PALMON EXPORTS KASEZ, MUMBAI V. INCOME TAX OFFICER - 21(2)(5), MUMBAI

ITA 1107/MUM/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2481 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Section: 143(3); 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1106& 1107/MUM/2018 (ASSESSMENT YEARS: 2009-10& 2010-11) M/S. PALMON EXPORTS KASEZ FLAT NO. 9, JANTA INDUSRIAL COMPOUND, 162 SENAPATI BAPAT MARG, LOWER PAREL (W) MUMBAI 400012 VS. INCOME TAX OFFICER - 21(2)(5) MUMBAI PAN AAHFP4369G APPELLANT RESPONDENT APPELLANT BY: SHRI HIMANSHU GANDHI RESPONDENT BY: SHRI S.K. BEPARI DATE OF HEARING: 27.09.2018 DATE OF PRONOUNCEMENT: 14.11.2018 O R D E R PER SAKTIJIT DEY, JM THE AFORESAID APPEALS BY THE SAME ASSESSEE ARE DIRE CTED AGAINST A COMMON ORDER DATED 07.11.2017 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-33, MUMBAI FOR ASSESSMENT YEAR S 2009-10 & 2010- 11. 2. THE ONLY ISSUE IN DISPUTE IN BOTH THE APPEALS RELAT ES TO ADDITION MADE ON ACCOUNT OF NON-GENUINE PURCHASES. 3. BRIEF FACTS, WHICH ARE MORE OR LESS COMMON IN BOTH THE APPEALS ARE, THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF TRADING IN GARMENTS, TEXTILE, METAL, COMPUTERS AS WELL AS EXPO RT AND IMPORT BUSINESS. FOR A.Y. 2009-10 THE ASSESSEE FILED ITS RETURN OF I NCOME ON 11.09.2009 DECLARING TOTAL INCOME OF ` 7,93,117/-. ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 30.11.2011 ACCEPTING THE INCOME RETURNED. SIMILARLY, FOR A.Y. 2010-11 THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2010 DECLARING TOTAL INCOME OF ITA NO. 1106/MUM/2018 M/S. PALMON EXPORTS KASEZ 2 ` 4,59,175/-. THE RETURN OF INCOME WAS PROCESSES UNDE R SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV.), MUMBAI AS WELL AS THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT PURCHASES MADE BY THE ASSESSEE FRO M CERTAIN PARITIES ARE NOT GENUINE, THE ASSESSING OFFICER (AO) REOPENE D THE ASSESSMENTS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (HERE INAFTER 'THE ACT'). DURING ASSESSMENT PROCEEDINGS, APART FROM CALLING U PON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES THROUGH PROPER D OCUMENTARY EVIDENCES, THE AO ALSO CONDUCTED INDEPENDENT ENQUIR Y BY ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PA RTIES. AS OBSERVED BY THE AO, IN RESPONSE TO NOTICE ISSUES UNDER SECTION 133(6) OF THE ACT FOR A.Y. 2009-10 THE CONCERNED PARTIES IN THEIR REPLY STATED TO HAVE NOT SOLD ANY GOODS TO THE ASSESSEE, SINCE, THEIR BUSINESS WAS CL OSED DURING THE FINANCIAL YEAR 2008-09. THE AO THEREFORE CALLED UPON THE ASSE SSEE TO EXPLAIN WHY THE PURCHASES SHOWN SHOULD NOT BE ADDED. SO FAR AS A.Y. 2010-11 IS CONCERNED, THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED UNSERVED. THUS, THE AO OBSERVED THAT THE ASSESSEE W AS UNABLE TO PROVE THE GENUINENESS OF PURCHASES. SINCE IN A.Y. 2009-10 THE SELLING PARTIES HAD STATED THAT THEY HAVE NOT SOLD ANY GOODS TO THE ASSESSEE, THE AO MADE ADDITION OF THE ENTIRE PURCHASES CLAIMED TO HAVE BE EN MADE FROM THOSE PARTIES. IN SO FAR AS A.Y. 2010-11 IS CONCERNED, TH E AO MADE ADDITION BY ESTIMATING THE PROFIT @12.5% OF THE NON-GENUINE PUR CHASES. BEING AGGRIEVED BY THE ADDITIONS MADE, THE ASSESSEE PREFE RRED APPEALS BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A), AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, RESTRICTED THE ADDITION IN BOTH THE ASSESSMENT YEARS AT 12.5% ON T HE NON-GENUINE PURCHASES. 4. THE LEARNED AUTHORISED REPRESENTATIVE REITERATING T HE STAND TAKEN BEFORE THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT IN CASE OF ONE OF THE PARTNERS OF THE ASSESSEE FIRM, WHO IS ALSO ENGAGED IN IDENTICAL NATURE OF BUSINESS, THE TRIBUNAL HAS RESTRICTED THE ADDITION TO 5% OF THE NON- GENUINE PURCHASES. THUS, HE SUBMITTED, THERE BEING NO DIFFERENCE IN ITA NO. 1106/MUM/2018 M/S. PALMON EXPORTS KASEZ 3 FACTS,THE ADDITION IN CASE OF THE PRESENT ASSESSEE SHOULD ALSO BE RESTRICTED TO 5% OF THE NON-GENUINE PURCHASES. 5. I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE FACTS ON RECORD IT IS EVIDENT THAT SINCE DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF PURCHASES MADE FROM THE DECLARED SOURCE, THE AO TRE ATED THE PURCHASES AS NON-GENUINE. WHILE IN A.Y. 2009-10 THE AO HAS AD DED THE ENTIRE NON- GENUINE PURCHASES OF ` 5,43,950/-, IN A.Y. 2010-11 HE HAS RESTRICTED THE ADDITION TO 12.5% OF THE NON-GENUINE PURCHASES. WHI LE DECIDING THE APPEALS FILED BY THE ASSESSEE, THE LEARNED CIT(A) H AS CONFIRMED THE ADDITION IN BOTH THE ASSESSMENT YEARS AT 12.5% OF T HE NON-GENUINE PURCHASES. ADMITTEDLY, THERE ARE NO APPEALS BY THE DEPARTMENT AGAINST THE AFORESAID ORDER OF THE LEARNED CIT(A). IT IS RE LEVANT TO OBSERVE, WHILE DECIDING THE APPEAL OF ONE THE PARTNERS OF THE ASSE SSEE FIRM FOR THE VERY SAME ASSESSMENT YEAR, VIZ., SUNIL MOHAN LAHORI VS. ACIT IN ITA NO. 5948/MUM/2017 DATED 07.03.2018, THE COORDINATE BENC H UNDER IDENTICAL FACTS AND CIRCUMSTANCE HAS RESTRICTED THE ADDITION ON ACCOUNT OF ALLEGED NON-GENUINE PURCHASE AT 5% OF SUCH PURCHASES. CONSI DERING THE ABOVE, I DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTEN T OF 5% OF THE ALLEGED NON- GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS. CON SEQUENTLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2018. SD/ - (SAKTIJIT DEY) JUDICIALMEMBER MUMBAI, DATED: 14 TH NOVEMBER, 2018 ITA NO. 1106/MUM/2018 M/S. PALMON EXPORTS KASEZ 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -33, MUMBAI 4. THE PR.CIT- 21, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.