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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: HON’BLE SHRI JOGINDER SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
1 Simla Steel Private Limited आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण “ई” ” ” ” "यायपीठ "यायपीठ मुंबई मुंबई म"। म"। आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण "यायपीठ "यायपीठ Assessment Years-2009-10 & 2010-11 मुंबई मुंबई म"। म"। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI माननीय माननीय माननीय "ी जोिग"दर "सह , उपा"य" एवं माननीय एवं एवं एवं माननीय माननीय "ी मनोज कुमार अ"वाल, लेखा सद"य के सम"। माननीय माननीय BEFORE HON’BLE SHRI JOGINDER SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./I.T.A. Nos.4677-4678/Mum/2015 (िनधा"रण िनधा"रण वष" वष" / / / / Assessment Years: 2009-10 & 2010-11) िनधा"रण िनधा"रण वष" वष" Simla Steel Private Limited ITO-14 (3)(4) बनाम/ Shop No.2, Gaffoor Khan Estate [Erstwhile ITO 10(1)(4)] Aayakar Bhavan LBS Marg, Kurla, Andheri(E) Vs. M.K. Road, Mumbai-400 020 Mumbai-400 021 "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAICS 9256 K (अपीलाथ"/Appellant) (""थ" / Respondent) : & आयकर अपील सं./I.T.A. Nos.4869-4870/Mum/2015 (िनधा"रण िनधा"रण िनधा"रण वष" िनधा"रण वष" वष" / / / / Assessment Years: 2009-10 & 2010-11) वष" ITO-14 (3)(4) Simla Steel Private Limited बनाम/ [Erstwhile ITO 10(1)(4)] Shop No.2, Gaffor Khan Estate 455, 4th Floor, Aayakar Bhavan LBS Marg, Kurla, Andheri(E) Vs. M.K. Road, Mumbai-400 020 Mumbai-400 021 "थायीलेखासं./जीआइआरसं./PAN/GIR No. AAICS 9256 K (अपीलाथ"/Appellant) (""थ" / Respondent) : Assessee by : Shri Anil Thakkar- Ld. AR Revenue by : Shri D.G. Pansari-Ld. DR सुनवाई की तारीख/ : 23/10/2018 Date of Hearing घोषणा की तारीख / : 16/11/2018 Date of Pronouncement आदेश आदेश / O R D E R आदेश आदेश Per Bench Simla Steel Private Limited Assessment Years-2009-10 & 2010-11
These are cross appeals for Assessment Years [AY] 2009-10 & 2010- 11 which contests separate orders of first appellate authority. Since common issues are involved, we dispose-off the same by way of this common order for the sake of convenience & brevity. These appeals were earlier dismissed by the Tribunal vide common order dated 19/01/2018 ex-parte qua the assessee. However, subsequently upon application of the assessee, the order has been recalled vide MA Nos. 86 & 87/ Mum/2018 order dated 24/08/2018 with the following observations:- 2. The applicant-assessee has furnished an Affidavit explaining the reasons for non- appearance on the appointed date of hearing. Considering the reasons averred, whose bona fide have not been assailed by the Revenue, we deem it fit and proper to recall the order dated 19.01.2018 dismissing the appeals of the assessee ex parte. Accordingly, & 4870/Mum/2015 pertaining to Assessment Years 2009-10 & 2010-11 respectively are directed to be reinstituted for a hearing before the regular Bench on 22.10.2018, a date announced in the open court in the presence of both the parties. Since the date of hearing has been announced in the open court in the presence of both the parties, the requirement of issuance of a formal notice of hearing is hereby dispensed with. Registry is directed to post the aforesaid two appeals before the regular Bench on 22.10.2018. Accordingly, the appeals have come up for fresh hearing before this bench. As evident from respective grounds of appeal
, the sole issue involved under the appeal is estimated additions on account of alleged bogus purchases.
2. First, we take up cross appeals for AY 2009-10 ITA Nos. 4869/Mum/2015 & 4677/Mum/2015 which contest the order of Ld. Commissioner of Income Tax (Appeals)-22 [CIT(A)], Mumbai, Appeal No.CIT(A)-22/IT/94/2014-15 dated 15/06/2015 qua additions on account of certain alleged bogus purchases. During impugned AY, the assessee Simla Steel Private Limited Assessment Years-2009-10 & 2010-11 being resident corporate entity was engaged as dealer of iron & steel items. The assessment for the impugned AY was framed by Ld. Income Tax Officer–10(1)(4) , Mumbai [AO] u/s 143(3) read with Section 147 on 27/03/2014 wherein the income of the assessee was re-assessed at Rs.134.03 Lacs after addition of bogus purchases u/s 69C for Rs.128.71 Lacs as against returned income of Rs.5.32 Lacs e-filed by the assessee on 22/09/2009 which was processed u/s 143(1).
3. Pursuant to receipt of certain information from DGIT (Investigation) / Sales Tax Department, Maharashtra regarding dealers being indulging in bogus purchase bills without carrying out any actual business, the assessee was subjected to reassessment proceedings for impugned AY vide issuance of notice u/s 148 dated 31/03/2013. Pursuant to the said information, it transpired that the assessee stood benefitted of bogus purchases aggregating to Rs.514.84 Lacs from 8 entities, the details of which have already been extracted in para-5.2 of the quantum assessment order. Accordingly, the assessee was required to substantiate the purchases made from these suppliers by way of documentary evidences. The assessee defended the same by submitting ledger extracts, sales invoices, bank statements evidencing payments to suppliers etc. However, notices sent u/s 133(6) to confirm the transactions remained un-served and physical inspection of site of the suppliers revealed that none of the party existed at the given addresses. The assessee failed to produce any of the suppliers to confirm the transactions. The factual matrix led the Ld. AO to treat the purchase transactions as non-genuine and finally, 25% of these purchases were disallowed and added to the income of the assessee Simla Steel Private Limited Assessment Years-2009-10 & 2010-11 which resulted into impugned additions of Rs.128.71 Lacs in the hands of the assessee.
4. Aggrieved, the assessee contested the same with partial success before Ld. CIT(A) vide impugned order dated 15/06/2015 wherein Ld. CIT(A), relying upon the decision of Hon’ble Gujarat High Court rendered in CIT Vs Simit P.Sheth [356 ITR 451], restricted the impugned additions to 12%, against which the assessee as well as revenue is in further appeal before us.
5. The only ground urged by Ld. Auhtorized Representative for Assessee [AR], Shri Anil Thakkar, is the fact that estimated additions of 12% were still on the higher side considering the nature of assessee’s business whereas Ld. Departmental Representative [DR], Shri D.G.Pansari, submitted that the additions as made by Ld. AO may be restored.
6. Upon careful consideration, we are of the opinion that the assessee was engaged as dealer in iron & steel items which could not be carried out without actual purchase of material. The turnover achieved by the assessee has not been disturbed / disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchase documents. However, at the same time, notices sent u/s 133(6) elicited no response and physical inspection of the sites of all the suppliers revealed that none of the suppliers existed at the given address. The assessee failed to produce any of the suppliers to confirm the transactions and the delivery of material could not be proved conclusively. Therefore, in the given situation, the addition which could be made was to account for profit element embedded in these Simla Steel Private Limited Assessment Years-2009-10 & 2010-11 purchase transactions to factorize for profit element earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against alleged bogus purchases, which lower authorities have rightly done. However, considering the fact that the assessee was dealing in price sensitive commodity like iron & steel, we find the estimation of 12% to be on the higher side. Therefore, we restrict the same to 8% of alleged bogus purchases of Rs.5,14,84,630/- which comes to Rs.41,18,770/-. The impugned order stand modified to that extent. Resultantly, the revenue’s appeal stand dismissed whereas the assessee’s appeal stands partly allowed. Cross Appeals for AY 2010-11 : & 4678/Mum/2015
7. In AY 2010-11, the assessee has been saddled with similar additions of Rs.70.52 Lacs against aggregate purchases of Rs.282.09 Lacs stated to be made by the assessee from 5 entities. The first appellate authority has restricted the same to 12%. Facts and circumstances being pari-materia the same as for AY 2009-10, taking the same view, we restrict the impugned additions to 8% of alleged bogus purchases of Rs.2,82,09,147/- which comes to Rs.22,56,732/-. The impugned order stand modified to that extent. Resultantly, the revenue’s appeal stand dismissed whereas the assessee’s appeal stands partly allowed.