NISHIGANDHA POLYMERS P.LTD, MUMBAI v. ITO 2(2)(3), MUMBAI

ITA 5017/MUM/2015 | 2009-2010
Pronouncement Date: 01-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 501719914 RSA 2015
Bench Mumbai
Appeal Number ITA 5017/MUM/2015
Duration Of Justice 2 year(s) 23 day(s)
Appellant NISHIGANDHA POLYMERS P.LTD, MUMBAI
Respondent ITO 2(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 01-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 01-11-2017
Assessment Year 2009-2010
Appeal Filed On 09-10-2015
Judgment Text
ITA.NO.5261 & 5017/MUM/2015 NISHIGANDHA POLYMERS PRIVATE LIMITED ASSESSMENT YEAR-2009-10 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.5261/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 2(2)(3) R.NO.542 AAYAKAR BHAVAN M.K.ROAD MUMBAI-400 020 / VS. NIS HIGANDHA POLYMERS PRIVATE LT D 3 RD FLOOR RUSTOM BUILDING 29 VEER NARIMAN ROAD MUMBAI-400 023 ! ./ ./PAN/GIR NO. AAACN-6044-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) & ./I.T.A. NO.5017/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) NISHIGANDHA POLYMERS PRIVATE LTD 3 RD FLOOR RUSTOM BUILDING 29 VEER NARIMAN ROAD MUMBAI-400 023 / VS. INCOME TAX OFFICER 2(2)(3) R.NO.542 AAYAKAR BHAVAN M.K.ROAD MUMBAI-400 020 ! ./ ./PAN/GIR NO. AAACN-6044-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : BHUPENDRA KARKHAN IS LD.AR RE VENUE BY : SUMAN KUMAR LD. DR / DATE OF HEARING : 26/10/2017 / DATE OF PRONOUNCEMENT : 01/11/2017 ITA.NO.5261 & 5017/MUM/2015 NISHIGANDHA POLYMERS PRIVATE LIMITED ASSESSMENT YEAR-2009-10 2 / O R D E R PER BENCH 1. THESE ARE CROSS APPEALS BY ASSESSEE AS WELL AS R EVENUE FOR ASSESSMENT YEAR [AY] 2009-10 WHICH CONTEST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-5 [CIT(A)] MU MBAI APPEAL NO. IT-10/14-15/17/15-16 ORDER DATED 07/08/2015 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER 2(2)(3) MUMBAI ON 10/02/2014 U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT 1961 . THE REGISTRY HAS NOTED THAT THE APPEAL OF THE REVEN UE IS DELAYED BY 31 DAYS. HOWEVER UPON PERUSAL OF AUTHORIZATION MEMO DATED 05/11/2015 PLACED ON RECORD IT IS NOTED THAT CORRECT DATE OF COMMUNICATION OF IMPUGNED ORDER IS 15/09/2015 WHICH IS WRONGLY WRITT EN AS 07/08/2015 IN FORM NO.36 AND THEREFORE PRIMA FACIE THE APPEAL IS IN ORDER AND MOREOVER THE ASSESSEE HAS NOT RAISED ANY OBJECTION AGAINST THE SAME. FURTHER THE ASSESSEE HAS WITHDRAWN THE GROUND RELA TING TO VALIDITY OF REASSESSMENT PROCEEDINGS DURING HEARING BEFORE US AND HENCE THE SAME IS TREATED AS NOT PRESSED. THE ONLY DISPUTE IN VOLVED IN THE APPEAL IS ESTIMATED ADDITION AGAINST CERTAIN ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED AS IMPORTER & TRADER OF SYNTHETIC RUBBER & ALLIED PRODUCTS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 10/02/2014 WHERE THE INCOME OF THE ITA.NO.5261 & 5017/MUM/2015 NISHIGANDHA POLYMERS PRIVATE LIMITED ASSESSMENT YEAR-2009-10 3 ASSESSEE WAS DETERMINED AT RS.66 08 700/- AFTER CER TAIN ADDITIONS OF ALLEGED BOGUS PURCHASES F OR RS.49 65 480/-. THE ORIGINAL RETURN WAS FILED ON 24/09/2009 AT RS.16 43 224/- WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION O F CERTAIN 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.71 77 726/- FROM ELEVEN SUCH PARTIES. CONSEQUENT LY NOTICE U/S 148 DATED 22/02/2013 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). 2.3 THE ASSESSEE SUBMITTED LEDGER EXTRACTS INVOICES BANK STATEMENTS EVIDENCING PAYMENT TO SUPPLIERS BUT COULD NOT SUBSTANTIATE DELIVERY THEREOF. THE LD. AO NOTED THAT THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASE TRANSACTIONS B Y PRODUCING ANY OF THE SUPPLIERS AND THEREFORE TREATED THE SAME AS NO N-GENUINE PURCHASES. FINALLY LD. AO WORKED OUT PEAK ADDITION S AGAINST THESE PURCHASES AT RS.49 65 480/- AND ADDED THE SAME TO T HE INCOME OF THE ASSESSEE. 3. AGGRIEVED THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 07/08/20 15 WHERE THE LD. CIT(A) RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CIT VS. SIMIT P.SHETH [38 TAXMANN.COM 385] RESTRICTED THE ADDITIONS TO 12.5% OF ALLEGED BOGUS PURCHASES. AGGRIEVED THE REVENUE AS WELL AS ASSESSEE IS IN APPEAL BEFORE US. ITA.NO.5261 & 5017/MUM/2015 NISHIGANDHA POLYMERS PRIVATE LIMITED ASSESSMENT YEAR-2009-10 4 4. THE LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTEN TION TO THE FACT THE PURCHASES WERE BACKED BY INVOICES AND THE PAYME NTS WERE THROUGH BANKING CHANNELS. MOREOVER COMPLETE QUANTITATIVE R ECONCILIATION OF SALE PURCHASE AND STOCK WAS AVAILABLE ON RECORD AND HENC E THE IMPUGNED ADDITIONS WERE NOT JUSTIFIED. THE LD. AR IN THE AL TERNATIVE PLEADED FOR SOME REASONABLE ESTIMATION AGAINST THE SAME. 5. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACING RELIAN CE ON THE STAND OF LD. AO CONTENDED THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF IMPUGNED PURCHASES AND DESPITE THAT LD. AO RESTRICTED THE IMPUGNED ADDITIONS TO PEAK OF PURCHASES WHICH W AS QUITE FAIR AND REASONABLE. OUR ATTENTION WAS DRAWN TO THE FACT THA T THE ASSESSEE FAILED TO PROVE THE ACTUAL DELIVERY OF MATERIAL. 6. 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 OF MATERIAL SINCE THE ASSE SSEE WAS ENGAGED IN MATERIAL INTENSIVE BUSINESS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED OR DISTURBED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES AND QUANTITATIVE RECONCILIATION WAS AVA ILABLE ON RECORD. AT THE SAME TIME THE ASSESSEE COULD NOT PRODUCE ANY O F THE SUPPLIERS TO CONFIRM THE TRANSACTION AND ALSO COULD NOT PROVE AC TUAL DELIVERY OF MATERIAL. THEREFORE IN SUCH A SITUATION THE ADDIT ION WHICH COULD BE MADE WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES WHICH LD. CIT(A) HAS RIGHTLY DONE ITA.NO.5261 & 5017/MUM/2015 NISHIGANDHA POLYMERS PRIVATE LIMITED ASSESSMENT YEAR-2009-10 5 SO. HOWEVER KEEPING IN VIEW OVERALL FACTS AND CIRC UMSTANCE AND NATURE OF ASSESSEES BUSINESS WE RESTRICT THE IMPUGNED AD DITIONS TO 10% OF ALLEGED BOGUS PURCHASES OF RS. 71 77 226/- WHICH COMES TO RS.7 17 723/-. THE ORDER OF LD. CIT(A) STANDS MODI FIED TO THAT EXTENT. 7. RESULTANTLY THE REVENUES APPEAL STANDS DISMISS ED WHEREAS 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