TUSHAR A. SHAH (HUF), MUMBAI V. ITO WARD - 20(3)(4), MUMBAI

ITA 1001/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9071 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1001/MUM/2017 ASSESSMENT YEAR: 2009 - 10 SHRI TUSHAR A. SHAH ( HUF ) 202, 2 ND FLOOR, SUMER TOWER NO.1, 108, SETH MOTISHA LANE, BUCULLA, MUMBAI - 400010. VS. ITO - 20(3)(4), ROOM NO. 616, 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012. PAN NO. A AAHT9068F APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI RAJAT MITTAL, DR DATE OF HEARING : 23 /08/2017 DATE OF PRONOUNCEMENT : 11/10/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2009 - 10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 2, MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S 14 7 OF THE INCOME TAX ACT 1961, (T HE ACT). ITA NO. 1001/MUM/2017 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESEE READ AS UN DER: - 1. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING RS.25,00,013/ - BEING 4.8% OF RS.5,20,83,614/ - BEING INFLATED PURCHASES I.E. ALLEGED BOGUS PURCHASES AS AGAINST THE ADDITION OF RS.65,10,451/ - BEING 12.5% OF RS.5,20,83,614/MADE BY THE LEARNED ASSESSING OFFICER.YOUR APPELLANT SUBMITS THAT PURCHASES ARE GENUINE AND OUGHT TO BE ALLOWED IN FULL. 2. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS THAT 4.8% ADDITION ON PURCHASES OF RS.5,20,83,614/ - IS EXCESSIVE, UNREASONABLE AND OUGHT TO BE REDUCED SUBSTANT IALLY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESEE HAD TAKEN BOGUS PURCHASE BILLS FROM THE FOLLOWING HAWALA OPERATORS: SR. NO. NAME OF THE PARTY AMOUNT (RS.) 1. DHARMESH TRADING CO. 1,44,50,837/ - 2. PIONEER TRADING CORPORATION 20,925/ - 3. J.B. INTERLINK 12,70,041/ - 4. JINDAL STEEL CORPORATION 19,93,622/ - 5. BRIGHT CORPORATION 18,75,385/ - 6. YASH IMPEX 1,66,03,561/ - 7. MARUTI STEEL TRADERS 13,178/ - 8. KWALITY ENTERPRISES 10,41,638/ - 9. OM ENTERPRISES 1,48,14,638/ - TOTAL 5,20,83,614/ - THE AO NOTED THAT THE ABOVE PARTIES HA D GIVEN THEIR STATEMENTS ON OATH THAT THEY HAD GIVEN ONLY BILLS AND NO ACTUAL TRANSACTION HAD TAKEN PLACE BETWEEN THEM AND THE ASSESSEE. IN VIEW OF THE ABOVE, THE AO REOPENED THE ASSESSMENT AFTER ISSUING NOTICE U/S 148. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ISSUED N OTICE U/S 133(6) TO THE ABOVE PARTIES TO VERIFY THE ITA NO. 1001/MUM/2017 3 PURCHASES. HE FOUND THAT THE NOTICE S ISSUED TO THEM WERE RETURNED BY THE POSTAL AUTHORITIES AS UNSERVED. THEREAFTER, THE AO VIDE LETTER DATED 13.03.2015 ASKED THE ASSESSEE TO PRODUCE THE ABOVE PARTIES A LONG WITH THEIR COPY OF INCOME TAX RETURN, LEDGER ACCOUNT, BANK STATEMENT AND ORIGINAL PAN CARD. IN RESPONSE TO IT, THE ASSESSEE FILED A REPLY BEFORE THE AO WHICH HAS BEEN EXTRACTED AT PARA 7 OF THE ASSESSMENT ORDER. HOWEVER, THE AO WAS NOT CONVINCED WITH SAID EXPLANATION OF THE ASSESSEE AS NO MATERIAL S WERE RECEIVED IN RESPECT OF THESE PURCHASES WHICH COULD HAVE BEEN INCLUDED IN THE CLOSING STOCK. THEREFORE, THE AO ESTIMATED THE PROFIT ELEMENT @ 12.5% ON THE PURCHASE AMOUNT OF RS.5,20,83,614/ - . THE DISALLO WANCE MADE BY THE AO THUS COMES TO RS.65,10,451/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) TOOK INTO ACCOUNT THE FACTS THAT THE ASSESSEE HAD ALREADY RECORDED A G.P. OF 9.36% IN HIS BOOKS AND THE SALES HAD NOT BEEN DOUBTED. THE ASSESSEE OFFERED BEFORE THE LD. CIT(A) ADDITION ON AVERAGE PERCENTAGE OF CURRENT YEAR AND SUBSEQUENT YEAR I.E. 4.8% (CURRENT YEAR G.P. 3.65% + PREVIOUS G.P. 5,94%). THE LD. CIT(A) WAS CONVINCED WITH THE ABOVE SUBMISSION OF THE ASSESSEE AND DIRECTED THE AO TO ESTIMATE PROFIT @ 4.8% ON THE TOTAL ALLEGED BOGUS PURCHASES OF RS.5,20,83,614/ - WHICH WORKS OUT TO RS.25,00,013/ - . THUS THE LD. CIT(A) GAVE RELIEF OF THE BALANCE AMOUNT OF RS.40,10,438/ - TO THE ASSESSEE. 5 . WE FIND THAT THERE IS NO COMPLIANCE BY THE ASSESSEE BEFORE THE TRIBUNAL ON THE DATE FIXED FOR HEARING. ITA NO. 1001/MUM/2017 4 6. THE LD. DR SUBMITS THAT THE LD. CIT(A) HAS CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE AND THEN RESTRICTED THE DISALLOWANCE TO RS.25,00,013/ - . T HEREFORE, IT IS STATED BY HIM THAT THE ASSESSEE SHOULD NOT HAVE FURTHER GRIEVANCE. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND THAT THE ASSESSEE HAD FILED THE FOLLOWING SUBMISSION BEFORE THE LD. CIT(A): WITHOUT PREJU DICE TO THE ABOVE, YOUR HONOUR WOULD APPRECIATE THAT THE GROSS OF 12.5% ADOPTED BY THE AO IS VERY MUCH ON THE HIGHER SIDE. YOUR HONOUR WOULD APPRECIATE THAT THE GROSS PROFIT OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION WAS 3.65% AND FOR THE SUBSEQUENT YEAR, IT WAS 5.94% GIVING AN AVERAGE RATE OF 4.8%. ACCORDINGLY, IF YOUR HONOUR IS NOT INCLINED TO DELETE THE ENTIRE ADDITION, THE GROSS MAY BE RESTRICTED TO 4.8%. THE LD. CIT(A) HAS CONSIDERED THE ABOVE SUBMISSION OF THE ASSESSEE AGAINST THE RELEVANT FA CTS AND DIRECTED THE AO TO ESTIMATE PROFIT @ 4.8% ON THE TOTAL ALLEGED BOGUS PURCHASES OF RS.5,20,83,614/ - WHICH WORKS OUT TO RS.25,00,013/ - . HE HAS GIVEN RELIEF TO THE ASSESSEE OF THE BALANCE AMOUNT OF RS.40,10,438/ - . THERE IS NO DISPUTE THAT AFTER THE NO TICE U/S 133(6) WERE RETURNED BY THE POSTAL AUTHORITIES AS UNSERVED THE AO HAD REQUESTED THE ASSESSEE TO PRODUCE THE ABOVE PARTIES FOR EXAMINATION. HOWEVER, THE ASSESSEE FAILED TO DO SO. THE AO ESTIMATED THE PROFIT @ 12.5% OF THE TOTAL AMOUNT OF PURCHASE S OF RS.5,20,83,614/ - . THE LD. CIT(A) RESTRICTED IT TO 4.8% TAKING INTO ACCOUNT THE SUBMISSION OF THE ASSESSEE THAT THE GROSS PROFIT FOR THE IMPUGNED ASSESSMENT YEAR ITA NO. 1001/MUM/2017 5 WAS 3.65% AND FOR THE SUBSEQUENT YEAR IT WAS 5.94% GIVING AN AVERAGE RATE OF 4.8%. WE FI ND THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ESTIMATE OF 4.8% BY THE LD. CIT(A) ON THE ALLEGED BOGUS PURCHASES OF RS.5,20,83,614/ - IS REASONABLE ONE. WE UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 11/10/2017. SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/10/2017 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./ASSTT. REGISTRAR) ITAT, MUMBAI