ITO-20 (2)(4), MUMBAI v. M/S NATIONAL ENGINEERING WORKS, MUMBAI

ITA 5196/MUM/2019 | 2009-2010
Pronouncement Date: 05-03-2021 | Result: Dismissed

Appeal Details

RSA Number 519619914 RSA 2019
Assessee PAN AAAFN0629G
Bench Mumbai
Appeal Number ITA 5196/MUM/2019
Duration Of Justice 1 year(s) 6 month(s) 28 day(s)
Appellant ITO-20 (2)(4), MUMBAI
Respondent M/S NATIONAL ENGINEERING WORKS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted SMC
Tribunal Order Date 05-03-2021
Last Hearing Date 04-03-2021
First Hearing Date 04-03-2021
Assessment Year 2009-2010
Appeal Filed On 07-08-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5196/MUM/2019 ASSESSMENT YEAR: 2009-10 ITO-20(2)(4) ROOM NO. 220 2 ND FLOOR PIRAMAL CHAMBERS LALBAUG PAREL MUMBAI-400012. VS. M/S NATIONAL ENGINEERING WORKS 19 ATLAS MILLS COMPOUND OPP. REAY ROAD MUMBAI-400 008 PAN NO. AAAFN 0629 G APPELLANT RESPONDENT REVENUE BY : MR. SANJAY J. SETHI DR ASSESSEE BY : NONE DATE OF HEARING : 04/03/2021 DATE OF PRONOUNCEMENT : 05/03/2021 ORDER PER N.K. PRADHAN A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-32 MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE I NCOME TAX ACT 1961 (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 04.03.2021 NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE BENCH ON THE ABOVE DATE. AS THERE IS NON-COMPLIANCE BY THE A SSESSEE WE ARE PROCEEDING TO DISPOSE OFF THIS APPEAL AFTER EXAMINI NG THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL RE PRESENTATIVE (DR). ITA NO. 5196/M/2019 NATIONAL ENGINEERING 2 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N LAW THE LD. CIT(A)HAS ERRED IN GRANTING RELIEF OF RS.5 39 483/- BY RESTRICTING THE ADDITION TO 6% OF THE ALLEGED BOGUS PURCHASE FROM HAWALA PARTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N LAW THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ONUS IS ON THE ASSE SSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS AND THE TRUE NATURE OF THE PURCHASE TRANSACTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N LAW THE LD. CIT(A)HAS ERRED IN NOT CONSIDERING THE FACT THAT THE HAWALA DEALERS ADMITTED ON OATH BEFORE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIA L TO ANYBODY AND ASSESSES FAILED TO PRODUCES SUCH PARTIES AT ASSESSMENT STAGE THOUGH SPECIFICALLY ASKED BY THE A.O. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N LAW THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT PURCHASES WERE MA DE FROM SOME OTHER PARTIES WHICH WERE NOT RECORDED IN BOOKS OF ACCOUNTS AND ON LY ACCOMMODATION BILLS WERE OBTAINED FROM HAWALA PARTIES AND THEREBY ATTRA CTING PROVISIONS OF SECTION 40A(3). 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009-10 ON 0 9.09.2009 DECLARING TOTAL INCOME OF RS.9 36 648/-. THE RETURN WAS PROCE SSED U/S 143(1) OF THE ACT. ON RECEIPT OF INFORMATION FROM THE SALES TAX D EPARTMENT GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD OBTAINED ACCOM MODATION ENTRIES AMOUNTING TO RS.82 99 742/- BY MAKING BOGUS PURCHAS ES FROM FOUR PARTIES THE AO RE-OPENED THE ASSESSMENT BY ISSUING NOTICE U /S 148 OF THE ACT. CONSIDERING THE FACTS OF THE CASE AND ALSO OBSERVIN G THAT THE ASSESSEE FAILED TO PRODUCE THE SAID PARTIES FOR EXAMINATION THE AS SESSING OFFICER (AO) ESTIMATED THE PROFIT @ 12.5% ON THE DISPUTED PURCHA SES OF RS.82 99 742/- WHICH COMES TO RS.10 37 468/-. 4. IN APPEAL THE LD. CIT(A) VIDE ORDER DATED 15.05 .2019 HELD THAT : ITA NO. 5196/M/2019 NATIONAL ENGINEERING 3 I HAVE CONSIDERED THE ASSESSMENT ORDER THE SUBMIS SIONS AND DETAILED FILED BY THE APPELLANT. I FIND THAT THE AO HAS MADE THE ADDI TION ON THE BASIS OF INFORMATION REGARDING BOGUS PURCHASES F ROM 4 PARTIES AMOUNTING TO RS.82 99 742/- BASED ON THE INVESTIGATION CARRIED OUT BY THE SALES TAX AUTHORITIES. THE APPELLANT HAS SUBMITTED COPY OF BI LLS/ INVOICES ISSUED BY THE ALLEGED PURCHASE PARTIES COPY OF BANK ACCOUNT REFL ECTING PAYMENTS AND THE ASSESSEE'S FINANCIAL STATEMENTS. THE AO HAS HELD TH AT THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE THE SAID PARTIES FOR EXAMINATION/VE RIFICATION OF THE PURCHASES. THE AO HAS ACCORDINGLY TAKEN A VIEW THAT THE PURCHA SES MADE FROM THE SAID PARTIES REMAIN UNVERIFIABLE. HOWEVER CONSIDERING T HAT THE ASSESSEE HAS PROVIDED QUANTITATIVE SUMMARY OF SALES AND PURCHASE S AND THE SUMMARY OF DETAILS OF OPENING AS WELL AS CLOSING STOCK THE AO HAS CONCLUDED THAT THE GOODS PURCHASED HAVE BEEN CONSUMED BY THE APPELLANT FOR M ANUFACTURING OF FINISHED PRODUCT FINALLY SOLD. ACCORDINGLY THE AO HAS MADE AN ADDITION @12.5% OF THE RELEVANT PURCHASES FROM THE SAID PARTIES CONSIDERI NG THE DECISION OF THE ITAT AHMEDABAD IN THE CASE OF DCIT VS. KULUBI STEEL BARO DA. 5.1 THE APPELLANT HAS SUBMITTED THAT IT IS ENGAGED IN THE WORK OF CONTRACTOR OF LABOUR AND SHIP REPAIR AND THE VAT ON THE ITEMS OF IRON STEEL PURCHASED IS 5% AND THE ADDITION MADE @ 12.5% IS NOT JUSTIFIED SINCE TH E NECESSARY EVIDENCES HAVE BEEN PRODUCED AND THE GOODS HAVE BEEN CONSUMED AS N OTED BY THE AO. I FIND THAT THE APPELLANT HAS SHOWN GP RATE OF 16.81% DURING TH E YEAR AS PER AUDIT REPORT SUBMITTED. CONSIDERING THE ABOVE STATED FACTS AND C IRCUMSTANCES OF THIS CASE I AM OF THE CONSIDERED OPINION THAT THE PROFIT ELEMENT O N THE SAID SUSPICIOUS PURCHASES CAN BE FAIRLY ESTIMATED AS 6%. ACCORDINGLY THE ADD ITION MADE BY THE AO IS RESTRICTED TO RS.497 985/-. THE AO IS DIRECTED TO R E-COMPUTE THE TOTAL INCOME AND ALLOW RELIEF ACCORDINGLY. 5. BEFORE US THE LD. DR RELIES ON THE ORDER OF THE AO. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGE D IN THE WORK OF CONTRACT- LABOUR AND SHIP REPAIR. THE VAT ON THE ITEMS OF IRO N AND STEEL PURCHASED IS ITA NO. 5196/M/2019 NATIONAL ENGINEERING 4 5%. THE ASSESSEE HAS SHOWN GP RATE OF 16.81% DURING THE YEAR. HAVING CONSIDERED THE ABOVE FACTS THE LD. CIT(A) HAS RIGH TLY RESTRICTED THE DISALLOWANCE TO 6% OF THE DISPUTED PURCHASES WHICH COMES TO RS.4 97 985/-. WE AFFIRM THE ORDER OF THE LD. CIT(A). 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/03/2021. SD/- SD/- (VIKAS AWASTHY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 05/03/2021 RAHUL SHARMA SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT MUMBAI