
Assistant Registrar
Income Tax Appellate Tribunal, Mumbai