Income Tax Appellate Tribunal - Mumbai
Acit 30(1), Mumbai vs B.K. Sharma, Mumbai on 11 January, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES "B", MUMBAI BEFORE SHRI D. KARUNAKARA RAO (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA No. 834/MUM/2015 Assessment Year: 2010-11 A.C.1.T.-30(1), Vs. Sh. B.K. Sharma, Mumbai. Mumbai. PAN No. AACHB0148Q (Appellant) (Respondent) Revenue By: Sh. Suman Kumar Assessee By: Sh. R.C Jain Date of Hearing > 06/01/2017 Date of pronouncement : 11/01/2017 ORDER L PER RAVISH SOOD, JUDICIAL MEMBER -
The present appeal has been filed by the revenue against the order of the CIT(A)-41, Mumbai, dt:19 /11/2014, which in itself has arisen from the assessment order passed by the A.O under section 143(3) r.w.S.144 of the Income Tax Act, 1961(in short 'Act}, dated 25.03.2013.
2. The brief facts of the case are that the assessee HUF which is engaged in the business of trading of iron, steel, hardware and chemicals. etc. had e declaring total] income of Rs.
Khyati Steel
-filed its return of income as on 09.09.2010, Reg. Post [No received 10.01.2013 Reg. Post [No reply Teceived 05.03.2013 Hand delivery 05.03.2013 | Hand delivery as party not available J.B. Purchase | 6,52,538/- | 05.03.2013 Hand Could not Interlink delivery be served | as party not available Revika Purchase 6,67,685/- | 05.03.2013 Hand Could not Trade | delivery | be served Impex Pvt. : as party Ltd. . - not available The A.O after failing to get compliance effected to the notices issued u/s 133(6) to the aforesaid six parties, therein directed the assessee to place on record the confirmations from the said respective parties along with their income tax credentials, as well as produce them for necessary verification. The A.O thereafter observing that as regards four parties, i.e. (i) N.B. Enterprises (ii) Jindal Steel Corpn. (iii) J.B. Interlink (iv) Revika Trade Impex Pvt. Ltd., no confirmation was received, despite being informed by the assessee that the confirmations from the said respective parties would shortly be placed on record, while for as regards the remaining two parties, i.e. (i) Khyati Steel Corpn. and (ii) Jinesh Trading Corpn., the assessee only filed the ledger accounts of the respective parties as appearing in its 'books of accounts' alongwith would purchase the exact quantity of the material, either directly or through brokers. That in the backdrop of the aforesaid facts, it was thus submitted by the assessee that to the extent the purchases would be carried out through the brokers, the entire work, i.e. collection of the bills and payments, arranging the material etc. was done by the brokers, and in majority of such cases the supplier parties would not be known to the assessee. It was further submitted by the assessee that in order to substantiate the genuineness and veracity of the purchases carried out by the assessee from the aforesaid six parties, it had placed on record of the A.O substantial material which therein did go to prove the said purchase transactions, as under :-
Sr. No. Particular
1. Statement of sales with corresponding purchases
2. Copy of purchase bills
3. Copy of Lorry receipts
4. Copy of sales invoices
5. Copy of Stock Register
6. Copy of Bank Statement
4. The assessee assailing the observations of the A.O before the CIT(A) that confirmations w.r.t. neither of the six parties had been was submitted by the assessee before the CIT(A) that as regards the Served on them, however no replies were received from the said Tespective parties. The assessee further in its attempt to substantiate the genuineness of the Purchase transactions, therein took support of the following facts :-
regards which were placed on record.
3. The assessee had maintained the stock register for receipt and issue of the goods, copy of which was placed on record.
4. The assessee had paid to the supplier parties by account payee cheque, and the copy of the bank statement was placed on record.
5. The copies of lorry receipts through whom the assessee had sent the goods through transportation, were placed on record by the assessee.
6. That out of total purchase from six parties, the goods of the value of Rs. 32,56,476/- were sold by the assessee out of Maharashtra.
Thus in the backdrop of the aforesaid facts, the assessee relying on the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. M/s Nikunj Exim Enterprises Pvt. Ltd. (2015) 372 ITR 619 (Bom), along with certain other judicial pronouncements /orders, therein submitted that now when the assessee had placed on record the purchase bills, furnished details of the purchases with corresponding sales, bank statement for proof of payment, copy of the stock register etc., then merely for the reason that the supplier parties had failed to put up an appearance before the A. O, would not go to prove that the purchases were bogus. That as regards the observations of the A.O that four parties (out of six absolutely failed to discharge the onus as stood cast upon it to substantiate the 'genuineness and veracity of purchase transactions. It was averred by the Ld. D.R that the A.O after failing to obtain the necessary confirmations u/s 133(6) from the aforesaid parties, therein directed the assessee to place on record the confirmations of the said respective parties alongwith their income tax credentials, as well as produce the said respective parties for necessary verifications, however as the assessee failed to do the needful, therein the A.O being left with no other alternative, coupled with the fact that four of the supplier parties had been blacklisted by the Sales Tax Department for being into the business of providing accommodation entries, thus proceeded with, and after rejecting the 'books of accounts' u/s 145(3), had rightly held the purchase transactions relatable to the aforesaid parties, as bogus, and made an addition of Rs. 33,86,936/-. It was submitted by the Ld. D.R that as the CIT(A) had failed to appreciate the facts in the right perspective, therefore his order may therein be set aside and the assessment framed by the A.O be restored. That on the other hand the Ld. Authorized Representative (for short 'A.R) heavily Supported the order of the CIT(A) and therein submitted that the latter had rightly set aside the assessment order and deleted the additions made by the A.O. The Ld. A.R referring to the substantial material which was placed on record of the lower authorities to substantiate the genuineness and veracity of the purchase transactions, therein reiterating the facts and submissions as were so made by the assessee before the lower authorities, therein submitted that merely for the reason that the supplier parties had 10 in the case of : DCIT, Mumbai Vs. Shri. Rajeev G. Kalathil (ITA No. 672.7 /Mum/2012, dt:20.08.2014) ITAT Mumbai "D" Bench
6. We have heard the Ld. Representatives of both the Parties, 11 ourselves to subscribe to the observations of the A.O, who had drawn adverse inferences as regards the genuineness of the purchase transactions carried out by the assessee from the four parties (out of six parties), i.e. namely (i) N.B. Enterprises (ii) Jindal Steel Corpn. (iii) J.B. Interlink and (iv) Revika Trade Impex Pvt. Ltd., for the reason that the Said respective parties had been identified by the Sales Tax Department of the Govt. of Maharashtra as having been engaged in the activity of issuing bogus bills, without supplying goods. We find ourselves to be in agreement with the observations of the coordinate bench of the Tribunal so recorded in the case of : Shri. Rajeev G. Kalathil, ITA No. 6727/Mum/2012 (supra), and are of the considered view that though the genuineness of the purchase transactions carried out by the assessee from the aforesaid 4 parties, in light of their alleged reputation as that of being into the business of providing bogus bills, would be under serious doubts, but then suspicions or doubts of the highest degree cannot be allowed to take place of evidence. We are of the considered view that the A.O in the backdrop of the aforesaid facts should have carried out further investigations and brought the same to a logical end, by placing on record such material which could inescapably and irrebutably prove the ingenuineness of the said purchase transactions, as it was only then that he could have justifiably dislodged the said claim of expenditure so raised by the assessee. We though are not oblivious of the fact that the A.O after failing to have gathered the confirmations from the aforesaid respective parties u /s 133(6), had directed the assessee to produce the parties, along with the copies .
12 13bogus purchases, rejected the books of accounts of the assessee u/s 145(3) and culminated the assessment vide his assessment order dated:25.03.2013. Thus in light of the insufficient time allowed by the A.O to the assessee for placing on record the documentary evidence and. production of the aforesaid parties for examination, we herein in light of the totality of the circumstances prevailing in the present case, can safely conclude that the assessee had remained divested of sufficient opportunity to effect compliance to the directions of the A.O, and for such reason had failed to substantiate the genuineness of the purchase transactions under consideration. We in light of the insufficient time allowed to _ the assessee by the A.O to substantiate the genuineness of the purchase transactions, are thus unable to persuade ourselves to subscribe to the adverse inferences drawn by the A.O for the reason that the assessee had failed to discharge onus as stood cast upon him. We however are also not much inspired by the order of the CIT(A), whom we find had acted upon the explanation and the documents which were furnished by the assessee, say bank statement, challan copies, stock register etc., and had summarily accepted the same. We are of the considered view that it remains as a matter of fact that neither the confirmations from the aforesaid respective supplier parties had been filed by the assessee, nor the respective parties had been produced for examination before the A.O, which furnishing of the confirmations and examination of the aforesaid respective parties before the A.O gains all the more importance, and rather would be indispensably required for proving the genuineness of the purchase transactions under consideration, 14 15 copies of the purchase bills, while for no other details, say income tax credentials, confirmations of the respective parties and copies of the bank accounts were ever placed on record. We further find that the aforesaid claim of the assessee therein rebutting the observations recorded by the A.O in the body of the assessment order had been summarily accepted by the CIT(A), without making necessary verifications from the record. We are unable to find ourselves to be in agreement with the aforesaid findings of the CIT(A), and being of the view that the Same are not based on any verifications on the part of the CIT(A), much the less any concrete evidence, we therefore are not persuaded to subscribe to the findings and the conclusion arrived at by the CIT(A) by summarily accepting the explanations of the assessee during the course of the appellate proceedings, and thus set aside the order of the CIT{(A) _and restore the matter pertaining to the purchases made by the assessee from the aforesaid two parties (i) Khyati Steel Corpn. and
(ii) Jinesh Trading Corpn. also to the file of the A.O, who is herein directed to verify from the record that as to whether the claim of the assessee that the confirmations of the aforesaid two parties were furnished during the course of the assessment proceedings, is found to be in order, or not. We herein direct the A.O that in case the confirmations, as claimed by the assessee, are proved by the assessee to have been filed during the course of the assessment proceedings, then no adverse inference as regards the purchase transactions pertaining to the said respective parties would be drawn, however in case the claim of the assessee is found to be incorrect, then in terms of the directions given in respect to the 16--
8. That the appeal of the revenue is allowed for statistical purposes, in light of our aforesaid observations.
Order pronounced in the open court on 1] /01/2017.
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. (D.KARUNAKARA RAO) (RAVISH SOOD) ACCOUNTANT MEMBER . JUDICIAL MEMBER HIS Mumbai: fest Dated : 11.01.2017 ferstrafter ofS fare, START TART Bea, ASS / DR, TAT, Mumbai aS IST / Guard File 3G / BY ORDER, SUAETTR THAR (Dy./Asstt. Registrar) STR Sete HAUT, Fas / TAT, Mumbai