Income Tax Appellate Tribunal - Mumbai
Dcit 11(2)(2), Mumbai vs Supreme Offshore Construction And ... on 14 June, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
"E" Bench, Mumbai
Before Shri P K Bansal, Vice President
and Shri Pawan Singh, Judicial Member
ITA No.626 /Mum/2015
(Assessment Year: 2011-12)
D C I T - 11(2)(2) M/s. Supreme Offshore Construction
Room No. 477A, 4th Floor and Technical Service Ltd.
Aayakar Bhavan, M.K. Road Vs. 410-411, Midas Sahar Plaza
Mumbai 400020 M.V. Road, JPB. Nagar
Andheri (E), Mumbai 400059
PAN - AAECS0155R
Appellant Respondent
Appellant by: Dr. A.K. Nayak
Respondent by: None
Date of Hearing: 14.06.2017
Date of Pronouncement: 14.06.2017
ORDER
Per P.K. Bansal, Vice President This appeal has been filed by Revenue against the order of the CIT(A)- 18, Mumbai dated 11.11.2014 for A.Y. 2011-12.
2. The only issue involved in this appeal relates to the disallowance of purchases amounting to Rs.1,03,55,993/- reduced by the CIT(A) to 10% i.e. Rs.10,35,599/- thereby granting relief of Rs.93,20,394/-.
3. Facts relating to this ground are that the AO noted that the assessee had made purchases of Rs.1,03,55,993/- from M/s. Cee Port Iron & Steel Pvt. Ltd. As the name of the party appeared in the havala dealers identified by the Sales Tax Department and displayed in its website at Serial No. 1475, the AO therefore disallowed the total purchases amounting to Rs.1,03,55,993/-.
4. When the matter went before the CIT(A), the CIT(A) reduced the said purchases to 10% of Rs.1,03,55,933/-.
2 ITA No. 626/Mum/2015Supreme Offshore Construction & Technical Services Ltd.
5. None appeared on behalf of the assessee. We, therefore, decided to dispose off the appeal after hearing the learned D.R. After hearing the learned D.R. and going through the orders of the tax authorities below we noted that the CIT(A) has reduced the addition to 10% of the bogus purchases by observing as under: -
"From the perusal of the submissions and facts of the case it is noticed that the AO has made disallowance of purchases made from Ceeport Iron and Steel Pvt. Ltd amounting to Rs.1,03,55,993/- because the assessee could not produce the party for examination. The AO has no documentary evidence in his possession except that the name of M/s. Ceeport Iron and Ceeport Iron and Steel Pvt. Ltd was appearing in the list of hawala operators in the website of Sales Tax Department. No other incriminating document was available with the AO for making this disallowance. On the other hand the AR has submitted complete details and documentary evidence in the shape of invoices, transportation receipts, octroi bills and stock inventory also the payments were made through account payee cheques. But only the assessee could not produce the party for examination. It is observed that the Hon'ble Bombay High Court in the case of CIT v. Nikunj Eximp Enterprises Pvt. Ltd in appeal No.5604 order dated 17.12.2012 has decided the, issue of bogus purchases where the question before the Hon'ble High Court was whether on the facts and in the circumstances of the case and in law the Tribunal was right in deleting the addition made by the AO of Rs.1.33 crores towards bogus purchases even though the suppliers were non-existent and one of the parties had categorically denied having any business dealing with the assessee company. Even the Hon'ble Mumbai Tribunal in the case of DCIT v. Shri Rajeev G. Kalathil order dated 20.8.2014 has decided this issue by holding as under:
We have heard the rival submissions and perused the material before us. We find that AO had made the addition as one of the supplier was declared a hawala dealer by the VAT Department. We agree that lot was a good starting point for making further investigation and take it to logical end. But, he left the job at initial point itself. Suspicion of highest degree cannot take place of evidence. He could have called for the details of the bank accounts of the suppliers to find out as whether there was any immediate cash withdrawal from their account. We find that no such exercise was done. Transportation of good to the site is one of the deciding factor to be considered for resolving the issue. The FAA has given a finding of fact that part of the goods received by the asessee was forming part of closing stock. As far as the case of Western Extrusion Industries (supra) is concerned, we find that in that matter cash was immediately withdrawn by the supplier and there was no evidence of movement of goods. But, in the case before us, 3 ITA No. 626/Mum/2015 Supreme Offshore Construction & Technical Services Ltd.
there is nothing in the order of the AO about the cash traial. Secondly, proof of movement of goods is not in doubt Therefore, considering the peculiar facts and circumstances of the case under appeal, we are of the opinion that the order of the FAA does not suffer from any legal infirmity and there are not sufficient evidence on file to endorse the view taken by the AO. So confirming the order of the FAA, we decide ground no.1 against the AO.
Further, the Hon'ble Gujarat High Court in the case of CIT vs. Bholanath Poly Fab (P). Ltd 40 Taxmann.com 494 has held that where the assessee who purchased cloth and sell goods but purchased were not traceable. The profit element embedded in the purchases would be subject to tax and not entire amount. Keeping in view the facts and circumstances of the present case that the facts are squarely covered by the decision of Hon'ble Bombay High Court and Gujarat High Court that the assessee has submitted complete evidences and moreover the sales were not doubted by the AO. Since sales are accepted, therefore, purchases cannot be treated as bogus. Without purchases, there cannot be any sales. However, it is a case where purchases invoices were received from M/s. Cee Port Iron and Steel Pvt. Ltd but actually material was received from other Company. Thus the facts are squarely covered by the decision of Honorable Gujarat High Court in the case of CIT vs. Bholanath Poly Fab (P) Ltd (supra). Therefore, I am of the view that only the profit element embedded by these purchases of Rs.1,03,55,993/- @ 10% has to be confirmed. Therefore, the addition made by the AO on account of bogus purchases is restricted to Rs.10,35,599/- and balance addition is deleted. The ground of appeal is partly allowed."
6. The learned D.R. even though vehemently relied on the order of the AO but could not produce any cogent material in evidence or any case law contrary to one on which the CIT(A) placed reliance while reducing the addition to 10% of Rs.1,03,55,993/- . We are, therefore, of the view that this is not a fit case which warrants our interference. We accordingly confirm the order of the CIT(A).
7. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 14th June, 2017.
Sd/- Sd/-
(Pawan Singh) (P.K. Bansal)
Judicial Member Vice President
Mumbai, Dated: 14th June, 2017
4 ITA No. 626/Mum/2015
Supreme Offshore Construction &
Technical Services Ltd.
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) -18, Mumbai
4. The CIT - 8, Mumbai
5. The DR, "E" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.