DCIT CIR 2, KALYAN v. KONARK INFRASTRUCTURE(SW-KDMC)(J/V), THANE

ITA 2588/MUM/2017 | 2009-2010
Pronouncement Date: 13-11-2017 | Result: Dismissed

Appeal Details

RSA Number 258819914 RSA 2017
Assessee PAN AAAAK8524Q
Bench Mumbai
Appeal Number ITA 2588/MUM/2017
Duration Of Justice 7 month(s) 2 day(s)
Appellant DCIT CIR 2, KALYAN
Respondent KONARK INFRASTRUCTURE(SW-KDMC)(J/V), THANE
Appeal Type Income Tax Appeal
Pronouncement Date 13-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 13-11-2017
Assessment Year 2009-2010
Appeal Filed On 10-04-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C MUMBAI BEFORE SHRI D.T.GARASIA JM AND SHRI RAJESH KUMAR AM I.T.A. NO. 2588 AND 2589 /MUM/20 1 7 ( / ASSESSMENT YEAR : 2 009 - 10 AND 2011 - 12 ) DY.COM MISSIONER OF INCOME TAX - CIRCLE - 2 2 ND FLOOR MOHAN PLAZA WAYALE NAGAR KHADAKPADA KALYAN (W) THANE - 421301 / VS. M/S KONARK INFRASTRUCTURE (SW - KDMC) (J/V) FIRST FLOOR KONARK PLAZA SAPNA TALKIES NR.SAPNA GARDEN ULHASNAGAR THANE - 421003 CROSS - OB JECTION NO.21 2 AND 213/MUM/2017 ARISING OUT OF I.T.A. NO. 2588 AND 2589 /MUM/20 17 (AYS - 2009 - 10 AND 2011 - 12) ./ PAN : AAAAK8524Q ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI VIJAY MEHTA / REVENUE BY : SHRI RAJAT MEHTA / DATE OF HEARING : 4.09. .2017 / DATE OF PRONOUNCEMENT : 13 . 1 1 . 201 7 / O R D E R PER RAJESH KUMAR A. M: TH ESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE C OMMON ORDER OF DATED 30.1.2017 PASSED BY THE CIT(A) - 11 WHICH PERTAIN S TO THE ASSESSMENT YEAR 2 0 09 - 10 AND 2011 - 12. THE ASSESSEE ALSO FILED CROSS - OBJECTIONS THERETO. 2 I.T.A. NO.2588 AND 2589/MUM/2017 CO NO.212 AND 213/MUM/2017 2. SINCE THE ISSUES AGITATED IN BOTH THE A PPEALS AND CROSS - OBJECTIONS ARE ALMOST IDENTIC AL IN NATURE THEREFORE THESE WERE CLUBBED TOGETHER HEARD TOGETHER AND ARE BEING DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.2588/MUM/2017 (BY REVENUE) AND CO 212/MUM/2017(BY ASSESSEE) 3 . THE ONLY GROUND RAISED BY THE REVENUE IS AG AINST THE DELETION OF ADDITION OF RS.1 61 38 686/ - BY THE LD.CIT(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES BEING NON - GENUINE WHEREAS THE ASSESSEE FILED CROSS - OBJECTION AGAINST THE UPHOLDING THE REOPENING U/S 147 R.W.S.148 CONFIRMING THE ADDI TION TO THE TUNE OF RS.34 22 360/ - BEING 17.5% OF THE TOTAL BOGUS PURCHASES AS AGAINST THE 100% MADE BY THE AO . 4 . FACTS IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN DIVERSIFIED BUSINESS ES SUCH AS OCTROI AND TOLL COLLECTION STEEL INDUSTRIES DEVELO PMENT & CONSTRUCTION OF COMMERCIAL HOUSING PROJECTS AND GOVERNMENT CIVIL CONTRACTS. A SEARCH AND SURVEY ACTIONS WERE CARRIED OUT ON 18.2.2010 ON KONARKA GROUP AND IS ASSOCIATE CONCERNS. CONSEQUENTLY T HE CASE OF THE ASSESSEE WAS ASSIGNED TO THANE CIT - II . THE ASSESSEE FILED E - RETURN OF INCOME U/S 139(1) ON 30.9.2009 DECLARING TOTAL INCOME AT NIL. THE AO RECEIVED INFORMATION FROM THE STATE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS AVAILED ENTRIES OF BOGUS PURCHASE FROM HAWALA DEALERS TO THE TUNE OF RS.1 95 62 046/ - . IN ORDER TO VERIFY THE GENUINENESS OF THE PURCHASES THE AO ISSUED NOTICE TO THE 3 I.T.A. NO.2588 AND 2589/MUM/2017 CO NO.212 AND 213/MUM/2017 7 PARTIES U/S 133(6) DATED 14.7.2014 CALLING UPON THEM TO FILE BILLS AND DELIVERY CHALLANS PAYMENT DETAILS IN RESPECT OF THE S ALES MADE TO M/S KONARK INF RASTRUCTURE (SW/KDMC)(J/V) BUT THE NOTICE SENT TO THIS PARTY RETURNED UNSERVED BY THE POSTAL AUTHORITY. THEREAFTER THE AO DEPUTED INSPECTOR TO VERIFY THESE PARTIES BUT THE INSPECTOR REPORTED THAT NO SUCH PARTIES WE RE IN EXISTENCE AND THERE WAS NO BUSI NESS ACTIVITIES CARRIED OUT IN THE SAID PREMISES. ACCORDINGLY THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO FU RNISH DETAILS OF PURCHASES ABOVE RS.50 000/ - WITH BILLS NAMES OF THE PARTIES AND PAN INCLUDING TIN AND TO SUBMIT THE BILLS AND VOUCHER S TRANSPORT RECEIPT DELIVERY CHALANS AND STOCK REGISTER FOR THE PERIOD FROM 1.4.2010 TO 31.3.2011. THEREAFTER THE ASSESSEE FILED SUBMISSIONS FROM TIME TO TIME FILING THE DETAILS CALLED FOR BY THE AO PARTLY . THE AO AFTER CONSIDERING THE SAME CAME TO THE CONCLUSION THAT THE PURCHASE S AS MADE BY THE ASSESSEE WERE BOGUS AND MOSTLY MADE IN THE SECOND WEEK OF THE YEAR 2009 AND EVEN IF THE PURCHASES WERE CONSIDERED AS HAVING BEEN MADE ACTUALLY THEY WILL FALL U/S 40A(3) OF THE ACT FOR HAVING PAID IN CASH . THEREFORE THE AO ADDED THE ENTIRE PURCHASES OF RS. 1 95 62 046/ - TO THE INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT U/S 143(3) OF THE ACT R.W.S.147 VIDE ASSESSMENT ORDER DA T ED 23.3.2015 BY ASSESSING THE INCOME AT RS.1 95 62 050/ - . AGGRIEVED BY T HE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE REOPENING OF 4 I.T.A. NO.2588 AND 2589/MUM/2017 CO NO.212 AND 213/MUM/2017 ASSESSMENT U/S 147 OF THE ACT AND PARTLY SUSTAINING THE ADDITION TO THE EXTENT OF 17.5% OF THE TOTAL PUR CHASES AFTER HEARING VARIOUS CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE AND CONSIDERING VARIOUS DECISIONS OF HONBLE HIGH COURTS AND TRIBUNAL S . 5. WE HAVE CAREFULLY CONSIDERING THE RIVAL PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE I MPUGNED ORDERS AND CASE LAW S RELIED UPON BY THE ASSESSEE. IN THE CROSS - OBJECTION THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT . AFTER EXAMIN ING THE RECORD S W E FIND THAT THE REOPENING HAS BEEN DONE ON THE BASIS OF INFO RMATION FROM THE SALES TAX DEPARTMENT GOM THAT THE ASSESSEE HAS AVAILED HAWALA ENTRIES FOR PURCHASE OF GOODS FROM THE HAWALA OPERATORS TO THE TUNE OF RS.1 95 62 046/ - . IN OUR OPINION THE SAID INFORMATION WAS NOT AVAILABLE BEFORE THE AO AT THE TIME OF FRAMING OF THE ASSESSMENT AND THEREFORE WAS CONSTITUTED VALID REASON FOR REOPENING THE ASSESSMENT U/S 148 OF THE ACT . WE ARE IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD.CIT(A) ON THE ISSUE OF REOPENING OF THE ASSESSMENT AND ACCORDINGLY THE CROSS OBJECTION RAISED AGAINST RE - OPENING IS DISMISSED . SO FAR AS THE PART CONFIRMATION OF ADDITION AT THE RATE OF 17.5% IS CONCERNED WE ARE OF THE OPINION THAT THE ADDITION HAS TO BE MADE TO THE TUNE OF SAVINGS WHICH THE ASSESSEE MAY HAVE MADE BY PURCHASE OF GOODS FROM THE GRAY MARKET BY NON - PAYMENT OF VAT AND OTHER INCIDENTAL LEVIES. WE ALSO FIND THAT IN THE SIMILAR AND IDENTICAL FACTS OF THE 5 I.T.A. NO.2588 AND 2589/MUM/2017 CO NO.212 AND 213/MUM/2017 CASES THE COORDINATE BENCHES HAVE BEEN TAKING A CONSISTENT VIEW THAT SOME PERCENTAGE ADDITION RANGING FROM 4 % TO 12 .50% OR A REASONABLE PERCENTAGE OF THE BOGUS PURCHASE SHOULD BE APPLIED TOWARDS SAVINGS AND THE LEAKAGES OF REVENUE FOR THE REASON THAT THE ASSESSEE MIGHT HAVE PURCHASED THE MATERIAL FROM GR E Y MARKET THEREBY SAVING VAT AND OTHER INCIDENTAL TAXES. IN THE INSTANT CASE WE FIND THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF PURCHASES BY PRODUCING THE RELEVANT DOCUMENTARY AND CIRCUMSTANCES EVIDENCES BEFORE THE LOWER AUTHORITIES AS DESIRED BY THEM WHEREAS THE CONSUMPTION OF THE MATERIALS IS NOT DISP UTED . THEREFORE WE ARE OF THE CONSIDERED VIEW THAT A REASONABLE ADDITION SHOULD BE MADE TO COVER THE VARIOUS TYPES OF SAVINGS WHICH THE ASSESSEE MIGHT HAVE MADE BY PURCHAS ING THE GOODS FROM THE GRAY MARKET. ACCORDINGLY WE FEEL REASONABLE IF THE ADDITI ON IS SUSTAINED TO THE TUNE OF 5 % OF THE AMOUNT OF BOGUS PURCHASES. ACCORDINGLY THE CO OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED. AS THE ADDITION MADE BY THE LD. CIT(A) AT THE RATE OF 17.5% OF THE BOGUS PURCHASE IS ON HIG HER SIDE IT SHOULD BE MADE ON REASONABLE ACCOUNT WHICH BRINGS THE TAX AND SAVINGS WHICH THE ASSESSEE MIGHT HAVE MADE. RESULTANTLY THE APPEAL OF THE REVENUE STANDS DISMISSED. ITA NO.258 9 /MUM/2017 (BY REVENUE) AND CO 21 3 /MUM/2017(BY ASSESSEE) 6 . SINCE WE HAVE DECIDED THE ISSUE IN FAVAOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN ITA NO.2588/MUM/2017 (BY REVENUE) AND CO 6 I.T.A. NO.2588 AND 2589/MUM/2017 CO NO.212 AND 213/MUM/2017 212/MUM/2017(BY ASSESSEE) BY ALLOWING THE RELIEF TO THE EXTENT OF 12 .5 % AND DISMISSED THE APPEAL OF THE REVENUE. THE DECISION TAKEN THER EIN WOULD MUTATIS MUTANDIS APPLY TO THESE SUITS AS WELL. ACCORDINGLY APPEAL OF THE REVENUE IS DISMISSED AND THAT OF CROSS - OBJECTION FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 7 . RESULTANTLY APPEALS OF THE REVENUE ARE DISMISSED AND CROSS - OBJECTION FI LED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOV 2017 S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 13 . 1 1 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / TH E CIT(A) 4. / CIT CONCERNED 5. / DR ITAT MUMBAI 6. / GUARD F ILE / BY ORDER T RUE COPY / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI