Anant Plastic Industries Mumbai v. Income Tax Officer Ward 30 1 1 Mumbai

In The Income Tax Appellate Tribunal Smc Bench Mumbai Before Shri Shamim Yahya Accountant Member I T A No 4782 Mum 2017 Assessment Year 2009 10 Anant Plastic Industries Ground Floor Seksaria Ind Estate New Complex Chincholi Bunder Road Mala W Mumbai 400 064 Vs Income Tax Officer Ward 30 1 1 C 13 6 Th Floor Pratyakshkar Bhavan Bandra E Mumbai 4 00 051 Pan Gir No Aahfa 6976 E Appellant Respondent Appellant By None Respondent By Ms N Hemalatha Date Of Hearing 10 10 2017 Date Of Pronouncement 18 12 2017 O R D E R Per Shamim Yahya A M T His Appeal By The Assessee Is Directed Against Order Of Ld Commissioner Of Income Tax Appeals 41 Mumbai Dated 05 04 2017 A Nd Pertains To Assessment Year 2009 10 2 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito 2 T He Issue Raised Is That Ld Commissioner Of Income Tax Appeals Err Ed In Upholding The Validity Of Reopening And Sus Taining Disallowance Of 6 Of Bogus Purchases 3 I N This Case As Per The Details Furnished By The Assessee The Assessee A Partnership Firm Is Engaged In The Business Of Trading Of Plastic Powder The Assessee Derives Incomes Under The Head Profits And Gains Of Business Or Profession Only As Per The Information Received From Sales Tax Department The Asse Ssee Has Shown Purchases Of Rs 99 63 200 From The Above Mentioned Parties During The Financial Year Relevant To Assessment Year 2009 10 During The Course Of Investigation The Sales Tax Department Has Found That The Said Concern Were Not Doing Genuine B Usiness Of Purchase And Sales And Merely Indulged In Providing Accommodation Bills To Ascertain The Genuineness Of The Said Purchase Transactions The Notices U S 133 6 Of The I T Act Were Issued To The Above Mentioned Purchase Parties As Submitted B Y The Assessee In His Submissions A The Notices Issued U S 133 6 Were Retruned Unserved By The Postal Authorities Hence A Show Cause Notice Dated 06 2 2015 Was Issued And Duly Served To The Assessee And Requested To Produce These Parties But The As Sessee Failed To Produce The Said Parties Or Submit Documentary Evidences To Prove The Genuineness Of These Purchases The Assessee Submitted Certain Details Such As A Copy Of Audit Report Balance Sheet P L Account For The Assessment Year 2009 10 Purc Hase Statement Of Parties Including Bogus Parties Statement Of Sales Purchases 3 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito As Per Sales Tax Returns Filed With Copies Of Mvat Cst Paid Challans Bank Statement Showing Payments To Bogus Parties Ledger Accoun Ts Etc In Support Of Its Claim B Ut Fa Iled To Produce The Parties Or Such Documents Which Would Prove Genuineness Of The Said Purchases The Assessing Officer Proceeded To Add 6 Of The Bogus Purchase As Undisclosed Income 4 Against The Above Order The Assessee Appealed Before The Ld Comm Issioner Of Income Tax Appeals The Ld Commissioner Of Income Tax Appeals Confirmed The Action Of The Assessing Officer 5 Against The Above Order Of Ld Commissioner Of Income Tax Appeals The Assessee Is In Appeal Before The Itat 6 I Have He Ard Ld Departmental Representative None Appeared On Behalf Of He Assessee Despite Notice 7 As Regards The Reopening Of The Case On A Careful Consideration I Note That In This Case Information Was Received By The Assessing Officer From Dgit Investig Ation Mumbai There Are Some Parties Who Are Engaged In The Hawala Transactions And Are Also Involved In Issuing Bogus Purchase Bills For Sale Of Material Without Delivery Of Goods Which Information Was Based On Information Received By Revenue From Mahar Ashtra Sales Tax Authority Information Was Received That The Assessee Was Beneficiary Of Hawala Accommodation Entries From Entry Providers By Way Of Bogus 4 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito Purchase The Accommodation Entry Provider Has Deposed And Admitted Before The Maharashtra Sales Tax Authority Vide Statement Affidavit That They Were Engaged In Providing Bogus Accommodation Entries Wherein Bogus Sale Bills Were Issued Without Delivery Of Goods In Consideration For Commission These Accommodation Entry Providers On Receipt Of Cheque S From Parties Against Bogus Bills For Sale Of Material Later On Withdrew Cash From Their Bank Accounts Which Was Returned To Beneficiaries Of Bogus Bills After Deduction Of Their Agreed Commission The Assessee Was Stated To Be One Of The Beneficiaries Of These Bogus Entries Of Sale Of Material From Hawala Entry Operators In Favour Of The Assessee Wherein The Assessee Made Alleged Bogus Purchases Through These Bogus Bills Issued By Hawala Entry Providers In Favour Of The Assessee These Dealers Were Surv Eyed By The Sales Tax Investigation Department Whereby The Directors Of These Dealers Have Admitted In A Deposition Vide Statements Affidavit Made Before The Sales Tax Department That They Were Involved In Issuing Bogus Purchase Bills Wi Thout Delivery Of Any Material There Is A List Of Such Parties Wherein The Assessee Is Stated To Be Beneficiary Of Bogus Purchase Bills 8 From The Above I Find That Tangible And Cogent Incriminating Material Were Received By The Ao Which Clearly Showed That The Assess Ee Was Beneficiary Of Bogus Purchase Entries From Bogus Entry Providers Which Formed The Reason To Believe By The Ao That Income Has Escaped Assessment The Information So Received By The Ao Has Live Link With Reason To Believe That Income Has Escaped Asse Ssment On These 5 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito Incriminating Tangible Material Information Assessment Was Reopened At This Stage There Has To Be Prima Facie Belief Based On Some Tangible And Material Information About Escapement Of Income And The Same Is Not Required To Be Proved To The Guilt In This Regard I Refer To The Decision Of The Honble Apex Court In The Case Of Cit A Vs Rajesh Jhaveri Stock Brokers P Ltd 291 Itr 500 Section 147 Authorises And Permits The Assessing Officer To Assess Or Reassess Income Chargeable To L Ax If He Has Reason To Believe That Income For Any Assessment Year Has Escaped Assessment The Word Reason In The Phrase Reason To Believe Would Mean Cause Or Justification If The Ao Has Cause Or Justification To Know Or Suppose Hat Income Had Escape D Assessment It Can Be Said To Have Reason To Believe That An Income Had Escaped Assessment The Expression Cannot Be Read To Mean That The Ao Should Have Finally Ascertained The Fact By Legal Statute With Solicitude For The Public Exchequer With An Inbui Lt Idea Of Fairness To Taxpayers As Observed By The Supreme Court In Central Provinces Managnese Ore Co Ltd V Ito 1991 191 Itr 662 For Initiation Of Action Under Section 147 A As The Provision Stood At The Relevant Time Fulfillment Of The Two Requ Isite Conditions In That Regard Is Essential At That Stage The Final Outcome Of The Proceeding Is Not Relevant In Other Words At The Initiation Stage What Is Required Is Reason To Believe But Not The Established Fact Of Escapement Of Income At The Stage Of Issue Of Notice The Only Question Is Whether There Was Relevant Material On Which A Reasonable Person Could Have Formed A Requisite Belief Whether The Materials Would Conclusively Prove The Escapement Is Not The Concern At That Stage This Is So Because The Formation Of Belief By The Ao Is Within The Realm Of Subjective Satisfaction Ito V Selected Dalurband Coal Co P Ltd 1996 217 Itr 597 Supreme Court Raymond Woollen Mills Ltd V Ito 1999 236 Itr 34 Supreme Court 9 The Above D Iscussion And Precedent From Apex Court Fully Justify The Validity Of Reopening In This Case Further I Find That The Ld Commissioner Of Income Tax Appeals Has Carefully Examined The Issue And Has Properly Appreciated The Issue Hence I Do Not Find Any Infirmity In The Same Accordingly I Uphold The Order Of The Ld Commissioner Of Income Tax Appeals On The Issue Of Reopening Since The Issue 6 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito Has Been Decided On The Basis Of The Honble Apex Court Decision The Other Case Laws Referred By Assessee A Re Not Supporting The Assessees Case 10 As Regards The Merits I Find That Credible And Cogent Information Was Received In This Case By The Assessing Officer That Certain Accommodation Entry Provider Bogus Suppliers Were Being Used By Certain Parties To Obtained Bogus Bills The Assessee Was Found To Have Taken Accommodation Entry Bogus Purchase Bills During The Concerned Assessment Year From Different Parties Based Upon This Information Assessment Was Reopened The Credibility Of Information Relating To Reopening Remains Un Assailed In Such Factual Scenario The Assessing Officer Has Made The Necessary Enquiry The Issue Of Notice To All The Parties Have Returned Unserved Assessee Has Not Been Able To Provide Any Confirmation From Any Of The Party Assessee Has Also Not Been Able To Produce Any Of The Parties Necessary Evidence Relating To Transportation Of The Goods Was Also Not On Record In This Factual Scenario It Is Amply Clear That The Assessee Has Obtained Bogus Purchase Bills Mere Preparat Ion Of Documents For Purchases Cannot Controvert Overwhelming Evidence That The Provider Of These Bills Is Bogus And Non Existent 11 The Sales Tax Department In Its Enquiry Has Found The Parties To Be Providing Bogus Accommodation Entries The Assessin G Officer Also Issued Notices To These Parties At The Addresses Provided By The Assessee All These Notices Have Returned Unserved Assessee Has Not Been Able To Produce Any Of The Parties Neither The 7 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito Assessee Has Been Able To Produce Any Confirmation Fro M These Parties In Such Circumstances There Is No Doubt That These Parties Are Non Existent I Find It Further Strange That Assessee Wants The Revenue To Produce Assessees Own Vendors Whom The Assessee Could Not Produce The Purchase Bills From These N On Existent Bogus Parties Cannot Be Taken As Cogent Evidence Of Purchases In Light Of The Overwhelming Evidence The Revenue Authorities Cannot Put Upon Blinkers And Accept These Purchases As Genuine This Proposition Is Duly Supported By Honble Apex Co Urt Decision In The Case Of Sumati Dayal Vs Cit 1995 214 Itr 801 Sc And Cit Vs Durga Prasad More 1971 82 Itr 540 Sc In The Present Case The Assessee Wants That The Unassailable Fact That The Suppliers Are Non Existent And Thus Bogus Should Be Ignored And Only The Documents Being Produced Should Be Considered This Proposition Is Totally Unsustainable In Light Of Honble Apex Court Decisions 12 I Further Find That Honble Jurisdictional High Court In The Case Of Nikunj Eximp Enterprises In Writ Petition No 2860 Order Dt 18 6 2014 Has Upheld 100 Allowance For The Purchases Said To Be Bogus When The Sales Have Not Been Doubted However The Facts Of That Case Were Different Furthermore The Sales In That Case Were Basically To Government Departments Hence The Ratio From This Decision Is Not Fully Applicable On The Facts Of The Case 13 In These Circumstances The Learned Departmental Representative Has Referred To Honble Gujarat High Court Decision In The Case Of Tax Appeal No 240 Of 2003 In 8 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito The Case Of N K Industries Vs Dy Cit Vide Order Dated 20 06 2016 Wherein 100 Of The Bogus Purchases Was Held To Be Added In The Hands Of The Assessee And Tribunals Restriction Of The Addition To 25 Of The Bogus Purchases Was Set Aside It W As Expounded That When Purchase Bills Have Been Found To Be Bogus 100 Disallowance Was Required The Special Leave Petition Against This Order Along With Others Has Been Dismissed By The Honble Apex Court Vide Order Dated 16 1 2017 14 I Further Note That Honble Rajasthan High Court Has Similarly Taken Note Of Decisions Of The Apex Court On The Issue Of Bogus Purchases In The Case Of Cit Jaipur Vs Shruti Gems In Ita No 658 Of 2009 The Honble High Court Has Referred To The Decision Of Cit Jaipur Vs Aditya Gems D B In Ita No 234 Of 2008 Dated 02 11 2016 Wherein The Honble Court Had Inter Alia Held As Under Considering The Law Declared By The Supreme Court In The Case Of Vijay Proteins Ltd Vs Commissioner Of Income Tax Special Leave To A Ppeal C No 8956 2015 Decided On 06 04 2015 Whereby The Supreme Court Has Dismissed The Slp Confirmed The Order Dated 09 12 2014 Passed By The Gujarat High Court And Other Decisions Of The High Court Of Gujarat In The Case Of Sanjay Oilcake Industries Vs Commissioner Of Income Tax 2009 316 Itr 274 Guj And N K Industries Ltd Vs Dy C I T Tax Appeal No 240 2003 Decided On 20 06 2016 The Parties Are Bound By The Principle Of Law Pronounced In The Aforesaid Three Judgments 15 However I Note Th At This Is Not An Appeal By The Revenue Hence It Will Not Be Appropriate To Take Away The Relief Already Granted By The Revenue To The Assessee Hence I Confirm The Order Of Ld Commissioner Of Income Tax Appeals 9 Ita No 4782 Mum 2017 A Y 2009 10 Anant Plastic Industries Vs Ito 1 6 In The Result This Appeal Filed By The Assessee Stands Dismissed Order Pronounced In The Open Court On 18 12 2017 Sd S Hamim Yahya A Ccountant Member Mumbai Dated 18 12 2017 Roshani Sr Ps Copy Of The Ord Er Forwarded To 1 The Appellant 2 The Respondent 3 The Cit A 4 Cit Concerned 5 Dr Itat Mumbai 6 Guard F Ile By Order Dy Asstt Registrar Itat Mumbai