SUN STAR ADVERTINSING P.LTD, THANE v. ACIT CIR 3, THANE

ITA 3598/MUM/2017 | 2010-2011
Pronouncement Date: 02-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 359819914 RSA 2017
Assessee PAN AAICS8518C
Bench Mumbai
Appeal Number ITA 3598/MUM/2017
Duration Of Justice 5 month(s) 15 day(s)
Appellant SUN STAR ADVERTINSING P.LTD, THANE
Respondent ACIT CIR 3, THANE
Appeal Type Income Tax Appeal
Pronouncement Date 02-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 02-11-2017
Assessment Year 2010-2011
Appeal Filed On 17-05-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI D.T. GARASIA JUDICIAL MEMBER ITA NO.3598/M/2017 ASSESSMENT YEAR: 2010-11 M/S. SUN N STAR ADVERTISING PVT. LTD. D-303 ANANT LAXMI CHAMBER GOKHALE ROAD NAUPADA THANE 406 602 PAN: AAICS8518C VS. ACIT- CIRCLE-3 ASHAR IT PARK 6 TH FLOOR WAGLE ESTATE ROAD NO.16-Z THANE (W)-400 604 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI JAYANT K. BHATT A.R. REVENUE BY : SMT. N. HEMALATHA D.R. DATE OF HEARING : 08.08.2017 DATE OF PRONOUNCEMENT : 02.11.2017 O R D E R PER D.T. GARASIA JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 27.02.2017 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF OUTDOOR ADVERTISING THROUGH DISPLAY HOARDINGS AND ELECTRONIC MEDIA. DURING THE YEAR THE ASSESSING OF FICER (HEREINAFTER REFERRED TO AS THE AO) FOUND THAT ASSESSEE HAD MADE BOGUS PURCHASES FROM FOLLOWING PARTIES: ITA NO.3598/M/2017 M/S. SUN N STAR ADVERTISING PVT. LTD. 2 SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. M/S. ASIAN STEEL 17 79 751/- 2. M/S. SIDDHIVINAYAK STEEL 13 35 656/- TOTAL 31 15 407/- 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UND ER SECTION 133(6). THEREFORE THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.31 15 407/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE CLAIM BY OBSERVING AS UNDER: 7. . IT IS NOT IN DISPUTE THAT THE APPELLANT COMPANY HA S NOT SUBMITTED STOCK REGISTER AND CONSUMPTION RECORDS BE FORE THE UNDERSIGNED. IT IS THE CASE OF THE APPELLANT COMPANY THAT ALLEGED RAW MATERIAL I.E. STEEL FRAMES/BANNER STANDS WERE CONSUMED IN VARIOUS DISPL AYS/HOARDINGS HOWEVER THIS STATEMENT HAS REMAINED UNSUBSTANTIATED. DURING THE APPELLATE PROCEEDINGS THE COUNSEL OF THE APPELLANT I.E. SHRI SANJEEV BRAHME. CA WAS DIRECTED TO FURNISH QUANTITATIVE DETAILS NAMELY NUMBER OF STANDS/STEEL FRAMES PURCHASED AND DETAILS OF THEIR SALES/LOCATION OF HOARDING/DIS PLAYS. THE CASE WAS ADJOURNED TO 19.01.2007. HOWEVER THERE WAS NON-COMPLIANCE ON THE SAID DATE BY THE COUNSEL OF THE APPELLANT. IN THE INTERESTS OF JUSTI CE ANOTHER NOTICE U/S 250 DATED 31.01.2017 FIXING THE HEARING ON 20.02.2017 W AS ISSUED AND DULY SERVED ON THE APPELLANT COMPANY ON 03.02.2017 HOWEV ER THERE WAS AGAIN NON-COMPLIANCE BY THE APPELLANT AND THE REQUISITE D ETAILS WERE NOT FURNISHED . EVEN AS PER THE TAX AUDIT REPORT (FORM NO.3CD) THE QUANTITATIVE DETAILS HAVE NOT BEEN MAINTAINED AS PER PARA 28 (A) . THE FAADE OF SALE OF THESE STEEL FRAMES/BANNER STANDS THUS STANDS EXPOSE D. THE APPELLANT IS THE END USER OF MATERIAL SO PURCHASED AND NOT A TRADER. MOREOVER IN ABSENCE OF QUANTITATIVE DETAILS THERE IS VALID GROUND TO HOLD THAT THE APPELLANT MUST HAVE INFLATED ITS PURCHASES TO REDUCE THE TAXABLE P ROFITS. IN VIEW OF THESE FACTS THIS IS A CASE WHERE THE ENTIRE CASH HAS BEE N SIPHONED OFF BY DEBITING THE BOGUS PURCHASES. THEREFORE FOLLOWING THE PRINCIPLES LAID DOWN IN THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SRI GANESH RICE MILLS (294 ITR 316) THE ADDITION OF RS.31 15 407/- MADE BY THE AO IS SUSTAINED. THE AO HAS NOT APPLIED THE PROVISIONS OF SECTION 69C OF THE INCOME TAX ACT IN THE PRESENT CASE AS ALLEGED BY THE APPEL LANT COMPANY. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. ITA NO.3598/M/2017 M/S. SUN N STAR ADVERTISING PVT. LTD. 3 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LD. D.R. RELIED UPON THE DECISION OF THE TRIBUNAL AHMEDABAD BENCH IN THE CASES OF SHWETAMBAR STEELS VS. ITO AHMEDABAD AND GA NESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRES ENT CASE SHOW THAT ASSESSEE COULD NOT PRODUCE THE PARTIES FROM WHOM GO ODS ARE STATED TO HAVE BEEN PURCHASED. THE SUPPLIERS WERE FOUND TO BE ENGAGED IN PROVIDING BOGUS BILL WITHOUT ACTUAL DEALING OF GOOD S. IN THIS REGARD THE ASSESSEE HAS STATED THAT THEY HAD SUBMITTED QUA NTITATIVE DETAILS OF STOCK WITH RESPECT OF THE SALES WITH PURCHASES FROM THE PARTIES DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS SUBMIT TED THE DETAIL OF CORRESPONDING SALES IN RESPECT OF THE PURCHASE FROM THE SAID PARTIES. AS MENTIONED ABOVE THE AO HAS NEVER DISPUTED OR EXA MINED THE ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY T HE ASSESSEE WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED T HE SALES RECEIPTS OF THE ASSESSEE AS IT IS THEREFORE THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE ASSESSEE AND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE IS THE PURCHASES FROM T HE PARTIES FROM WHOM BILLS HAVE BEEN TAKEN AND CHEQUES HAVE BEEN IS SUED TO THEM. PURCHASES ARE NOT IN DISPUTE BUT THE PARTIES FROM W HOM PURCHASE ARE SHOWN TO HAVE BEEN MADE ARE DISPUTED AND SUSPICIOUS . THE AO HAD MADE THE ADDITION AS SOME OF THE SUPPLIERS WERE DEC LARED HAWALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD R EASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAK E ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSESSMENT O N SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECORD THE DETAILS OF PAYMENTS BY ACCOUNT PAYEE CHEQUE IT WAS INCUMBENT ON THE AO TO HAVE VERIFIED ITA NO.3598/M/2017 M/S. SUN N STAR ADVERTISING PVT. LTD. 4 THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE A ND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS A NY IMMEDIATE CASH WITHDRAWAL FROM THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED. THERE WAS NO DETAILED INVESTIGAT ION MADE BY THE AO HIMSELF. IT IS ALSO FOUND THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY REFLECTED IN TH E BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BACK FROM THE SUPPLIERS. MERELY BECAU SE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION L ETTERS WERE NOT FURNISHED ONE CANNOT CONCLUDE THAT THE PURCHASES W ERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISIO N OF NIKUNJ EXIMP ENTERPRISES VS. CIT 216 TAXMAN 171 (BOM). TO THIS E XTENT I AM OF THE VIEW THAT IF THE ASSESSEE HAS FULFILLED ITS ONU S OF MAKING THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT CANNOT BE PRESUMED THAT SUPPLIER WERE BOGUS SIMP LY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADDRESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN THE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF SCRUTINY PROCEEDINGS. THE AO HAS NOT BROUGHT ANY MA TERIAL ON RECORD TO SHOW THAT THERE IS SUPPRESSION OF SALES. IT IS B ASIC RULE OF ACCOUNTANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PUR CHASE FROM SALES. ESTIMATION OF PROFIT RANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S SIMIT P SHETH 356 ITR 451 (GUJ.). RESPECTFULLY FOLLOWING THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMAN ITA NO.3598/M/2017 M/S. SUN N STAR ADVERTISING PVT. LTD. 5 385 (GUJ) AND KEEPING IN VIEW OF THE GP ALREADY DEC LARED @5% I DIRECT THE AO TO TAKE THE GP @ 7.5% WHICH COMES TO RS.2 33 655/-. 6. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.11.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI DATED: 02.11.2017. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.