SURESH HARILAL PANCHAL, MUMBAI V. ITO 31(3)(4), MUMBAI

CO 94/MUM/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2830 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 29-06-2016
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: S S PHADKAR
• Keywords: Bogus purchase; Unexplained expenditure
• Section: 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER , A ND SHRI N.K. PRADHAN , A CCOUNTANT M EMBER ITA NO . 7206 /MUM/20 14 ASSESSMENT YEAR: 2010 - 11 INCOME TAX OFFICER - 31(3)(4), R. NO.706, 7 TH FLOOR, C - 11, PRATAYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 / VS. SHRI SURESH H PANCHAL (PROP. M/S IDEAL DIES & ENGINEERING WROKS), 60/61, NEW AASHIRWAD IND. ESTATE NO.5, RAM MANDIR ROAD, GOREGAON (W), MUMBAI - 400107 ( / REVENUE) ( /ASSESSEE) P.A. NO. AABPP6095 R C.O. NO.94/MUM/2016 (ARISING OUT OF ITA NO .7206/MUM/2014) ASSESSMEN T YEAR: 2010 - 11 SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 2 SHRI SURESH H PANCHAL (PROP. M/S IDEAL DIES & ENGINEERING WROKS), 60/61, NEW AASHIRWAD IND. ESTATE NO.5, RAM MANDIR ROAD, GOREGAON (W), MUMBAI - 400107 / VS. INCOME TAX OFFICER - 31(3)(4), R. NO.706, 7 TH FLOOR, C - 11, PRATAYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 ( /ASSESSEE) ( / REVENUE) P.A. NO. AABPP6095R ITA NO S.5239 & 5240/MUM/2016 ASSESSMENT YEAR: 2009 - 10 & 2011 - 12 SHRI SURESH H PANCHAL (PROP. M/S IDEAL DIES & ENGINEERING WROKS), 60/6 1, NEW AASHIRWAD IND. ESTATE NO.5, RAM MANDIR ROAD, GOREGAON (W), MUMBAI - 400107 / VS. INCOME TAX OFFICER - 31(3)(4), R. NO.706, 7 TH FLOOR, C - 11, PRATAYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400051 ( /ASSESSEE) ( / REVENUE) P.A. NO. AABPP6095R / ASSESSEE BY SHRI S.S. PHADKAR / REVENUE BY SHRI B.S. BIST - DR / DATE OF HEARING : 14 /02 /201 7 / DATE OF ORDER : 14 /0 3 /2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS IN APPEAL FOR ASSESSMENT YEAR 2010 - 11 (ITA NO.7206/MUM/2014), WHEREAS, THE ASSESSEE HAS PREFERRED CROSS OBJECTION (C.O. NO.94/MUM/2016). THE ASSESSEE IS ALSO IN APPEAL FOR ASSESSMENT YEAR 2009 - 10 (ITA SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 3 NO.52 39/MUM/2016) AND FOR ASSESSMENT YEAR 2011 - 12 (ITA NO.5240/MUM/2016), CHALLENGING THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI . 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 (ITA NO.7206/MUM/2014), WHEREIN, THE ADDITION OF RS.55,97,308/ - , MADE ON ACCOUNT UNEXPLAINED PURCHASES FROM M/S SIDDHIVINAYAK STEEL, M/S ASIAN STEEL, M/S O.B. STEEL TRADERS, M/S S.M. STEEL TRADERS, M/S RAVI ENTERPRISES AND M/S METRO HARDWARE WAS DELETED, IGNORING THE FACT THAT THE ADDITION WA S MADE ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT THAT THESE PARTIES ARE NOT DOING ANY GENUINE BUSINESS . IT WAS CONTENDED THAT VERIFICATION WERE CARRIED OUT BY THE ASSESSING OFFICER AND THE NOTICES SENT U/S 133(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WERE RETURNED UNSERVED BY THE POSTAL AUTHORITY. IT WAS ALSO PLEADED THAT THE ASSESSEE DID NOT PROVIDE LATEST ADDRESSES OF THE PARTIES FROM WHOM BOGUS PURCHASES WERE MADE. 2.1. DURING HEARING, THE CRUX OF ARGUMENT ADVANCED BY SHRI B.S. BIST, LD. DR, IS IDENTICAL TO THE GROUND RAISED BY CONTENDING THAT THE ONUS LIES UPON THE ASSESSEE WAS NOT DISCHARGED AND THE CONCERNED PARTIES FROM WHOM PURCHASES WERE CLAIMED TO BE MADE WERE NOT PRODUCED BY THE ASSESSEE. THE ADOPTION OF G.P. BY THE ASSESSING OFFICER WAS DEFENDED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SHRI S.S. PHADKAR, DEFENDED THE CONCLUSION OF THE LD. COMMISSIONER OF SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 4 INCOME TAX (APPEAL). IT WAS EXPLAINED THAT THE NET PROFIT RATE IN SUCH TYPE OF BUSINESS IS 5.7% AND THE GROSS PROFIT IS 21.77%. IT WAS PLEADED BY THE LD. COUNSEL THAT THE GROSS PROFIT MAY BE REDUCED TO 12.5% OF THE TOTAL PURCHASES. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL, AT THE RELEVANT TIME, WAS IN THE BUSINESS OF MANUFACTURING DIES AND ENGINEERING GOODS. FOR MANUFACTURING ACTIVITIES, THE ASSESSEE USED TO PURCHASE STEEL OF VARIOUS SIZES. DURING THE RELEVANT YEAR, THE ASSESSEE SHOWED TUR NOVER OF RS.1,40,65,334/ - AND PURCHASES AT RS.98,61,652/ - AND CONSEQUENTLY RETURNED THE GROSS PROFIT AT 21.77%. THE ASSESSEE DECLARED INCOME OF RS.7,98,680/ - ON 27/09/2010, WHICH WAS ACCOMPANIED BY AUDITED STATEMENT U/S 44AB OF THE ACT. THE ASSESSEE ATTEN DED THE PROCEEDINGS FROM TIME TO TIME. THE LD. ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN DEALERS HAVE CONFESSED BEFORE THE SALES TAX AUTHORITIES THAT THEY WERE CARRYING ON HAWALA BUSINESS AND NO GENU INE TRANSACTION W ERE A FFECTED BY THIS DEALER. THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO CERTAIN DEALERS FROM WHOM THE ASSESSEE CLAIMS TO HAVE PURCHASED STEEL. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE NECESSARY DETAILS INCLUDING THEIR ADDRE SSES FROM WHOM PURCHASES HAVE BEEN MADE. NOTICES WERE ISSUED TO FOLLOWING PARTIES: - SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 5 SL. NO. NAME OF THE PARTY AMOUNT IN RS. 1. M/S SIDDHIVINAYAK STEEL 12,12,005 2. M/S ASIAN STEEL 6,38,742 3. M/S O.B. STEEL TRADERS 25,50,370 4. M/S S.M. STEEL TRADERS 6,74,057 5. M/S RAVI ENTERPRISES 2,49,946 6. M/S METRO HARDWARE 2,72,188 TOTAL 55,97,308 THE NOTICES ISSUED TO THE PARTIES WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. IN THE ABSENCE OF NEW ADDRESSES FROM THE ASSESSEE, T HE LD. ASSESSING OFFICER MADE ADDITION OF RS.55,97,308/ - . 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE ADDITION MADE AS UNEXPLAINED EXPENDITURE FOR ALLEGED BOGUS PURCHASES WAS DELETED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BE FORE THIS TRIBUNAL. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAP OSITION AND ANALYZED, AS MENTIONED EARLIER, THE TURNOVER, BOOKED BY THE ASSESSEE, AS PER PROFIT & LOSS ACCOUNT, IS RS. 1 , 40 , 65 , 3 34/ - SHOWING THE NET PROFIT OF RS. 8,04,51,577/ - , WHICH COMES AFTER DEBITING THE VARIOUS EXPENDITURE. TO VERIFY THE GENUINENESS OF THE CLAIM, NOTICES U/S 133(6) OF THE ACT WERE ISSUED TO CERTAIN PARTIES. IN THE MEANTIME, INFORMATION CAME FROM CERTAIN SUPPLIERS, WHO WERE INDULGED IN PROVIDING ACCOMMODATION BILLS TO VARIOUS SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 6 CUSTOMERS WITHOUT EFFECTING THE RE AL DELIVERY OF GOODS , T HE ASSESSEE HAPPEN S TO BE ONE OF THE BENEFICIARIES OF THE SAID PARTIES / PARTY. WITHOUT GOING TO MUCH DELIBERATION WE FIND THAT THE TRIBUNAL HAD BEEN TAKING CONSISTENT STRAND BY ADOPTING A PARTICULAR GROSS PROFIT RATE IN SUCH TYPE O F CASES WHERE EITHER THE PARTIES ARE NOT TRACEABLE OR THE ASSESSEE HAD BEEN INDULGED IN NON - GENUINE TRANSACTIONS. THE ASSESSEE THOUGHT PRODUCED THE PURCHASE BILLS IN THE FORM OF SAMPLE FOR MAKING THE PURCHASES FROM AFORESAID SIX PARTIES BUT THESE PARTIES W ERE NEITHER PRODUCED NOR ANY CONFIRMATION WAS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. AT THE SAME TIME, THESE PARTIES WERE CLAIMED TO BE REGISTERED WITH THE VAT / CST AUTHORITIES AND VAT HAS BEEN SHOWN TO BE COLLECTED ON THESE TRANSACTIONS. NO USEFUL PURPOSE WILL BE SERVED IN SENDING THESE APPEALS TO THE FILE OF THE ASSESSING OFFICER AS THE PRECIOUS TIME OF THE AUTHORITIES WILL BE WASTED, THEREFORE, CONSIDERING THE TOTALITY OF MATERIAL FACTS, ASSERTION MADE BEFORE US FROM BOTH SIDES IT WILL BE A PPROPRIATE IF THE ADDITION IS MADE @15% OF THE GROSS PROFIT. THE LEARNED ASSESSING OFFICER IS ACCORDINGL Y DIRECTED TO QUANTIFY THE TAX ON ALL THE APPEALS. 3. SO FAR AS, THE CROSS OBJECTION OF THE ASSESSEE (CO.NO.94/MUM/2016 ARISING OUT OF ITA NO.7206/MUM/ 2015) IS CONCERNED, SINCE WE HAVE ADOPTED THE GROSS PROFIT @15%, THEREFORE, THIS CROSS OBJECTION OF THE ASSESSEE IS AUTOMATICALLY DISPOSED OF. SHRI SURESH H. PANCHAL ITA NO.7206/ MUM/2014, CO NO.94/MUM/2016 AND ITA NOS.5239 & 5240/MUM/2016 7 FINALLY, THE APPEALS OF THE ASSESSEE / REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISPOSED OF IN TERMS INDICATED HEREINABOVE. T HIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT T H E CONCLUSION OF THE HEARING ON 14 /02 /2017 . S D/ - SD/ - ( N.K. PRADHAN ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 14/ 0 3 /2017 SHEKHAR, P.S / / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPON DENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //T RUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I,