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Income Tax Appellate Tribunal, “H”
Before: SHRI SHAMIM YAHYA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appealfiled by the revenue is against the order of Commissioner of Income Tax (Appeals)-12, Mumbaidated Amoolya Engineers Pvt. Ltd. 09.08.16 for AY 2009-10 on the grounds mentioned herein below:- 1. "On the facts and in the circumstances of the case and in law, theLd.CIT(A) has erred in deleting the addition of Rs.7148.139/- on account of Bogus purchases without appreciating the fact that the assessee could not bring any evidence on record to the satisfaction of the AO to show that the purchases are genuine.
2. The appellant prays that the order of CIT(A) on the above grounds be setaside and that of the Assessing officer be restored.
3. The appellant craves leave to amend or alter any ground or add a newground which may be necessary.
2. As per the facts of the present case, the return of income for AY 2009-10 was filed on 29.09.09 declaring total income of Rs. 7,39,198/-. The return of income was processed u/s 143(1) of the I.T. Act which resulted in demand of Rs. 27,87,80/-. Subsequently, information was received by the AO from DGIT(Inv.), Mumbai related to bogus purchase entries received from the Sales Tax Department, Maharashtra. The AO had Amoolya Engineers Pvt. Ltd. information that the parties from whom the assessee had made purchases were bogus and they are engaged in the business of providing bills without actual delivery of goods. The AO carried out investigations and after seeking reply from the assessee, disallowed the claim of purchase amounting to Rs. 71,48,139/- as bogus purchases and added the same to the total income of the assessee vide order of assessment u/s 143(3) r.w.s 147 of the I.T. Act dated 09.03.15. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee. Now before us, the revenue has preferred the present appeal by raising the above grounds.
Ground No. 1 3. The sole effective ground raised by the revenue relates to challenging the order of CIT(A) in deleting the addition of Rs.71,48,139/- on account of Bogus purchases without appreciating the fact that the assessee could not bring any Amoolya Engineers Pvt. Ltd. evidence on record to the satisfaction of the AO to show that the purchases are genuine.
We have heard counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). Ld. CIT(A) while dealing with the said ground has passed the detailed order. The operative portion of CIT(A)’s order is contained in para no. 7 and the same is reproduced below:-
7. Ground of Appeal No.2 It is seen that A.O. has erred in law and on the facts of the case in making addition of Rs.71,48,139/- on account of bogus purchases. The case has been reopened on the basis of information received from DGIT (Inv) and Maharashtra Sales Tax Department.
However, during the course of hearing, it is seen that the appellant has submitted all ledger accounts of the concerned parties, sale and purchase bills, details of transportation, the Amoolya Engineers Pvt. Ltd. supporting vouchers and copy of bank statements. Nothing has been brought out on record by the A.O. to prove that the purchases are bogus. During the course of hearing attention was invited to the fact that the appellant's average gross profit for the last three years i.e. 3.62% due to the competitive market. It is seen that A.O. has made addition at 12.5% of the alleged bogus purchases 'which is quite high when compared to the gross margin declared by the appellant. Thus in the light of the discussion here it is held that the addition is liable to be deleted. Reliance is placed on the following judicial decisions of Hon. Supreme Court, Hon. Gujarat High Court, Hon. Mumbai High Court and Hon. Mumbai ITAT wherein the Hon. Hon. Supreme Court, Hon. High Courts and Hon. ITAT has deleted the additions in other cases made on identical grounds of bogus purchases 1. Munjal Sales Corpn Vs CIT (2008) 168 Taxman 43 (SC)
CIT Vs Reliance Utilities & Power Ltd. (2009) 178 Taxman 135 (Born)
Yatish Trading Co. (P) Ltd. Vs ACIT (2011) 129 lTD 237/9 taxmann.com 164 (Mum)
Amoolya Engineers Pvt. Ltd. 4. ITO Vs Strides Arcolab Ltd. (2012) 138 lTD 323/24 taxmann.com 89(Mum)
5. Morgan Stanley India Securities P. Ltd. Vs ACIT in ITAT, Mumbai.
Four Dimensions Securities (India) Ltd. Vs AcIdl.CIT in M/ 2011 ITAT, Mumbai ,/ ii
Kodak India (P) Ltd. Vs Addl.CIT(IT Appeal no. 7349/Mum/2012 dated 30/4/2013)
ACIT 11(2) Vs. Iqbal M. Chagala, Palloni Mansion ITAT, Mumbai
Hon. Mumbai High Court decision in the case of Babulal C. Borana Vs ITO (2006) 282 ITR 251.
Hon. Gujarat High Court decision in case of CIT Vs M.K. Bros (1987) 163 ITR 249
Hon. Gujarat High Court decision in case of CIT Vs Nangalia Fabrics P. Ltd. (2014) 220 Taxman 17
Hon. Mumbai ITAT judgement dated 17.6.2016 in the case of M/s. Om Shree International Vs ACIT in and ITA No. 4575/M/2012.
Amoolya Engineers Pvt. Ltd. 13. Kishanchand Chelaram Vs. CIT-125 ITR 713-SC.
H.R. Mehta Vs ACIT in of 2001 (Born)
CIT Vs. Nikunj Eximp Enterprises Pvt. Ltd. [372 ITR 619 (Born)2015]
ACIT Vs. Ramila Pravin Shah (ITA No.5246/ Mum/ 2013)
ACIT Vs.Tristar Jewellery Exports Pvt. Ltd. (ITA No.7593/Mhm/ 2011)
Therefore, since the facts and circumstances of the appellant's case here is identical to the above mentioned judicial orders, Ground of Appeal No 2 is allowed.
After having gone through the facts of the present case, judgments relied upon by both the parties as well as considering the orders passed by revenue authorities and hearing the parties at length, we find that the Ld. CIT(A) has simply quoted various judgments passed by different courts including the tribunal and deleted the addition without recording any findings on merit. Whereas as per the facts of the present case, the AO had carried
Amoolya Engineers Pvt. Ltd. necessary investigations and provided opportunity to the assessee to establish the genuineness of the purchases claimed by it. However assessee failed to prove the genuineness of the purchases from these parties and it was found that the assessee had taken accommodation entries of purchases from these parties only to reduce its profit. No documentary evidence was placed on record by the assessee to prove the delivery of material. Ld. AR placed on record copy of order of assessment for AY 2010-11 in assessee’s own case wherein on the identical facts and circumstances the AO had made addition @ 5% of the total bogus purchases. Now coming to the facts of the case, since the assessee had failed to establish the genuineness of purchases made from the parties. Therefore, considering the peculiar facts and circumstances of the present case and while relying upon the following judgments:- 1) ClT vs Bholanath Poly Fab Ltd. (2013) 355 ITR 290 (Guj). (HC), 2. CIT v Simit D, Sheth (2013) 356 ITR 451 (Guj)-(HC) and 3. CIT vs. Sanjay Oil Cake Industries (2009) 316 ITR 274 (Guj) (1C) and taking into consideration the facts of the present case and the order of AO in Amoolya Engineers Pvt. Ltd. subsequent year AY 2010-11 and to account for the profit element embedded in these purchase transactions to factorize profit earned by assessee against purchase of material in the grey market and undue benefit of VAT against bogus purchases, we are of the considered view that the ends of justice would be met in case the additions are restricted @ 5 % of bogus purchases. Consequently orders passed by Ld. CIT(A) are set aside. Hence we direct the AO to restrict the additions to the extent of 5% of the bogus purchases. Accordingly this ground raised by the revenue is partly allowed.
Other grounds raised
by the revenue are general in nature, thus requires no specific adjudication.
6. In the net result, the appeal filed by the revenue stands partly allowed. Order pronounced in the open court on 7th Dec., 2017 Sd/- Sd/- (ShamimYahya) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 07.12.2017 Sr.PS. Dhananjay