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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2009-10 assails the order of the Ld. Commissioner of Income-Tax (Appeals)-25 [CIT(A)], Mumbai, New Appeal No.CIT(A)25/IT/643-2013-14 dated 27/02/2015 qua confirmation of certain additions on account of Bogus Purchases. The assessment was framed by Ld. Deputy Commissioner of Income Tax-22(1), Mumbai [AO] u/s 143(3) read with Section 147 on 18/12/2013. 2.1 Facts leading to the same are that the assessee being resident individual engaged as contractor & dealers in pumps under proprietorship concern namely Hi Tech Engineers was subjected to an assessment u/s 143(3) read with Section 147 for impugned AY on 18/12/2013 where the income of the assessee was determined at Rs.2,89,76,950/- after certain additions u/s on account of alleged bogus purchases for Rs.31,79,688/-. The original return was filed on 30/09/2009 at Rs.2,57,97,260/- which was processed u/s 143(1). The solitary issue involved in the appeal is addition of certain bogus purchases. 2.2 The reassessment proceedings were initiated upon receipt of certain information from Sales Tax Department, Maharashtra regarding dealers indulging in bogus purchase bills and it was noted that the assessee stood beneficiary of such bogus purchase bills to the tune of Rs.31,79,688/- from Avadhut Ramakant Wagh Assessment Year 2009-10 two parties. Consequently, notice u/s 148 dated 21/03/2013 was issued to the assessee which was followed by statutory notices u/s 143(2) and 142(1). 2.3 Notices sent u/s 133(6) to these parties to confirm the transactions remained un-served which was confronted to the assessee. The assessee was directed to produce the said parties along with supporting documents. The assessee, while expressing inability to produce the said parties, contended that it purchased pipes and electric cables from the two parties and the purchased material was consumed in a certain project executed for Municipal Corporation and therefore, the purchases were genuine. However, Ld. AO, not convinced, concluded that the assessee could not substantiate delivery of material and also could not discharge onus of proving the purchases transactions and therefore treating the same as bogus purchases, added the same to the income of the assessee.
Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 27/02/2015 where the assessee produced ledger extracts, invoices, delivery challans, bank statement evidencing payment of material and placed reliance on certain judicial pronouncements. However, not convinced, Ld. CIT(A) sustained the same on the premises that the assessee could not prove actual utilization of material for the project. Aggrieved, the assessee is in further appeal before us.
Avadhut Ramakant Wagh Assessment Year 2009-10 4. The Ld. Counsel for Assessee [AR] reiterated the said contentions and drew our attention to the fact that the contract work could not be carried out without consumption of material and further, assessee was in possession of primary purchase documents along with delivery challans and the payment of material was through banking channels and therefore, full addition was not justified.
Per Contra, the Ld. Departmental Representative [DR] placed reliance on the stand of lower authorities and contended that the assessee failed to prove the utilization of material for the project and could not produce any stock register to support the contention and therefore, full disallowance was justified.
We have carefully heard the rival contentions and perused relevant material on record. We are of the considered opinion that there could be no sale / contract receipts without actual consumption of material since the assessee was engaged as contractor. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The purchases were backed by invoices and delivery challans. At the same time, the assessee could not produce any confirmation from the impugned suppliers and all notices sent u/s 133(6) remained un-served, which cast serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit element earned by assessee against possible purchase
Avadhut Ramakant Wagh Assessment Year 2009-10 of material in the grey market and undue benefit of VAT against such bogus purchases. Therefore, we estimate the same @12.5% which comes to Rs.3,97,461/-. 7. Resultantly, the assessee’s appeal stands partly allowed. Order pronounced in the open court on 04th October, 2017.
Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 04 .10.2017 Sr.PS:- Thirumalesh आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent 2. आयकर आयु�(अपील) / The CIT(A) 3. आयकर आयु� / CIT – concerned 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6.