ITO, 20(1)(1), MUMBAI V. ALIAKBAR HAIDERALI MUKHI, MUMBAI

ITA 1113/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6116 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Assessee Lawyers: R B POPAT
• Keywords: Bogus purchase; Corroborative evidences
• Section: 40A(3); 133(6); 13; 22; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI SHAMIM YAHYA(A.M.) & SHRI PAWAN SINGH ( JM) ITA NO. 1113/MUM/2019(ASSESSMENT YEAR : 2010-11) ITO-20(1)(1), MUMBAI VS SHRI ALIAKBAR HAIDERALI MU KHI 22, AKHARWA GALLI OPP ANJUMAN ISLAM COLLEGE MAULANA AZAD ROAD MUMBAI 400 008 PAN : AGKPM4793N APPELLANT RESPONDEDNT APPELLANT BY SHRI MICHAEL JERALD (DR) RESPONDENT BY SHRI R.B. POPAT DATE OF HEARING 06-02-2020 DATE OF PRONOUNCEMENT 10-02-2020 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF CIT(A)-32, MUMBAI DATED 19-12-2018 FOR ASSESSMENT YEAR 2010-11 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS.6 8,12,694/- BY RESTRICTING THE ADDITION TO 3% OF ALLEGED BOGUS PUR CHASES FROM HAWALA PARTIES.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE THE FACT THAT ONUS IS ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS AND TRUE N ATURE OF THE TRANSACTION. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN NOT CONSIDERING THAT TH E HAWALA DEALERS ADMITTED ON OATH BEFORE SALES TAX AUTHORITIES THAT THEY HAVE NOT SOLD ANY MATERIAL TO ANYBODY.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS ERRED IN NOT APPRECIATING THE FA CT THAT PURCHASES WERE MADE FROM SOME OTHER PARTIES WHICH WERE NOT RE CORDED IN THE 2 ITA 1113/MUM/2019 BOOKS OF ACCOUNTS AND ONLY ACCOMMODATION BILLS WERE OBTAINED FROM HAWALA PARTIES AND THEREBY ATTRACTING PROVISIONS OF SECTION 40A(3) OF THE INCOME-TAX ACT.' 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN IND IVIDUAL AND IS RUNNING ITS BUSINESS IN THE NAME OF PROPRIETORY CON CERN, VIZ. METAL PROFILE. THE ASSESSEE IS ENGAGED IN TRADING OF IRO N AND STEEL. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 29-09-2010 DECLARING INCOME OF RS.3,55,280/-. INIT IALLY, THE RETURN OF INCOME WAS PROCESSED U/S 143(1). SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S 147. THE NOTICE U/S 148 DATED 29- 03-2017 WAS SERVED UPON THE ASSESSEE. THE ASSESSMENT WAS REOPE NED ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DEPART MENT THROUGH DIT(INV) THAT ASSESSEE S NAME WAS APPEARING IN THE LIST OF BENEFICIARIES OF HAWALA TRADERS. BASED ON THE INFO RMATION, THE AO FORMED HIS BELIEF FOR REOPENING OF THE ASSESSMENT. AFTER SERVING STATUTORY NOTICE, THE AO PROCEEDED TO COMPLETE THE ASSESSMENT. DURING THE ASSESSMENT, THE ASSESSEE WAS ASKED TO SU BSTANTIATE THE PURCHASES SHOWN FROM FOLLOWING PARTIES:- S.NO. NAME OF THE PARTY F.Y. AMOUNT(INRS.) 1 DHRUV SALES CORPORATION 2009-10 7,69,142 2 SIDDHIVINAYAK TRADING CO 2009-10 3,36,425 3 NATIONAL TRADING CO 2009 - 10 17,71,999 4 DEEPALI ENTERPRISES 2009 - 10 35,06,056 5 REKHA TRADING CO 2009-10 13,95,145 6 RENUKA SALES CORPORATION 2009-10 17,13,675 7 NAMAN ENTERPRISES 2009-10 5,87,695 8 SHYAM CORPORATYION 2009-10 35,58,429 3 ITA 1113/MUM/2019 9 K.K. TRADERS 2009-10 9,54,336 10 R.K. TRADERS 2009-10 10,86,093 11 PRAYOSHA TRADING CO 2009-10 13,74,611 12 HITEN ENTERPRISES 2009 - 10 6,32,873 13 ANSHU MECHANTILE PVT LTD 2009 - 10 5,76,538 14 DHIREN MECHANTILE PVT LTD 2009-10 8,97,979 15 OM ENTERPRISES 2009-10 25,67,106 16 SIMANDHAR TRADING CORPN 2009-10 2,43,334 17 SHREE YAMUNA IMPEX 2009-10 21,70,673 18 SHAH INDUSTRIES 2009 - 10 3,87,55 19 TUBE INDIA 2009 - 10 25,94,886 20 RUPANI & CO 2009 - 10 25,94,886 21 DARSHAN SALES CORPN 2009-10 28,79,665 22 MATOSHREE TRADERS 2009-10 84,973 TOTAL 3,09,66,789 3. THE ASSESSEE FURNISHED THE COPY OF INVOICES FROM TH E PARTIES AND OTHER SUPPORTING DOCUMENTS. IN ORDER TO VERIFY THE PURCHASES, THE AO ISSUED NOTICES U/S 133(6) TO ALL THE PARTIES TO PROVIDE DETAILS OF TRANSACTIONS ALONGWITH SUPPORTING EVIDENCES. THE N OTICES SENT TO THE PARTIES WERE RETURNED WITH THE REMARK OF POSTAL AUTHORITIES LEFT / NOT KNOWN / UNCLAIMED . THE ASSESSEE WAS CONFRONTED WITH THE REPORT OF POSTAL AUTHORITIES. THE ASSESSEE CLAIMED THAT HE HAD ALREADY FURNISHED NECESSARY DETAILS, PAYMENTS WERE MADE THROUGH CROSSED CHEQUE, CORRESPONDING SALES AND RECONCILIAT ION OF PURCHASES AND CONSUMPTION WAS ALSO FURNISHED. THE AO CONCLUD ED THAT THE ASSESSEE FAILED TO FURNISH THE SUPPORTING DOCUMENTS ABOUT THE TRANSPORTATION OF GOODS. THE AO, ON THE BASIS OF I NFORMATION THROUGH THE DIT(INV) CONCLUDED THAT ASSESSEE FAILED TO PRODUCE THE PARTIES. THE PURCHASE BILLS WERE FROM THE SUSPICIO US PARTIES. IT IS 4 ITA 1113/MUM/2019 CONCLUSIVE PROVE THAT PURCHASES WERE MADE FROM SUSP ICIOUS PARTIES AS PARTIES WERE NOT AVAILABLE AT THEIR GIVEN ADDRES SES. THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER NOR WAS ANY PROOF OF TRANSPORTATION OF GOODS FURNISHED. THE AO, ON THE BASIS OF DECISION OF HON BLE GUJARAT HIGH COURT IN SIMIT P SHETH 356 ITR 451 (GUJ) CONCLUDED THAT ASSESSEE FAILED TO ESTABLISH G ENUINENESS OF TRANSACTION, BUT ASSESSEE HAS SHOWN SALES WHICH CAN NOT BE IGNORED AND THESE FACTS LEAD TO CONCLUSION THAT ASSESSEE PU RCHASED THE MATERIAL IN THE GREY MARKET AND SOURCES OF FUNDS US ED FOR PURCHASES FROM GREY MARKET HAD NOT BEEN EXPLAINED. ON THE BA SIS OF THESE OBSERVATIONS, THE AO TREATED 25% OF SUCH PURCHASES AS UNEXPLAINED. THE AO ACCORDINGLY DISALLOWED RS.77,41,679/- BEING 25% OF AGGREGATE OF RS.3,09,66,789. ON APPEAL BEFORE CIT( A), THE DISALLOWANCE WAS RESTRICTED TO 3% OF THE AGGREGATE OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE HAS FILED THE PR ESENT APPEAL. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( LD. DR) FOR THE REVENUE AND THE LD. AUTHORISED REPRESENTATIVE (LD.A R) OF THE ASSESSEE AND PERUSED THE RECORD. THE LD. DR SUPPOR TED THE ORDER OF AO AND SUBMITTED THAT INVESTIGATION WING OF INCOME TAX DEPARTMENT MADE FULL-FLEDGED ENQUIRY ABOUT THE MODU S OPERANDI OF HAWALA OPERATORS. THE HAWALA OPERATORS USED TO ISS UE BOGUS BILLS 5 ITA 1113/MUM/2019 AND VOUCHERS WITHOUT ACTUAL DELIVERY OF GOODS. THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF SUCH HAWALA TRADERS. T HE ASSESSEE HAS SHOWN PURCHASES ONLY TO INFLATE THE EXPENSES AND TO REDUCE THE GROSS PROFIT. THE LD. DR SUBMITS THAT FINDING OF A O BE RESTORED BY SETTING ASIDE THE FINDING OF LD. CIT(A). 5. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SUBMIT S THAT IN AY 2009-10 SIMILAR ADDITION WAS MADE; HOWEVER, ON FURT HER APPEAL BEFORE THE LD.CIT(A), THE DISALLOWANCE WAS RESTRICT ED TO 3% OF THE ALLEGED BOGUS PURCHASES. THE LD. CIT(A) WHILE PASS ING THE ORDER FOR THE PRESENT YEAR FOLLOWED THE ORDER OF HIS PRED ECESSOR. THE REVENUE HAS NOT FILED ANY FURTHER APPEAL AGAINST TH E ORDER OF LD. CIT(A). THE LD.AR SUBMITS THAT THE REVENUE MUST FO LLOW THE CONSISTENCY ONCE THE ORDER FOR AY 2009-10 WAS ACCEP TED. THE REVENUE SHOULD HAVE ACCEPTED THE DECISION OF LD.CIT (A) FOR THIS YEAR, AS WELL. ON MERIT THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE AO HAS NOT DISPUTED THE SALE OF THE ASSESSEE. THE B OOKS OF ACCOUNTS OF ASSESSEE WERE NOT REJECTED. THE AO SOLELY RELIED ON THE REPORT OF SALES TAX AND INVESTIGATION WING WITHOUT ANY CORROB ORATIVE EVIDENCE. THE LD AR PRAYED FOR DISMISSAL OF THE APP EAL. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE H AVE NOTED THAT 6 ITA 1113/MUM/2019 WHILE PASSING THE RE-ASSESSMENT, THE AO MADE DISALL OWANCE OF 25% OF AGGREGATE OF PURCHASES. THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SALES OF ASSESSEE WER E ACCEPTED. THE LD CIT(A), AFTER FOLLOWING THE DECISION OF HIS PRED ECESSOR FOR AY 2009-10, RESTRICTED THE DISALLOWANCE TO 3%. DURING THE COURSE OF HEARING, THE LD. DR ACCEPTED THAT NO APPEAL WAS FIL ED AGAINST THE ORDER OF LD. CIT(A) FOR AY 2009-10. THE LD. CIT(A) , WHILE PASSING THE ORDER FOR THE YEAR UNDER CONSIDERATION, HAS FOLLOWED THE ORDER FOR AY 2009-10. NO CONTRARY MATERIAL OR LAW IS BROUGHT TO OUR NOTICE FOR TAKING ANY VIEW. THEREFORE, WE DO N OT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE, WHI CH ARE HEREBY DISMISSED. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-02-2020. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 10 TH FEBRUARY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI