NEW METAL REFINERY INDIA PVT LTD. , Mumbai v. DCIT 5(1)(2), Mumbai

ITA 2615/MUM/2019 | 2010-2011
Pronouncement Date: 08-03-2021 | Result: Dismissed

Appeal Details

RSA Number 261519914 RSA 2019
Bench Mumbai
Appeal Number ITA 2615/MUM/2019
Duration Of Justice 1 year(s) 10 month(s) 11 day(s)
Appellant NEW METAL REFINERY INDIA PVT LTD. , Mumbai
Respondent DCIT 5(1)(2), Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 08-03-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-03-2021
Last Hearing Date 02-04-2020
First Hearing Date 02-04-2020
Assessment Year 2010-2011
Appeal Filed On 26-04-2019
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE HONBLE SHRI SAKTIJIT DEY JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2614/MUM/2019 ( / ASSESSMENT YEAR: 2009-10) & ./ I.T.A. NO.2615/MUM/2019 ( / ASSESSMENT YEAR: 2010-11) & ./ I.T.A. NO.2616/MUM/2019 ( / ASSESSMENT YEAR: 2013-14) NEW METAL REFINERY INDIA PVT.LTD. 132 APPA BUILDING SVP ROAD NULL BAZAR MUMBAI-400 004. / VS. D CIT - 5(1)(2) AAYKAR BHAVAN NEW MARINE LINES MUMBAI-400 020 PAN/GIR NO. AABCN - 9710 - C ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI THARIAN OOMMEN-LD. SR. DR / DATE OF HEARING : 25/02/2021 / DATE OF PRONOUNCEMENT : 08/03/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY THE ASSESSEE FOR ASSESSMENT YEARS (AY) 2009-10 2010-11 & 2013-14 CHALLENGES SEPARATE ORDE RS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-10 MUMBAI [I T(A)] ON CERTAIN COMMON GROUNDS. THE FACTS AS WELL AS ISSUES ARE MO RE OR LESS IDENTICAL 2 AND THEREFORE THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE & BREVITY. 2. AT THE TIME OF HEARING NONE APPEARED FOR ASSESS EE. THE PERUSAL OF ORDER SHEET ENTRIES WOULD SHOW THAT THE ASSESSEE HA S FAILED TO ATTEND HEARING ON VARIOUS OCCASIONS. AT THE SAME TIME WE FIND THAT THE MATERIAL ON RECORD IS QUITE SUFFICIENT FOR DISPOSAL OF THESE APPEALS. THEREFORE THE MATTER WAS PROCEEDED WITH AFTER HEARING LEARNED DR WHO SUPPORTED THE ORDERS OF LOWER AUTHORITIES. FIRST WE TAKE UP APPE AL FOR AY 2009-10 WHICH IS AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX (APPEALS)- 10 MUMBAI [CIT(A)] DATED 22/10/2019 ON FOLLOWING G ROUNDS OF APPEAL: - 1. THE CIT(A) WRONGLY CONFIRMED THE RE-OPENING THE ASSESSMENT WHICH WAS ONLY ON THE BASIS OF THIRD PARTY SATISFACTION WITHOUT AO APPLYING HIS OWN JUDGMENT. 2. THE CIT(A) WRONGLY CONFIRMED THE RE-OPENING THE ASSESSMENT AS VALID THOUGH CONSIDERING THE FACTS THE PROVISIONS ARE NOT APPLIC ABLE TO FACTS OF THE CASE. 3. THE CIT(A) WRONGLY CONFIRMED THE ADDITIONS OF AN AMOUNT OF RS.9090168 ON ASSUMPTION OF TWELVE AND HALF PERCENTAGE PROFIT ON ALLEGED BOGUS PURCHASES THOUGH NO SUCH PROFIT IS EARNED. 4. THE CIT(A)ERRED IN CONFIRMING EXTRA INCOME TO TH E TUNE OF TWELVE AND HALF PERCENTAGE EARNED BEING AN AMOUNT OF RS.9090168. TH E PROFIT DECLARED ON SUCH TURNOVER SHOWN WAS SUFFICIENT AND REASONABLE FOR SU CH TYPE OF TRANSACTIONS. 5. THE CIT(A) HAS ERRED IN HOLDING THAT PURCHASES W ERE MADE IN OPEN MARKET THOUGH NO SUCH PURCHASES WERE MADE AS THE APPELLANT HAS CATEGORILY STATED THAT NO PURCHASES OR SALES IN RESPECT OF SUCH PARTIES WERE MADE. THE ASSESSMENT WAS FRAMED BY LEARNED ASSESSING OFFI CER (AO) U/S 143(3) R.W.S. 147 ON 28/03/2016 WHEREIN THE ASSESSE E WAS SADDLED WITH CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ADDITIONS SO MADE ARE THE SOLE SUBJECT MATTER OF APPEAL BEFOR E US. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACTURING OF L EAD AND LEAD ALLOYS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS U/S 143(3 ) R.W.S. 147 VIDE ORDER DATED 28/03/2016. THE ORIGINAL RETURN FILED B Y THE ASSESSEE WAS 3 PROCESSED U/S 143(1). HOWEVER THE CASE WAS REOPENE D PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPAR TMENT THAT THE ASSESSEE PROCURED ACCOMMODATION PURCHASE BILLS OF R S.727.21 LACS FROM 5 TAINTED PARTIES AS DETAILED IN THE ASSESSMEN T ORDER. ACCORDINGLY NOTICE U/S 148 WAS ISSUED ON 03/03/2015 AS PER DUE PROCESS OF LAW WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 142(1) & 143(2) WHEREIN THE ASSESSEE WAS REQUIRED TO ESTABLISH THE GENUINENESS OF THESE PURCHASES. 3.2 THE ASSESSEE DEFENDED THE SUSPICIOUS PURCHASES BY ADDUCING PURCHASE AND SALES INVOICES. IT WAS SUBMITTED THAT FOR EVERY PURCHASE OF AN ITEM THERE WAS A CORRESPONDING SALE. FURTHER P URCHASE AND SALES WERE OF TRADING IN NATURE. HOWEVER FINDING THAT PR IMARY ONUS TO ESTABLISH THE GENUINENESS OF THE PURCHASE REMAINED UN-DISCHAR GED SINCE THE ASSESSEE FAILED TO PRODUCE ANY OF THE SUPPLIERS FOR CONFIRMATION OF PURCHASES THE LD. AO PROCEEDED TO DISALLOW THESE P URCHASES. IN AFFIDAVITS / STATEMENTS MADE BY KEY PERSONS OF THES E CONCERNS BEFORE SALES TAX AUTHORITIES IT WAS ADMITTED THAT THEY HA VE NOT DONE ANY GENUINE BUSINESS. THEREFORE A PRESUMPTION WAS DRAW N BY LD. AO THAT THE GOODS WERE PROCURED FROM GREY MARKET AND TO ACC OMMODATE THE SAME BOGUS PURCHASE BILLS WERE PROCURED BY THE ASS ESSEE FROM THESE CONCERNS. THEREFORE A CERTAIN PERCENTAGE OF TAINTE D PURCHASE WAS TO BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE TO PLUG POSSIBLE LEAKAGE OF REVENUE. THE SAID ESTIMATION WA S DONE @12.5% WHICH RESULTED INTO AN ADDITION OF RS.90.90 LACS IN THE HANDS OF THE ASSESSEE. ANOTHER RELEVANT FACT IS THAT THE ASSESSE E WAS SUBJECTED TO SURVEY PROCEEDINGS U/S 133A ON 24/01/2013 BY THE DE PARTMENT TO VERIFY THE CORRECTNESS OF PURCHASES. THE KEY DIRECTOR OF A SSESSEE-COMPANY WAS UNABLE TO EXPLAIN THE PURCHASES SATISFACTORILY DURING SURVEY 4 PROCEEDINGS. FINALLY THE ADDITIONS AGAINST TAINTED PURCHASES WERE ESTIMATED @12.5% AND ADDED BACK TO THE INCOME OF TH E ASSESSEE. 3.3 AGGRIEVED BY AFORESAID ADDITIONS THE ASSESSEE ASSAILED THE LEGALITY OF REASSESSMENT PROCEEDINGS AS WELL AS QUA NTUM ADDITIONS ON MERITS BEFORE LEARNED FIRST APPELLATE AUTHORITY. T HE LEGAL GROUNDS WERE REJECTED BY LD. CIT(A) BY OBSERVING THAT THE PRIMAR Y CONDITIONS TO REOPEN THE CASE WERE FULFILLED SINCE LD. AO HAD VALID REAS ONS TO FORM A BELIEF THAT CERTAIN INCOME HAD ESCAPED ASSESSMENT. ON MERI TS ALSO LD. CIT(A) ALSO UPHELD THE ACTION OF LD. AO IN MAKING ESTIMATE D ADDITIONS. AGGRIEVED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. UPON DUE CONSIDERATION OF MATERIAL FACTS AS WELL AS THE ORDER OF LOWER AUTHORITIES IT IS QUITE EVIDENT THAT THE ASS ESSEE HAD MADE CERTAIN PURCHASES FROM CONCERNS RUN BY A TAINTED GROUP. IT WAS ADMITTED BY KEY PERSONS OF THOSE CONCERNS THAT THEY DID NOT CARRY O UT ANY GENUINE BUSINESS ACTIVITIES. DURING SURVEY PROCEEDINGS ALSO THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE PURCHASES MADE DURIN G THE YEAR. THE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIERS TO PROVE THE GENUINENESS OF THE PURCHASES. HENCE THE ASSESSEE WA S UNABLE TO DISCHARGE THE PRIMARY ONUS OF PROVING IMPUGNED PURC HASES. ON THE FACTS OF THE CASE IT WAS A FIT CASE FOR ESTIMATION OF IN COME EARNED ON THESE TAINTED PURCHASES. WE FIND THE ESTIMATION OF 12.5% TO BE FAIR AND REASONABLE. NO NEW MATERIAL IS BEFORE US TO DEVIATE FROM THE ADJUDICATION OF LD. CIT(A) IN THE IMPUGNED ORDER. 5. SO FAR AS THE VALIDITY OF REASSESSMENT PROCEEDIN GS IS CONCERNED WE FIND THAT ORIGINAL RETURN WAS PROCESSED U/S 143( 1) AND THE CASE WAS REOPENED UPON RECEIPT OF SPECIFIC INFORMATION FROM SALES TAX AUTHORITIES WHICH INDICATED POSSIBLE ESCAPEMENT OF INCOME IN TH E HANDS OF THE 5 ASSESSEE. NOTHING MORE WAS REQUIRED AT THIS STAGE. THEREFORE NO INFIRMITY COULD BE FOUND IN THE JURISDICTION ACQUIR ED BY LD. AO. RESULTANTLY THE LEGAL GROUNDS AS WELL AS APPEAL ST AND DISMISSED. 6. SIMILAR ARE THE FACTS IN AY 2010-11 WHEREIN THE ASSESSEE HAS BEEN SADDLED WITH ESTIMATED ADDITIONS OF 12.5% AGAINST T AINTED PURCHASES. THE BENEFIT OF PROFIT DECLARED ON THESE PURCHASES H AS ALREADY BEEN ALLOWED BY LOWER AUTHORITIES. THE IMPUGNED ORDER IS COMMON ORDER FOR AYS 2009-10 & 2010-11. THE ASSESSEE IS IN FURTHER A PPEAL BEFORE US WITH SIMILAR GROUNDS OF APPEAL. SINCE THE FACTS AS WELL AS ISSUES ARE IDENTICAL AS IN AY 2009-10 TAKING THE SAME VIEW T HE APPEAL STAND DISMISSED. 7. IN AY 2013-14 AN ASSESSMENT HAS BEEN FRAMED U/S 143(3) ON 28/03/2016. DURING SURVEY U/S 133A ON 24/01/2013 B OOKS OF ACCOUNTS WERE IMPOUNDED. THE ASSESSEE ADMITTED TO HAVE CARRI ED OUT UNACCOUNTED TRANSACTIONS. UPON EXAMINATION A CONCL USION WAS DRAWN THAT THERE WAS UNACCOUNTED SALES SINCE PURCHASES WE RE MORE THAN SALES. THE ASSESSEE HAD OFFERED AN AMOUNT OF RS.70 LACS REPRESENTING INCOME FROM UNDISCLOSED TURNOVER OF PURCHASE AND SA LES SHORTAGE OF STOCK / CASH ETC. HOWEVER LD. AO ESTIMATED INCOME OF 25% ON UNACCOUNTED PURCHASES AND GROSS PROFIT OF 17.61% ON SHORTAGE OF STOCK. ANOTHER ADDITION OF SHORTAGE OF CASH FOR RS.13.34 L ACS WAS ALSO MADE IN THE HANDS OF THE ASSESSEE. THE ACTION OF LD. AO UP ON CONFIRMATION BY LD. CIT(A) IS UNDER CHALLENGE BEFORE US. WE FIND THAT THE DISCREPANCIES FOUND DURING THE COU RSE OF SURVEY PROCEEDINGS REMAINED TO BE EXPLAINED BY THE ASSESSE E TO THE SATISFACTION OF LOWER AUTHORITIES. THE UNACCOUNTED PURCHASES / SALES SHORTAGE OF STOCK AND CASH WERE NOTED DURING THE CO URSE OF SURVEY. THE 6 ONUS TO EXPLAIN THE DISCREPANCIES REMAINED UN-DISCH ARGED. THEREFORE THE ESTIMATIONS AS MADE BY LOWER AUTHORITIES IN OU R CONSIDERED OPINION ARE QUITE FAIR AND REASONABLE AND NO INTERFERENCE I S CALLED FOR. RESULTANTLY THE APPEAL STAND DISMISSED. 8. IN THE RESULT ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED ON 08TH MARCH 2021 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08/03/2021 SR.PS:-JAISY VARGHESE !' #' / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + $- - / DR ITAT MUMBAI 6. ./0 / GUARD FILE / BY ORDER / (DY./ASSTT.REGISTRAR) / ITAT MUMBAI.