NILESH RAMESH BHURE, THANE V. DCIT CIR 3, THANE

ITA 1078/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9851 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: JIGNA PAREKH
• Keywords: Reopening of assessment; Bogus purchase; Principle of natural justice; Accommodation entries
• Section: 143(3); 133(6); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 1 078 / MUM/20 1 6 ( / ASSESSMENT YEAR : 20 0 9 - 10 ) SHRI NILESH RAMESH BHURE, D - 11, PLOT NO.52, VIRANGULA CHS, VEER SAVARKAR NAGAR, THANE WEST - 400606 / VS. DY. COMMISSIONER OF INCOME TAX - CIRCLE - 3, ROOM NO.2, B WING, 6 TH FLOOR, 16Z, ASHAR IT PARK, WAGLE ESTATE, THANE(W), ( / APPE LLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AGVPB5383L / APPELLANT BY: SHRI JI GNA PAREKH / RESPONDENT BY SHRI SAURABHKUMAR / DATE OF HEARING : 4 . 7. 201 7 / DATE OF PRONOUNCEMENT : 12. . 7. 201 7 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 1 , MUMBAI D A T ED 29 .12.2015 PERTAINING TO A.Y. 20 0 9 - 10. 2. IN THE GROUNDS OF APPEAL THE ASSESSEE HAS RAISED FOLLOWING ISSUES : A) REOPENING OF ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961; B) VIOLATION OF PRINCIPLE OF NATURAL JUSTICE; C) NON - APPLICATION OF MIND BY THE AO BEFORE MA KING ASSESSMENT; D) THE ISSUE OF NON - RECORDING SATISFACTION BY THE AO BEFORE MAKING ADDITION; E ) CONFIRMATION OF ADDITION OF RS.19,04,514 / - WITHOUT CONSIDERING THE MATERIAL AVAILABLE BEFORE HIM AND F ) THE ADDITION MADE BY THE AO ON THE INFORM ATION AVAILABLE MVAT SITE OF STATE GOVERNMENT OF MAHARASHTRA WITHOUT APPLICATION OF MIND. ITA NO . 1078 / M/1 6 2 3. AT THE TIME HEARING, THE LD.AR DID NOT PRESS GROUNDS OF APPEAL WITH REGARD TO THE ITEMS (A) TO ( D ) AS MENTIONED ABOVE, THEREFORE DISMISSE D AS NOT PRESSED. 4. ONLY ISSUE RAISED IN THE GROUNDS OF APPEAL NO.(E) IS WITH REGARD TO ADDITION OF RS.19,04,514/ - AS SUSTAINED BY THE LD.CIT(A) AND AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES. 5. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF IN COME ON 25.9.2010 DECLARING TOTAL INCOME OF RS.26,69,980/ - . THE AO REOPENED HE CASE OF THE ASSESSEE UPON RECEIVING THE INFORMATION FROM THE SALES TAX DEPARTMENT, MUMBAI, THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES OF BOGUS PURCHASES FROM FIVE PARTIES AS DETAILED IN PARA 3 OF THE ASSESSMENT ORDER AND ACCORDINGLY, ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 ON 25.3.2013. IN ABSENCE OF COMPLIANCE OF THE SAID NOTICE, AO TREATED THE ORIGINAL RETURN FILED BY THE ASSESSEE AS RETURN IN RESPONSE TO THE NOTICE U/S 148 . THE AO ISSUED NOTICE S U/S 133(6) OF THE ACT WHICH WERE RETURNED UNSERVED AND ACCORDINGLY A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE CALLING UPON HIM AS TO WHY THE SAID BOGUS PURCHASE OF RS.19,04,514/ - FROM FIVE PARTIES WHO WERE DECLARED BY THE SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA AS HAWALA DEALERS S HOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN REPLY TO THE SAID NOTICE THE ASSESSEE SUBMITTED THAT ALL THE PAYMENT OF PURCHASE S WERE MADE TO THESE DEALERS BY ACCOUNT PAYEE CHEQUES AND GOODS WERE IN FACT RECEIVED AND USED ITA NO . 1078 / M/1 6 3 IN EXECUTION OF CONTRACT AND INVOICES AND BILLS WERE PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, THE AO DID NOT FIND REPLY OF THE ASSESSEE AS CONVINCING AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDER DATED 13.3.2014 PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.45,74,494/ - . 6 . IN THE APPELLATE PROCEEDINGS, THE FIRST APPELLATE AUTHORITY AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL PLACED BEFORE HIM DURING THE APPELLATE PROCEEDINGS DISMISSED THE APPEAL OF THE ASSESSEE. THE LD.CIT(A) OBSERVED THAT DELIVERY CHALLANS WERE NOT MENTI ONED ON THE PURCHASES BILLS AND NO MODE OF TRANSPORTATION WAS GIVEN. THE LD. CIT(A) ALSO RECORDED THE FINDINGS THAT THE ASSESSEE COULD NOT PROVE THE CONSUMPTION OF MATERIAL S AND GENUINENESS OF PURCHASES AND FINALLY AFTER FOLLOWING THE DECISIONS AS MEN TIONED AT PARA 5.1 DISMISSED HE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLAC ED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE IS IN THE BUSINESS OF CIVIL CONSTRUCTION AND DURING THE COURSE OF EXECUTION OF CONTRACT, HE RECEIVED SOME BILLS OF BOGUS PURCHASES FROM FIVE PARTIES AGGREGATING TO RS.19,0 4,514/ - WHO WERE DECLARED HAWALA OPERATORS IN THE LIST OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA ITA NO . 1078 / M/1 6 4 W ITHOUT SUPPLYING ANY MATERIAL IN PHYSICAL FORM. WE ALSO FIND THAT THE ASSESSEE HAS DULY EXECUTED THE CONTRACTS AWARDED TO HIM BUT COULD NOT PROVE T HE GENUINENESS OF THE PURCHASE S BEFORE THE LOWER AUTHORITIES . WE NOTICE THAT THE AO ISSUED NOTICES U/S 133( 6) TO THOSE HAWALA OPERATORS WHICH WERE RETURNED UNSERVED . UNDER THE THESE CIRCUMSTANCES WHEN THE ASSESSEE HAS TAKEN SOME ACCOMMODATION ENTRIES OF BOGUS PURCHASES , THE TOTAL DISALLOWANCES OF THE BOGUS PURCHASE IS NOT JUSTIFIED AS THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GRAY MARKET TO AVOID OCTROI, AND OTHER TAXES. THEREFORE, WE ARE OF THE OPINION THAT IT WOULD BE FAIR AND REASONABLE IF CER TAIN PERCENTAGE OF TOTAL BOGUS PURCHASES IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE AO TO APPLY 20% OF THE BOGUS PURCHASE AND ADD THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ACCORDI NGLY, WE PARTLY ALLOW THE APPEAL OF THE ASSESSEE AS INDICATED ABOVE. 8 . IN THE RES U LT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12TH JUL Y , 2017 . 12TH JUL Y , 2017 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12. 7.2017 . . ./ SRL , SR. PS ITA NO . 1078 / M/1 6 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI