SHRI VIJENDRA H. JAIN, MUMBAI V. I.T.O. - 20(3)(5), MUMBAI

ITA 1040/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8147 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Corroborative evidences
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 1040 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) SHRI VIJENDRA H. JAIN M/S. NEPTUNE STEEL IMPEX 100, ADESHIR DADY STREET V.P. ROAD, MUMBAI 400 004 PAN ADTPJ8464D . APPELLANT V/S INCOME TAX OFFICER WARD 20 ( 3 ) (5) , MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 0 5 . 12 .2018 DATE OF ORDER 26.12.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 30.11.2017 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10. 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 3 . BRIEFLY THE FACTS ARE, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN 2 SHRI VIJENDRA H. JAIN THE BUSINESS OF TRADING IN FERROUS AND NONFERROUS METALS AND UTENSILS THROUGH HIS PROPRIET ARY CONCERN M/S NEPTUNE STEEL IMPEX. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME OF ` 6,53,900. INITIALLY THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX A CT, 1961 ( FOR SHORT THE ACT ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INVESTIGATION), MUMBAI AND THE SALES - TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT PURCHASES OF ` 1,14,71,027 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE IN THE RELEVANT PREVIOUS YEAR FROM SIX PARTIES ARE NOT GENUINE, SINCE THEY HAVE BEEN IDENTIFIED AS HAWALA OPERATORS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN COURSE OF THE ASS ESSMENT PROCEEDINGS, TO ASCERTAIN THE GENUINENESS OF ASSESSEES CLAIM, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE PARTIES WHO HAVE SUPPOSEDLY SOLD GOODS TO THE ASSESSEE. AS OBSERVED BY THE ASSESSING OFFICER, NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED UNSERVED. THEREFORE, HE CALLED UPON THE ASSESSEE TO PRODUCE THE SELLING DEALERS ALONG WITH THE COPY OF THE INCOME TAX RETURNS, LEDGER ACCOUNTS, BANK STATEMENTS, ORIGINAL PAN CARD ET CETERA. AS OBSERVED BY THE ASSESS ING OFFICER, EXCEPT, FURNISHING THE PURCHASE BILLS AND BANK STATEMENTS INDICATING PAYMENT MADE TO THE CONCERNED PARTIES, THE ASSESSEE COULD NOT FURNISH ANY CONCLUSIVE EVIDENCE TO PROVE THE PURCHASES MADE. 3 SHRI VIJENDRA H. JAIN HOWEVER, THE ASSESSING OFFICER ACCEPTED THAT THE AS SESSEE WAS ABLE TO CO - RELATE THE PURCHASE OF MATERIAL WITH THE ALLOCATION OF RAW MATERIALS AND SALES OF FINISHED PRODUCTS. THEREFORE, HE WAS OF THE VIEW THAT THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM GREY MARKET AND TO REGULARIZE SUCH PURCHASES HAS O BTAINED ACCOMMODATION BILLS FROM THE CONCERNED PARTIES. THEREFORE, HE HELD THAT THE PURCHASES SHOWN BY THE ASSESSEE ARE NOT GENUINE. ACCORDINGLY, HE BROUGHT TO TAX THE PROFIT ELEMENT BY ESTIMATING IT AT 12.5% OF THE NONGENUINE PURCHASES WHICH WORKED OUT ` 15,33,870. THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID ADDITION IN APPEAL, HOWEVER, LEARNED COMMISSIONER (APPEALS) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 4 . WHEN THE APPEAL WAS CALLED FOR HEARING NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. EVEN, THE ASSESSEE HAS NOT SOUGHT FOR ADJOURNMENT OF THE CASE. IN THESE CIRCUMSTANCES AND CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRES ENTATIVE. 5 . HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, IN ASSESSEE'S CASE ORIGINALLY NO SCRUTINY ASSESSMENT WAS MADE AND THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCES SED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED SPECIFIC 4 SHRI VIJENDRA H. JAIN INFORMATION FROM EXTERNAL SOURCES INDICATING THAT CERTAIN PURCHASES MADE BY THE ASSESSEE ARE NOT GENUINE. ACCORDINGLY, ON THE BASIS OF SUCH INFORMATION THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THEREFORE, THE VALIDITY OF RE - OPENING OF ASSESSMENT IS U PHELD. AS REGARDS THE MERITS OF THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES, IT IS EVIDENT, NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE HAS PRODUCED ANY SUPPORTING EVIDENCE EITHER TO PROVE DELIVERY OF GOODS OR THE FACT THAT THE GOODS WERE ACTUALLY SOLD BY THE CONCERNED PARTIES. THE ASSESSEE EVEN COULD NOT ESTABLISH THE EXISTENCE OF THE CONCERNED PARTIES, CONSIDERING THE FACT THAT THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED BACK UNSERVED . IN THE AFORESAID CIRCUMSTANCES THE CLAIM OF THE ASSESSEE THAT THE PURCHASES MADE ARE GENUINE CANNOT BE ACCEPTED. HOWEVER, THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS PURCHASED GOODS FROM SOME OTHER SOURCE AND FOR THAT REASON ALONE H E HAS ESTIMATED THE PROFIT AT THE RATE OF 12.5% WHICH HAS BEEN SUSTAINED BY LEARNED COMMISSIONER (APPEALS). THE ASSESSEE HAS NEITHER APPEARED BEFORE US NOR BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE AFORESAID FACTUAL FINDING OF THE DEPARTMENTAL AUTHO RITIES AND HAS ALSO FAILED TO DEMONSTRATE THAT THE PROFIT RATE ADOPTED AT 12.5% IS UNREASONABLE. IN THESE 5 SHRI VIJENDRA H. JAIN CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE DISPUTED ISSUE. GROUNDS RAISED AR E DISMISSED. 6 . IN THE RESULT ASSESSEE'S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 26.12.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI