Income Tax Appellate Tribunal - Mumbai
Essel Marketing & Promotions P.Ltd, ... vs Asst Cit 9(2)(2), Mumbai on 21 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "D", MUMBAI
BEFORE SHRI SHAMIM YAHYA (AM) AND SHRI RAM LAL NEGI (JM)
ITA No. 3455/MUM/2016
Assessment Year: 2009-10
M/s Essel Marketing & The ACIT, Ward 9(2)(2),
Promotions Pvt. Ltd., Aaykar Bhawan,
C-4109, Oberai Garden Estate, Mumbai - 400021
Chandivali, Sakinaka, Vs.
Andheri (East),
Mumbai - 400072
PAN: AABCE6463B
(Appellant) (Respondent)
Assessee by : None
Revenue by : Shri Ram Tiwari (Sr. DR)
Date of Hearing: 04/01/2018
Date of Pronouncement: 21/02/2018
ORDER
PER RAM LAL NEGI, JM
This appeal has been filed by the assessee against order dated 28.03.2016 passed by the Ld. Commissioner of Income Tax (Appeals)-16, Mumbai, for the assessment year 2009-10, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order passed u/s 143 (3) read with section 147 of the Income Tax Act, 1961 (for short 'the Act').
2. Brief facts of the case are that the assessee a registered Private Limited Company engaged in the business and trading and manufacturing of promotional advertising items, filed its return of income for the assessment year under consideration declaring the total income of Rs. 65,43,680/-. Subsequently, on the basis of information received from Sales Tax Department, State of Maharashtra that the assessee had obtained bogus purchase bills from hawala dealers, the assessment was reopened u/s 147. In response to notice 2 ITA No. 3455/MUM/2016 Assessment Year: 2009-10 u/s 148, the assessee filed return of income. During the course of reassessment proceedings notices u/s 143 (2) and 142 (1) were served upon the assessee. After hearing the assessee in the light of the documents submitted by the assessee, the AO rejected the contention of the assessee and held that the assessee had obtained bogus bills for Rs. 75,75,636/- from 7 hawala dealers without purchasing any material from the said parties. Accordingly, the AO made addition of the said amount to the income of the assessee. Aggrieved by the assessment order, the assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) relying on the various decisions of the judgments rendered by the Tribunals, High Courts and the Hon'ble Supreme Court restricted the addition to 12.5%.
3. Still aggrieved, the assessee has preferred this appeal before the Tribunal on the following effective grounds:-
"Assumption of valid jurisdiction
1. On the facts and in the circumstances of the case, the learned CIT (A) erred in rejecting the contention of the appellant that A.O. has failed to assume a valid and legal jurisdiction to issue notice under section 147 of the I.T. Act.
2. On the facts and in the circumstances of the case the learned CIT (A) erred in mentioning that no specific arguments were advanced/raised during the course of appellate proceedings against assumption of legal and valid jurisdiction by the A.O.
3. On the facts and in the circumstances of the case the learned CIT (A) erred in holding the legalitity /validity of the assessment order in spite of the fact that no notice u/s 143 (2) was issued as required under the law.
Addition on account of Gross Profit 3 ITA No. 3455/MUM/2016 Assessment Year: 2009-10
4. On the facts and in the circumstances of the case the learned CIT (A) erred in increasing the rate of gross profit by 12.5% on the purchase of Rs. 75,75,636/- termed bogus purchases."
4. This appeal was fixed for hearing on 04.01.2018. On the said date, when the case was called for hearing, none appeared on behalf of the assessee. Further, no application for adjournment was received. Since, the assessee did not appear despite service of notice, we decided to dispose of the appeal on the basis of the material on record after hearing the Departmental Representative (DR).
5. Before us, the Ld. DR relying on the order passed by the Ld. CIT (A), submitted that since the assessee failed to establish the genuineness of purchases in question during the assessment proceedings, as well as during the appellate proceedings, the Ld. CIT (A) has rightly sustained the addition to 12.5% of the total amount of bogus purchases determined by the AO. Ld. DR further submitted that since there is no merit in the appeal of the assessee, the same is liable to be dismissed.
6. We have carefully gone through the orders passed by the authorities below and the cases relied upon by the AO as well as the Ld. CIT (A). Ground No. 1to 3 of the appeal are general in nature, therefore, we do not considered it necessary to adjudicate the said grounds. Vide Ground No. 4 the assessee has challenged the action of the Ld. CIT (A) in sustaining addition of 12.5% of the total amount of bogus purchases determined by the AO. The evidence on record suggest that the assessee had not purchased the goods in question from the parties mentioned in its books of account. The AO has not rejected the books of account of the assessee and also not disputed the sale. The said facts further give rise to the 4 ITA No. 3455/MUM/2016 Assessment Year: 2009-10 conclusion that the assessee had made the purchases in question from grey market evading VAT and other taxes applicable during the relevant period.
7. The Hon'ble Bombay High Court while upholding the decision of Mumbai Tribunal In CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. 372 ITR 619 (Bom),) has held that merely because the suppliers had not appeared before the Assessing Officer or the CIT (A) one could not conclude that the purchases were not made by the respondent/assessee. The Hon'ble Gujarat High Court in CIT vs. Simit P. Seth 356 ITR 451(Guj) has upheld the decision of the Tribunal and sustained the addition 12.5% of the total bogus purchases holding that only profit element embedded in such purchases can be added to income of the assessee. In our considered view, the order passed by the Ld. CIT(A) is based on the principles of law laid down by the Hon'ble Hon'ble Bombay and Gujarat High Court discussed above. We, therefore, do not find any infirmity in the order of the Ld. CIT (A) to interfere with. Hence, we uphold the order of the Ld. CIT (A) and dismiss all the grounds of the appeal filed by the assessee.
In the result, appeal filed by the assessee for assessment year 2009- 2010 is dismissed.
Order pronounced in the open court on 21st February, 2018.
Sd/- Sd/-
(SHAMIM YAHYA) (RAM LAL NEGI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
मुंबई Mumbai; दिन ुं क Dated: 21/02/2018
Alindra, PS
5
ITA No. 3455/MUM/2016
Assessment Year: 2009-10
आदे श प्रतितिति अग्रेतिि/Copy of the Order forwarded to :
1. अपील र्थी / The Appellant
2. प्रत्यर्थी / The Respondent.
3. आयकर आयक्त(अपील) / The CIT(A)-
4. आयकर आयक्त / CIT
5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai
6. ग र्ड फ ईल / Guard file.
आदे शानुसार/ BY ORDER, सत्य दपि प्रदि //True Copy// उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण, मुंबई / ITAT, Mumbai