CAPITOL FIBRES PVT. LTD., THANE v. ITO WARD,1(3), THANE

ITA 2597/MUM/2016 | 2011-2012
Pronouncement Date: 01-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 259719914 RSA 2016
Bench Mumbai
Appeal Number ITA 2597/MUM/2016
Duration Of Justice 1 year(s) 6 month(s) 20 day(s)
Appellant CAPITOL FIBRES PVT. LTD., THANE
Respondent ITO WARD,1(3), THANE
Appeal Type Income Tax Appeal
Pronouncement Date 01-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 01-11-2017
Last Hearing Date 25-10-2017
First Hearing Date 25-10-2017
Assessment Year 2011-2012
Appeal Filed On 11-04-2016
Judgment Text
ITA.NO.2597/MUM/2016 CAPITOL FIBRES PRIVATE LIMITED ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI . . BEFORE SHRI D.T. GARASIA JM AND SHRI MANOJ KUMAR AGGARWAL AM ./I.T.A. NO.2597/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) CAPITO L FIBERS PRIVATE LIMITED PLOT NO.C-30 ROAD NO.16 WAGLE INDUSTRIAL ESTATE THANE-400 604 / VS. INCOME TAX OFFICE WARD 1(3) MUMBAI ! ./ ./PAN/GIR NO. AAACC-6928-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : DR. P.DANIEL LD.AR RE VENUE BY : V.JENARDHANAN LD. SR. DR / DATE OF HEARING : 25/10/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-3 [CIT(A)] NASIK APPEAL NO. 118/15-16/NSK(OLD 240/14- 15/THN) DATED 29/01/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER 1(3) THANE [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT 1961 ON 30/03/2014. THE ONLY ITA.NO.2597/MUM/2016 CAPITOL FIBRES PRIVATE LIMITED ASSESSMENT YEAR-2011-12 2 EFFECTIVE GROUND PRESSED BY LD. COUNSEL FOR ASSESSE E [AR] BEFORE US IS ESTIMATION ON ACCOUNT OF CERTAIN BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF REGENERATED STAPLE FIBRE WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 30/03/2014 AT RS.2 05 77 012/- UNDER NORMAL PROVISIONS BEFORE SET -OFF OF BROUGHT FORWARD LOSSES AND AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.1 82 93 027/-. THE ORIGINAL RETURN WAS FILED ON 01/10/2011 AT NIL WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION AGAINST BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N 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.1 82 93 027/- FROM TWO SUCH ENTITIES. CONSEQUENT LY NOTICE U/S 148 DATED 18/03/2013 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). THE ASSESS EE REFLECTED TURNOVER OF RS.19.65 CRORES WITH GROSS PROFIT / NET PROFIT R ATES OF 11.32% & 3.05%. 2.3 THE ASSESSEE SUBMITTED THAT PURCHASES WERE GENU INE SINCE PAYMENTS WERE MADE TO THE SUPPLIER THROUGH BANKING CHANNELS. HOWEVER NOT CONVINCED LD. AO TREATED THE SAME AS ACCOMMODATION ENTRIES AND ADDED THE SAME TO THE INCOME OF THE ASS ESSEE. 3. AGGRIEVED THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/01/2 016 WHERE THE ITA.NO.2597/MUM/2016 CAPITOL FIBRES PRIVATE LIMITED ASSESSMENT YEAR-2011-12 3 ASSESSEE POINTED OUR CERTAIN ERROR IN FIGURES PICKE D UP BY LD. AO AND ALSO DREW ATTENTION TO DECLARED GROSS PROFIT RATE O VER SEVERAL YEARS. THE ASSESSEE ALSO SUBMITTED PARTY-WISE BILL DETAILS QUANTITATIVE DETAILS ETC. TO CONTEND THAT THE MATERIAL WAS USED IN THE P RODUCTION PROCESS. THE LD. CIT(A) AFTER DUE CONSIDERATION CONCLUDED THAT THE AMOUNT OF ALLEGED BOGUS PURCHASES MADE BY ASSESSEE WAS RS.1 28 06 504/- AGAINST WHICH ADDITION OF 25% WAS SUFFICIENT TO ACC OUNT FOR UNDUE BENEFIT OBTAINED BY THE ASSESSEE. AGGRIEVED THE ASSESSEE I S IN FURTHER APPEAL BEFORE US. 4. THE LD. AR PLEADED THAT THE ESTIMATION AS MADE B Y LD. CIT(A) WAS ON THE HIGHER SIDE AND FURTHER THE BENEFIT OF VAT SUBSEQUENTLY REVERSED BY THE ASSESSEE AGAINST ALLEGED BOGUS PURCHASES SHOULD BE GRANTED TO HIM. PER CONTRA LD. DR PLEADED FOR CONFIRMATION OF THE ORDER OF FIR ST APPELLATE AUTHORITY. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN MANUFACTURING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE A ND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE B ACKED BY INVOICES. AT THE SAME TIME THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM THE IMPUGNED SUPPLIER WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE IN SUCH A SITUATION T HE ADDITION WHICH COULD BE MADE WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE ITA.NO.2597/MUM/2016 CAPITOL FIBRES PRIVATE LIMITED ASSESSMENT YEAR-2011-12 4 BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER WE FIND THE ESTIMATION TO BE ON THE HIGHER SIDE AND HENCE KEEPING IN VIEW THE OVERALL FACTS AND CI RCUMSTANCES OF THE CASE WE RESTRICT THE SAME TO 10% OF ALLEGED BOGUS PURCHASES . THE LD. AR HAS CONTENDED THAT THE ASSESSEE HAS REVERSED VAT @5% AMOUNTING TO RS.5 62 648/- OUT OF THESE PURCHASES. A COPY OF VAT RETURNS DATED 22/03/2012 & 11/10/2012 FOR THE RELEV ANT PERIOD AS PLACED ON RECORD SUBSTANTIATE THE SAME SINCE IT IS OBSERVE D THAT THE ASSESSEE HAS REVERSED VAT CREDIT OF RS.5 62 648/- IN SUBSEQU ENT REVISED RETURN. HENCE THE ADDITION IS ESTIMATED ON NET ALLEGED BOGUS PURCHASES I.E. RS.1 28 06 504/- LESS RS.5 62 648/-. RESULTANTLY THE ADDITION IS RESTRICTED TO 10% OF RS.1 22 43 856/- WHICH COMES T O RS.12 24 386/-. 6. RESULTANTLY THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- - / DR ITAT MUMBAI 6. . / GUARD FILE / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI