Pr. Commissioner Of Income} Tax-19, R v. Kamal Khata, Jj

Digitallysigned byRUSHIKESHRUSHIKESHV PATILV PATILDate:2023.05.0415:06:43+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1016 OF 2018WITH INCOME TAX APPEAL NO. 1026 OF 2018 Pr. Commissioner of Income} Tax-19, R.No. 228, Matru Mandir, }Tardeo Rd, Mumbai – 400 007} ...Appellant Versus Vishwashakti Construction }Room No. 20/21, 1[st] floor, 10,}Atul Niwas, 7[th] Khetwadi Lane,}Mumbai – 400 004}…Respondent **** Mr. Suresh Kumar, Advocate for the Appellant. Ms. Neelam C. Jadhav, Advocate for the Respondent. **** CORAM : DHIRAJ SINGH THAKUR AND KAMAL KHATA, JJ. PRONOUNCED ON : 4[th] MAY, 2023. J U D G M E N T PER DHIRAJ SINGH THAKUR, J.: .Both these appeals have been preferred under Section 260Aof the Income Tax Act, 1961 (“the Act”) challenging the order dated20[th] January, 2017 passed by the Income Tax Appellate Tribunal, 15 & 20 ITXA.1016 & 1026 of 2018.OS.doc Bench ‘F’, Mumbai (“ITAT”), for the assessment years 2009-10 and2010-11. 2.The facts and issues arising in both these appeals areidentical, however, for the sake of deciding the issue, reference isbeing made to the facts in I.T.A. No.1016 of 2018. 3.As many as fve questions of law have been framed for ourconsideration: 4.Briefly stated the material facts in the backdrop of which thepresent controversy has arisen, are as under: The Appellant/assessee is a partnership frm engaged in thebusiness of road repairs/construction as an contractor forMunicipal Corporation of Greater Mumbai (M.C.G.M). Return ofincome was fled relevant to the assessment year 2009-10 declaringa total income of Rs.37,04,810/-. The Assessing Offcer (A.O.),during the course of assessment proceedings noticed that theassessee had claimed total purchases of Rs.88,53,059/- fromvarious entities. Information was also received from the Sales TaxDepartment in respect of certain bogus parties. The TIN of the said parties matched with those from whom the purchases were allegedto have been made by the Appellant. Notices under Section 133(6) of the Act were issued by theA.O. to which there was no compliance. The assessee is also statedto have failed to produce the said parties from the aforesaid tenentities. Consequently, the A.O. treated the amount ofRs.88,53,059/- as bogus purchases to inflate the expenditure andadded back the same to the total income which was determined atRs.1,25,57,870/- in its order under Section 143(3) r/w Section 147of the Act, dated 10[th] March, 2014. 5.An appeal was preferred before the CIT(A) by the assessee,who concurred with the A.O. that purchases from the ten parties inquestion were bogus but held that the entire amount of suchpurchases could not be added to the total income and that only theproft element embedded and suppressed in the disputed purchasesbe assessed to income, which he estimated at 12.5%. The CIT(A)accordingly retained the addition to the extent of 12.5% whiledeleting the rest. 6.An appeal was preferred before the ITAT both by the assessee 15 & 20 ITXA.1016 & 1026 of 2018.OS.doc as also the revenue, which was fnally decided by virtue of the orderimpugned dated 20[th] January, 2017, which is impugned in thepresent appeal. The Tribunal upheld the view of the CIT(A) to treatthe purchases from ten parties as bogus and also upheld the viewexpressed by the CIT(A) to sustain the addition to the extent of12.5% of the amount of the disputed purchases relying upon thedecision of Gujarat High Court in the case of CIT V/s. BholanathPoly Fab Pvt. Ltd.[1]. 6.An appeal was preferred before the ITAT both by the assessee 15 & 20 ITXA.1016 & 1026 of 2018.OS.doc as also the revenue, which was fnally decided by virtue of the orderimpugned dated 20[th] January, 2017, which is impugned in thepresent appeal. The Tribunal upheld the view of the CIT(A) to treatthe purchases from ten parties as bogus and also upheld the viewexpressed by the CIT(A) to sustain the addition to the extent of12.5% of the amount of the disputed purchases relying upon thedecision of Gujarat High Court in the case of CIT V/s. BholanathPoly Fab Pvt. Ltd.[1]. In a case involving a similar issue, even this Court in IncomeTax Appeal No. 398 of 2018 decided on 18[th] July, 2022, haddismissed the appeal fled by the revenue on the ground that if theentire amount of purchases were to be held as non-genuinepurchases, then it would not be possible to justify as to how theworks allotted to the assessee for execution by the semiGovernment Agencies, could be completed. 7.Even in the present case the Appellant is a contractor, whohad been allotted a subcontract for carrying out civil works of roadand buildings repairs for which various types of building materialsare stated to have been purchased from several suppliers including 1[2013] 355 ITR 290 (Guj) 15 & 20 ITXA.1016 & 1026 of 2018.OS.doc the ten suppliers, who are alleged to have been providingaccommodation entries. It is not denied that the works allotted hadbeen completed for the concerned agency, which would have beenotherwise impossible, if the entire purchases made by the Appellantwere to be held as non-genuine. In our opinion the order passed by the Tribunal warrants nointerference. No substantial questions of law arise in the presentappeal. This decision shall apply mutatis mutandis to I.T.A. No. 1026of 2018. In the result, both the appeals are, accordingly, dismissed. (KAMAL KHATA, J.) (DHIRAJ SINGH THAKUR, J.)