Appeal details
Counselvise Citation
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-11-2024
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
26-08-2024
Assessment Year
2009-2010
Appeal Filed On
19-07-2024
Judgement Text
" \n \n IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH ‘C’, MUMBAI \n \nBEFORE SHRI AMARJIT SINGH, HON’BLE ACCOUNTANT MEMBER \n AND SHRI RAHUL CHAUDHARY, HON’BLE JUDICIAL MEMBER \n \n \n ITA No.3676/Mum/2024 \n Assessment Year: 2009-10 \n \nACIT 32(1), Mumbai \nvs \n \nP B Construction Company \n \nMonarch \nCastle \nCHS \nLtd. \nHanuman Road, Dattawadi Vile \nParle East, Mumbai-400057. \n \nPAN: AACFP 2842 B \n (Appellant) (Respondent) \n \nPresent for: \nAssessee by \n: Shri A.N. Shah \nRevenue by \n \n: Shri Raj Singh Meel, Sr. DR \n \nDate of Hearing \n: 26.08.2024 \nDate of Pronouncement \n: 14.11.2024 \n \nO R D E R \nPER AMARJIT SINGH, AM: \n \nThe present appeal filed by the revenue is directed against \nthe order of ld. CIT(A), NFAC dated 22.05.2024 for Assessment \nYear 2009-10. The revenue has raised the following grounds of \nappeal: \n\"1. On the facts and in the circumstances of the case and law, the Ld. \nCIT(A) has erred in deleting the addition of Rs. 1,03,37,643/- on \naccount of bogus purchases.\" \n2. \"On the facts and in the circumstances of the case and in law, the Ld. \nCIT(A) has erred in not considering that the addition was made on the \nbasis of information received from DIT(Inv.) and Sales Tax Department, \nMaharashtra with regard to bogus purchases made by the assessee \nfrom dealers without actual supply of goods.\" \n\n \nITA No.3676/Mum/2024 \nP B Construction Company \nA.Y. 2009-10 \n \n \n2 \n3. \"On the facts and in the circumstances of the case and in law, the Ld. \nCIT(A) has erred in not considering that the hawala dealers have \nadmitted on oath before the Sales Tax Authorities that they have not \nsold any material to anybody.\" \n4. \"On the facts and in the circumstances of the case and in law, the Ld. \nCIT(A) has erred in not considering that the assessee could not prove \nthe genuineness and creditworthiness of the purchase transactions \nduring the course of assessment proceedings.\" \n5. \"On the facts and circumstances of the case and in law, the Ld. \nCIT(A) has erred in estimating the profit at 12.5% of the total alleged \nbogus purchases from hawala dealers without appreciating the fact that \nit is not incumbent on CIT(A) to restrict such disallowance to only 12.5% \nand while doing so, Ld,CIT(A) failed to confirm to the ratio laid down by \nthe Hon'ble Apex court in the case of N.K. Proteins Ltd. vs. DCIT in SLP \n(Civil) No.769/2017 dated 16.01.2017.\" \n6. \"On the facts and circumstances of the case and in law, the Ld. \nCIT(A) has erred in not appreciating that purchases were made from \nsome other parties which were not recorded in the books of accounts \nand only accommodation bills were obtained from hawala parties.\" \n7. The appellant craves leave to amend or alter or add a new ground \nwhich may be necessary.” \n2. \nFact in brief is that the case was reopened by issuing of \nnotice u/s 148 of the Act on 22.03.2013 on the basis of \ninformation received from DIT(Inv.) and Sales Tax Department in \nrespect of accommodation bills obtained by the assessee from the \ndealers who were indulged in providing bogus purchases entries. \nDuring the year under consideration as per the detail given at \npage no. 1 & 2 of the assessment order, the assessee has \nobtained accommodation entries from the following parties as \nunder: \n\n \nITA No.3676/Mum/2024 \nP B Construction Company \nA.Y. 2009-10 \n \n \n3 \nTIN \nName of bogus dealers \nPAN \nF.Y. \nAmount \n27970618226V \nShreeji Traders \nAILPB7423K \n2008-09 \n22,14,576 \n27020614820V \nBhagwati Trading Co. \nAAIFB0449E \n2008-09 \n27,81,751 \n27170360840V \nSampark Steels \nABAFS4806M 2008-09 \n28,05,197 \n27740535951V \nPrayan Trading Co. \nAAISP6755D \n2008-09 \n12,30,284 \n27830385697V \nVitarag Trading Co. \nAAFFV2004C \n2008-09 \n11,72,997 \n27940638564V \nSmartlink Tradex Pvt. Ltd. \nAALCS0441B \n2008-09 \n16,09,645 \n \n3. \nDuring the course of assessment, assessee submitted that \nassessment for the year under consideration was already \ncompleted u/s 143(3) of the Act on 08.12.2011 assessing the \ntotal income at Rs. 1,05,10,100/- as against return of income of \nRs. 1,03,10,092/-. In respect to the notice u/s 142(1) issued by \nthe assessing officer, the assessee has filed details of purchases \nalong with copies of ledger accounts of respective purchase \nparties utilization of purchase material with details of realization \nand execution of contract. The assessing officer also stated that \nstatement of the parties indulged in providing accommodation \nbills were also recorded u/s 131 of the Act wherein they had \nadmitted to have provided accommodation bills without supplying \nany goods mentioned in the bills. The assessing officer stated that \nthe assessee had failed to furnish any evidences regarding the \nactual receipt of goods such as gate pass, register movement of \ngoods, date of purchase and date of receipt of material, date of \ntransportation, payment of octroi etc. The assessing officer \nconcluded that assessee had not substantiate the claim of \npurchases except providing extract of bills and payment made \nthrough banking channel therefore, the hundred percent 100% \n\n \nITA No.3676/Mum/2024 \nP B Construction Company \nA.Y. 2009-10 \n \n \n4 \npurchases to the amount of Rs.1,18,14,449/- was disallowed and \nadded to the total income of the assessee. \n4. \nThe assessee filed appeal before the Ld. CIT(A). The ld. \nCIT(A) has restricted the addition to the extent of 12.5% of the \nimpugned purchases after referring the decision of First Appellate \nAuthority in the case of the assessee itself for assessment year \n2010-11 relying on the decision of Hon’ble Gujarat High Court in \nthe case of CIT v. Simit P. Sheth 356 ITR 451 (Guj). \n5. \nDuring the course of appellate proceedings before us, the \nLd. Counsel filed Paper Book comprising copies of documents and \ndetails furnished before lower authorities. The Ld. Counsel \nsubmitted that on similar facts and identical issues in the case of \nthe assessee ITAT Mumbai for the assessment year 2010-11 vide \nITA No. 3165/Mum/2017 dated 13.11.2017 has upheld the \ndecision of Ld. CIT(A) in sustaining the purchases @ 12.5%. \n6. \nOn the other hand the Ld. DR supported the order of Ld. \nCIT(A). \n7. \nHeard both the sides and perused the material on record. \nWithout reiterating the facts as discussed above, the Assessing \nOfficer has disallowed the 100% of the purchases made by the \nassessee from the supplier who were indulged in providing \naccommodation bills without supplying any material as per the \ninformation received from the Sales Tax Department. The Ld. \nCIT(A) has restricted the addition to the extent of 12.5% by \n\n \nITA No.3676/Mum/2024 \nP B Construction Company \nA.Y. 2009-10 \n \n \n5 \nrelying upon the decision of Hon’ble Gujarat High in the case of \nSimit P. Sheth as referred supra in this order that only profit \nearned by the assessee has to be taxed on reasonable basis. \nSince similar issue on identical fact has already been adjudicated \nby the Co-ordinate Bench of ITAT in the case of the assessee as \ndiscussed above in this order, therefore with the assistance of Ld. \nRepresentative we have perused the decision of ITAT in the case \nof the assessee vide ITA No. 3165/Mum/2017 for A.Y. 2010-11 \nthe relevant extract of decision is reproduced as under: \n“4. We have carefully considered the rival submissions and perused the \nmaterial placed before us including the impugned orders of authorities \nbelow. The undisputed facts are that the assessee is a beneficiary of \nbogus purchases to the tune of Rs.95,48,660/- which could not be \nproved by the assessee and even notices sent to the parties u/s 133(6) \nby the AO could not be served and therefore entire amount of bogus \npurchases added to the total income of the assessee. In the appellate \nproceedings, the ld.CIT(A) directed the AO to sustained the addition at \nthe rate of 12.5% by following the decision in the case of Simit P Seth \n(supra) by observing that only profit earned by the assessee has to be \ntaxed on reasonable basis. Considering the circumstances in totality, \nwe are of the view that the order of the ld.CIT(A) does not suffer from \nany illegality or infirmity as the FAA has taken a very reasonable view \nin sustaining the purchases at the rate of 12.5%. The ITAT in a number \nof cases on identical facts and circumstances, have taken a consistent \nview that some percentage addition ranging from 5% to 12.50% or a \nreasonable percentage of the bogus purchase has to be made to tax the \nsavings by the assessee by purchasing the material from gray market \nthereby saving VAT and other incidental taxes. The AO has not disputed \nsales corresponding to the bogus purchases . On these e facts on record, \nwe find that the ld.CIT(A) has taken a reasoned view and there is no \nnecessity to interfere in the appellate order. Accordingly, we uphold the \norder of the ld.CIT(A) and dismiss the appeal of the revenue.” \n\n \nITA No.3676/Mum/2024 \nP B Construction Company \nA.Y. 2009-10 \n \n \n6 \n8. \nSince, the issue in appeal is squarely covered by the \ndecision of ITAT in the case of the assessee itself therefore, \nfollowing the decision of ITAT to tax only profit element on \nreasonable basis we do not find any infirmity in the decision of \nLd. CIT(A) in restricting the disallowance to the extent of 12.5% of \nthe purchases as discussed. Therefore, all the grounds of appeal \nof the Revenue are dismissed. \n9. \nIn the result, the appeal of the Revenue is dismissed. \nOrder pronounced in the open court on 14.11.2024 \n \n \n \nSd/- \n \n \n \n \n \nSd/- \n (RAHUL CHAUDHARY) (AMARJIT SINGH) \n JUDICIAL MEMBER ACCOUNTANT MEMBER \n \nMumbai:14.11.2024 \nBiswajit, Sr. P.S. \n \nCopy to: \n1. The Appellant: \n2. The Respondent: \n3. The CIT, \n4. The DR . \n \n \n//True Copy// \n \n[ \n \n \n \n \n \n \n \n \n \n \n By Order \n \n \n Assistant Registrar \n ITAT, Mumbai Benches, Mumbai \n \n \n \n \n \n \n \n"
