DEEPESH H. JANANI, MUMBAI V. ITO 25(2)(3), MUMBAI

ITA 1015/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9069 (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
• Assessee Lawyers: S M BANDI
• Keywords: Bogus purchase; Reassessment proceedings
• 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. 1015 /MUM/2017 ASSESSMENT YEAR: 2009 - 10 SHRI DEEPESH HASMUKH JANANI , 6, MEGHDOOT SOCIETY 6 TH GULMOHAR CROSS ROAD, JVPD SCHEME MUMBAI - 400049 VS. ITO - 25(2)(3) AAYAKAR BHAVAN, MUMBAI. PAN NO. A ABPJ5027D APPELLANT RESPONDENT ASSESSEE BY : SHRI S.M. BANDI, AR 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 COMMISS IONER OF INCOME TAX (APPEALS) - 37 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT 1961, (T HE ACT). ITA NO. 1015/MUM/2017 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AS WELL AS ON FACTS IN DISALLOWING THE ADDITION OF RS.9,30,930/ - BY ESTIMATING 12.5% AS PROFIT ELEMENT ON THE ALLEGED BOGUS PURCHASE FROM FOUR PARTIES AMOUNTING TO RS.74,47,440/ - . 2. THE APPELLANT HUMBLY PRAYS THAT THE ADDITION MADE BY THE LD. A.O. & PARTLY CONFIRMED BY LD. CIT(A) MAY PLEASE BE DELETED AND RELIEF BE GRANTED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE S ALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD AVAILED BOGUS PURCHASE BILLS FROM THE FOLLOWING PARTIES: SR. NO. NAME OF THE PARTY AMOUNT 1. KESAR ENTERPRISES RS.28,61,300 2. SUNRISE ENTERPRISES RS.7,40,740 3. COSMOS ENTERPRISES RS.17,82,300 4. AMAR ENTERPRISE RS.20,63,100 RS.74,47,440 IN VIEW OF THE ABOVE, THE AO RECORDED THE REASONS AND THEN REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148. DURING THE COURSE OF REASSESSMENT PROCEEDINGS , THE AO ISSUED NOTICE U/S 133(6) TO THE ABOVE PARTIES TO VERIFY THE GENUINENESS OF PURCHASES. HOWEVER, THE LETTERS SEN T BY HIM WERE RETURNED BACK BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN. THEREAFTER, THE AO REQUESTED THE ASSESSEE TO GIVE THE L ATEST ADDRESS/WHEREABOUTS OF THE PARTIES AND PRODUCE THEM BEFORE HIM FOR EXAMINATION. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE PURCHASES ITA NO. 1015/MUM/2017 3 MADE FROM THE ABOVE PARTIES WERE GENUINE AND CLAIMED THAT THE PAYMENTS TO THEM WERE MADE THROUGH CHEQUE. THE ASSES SEE ALSO SUBMITTED BEFORE THE AO COPIES OF INVOICE BILLS, LEDGER EXTRACTS AND BANKS STATEMENTS TO SUBSTANTIATE HIS PURCHASES. HOWEVER, THE ASSESSEE COULD NOT GIVE THE LATEST ADDRESS/WHEREABOUTS OF THE ABOVE PARTIES. HE ALSO FAILED TO PRODUCE THEM BEFORE THE AO FOR EXAMINATION. THE AO OBSERVED THAT SINCE THE ASSESSEE COULD NOT FILE WHEREABOUTS OF THE ABOVE PARTIES, NO RELIANCE COULD BE PLACED ON THE LEDGER ACCOUNT SUBMITTED BY HIM. AS THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS CAST UPON HIM TO PRO VE THE GENUINENESS OF PURCHASES, THE AO ESTIMATED THE PROFIT @ 25% OF THE ABOVE PURCHASES OF RS.74,47,440/ - . THE DISALLOWANCE MADE BY HIM THUS COMES TO RS.18,61,860/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) . WE FIND THAT THE LD. CIT(A), TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE ESTIMATED THE PROFIT @ 12.5% ON THE ABOVE PURCHASES OF RS.74,47,440/ - . THE DISALLOWANCE THUS COME TO RS.9,30,930/ - IN PLACE OF RS.18,61,860/ - MADE BY THE AO. 5. BEF ORE US, THE COUNSEL OF THE ASSESSEE FILES COPIES OF LETTERS/SUBMISSIONS MADE B EFORE THE AO AND THE LD. CIT(A). HE RELIES ON THE ORDER OF THE ITAT F BENCH, MUMBAI IN THE CASE OF M/S GEOLIFE ORGANICS VS. ACIT (ITA NO. 3699/MUM/2016) AND OTHERS. ITA NO. 1015/MUM/2017 4 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). HE FURTHER SUBMITS THAT THE ESTIMATION OF PROFIT @ 12.5% BY THE LD. CIT(A) IS THE MOST REASONABLE ONE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING A PROPRIETORSHIP CONCERN IN THE NAME AND STYLE M/S MIDAS MARKETING INC. IN THE CASE OF M/S GEOLIFE ORGANICS (SUPRA) RELIED ON BY THE LD. COUNSEL, THE ASSESSEE WAS ENGAGED IN THE BUSINES S OF TRADING IN FERROUS AND NON - FERROUS METALS UNDER THE PROPRIETARY CONCERN NAMELY M/S ANKUR STEEL & ENGINEERING COMPANY . HAVING CONSIDERED THE NATURE OF BUSINESS MENTIONED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CASE OF THE ASSESSEE IS DISTINGUISHABLE FROM THE ABOVE ORDER OF THE TRIBUNAL RELIED ON BY THE LD. COUNSEL. COMING TO THE MERIT OF THE CASE, WE FIND THAT THE ASSESSEE FAILED TO FILE BEFORE THE AO THE LATEST ADDRESS/WHEREABOUTS OF THE PARTIES FROM WHOM THE PURCHASES WERE CLAIMED TO HAVE BEEN MADE. HE ALSO FAILED TO PRODUCE BEFORE THE AO THE SAID PARTIES FOR EXAMINATION. THE AO HAS RIGHTLY OBSERVED THAT NO RELIANCE COULD BE PLACED ON THE LEDGER ACCOUNT SUBMITTED BY THE ASSESSEE AS HE FAILED TO FILE EVEN THE LATEST ADDRESS OF THE S AID PARTIES. ITA NO. 1015/MUM/2017 5 WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY REDUCED THE ESTIMATION OF PROFIT MADE BY THE AO FROM 25% TO 12.5% AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. WE UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT , THE APPEAL IS DISMISSED. ORDER PRONOUNCED 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