RAJENDRA M PAWAR, MUMBAI V. INCOME TAX OFFICER 27(3)(1), MUMBAI

ITA 1070/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1890 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAYKUMAR OZJA
• Assessee Lawyers: VIRAG SHAH
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 1070/ MUM/20 1 8 ( ASSESSMENT YEAR : 2009 - 10 ) SHRI RAJENDRA M PAWAR PROP. OF ANRON CHEMICALS CO., 1/18, 2 ND FLOOR PRAGATI CHS, S.G. BARVE MARG CHEMBUR (E) MUMBAI 400 071 VS. ITO 27(3)(1) MUMBAI PAN/GIR NO. AAGPP7819N ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI VIRAG SHAH REVENUE BY SHRI AJAY KUMAR OZJA DATE OF HEARING 12 / 11 /201 8 DATE OF PRONOUNCEMENT 16 / 11 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 25 MUMBAI DATED 14/12/2017 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT, 1961. 2. IN THIS APPEA L ASSESSEE IS AGGRIEVED FOR UPHOLDING ADDITION OF 12.5% ON THE BOGUS PURCHASES. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 1070/MUM/2018 SHRI RAJENDRA M. PAWAR 2 4. FACTS IN BRIEF ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S. ANRON CHEMICALS CO., WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 08.09.2009 DECLARING TOTAL INCOME OF RS. 15 , 76 , 985/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING, MU MBAI, WITH REGARD TO THE ASSESSEE HAD TAKEN ACCOMMODATION BILL FOR PURCHASE THROUGH PARTIES DECLARED AS HAWALA OPERATORS BY MAHARASHTRA SALES TAX DEPARTMENT, THE CASE WAS RE - OPENED BY ISSUING NOTICE U/S, 148 ON 24.03.2014. IN RESPONSE TO THE NOTICE U/S. 148, THE AR O F THE ASSESSEE SUBMITTED THAT THE RETURN FILED ON 08.09.2009 MAY BE CONSIDERED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. AN ORDER U/S 143(3) R.W.S. 147 OF THE ACT WAS PASSED ON 18.03.2015 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 42,47,570/ - AFTER MAKING ADDITION OF RS. 26,70,584/ - , BEING PROFIT ELEMENT EMBEDDED IN THE SUSPICIOUS PURCHASES, CALCULATED @ 12.5% OF TOTAL 'SUSPICIOUS PURCHASES' OF RS. 2,13,64,668/ - . 5. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO, AGAIN ST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS ARGUED BY LEARNED AR THAT ASSESSEE HAS ALREADY SHOWN GP OF 9.5% IN RESPECT OF TRADING IN CHEMICALS, WHICH IS FAIR AND REASONABLE. IT WAS ALSO CONTENTION OF LEARNED AR THAT AVERAGE GP OF ASSESSEE I N ALL THE PRECEDING YEARS WAS AROUND 9. 0 %. IT WAS THEREFORE, SUBMITTED THAT CREDIT ITA NO. 1070/MUM/2018 SHRI RAJENDRA M. PAWAR 3 FOR THE GROSS PROFIT DECLARED BY THE ASSESSEE SHOULD BE GIVEN OUT OF ADDITION OF 12.5% UPHELD BY CIT(A). 5. ON THE OTHER HAND, LEARNED DR RELIED ON THE LOWER AUTHORITIES. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT BEFORE THE LOWER AUTHORITIES THE ASSESSEE HAS FAILED TO PRODUCE CORROBORATIVE EVIDENCE IN THE FORM OF TRANSPORTATION BILLS ETC. TO ESTABLISH THAT T H E ALLEGED PURCHASES WERE ACTUALLY TRANSPORTED TO ITS PREMISES. IT IS ALSO A FACT THAT THE AO HAS NOT CONFRONTED THE ASSESSEE WITH ALL THE INFORMATION IN HIS POSSESSION LIKE STATEMENTS OF THE ALLEGED HAWALA OPERATORS. FURTHER, THE AO STO PPED HIS INVESTIGATION WITH THE RETURN OF HIS 133(6) NOTICES. HE DID NOT GO AHEAD WITH MONEY TRAIL OF CHEQUES DEBITED IN THE ASSESSEE 'S BANK ACCOUNT TOWARDS THE ALLEGED PURCHASES THOUGH SUCH INVESTIGATION DO NOT LEAD TO CONCRETE RESULTS IN THE CASE OF HAWA LA DEALERS AND INVESTIGATORS OFTEN REACH DEAD END IN SUCH CASES. IT IS NOT THE CASE OF THE AO THAT THE IMPUGNED PURCHASES HAVE CONCLUSIVELY BEEN ESTABLISHED AS NOT HAVING BEEN EFFECTED AT ALL. THE AO HAS ONLY FOUND THE IMPUGNED SUPPLIER AS A BOGUS PARTY. K EEPING IN VIEW THE G.P. RATE OFFERED BY ASSESSEE AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 5% OF THE ALLEGED BOGUS PURCHASES. WE DIRECT ACCORDINGLY. ITA NO. 1070/MUM/2018 SHRI RAJENDRA M. PAWAR 4 7. IN THE RESULT, APPEAL OF THE AS SESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 / 11 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 16 / 11 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//