SHREE DILIPKUMAR B JAIN, MUMBAI V. ITO 29(1)(3), MUMBAI

ITA 1027/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9161 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: MRS RUCHI M RATHOD
• Keywords: Bogus purchase; Depreciation
• Section: 133(6)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1027 /MUM/ 2017 (ASSESSMENT YEAR 20 09 - 10 ) SHRI DILIPKUMAR B. JAIN PROP. M/S. HEM CHEM CORPORATION, 306 ADMJI BUILDING 413, NARSI NATHA STREET MULUND WEST M UMBAI - 400 080. PAN : AAJPJ3193N VS. ITO - 29(1)(3) C - 10, 1 ST FLOOR PRATYAKSHAKAR BHAWAN, BANDRA KURLA COMPEX BANDRA EAST MUMBAI - 400 051. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MRS. RUCHI M. RATHOD DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 16.10 . 201 7 DATE OF PRONOUNCEMENT 16 . 10 . 201 7 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1.12.2016 PASSED BY THE LEARNED CIT(A) - 40, MUMBAI AND IT RELATES TO A.Y. 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION RELATING TO BOGUS PURCHASES AND ALSO IN PARTIALLY CONFIRMING THE ADDITION RELATING TO PERSONAL EXPENSES. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. T HE ASSESSING OFFICER REOPENED THE ASSESSMENT UPON R ECEIVING INFORMATION THAT THE ASSESSEE HAS MADE PURCHASES FROM CERTAIN DEALERS , WHO WERE FOUND TO BE INDULGING IN ISSUING BOGUS BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIALS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE S U/S. 133(6) OF THE ACT TO TH OS E SUPPLIERS , BUT HE DID NOT RECEIVE ANY REPLY AND IN SOME CASES, THE NOTICES WERE RETURNED BACK UN - SERVED. THE ASSESSEE ALSO DID NOT FURNISH DETAILS OF TRAN SPORT RECEIPTS, OCTROI PAYMENT DETAILS AND OTHER EVIDENCES TO SUBSTA NTIATE THE GENUINENESS OF THE PURCHASES. ACCORDINGLY, THE ASSESSING SHRI DILIPKUMAR B. JAIN 2 OFFICER DISALLOWED 20% OF THE ALLEGED BOGUS PURCHASES AND THE SAME WAS CONFIRMED BY THE LEARNED CIT(A). 3. LEARNED AR SUBMITTED THAT THE ASSESSEE I S DEALING IN CHEMICAL PRODUCTS AND GROSS PROFIT DECLARED IS AROUND 5% ONLY . ACCORDINGLY, SHE SUBMITTED THAT THE DISALLOWANCE MADE AT THE RATE OF 20% IS VERY MUCH ON THE HIGHER SIDE. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RECONCILED PURCHASE S AND SALE S ALSO. 4. ON THE CONTRARY, LEARNED DEPA RTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE DISALLOWANCE MADE OUT OF ALLEGED BOGUS PURCHASE @ 20% APPEARS TO BE ON HIGHER SIDE. I ALSO NOTICED THAT THE ASSESSEE HAS BEEN DECLARING GROSS PROFIT RATE OF AROUND 5% ONLY. LEARNED AR SUBMITTED THAT THE ASSESSEE HAS RECONCILED PURCHASES AND SALE. CONSIDERING ALL THESE FACTS, I AM OF THE VIEW THAT ADDITION SHOULD BE SUSTAINED TO THE EXTENT OF 12.5% OF THE VALUE OF ALLEGE D BOGUS PURCHASES IN ORDER TO TAKE CARE OF POSSIBLE REVENUE LEAKAGES AND THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, I MODIFY THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION TO THE EXTENT OF 12.5% O F THE VALUE OF ALLEGED BOGUS PURCHASES. 6. NEXT ISSUE RELATES TO DISALLOWANCE OF EXPENSES. THE ASSESSING OFFICER MADE DISALLOWANCE OUT OF VARIOUS EXPE NSES ON ADHOC BASIS. DISALLOWANCE OF EXPENSES RELATING TO CONVEYANCE, DEPRECIATION OF CAR, INTEREST ON CA R LOAN, MOTORCYCLE EXPENSES, PETROL EXPENSES, TRAVELLING AND TELEPHONE EXPENSES, WERE MADE @ 40% ON THE REASONING THAT THESE EXPENSES MIGHT INCLUDE PERSONAL EXPENSES ALSO. THE LEARNED CIT(A) DELETED THE DISALLOW A NCE MADE UNDER OTHER HEADS BUT RESTRICTED TH E DISALLOWANCE MADE FROM THE ABOVE SAID EXPENSES TO THE EXTENT OF 15% AS AGAINST 40% MADE BY THE ASSESSING OFFICER. THE ASSESSEE IS STILL AGGRIEVED. SHRI DILIPKUMAR B. JAIN 3 7. I HEARD PARTIES AND PERUSED THE RECORD. I NOTICED THAT THE LEARNED CIT(A) HAS DELETED THE DISALLOWANCE M ADE OUT OF OTHER EXPENSES AND RESTRICTED THE DISALLOWANCE TO 15% AS AGAINST 40% MADE BY THE ASSESSING OFFICER OUT OF CONVEYANCE, DEPRECIATION OF CAR, INTEREST ON CAR LOAN, MOTORCYCLE EXPENSES, PETROL EXPENSES, TRAVELLING AND TELEPHONE EXPENSES . I NOTICED T HAT THE ASSESSING OFFICER HAD MADE DISALLOWANCE MAINLY ON THE REASONING THAT PERSONAL ELEMENT INVOLVED IN INCURRING THESE EXPENSES CANNOT BE RULED OUT . BEFORE ME, THE ASSESSEE COULD NOT FURNISH ANY MATERIAL TO CONTRADICT THE VIEW TAKEN BY THE AO . ALL THESE EXPENSES GENERALLY INVOLVE PERSONAL ELEMENT. I ALSO AGREE WITH THE VIEW TAKEN BY LD CIT(A) THAT DISALLOWANCE @ 40% IS ON THE HIGHER SIDE. HENCE, ON A CONSPECTUS OF THE MATTER, I AM OF THE VIEW THAT THE DISALLOWANCE SUSTAINED BY LD CIT(A) @ 15% ON THE ABOV E SAID EXPENSES IS REASON ABLE . ACCORDINGLY, I CONFIRM THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 16.10 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 16 / 10 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. C IT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI