Income Tax Appellate Tribunal - Mumbai
Asst Cit Cir 1, Kalyan vs Evonik Catalyst India P.Ltd, Thane on 5 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
"G" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND
SHRI RAJESH KUMAR, ACCOUNTANT MEMBER
ITA no.7038/Mum./2016
(Assessment Year : 2007-08)
Asstt. Commissioner of Income Tax
................ Appellant
Circle-I, Kalyan
v/s
Evonik Catalyst India Pvt. Ltd.
(Erstwhile Monarch Catalyst Pvt. Ltd.)
Plot no.F-1/2, MIDC, Phase-I ................ Respondent
Dombivali (East), Thane 421 203
PAN - AAACM5013G
ITA no.6428/Mum./2016
(Assessment Year : 2007-08)
Evonik Catalyst India Pvt. Ltd.
(Erstwhile Monarch Catalyst Pvt. Ltd.)
Plot no.F-1/2, MIDC, Phase-I ................ Appellant
Dombivali (East), Thane 421 203
PAN - AAACM5013G
v/s
Asstt. Commissioner of Income Tax
................ Respondent
Circle-1, Mumbai
Assessee by : Shri Varun Sankhesara a/w
Ms. Snehal Palnitkar
Revenue by : Shri V. Vidhyadhar
Date of Hearing - 14.09.2017 Date of Order - 05.10.2017
2
Evonik Catalyst India Pvt. Ltd.
ORDER
PER SAKTIJIT DEY, J.M.
These cross appeals arise out of a common order dated 6th September 2016, passed by the learned Commissioner (Appeals)-2, Thane, for the assessment year 2007-08 and 2008-09. However, in these appeals, we are concerned with assessment year 2007-08 alone.
2. The common issue arising for consideration in these appeals relate to the decision of the learned Commissioner (Appeals) in partly deleting / sustaining the addition made by the Assessing Officer on account of bogus purchases.
3. Brief facts are, the assessee a company is engaged in manufacturing and sale of nickel catalysts, active alloys catalysts, precious metal catalysts and chemicals. For the assessment year under dispute, the assessee filed its return of income on 10 th October 2007, declaring total income of ` 10,45,78,960. The assessment in case of the assessee was originally completed under section 143(3) of the Act by determining the income of ` 15,27,67,950. Subsequently, on the basis of information from Investigation Wing of the Department that purchases worth ` 1,22,75,815 from two parties were not genuine, the Assessing Officer re-opened the assessment under section 147 of the Act. During the assessment proceedings, the Assessing Officer called 3 Evonik Catalyst India Pvt. Ltd.
upon the assessee to prove the genuineness of the purchases made from N.P. Chemipharm and Navkar Enterprises. As alleged by the Assessing Officer, the assessee was unable to prove actual delivery of goods through any documentary evidence like delivery challan, transport bills, goods received notes, octroi receipts, etc. Therefore, treating the purchases made from the parties as bogus, the Assessing Officer added back the amount of ` 1,22,75,815 to the income of the assessee. Being aggrieved of the addition so made the assessee preferred appeal before the first appellate authority.
4. The learned Commissioner (Appeals) after considering the submissions of the assessee, though, agreed with the Assessing Officer that the assessee was unable to prove the genuineness of the purchases from the concerned parties, however, he restricted the disallowance to 25% of the alleged bogus purchase. Being aggrieved of the aforesaid decision of the learned Commissioner (Appeals) both the parties have filled appeals before us.
5. The assessee apart from challenging the addition sustained by the learned Commissioner (Appeals) has also challenged the re- opening of assessment under section 147 of the Act, whereas, the Revenue has challenged the decision of the learned Commissioner (Appeals) in reducing the addition to 25% of the bogus purchase. 4
Evonik Catalyst India Pvt. Ltd.
6. We have heard rival contentions and perused the material available on record. As far as the issue of re-opening of assessment under section 147 of the Act is concerned, after perusing the material on record, we are of the view that action initiated under section 147 of the Act is appropriate, since, the Assessing Officer had tangible material in his possession revealing the fact of bogus purchase made by the assessee from two parties. Therefore, we dismiss the ground raised by the assessee on re-opening. However, as far as merits of the issue is concerned, it is seen that while the Assessing Officer has added the entire purchases made from the parties, the learned Commissioner (Appeals) has restricted the addition to 25%. Perusal of the assessment order reveals, though, the assessee was unable to prove the actual delivery of goods at its premises, thereby, failing to conclusively prove the fact that goods were purchased from the concerned parties, however, it is also a fact that the Assessing Officer has not conducted any independent enquiry on his own, but has relied upon the information obtained from Sales Tax Department. Moreover, the Assessing Officer has not disputed the sales / consumption of the assessee. In these circumstances, though, the assessee's claim that purchases were made from the concerned parties is not acceptable, at the same time, the entire purchases cannot be added to the income of the assessee. As far as the disallowance made at 25% of the bogus purchase by the learned Commissioner (Appeals), we are of the view 5 Evonik Catalyst India Pvt. Ltd.
that the same is on the higher side considering the consistent view adopted by the Tribunal in cases of similar nature. In tune with the consistent view of the Tribunal as stated above, we restrict the addition to 12.5% of the alleged bogus purchase. Suffice to say, the learned Authorised Representative had no objection if the addition is restricted to 12.5% of the alleged bogus purchase. Thus, the order of the learned Commissioner (Appeals) is modified to this extent. Grounds raised by the assessee are partly allowed and grounds raised by the Revenue are dismissed.
7. In the result, assessee's appeal is partly allowed and Revenue's appeal is dismissed.
Order pronounced in the open Court on 05.10.2017 Sd/- Sd/-
RAJESH KUMAR SAKTIJIT DEY
ACCOUNTANT MEMBER JUDICIAL MEMBER
MUMBAI, DATED: 05.10.2017
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Mumbai City concerned;
(5) The DR, ITAT, Mumbai;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
(Dy./Asstt. Registrar)
ITAT, Mumbai