Indira Devi Patodia , Kolkata V. ITO, Ward - 44(1), Kolkata , Kolkata

ITA 1031/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6933 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD ALTAF HUSSAIN
• Keywords: Bogus purchase; Search and seizure; Accommodation entries
• Section: 133(6); 147; 148

Judgement Text

1 ITA NO.1031/KOL/2018 INDIRA DEVI PAT ODIA, AY:2011-12 , B(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL B(SMC) BENCH : KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 1031/KOL/2018 ASSESSMENT YEAR: 2011-12 INDIRA DEVI PATODIA (PAN: AGGPP6618K) VS. INCOME-TAX OFFICER, WD-44(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 28.01.2019 DATE OF PRONOUNCEMENT 01.03.2019 FOR THE APPELLANT SHRI SUBASH AGARWAL, ADVOCATE FOR THE RESPONDENT MD. ALTAF HUSSAIN, ADDL. CIT, SR . DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-13, KOLKATA DATED 23.04.2018 FOR AY 2011-12. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APP EAL IS AGAINST THE ACTION OF LD. CIT(A) IN UPHOLDING THE ACTION OF THE AO IN TREATING THE P URCHASE OF RS.8,48,400/- FROM M/S. MAYUR EXPORTS AS BOGUS. 3. BRIEF FACTS OF THE CASE AS NOTED BY THE AO IS TH AT A SEARCH AND SEIZURE OPERATION OF BHANWARILAL JAIN GROUP CONDUCTED ON 03.10.2014 HAD ESTABLISHED THAT M/S. MAYUR EXPORTS MANAGED BY BHAWANLAL JAIN GROUP USED TO PROVIDE AC COMMODATION ENTRIES OF PURCHASES AND THE ASSESSEE WAS ONE OF THE BENEFICIARY, SO THE ASSESSMENT OF THIS YEAR WAS REOPENED U/S. 148 READ WITH SEC. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE AO NOTED THAT ASSESSEE IS THE PROPRIETOR OF M/S . INDIRA JEWELS AND AS PER THE INFORMATION HE HAD RECEIVED THAT ASSESSEE HAS MADE BOGUS PURCHASE TO THE TUNE OF RS.8,48,400/- FROM M/S. MAYUR EXPORTS, HE ISSUED NO TICE U/S. 133(6) OF THE ACT TO M/S. 2 ITA NO.1031/KOL/2018 INDIRA DEVI PAT ODIA, AY:2011-12 MAYUR EXPORTS. AND ACKNOWLEDGES THAT HE RECEIVED RE PLY FROM M/S. MAYUR EXPORTS WHEREIN THE COPY OF LEDGER OF M/S. INDIRA JEWELS IN THE BOO KS OF M/S. MAYUR EXPORTS AND THE BANK ACCOUNT OF THE RELATED PERIOD WAS FORWARDED TO HIM. ACCORDING TO AO, DESPITE HIM ASKING THE SAID M/S. MAYUR EXPORTS TO PRODUCE COMPLETE STA TEMENT OF ALL BANK ACCOUNTS, THE SAME WAS NOT PRODUCED AND SINCE THE PARTY HAS PRODUCED T HE STATEMENT OF ITS BANK ACCOUNT FOR THE PERIOD FROM 17.06.2010 TO 22.06.2010 ONLY THE AO WA S OF THE OPINION THAT THE TRANSACTION IS NOT GENUINE AND HELD THAT THE PURCHASES CLAIMED BY THE ASSESSEE FROM M/S. MAYUR EXPORTS WAS TREATED AS BOGUS TRANSACTION AND THE SAME EXPEN DITURE WAS DISALLOWED, THUS, MAKING AN ADDITION OF RS.8,48,400/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO CONFIRM THE SAME. AGGRI EVED, THE ASSESSEE IS BEFORE US. 4. I HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I NOTE THAT THE ASSESSEE IS A LADY WHO CARRI ES ON THE BUSINESS OF SALE OF DIAMOND AND JEWELLERY MADE OF GOLD, GOLD COINS AND PRECIOUS ST ONES IN THE CAPACITY AS PROPRIETOR OF M/S. INDIRA JEWELS. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD CONDUCTED TOTAL SALE OF RS.45,55,541/- AND THE TOTAL PURCHASES DURING THE Y EAR WAS TO THE TUNE OF RS.72,79,841/-. IT WAS BROUGHT TO MY NOTICE THAT THE TRANSACTIONS IN R ESPECT OF PURCHASE AS WELL AS SALE HAS BEEN DULY ACCOUNTED FOR BY PROPER INVOICES WHICH IS SUBJ ECTED TO VAT. I NOTE THAT THE ASSESSMENT OF THE ASSESSEE WAS REOPENED BY THE AO A FTER GETTING SOME INFORMATION ON THE SEARCH CONDUCTED ON 03.10.2014 IN THE CASE OF BHAWA NLAL JAIN GROUP AT MUMBAI. SINCE THE ASSESSEE HAD PURCHASED SOME GOODS FROM M/S. MAYUR E XPORTS OF THE GROUP WHICH WAS SEARCHED AND IT WAS FOUND THAT THEY WERE INVOLVED I N PROVIDING ACCOMMODATION ENTRIES, THE AO REOPENED THE ASSESSMENT AND ISSUED NOTICE U/S.13 3(6) OF THE ACT WHICH WAS DULY REPLIED BY M/S. MAYUR EXPORTS CONFIRMING THE TRANSACTION AN D ALSO GIVING THE LEDGER COPY OF M/S. INDIRA JEWELS IN ITS BOOKS AND THE RELEVANT BANK ST ATEMENT IN RESPECT TO THE TRANSACTION. DESPITE THE CONFIRMATION FROM M/S. MAYUR EXPORTS, T HE AO DID NOT ACCEPT THE TRANSACTION AS GENUINE AND TREATED THE ENTIRE EXPENSES CLAIMED BY ASSESSEE AS PURCHASE WAS HELD TO BE BOGUS AND ENTIRE AMOUNT WAS ADDED IN THE HANDS OF A SSESSEE. I AM UNABLE TO COUNTENANCE SUCH AN ACTION OF THE AO FOR THE SIMPLE REASON THAT THOUGH THE AO DOUBTED THE PURCHASE HE HAS ACCEPTED THE SALES. I NOTE THAT ALL THE PURCHA SES AND SALES ARE RECORDED REGULARLY IN THE 3 ITA NO.1031/KOL/2018 INDIRA DEVI PAT ODIA, AY:2011-12 BOOKS AND THE PURCHASES WERE TAKEN INTO ACCOUNT AND CHARGED TO THE P&L ACCOUNT. THEREFORE, THE ONLY INFERENCE THAT CAN BE DRAWN IS THAT THE GOODS PURCHASED FROM M/S. MAYUR EXPORTS HAS ALSO FORMED PART OF THE GOODS WH ICH HAVE BEEN SOLD OR LYING IN THE STOCK. THE AO CANNOT DISALLOW THE PURCHASES WITHOU T REDUCING EITHER THE SALES OR THE STOCK BY A MATCHING SUM. I NOTE THAT M/S. MAYUR EXPORTS H AS CONFIRMED THAT THE ASSESSEE HAVING PURCHASED THE GOODS FROM IT FOR RS.8,48,400/-. SO, IT CANNOT BE HELD AS BOGUS ONLY ON THE STRENGTH OF THE INVESTIGATION WING REPORT AFTER SEA RCH ON BHANWARILAL JAIN GROUP. IN CASE IF THE AO WAS NOT SATISFIED WITH THE CONFIRMATION FROM M/S. MAYUR EXPORTS, THEN AO OUGHT TO HAVE PROVIDED THE ADVERSE MATERIAL IF ANY IN HIS PO SESSION TO THE ASSESSEE AND IN CASE AO WAS RELYING ON SEC. 132(4) STATEMENT OF THIRD PARTY , THEN ASSESSEE SHOULD HAVE BEEN GIVEN AN OPPORTUNITY TO CROSS-EXAMINE. MOREOVER, WHEN THE A O HAS ACCEPTED THE SALE FIGURE SHOWN BY THE ASSESSEE, THEN AO CANNOT UNILATERALLY DISALL OW THE EXPENSES INCURRED BY THE ASSESSEE FOR PURCHASES. SO, THE ENTIRE PURCHASE CANNOT BE A DDED AND ONLY THE PROFIT EMBEDDED IN THE SALE CAN AT THE BEST BE ADDED. I NOTE THAT THE ASS ESSEE HAS SHOWN THE GROSS PROFIT @ 10.25%. RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN A SIMILAR CASE REPORTED IN CIT VS. BHOLANATH POLY FAB PVT. LTD. 355 ITR 290 (GUJ.) AND CIT VS. SIMIT P. SHETH 356 ITR 451 (GUJ.), I CONSIDER THE GP @ 15% WOULD BE REASON ABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, I DIRECT THE AO TO DELETE THE ADDITION AND TO COMPUTE GP @ 15% THUS, THIS GROUND OF APPEAL OF ASSESSEE IS PARTLY ALLOWED . 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH, 2019. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 1 ST MARCH, 2019 JD.(SR.P.S.) 4 ITA NO.1031/KOL/2018 INDIRA DEVI PAT ODIA, AY:2011-12 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SM. INDIRA DEVI PATODIA, C/O, SUBASH AGARWAL & ASSOCIATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-700 069. 2 RESPONDENT ITO, WARD-44(1), KOLKATA. 3. 4. CIT(A)-13, KOLKATA(SENT THROUGH E-MAIL) CIT, KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR