Income Tax Appellate Tribunal - Mumbai
T.M. Mohamedally, Mumbai vs Ito Wd 14(2)(2), Mumbai on 8 June, 2017
ITA NO.5357/Mum/2014 T . M. M o h a m e d a l l y Assessment Year 2009-10 आयकर अपीलीय अिधकरण "ई" ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI ी सी. नाग साद, ाियक सद एवं ी मनोज कुमार अ वाल, ले खा सद के सम ।
BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./I.T.A. No.5357/Mum/2014 (िनधा रण वष / Assessment Year:2009-10) T.M.Mohamedally Income Tax Officer 14(2)(2) Harharwala Building बनाम/ Earnest House 112, Lohar Chawl Vs. Nariman Point Mumbai-400 002 Mumbai 400 021 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No.AACFT-2448-M (अ पीलाथ# /Appellant) : ( $थ# / Respondent) Revenue by : Dr. A.K. Nayak, Ld. DR Assessee by : None सुनवाई की तारीख / : 08/06/2017 Date of Hearing घोषणा की तारीख / : 08/06/2017 Date of Pronouncement 2 ITA NO.5357/Mum/2014 T . M. M o h a m e d a l l y Assessment Year 2009-10 आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)
1. The Captioned appeal by assessee for Assessment Year [AY] 2009-10 assails the order of Ld. Commissioner of Income Tax (Appeals)-25 [CIT(A)], Mumbai dated 02/07/2014 qua confirmation of addition on account of certain bogus purchases.
2. None has appeared on behalf of the assessee despite being provided with sufficient opportunity of being heard and service of RPAD notices and therefore, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative.
3. Briefly stated, the assessee being resident firm engaged in the business of tools, was subjected to an assessment u/s 143(3) read with section 147 of the Income Tax Act, 1961 for the impugned AY where the income of the assessee was assessed at Rs.7,63,38,390/- after addition of bogus purchases u/s 69C for Rs.7,46,76,767/-. The assessee was subjected to a survey on 22/01/2013 pursuant to receipt of certain information from the Sales Tax Department regarding dealers indulging in the practice of bogus / accommodation billing and the assessee stood beneficiary of those bogus purchases. The statutory notices u/s 148/143(3)/142(1) were issued from time to time. The original return of income was filed on 22/10/2010 declaring total income of Rs.16,61,619/-
3ITA NO.5357/Mum/2014 T . M. M o h a m e d a l l y Assessment Year 2009-10 and the same return was offered by the assessee in response to notice u/s
148. The assessee reflected turnover of Rs.16.19 crores with declared GP/NP of 15.59% / 1.85%.
4. Several opportunities were provided to the assessee to substantiate the purchases by filing the necessary documents and by producing the said suppliers and file confirmation letters / affidavits etc. but the assessee failed to comply the same. The summons issued to alleged bogus suppliers could not be served since they were not available at the given address and further address and telephone numbers printed on their bills were found to be false. The assessee could not prove the delivery of goods by producing delivery challans / transport details etc. and merely asserted that the said purchase were genuine and sales could not have been possible without making the purchases. Finally, the conduct of the assessee and surrounding circumstances / material led the AO to conclude that the assessee failed to discharge primary onus of proving the purchases and therefore, saddled with impugned addition u/s 69C against alleged bogus purchases made from following parties:-
No. Name Amount (Rs.)
1. Samay Sales Coproration 3,65,30,887/-
2. K.V.Trading Co. 5,99,147/-
3. Sunrise Enterprises 5,09,625/-
4. Kesar Enterprises 5,62,500/-
5. Excel Industries 5,77,125/-
6. Kavish International 56,250/-
7. Navkar Traders 25,333/-
8. Sona Tool Traders 2,15,40,661/-
9. Sona Engineering Company 1,48,37,699/-
TOTAL 7,46,76,767/-
4
ITA NO.5357/Mum/2014
T . M. M o h a m e d a l l y
Assessment Year 2009-10
5. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 02/07/2014 where the assessee contended that the purchase / sales invoices / books of accounts were verified by the Ld. AO and the sales were not disputed by the revenue. The assessee produced quantitative details which were test checked by the Ld. AO and further an affidavit of supplier confirming the transactions was produced before Ld. AO and therefore, treating purchases as bogus and addition thereof u/s 69C was not justified. Reliance was placed on many judicial pronouncements to support various contentions. The assessee also submitted additional evidences in the form of purchase invoices, confirmation of one supplier namely Sanjay Sales Corporation, audited accounts of two suppliers namely Sona Tool Traders & Sona Engineering Company with confirmation letters, quantitative/sales details of these three suppliers, sample copy of sales bill etc. against which remand report was called from the Ld. AO. Finally after appreciating the documents/submissions, remand report, GP/NP rate earned by the assessee, Ld. CIT(A) placed reliance on various judicial pronouncements and restricted the said disallowance to 15% of alleged bogus purchases of Rs.746.76 Lacs which came to Rs.1,12,01,514/-. Aggrieved, the assessee is in appeal before us.
6. The Ld. Departmental representative [DR] placed reliance on the findings of Ld. AO and contended that the assessee failed to substantiate the purchases made by him in any manner and mere production of 5 ITA NO.5357/Mum/2014 T . M. M o h a m e d a l l y Assessment Year 2009-10 documents was not sufficient to prove the actual delivery of goods. The assessee failed to produce the parties before Ld. AO and also could not produce confirmatory letters. Summons issued to the suppliers remained un-served since addresses / contact numbers were not genuine. The complete onus to prove the purchases squarely lied on the assessee, which he has failed to discharge and therefore, rightly been saddled with full disallowance and the Ld. CIT(A) erred in granting relief to the assessee.
7. We have heard the contentions and perused the relevant material on record. We are convinced with the arguments of Ld. DR that the assessee has failed to discharge the primary onus of proving the purchases and it could not produce evidences to show actual delivery of material and also could not produce confirmatory letters from the alleged bogus suppliers. However, even if all the purchases are found to be bogus, we find that sales turnover has not been disputed by the revenue and moreover, the assessee is in possession of primary purchase documents and the books of accounts of the assessee are audited. The payments are through banking channels.Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these transactions to factorize profit earned by assessee against purchase of material in the grey market and undue benefit of VAT against bogus purchases, which Ld. CIT(A) has rightly done so after elaborate discussion and appreciation of facts. Therefore, the order of Ld. CIT(A) being, fair, reasonable and a 6 ITA NO.5357/Mum/2014 T . M. M o h a m e d a l l y Assessment Year 2009-10 plausible view, require no interference on our part and the same is hereby confirmed.
8. The assessee's appeal stands dismissed.
Order pronounced in the open court on 08th June, 2017.
Sd/- Sd/-
(C. N. Prasad) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member
मुंबई Mumbai; िदनांक Dated : 08 .06.2017 Sr.PS:- Thirumalesh आदे श की ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ# / The Appellant
2. $थ# / The Respondent
3. आयकर आयु+(अपील) / The CIT(A)
4. आयकर आयु+ / CIT - concerned
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
6. गाड/ फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai