ITO, 27(1)(5), MUMBAI V. JITENDRA D. SHAH HUF, MUMBAI

ITA 1128/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5344 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase; Unexplained expenditure; Rule of consistency; Accommodation entries
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR, HON'BLE ACCOUNTANT MEMBER ITA NO. 1128 / MUM/201 9 ( A. Y : 20 09 - 10) INCOME TAX OFFICER 27 (1)( 5 ) ROOM NO. 331, TOWER NO. 6 VASHI RAILWAY STATION COMPLEX VASHI, NAVI MUMBAI 400 703 V. M/S. JITENDRA D. SHAH HUF 401, NAGESHWAR KRUPA RATAN BHUVAN NO.2 GARDEN LANE, SANGHANI ESTATE LBS MARG, GHATKOPAR(W) MUMBAI 400 086 PAN: AAAHJ1791F ( A PPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHARMIL JHAVERI DEPARTMENT BY : SHRI R. BHOOPATHI DATE OF HEARING : 11.02.2020 DATE OF PRONOUNCEMENT : 29 .09.2020 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 21.12.2018 FOR THE A.Y. 2009 - 10 IN RESTRICTING THE DISALLOWANCE TO 8 % OF PURCHASES OF . 1,06,80,488/ - AS AGAINST THE 12.5% OF PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSESSING OFFICER. 2 ITA NO. 1128/MUM/2019 (A.Y: 2009 - 10) JITENDRA D. SHAH HUF 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE IS A PROPRIETOR OF M/S. K.J. ENTERPRISES WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL, FILED RETURN OF INCOME FOR THE A.Y. 2 009 - 10 ON 15.09.2009 DECLARING INCOME OF . 3,22,980 / - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT (INV. ,) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.) MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM VARIOUS DEALERS WHO ARE SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANS PORTATION OF ANY GOODS. IN THE RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHAS ES MADE FROM THE PARTIES WHICH ARE REFERRED IN THE ASSESSMENT ORDER. IN RESPONSE, ASSESSEE HAS SUBMITTED COPIES OF BILLS OF THE PARTIES AND SUBMITTED THAT T HE PURCHASES MADE ARE GENUINE. ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOU NT PAYEE CHEQUES A S SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE. HOWEVER, PARTIES WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER . 3 ITA NO. 1128/MUM/2019 (A.Y: 2009 - 10) JITENDRA D. SHAH HUF 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS OF THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER SINCE THE PURCHASES MADE BY THE ASSESSEE AND CLAIMED AS EXPENSES IN HIS PROFIT AND LOSS ACCOUNT ARE NOT GENUINE, THE PURCHASES TO THAT EXTENT REMAINED UNVERIFIABLE . ASSESSING O FFICER OBSERVED THAT THE NOTICE ISSUED U/S. 133(6) OF THE ACT TO THE PART IES WERE RETURNED UNSERVED WIT H A REMARK LEFT/ NOT KNOWN AND THE ASSESSEE DID NOT PRODUCED THE PART IES BEFORE THE ASSESSING OFFICER . THEREFORE, ASSESSING OFFICER TREATED PURCHASES OF .13,35,061/ - BEING 12.5% OF . 1,06,80,488 / - AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES AND VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO AN EXTENT OF 8 % OF THE NON - GENUINE PURCHASES. 4. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. 4 ITA NO. 1128/MUM/2019 (A.Y: 2009 - 10) JITENDRA D. SHAH HUF 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), W E FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERM ENTS IN THE ASSESSMENT ORDER RESTRICTED THE DISALLOWANCE TO 8 % OF THE NON - GENUINE PURCHASES OF . 1,06,80,488 / - , WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 7.1 THE ONLY EFFECTIVE GROUND O F APPEAL PERTAINS TO ADDITION @ 12.5% OF BOGUS PURCHASES OF RS.13,35,061/ - . 7.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANT'S SUBMISSIONS. 7.3. DURING THE APPELLATE PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE STATED THAT IN THE ASSESSEE'S OWN CASE IN PERSONAL CAPACITY FOR AY.2009 - 10, THE HON'BLE ITAT SMC BENCH MUMBAI VIDE ORDER DATED 07/05/2018 HAS ESTIMATED THE PROFIT MARGIN AT 8%. FURTHER, FOLLOWING THE ORDER OF ITAT , CIT(A) - 25, MUMBAI HAS RESTRICTED PROFIT AT 8% IN THE CASE OF HUF AS WELL AS INDIVIDUAL CASE. THUS FOLLOWING THE DECISION OF HON'BLE, ITAT MUMBAI, THE ADDITION IN TERMS OF UNEXPLAINED EXPENDITURE IS RESTRICTED TO 8% OF RS. 1,06,80,488/ - HENCE, THE APPELL ANT'S GROUND OF APPEAL IS 'PARTLY ALLOWED'. 6. AS COULD BE SEEN FROM THE ABOVE, IT IS OBSERVED THAT IN ASSESSEES OWN CASE FOR THE A.Y: 2009 - 10 IN ITA.NO. 759/MUM/2018 DATED 07.05.2018 THE TRIBUNAL CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE RESTRICTED THE PROFIT RATE AT THE RATE OF 8%. FOLLOWING THE PRINCIPLE OF CONSISTENCY LD.CIT(A) RESTRICTED THE DISALLOWANCE TO 8%. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN 5 ITA NO. 1128/MUM/2019 (A.Y: 2009 - 10) JITENDRA D. SHAH HUF THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 8 % OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 8. BEFORE PARTING, WE NOTICED THAT THIS APPEAL WAS HEARD ON 11.02.2020 AND THE PRONOUNCEMENT IS DELAYED DUE TO LOCKDOWN IN VIEW OF COVID - 19 PANDEMIC. THE PRONOUNCEMENT IS AS PER RULE 34(5) OF INCOME TAX APPELLATE TRIBUNAL RULES, 1963 AND HON'BLE BOMBAY HIGH COURT DECISION VIDE ORDERS DATED 15.04.2020 AND 15.06.202 0 EXTENDING THE TIME BOUND PERIODS SPECIFIED BY HON'BLE HIGH COURT BY REMOVING THE PERIOD UNDER LOCKDOWN. THIS ASPECT WAS ALSO DEALT WITH IN DETAIL BY THE MUMBAI BENCH OF THE TRIBUNAL IN CASE OF DCIT V. JSW STEEL VIDE ORDER DATED 14.05.2020 IN ITA.NO. 626 4/MUM/2018. ORDER PRONOUNCED ON 29 . 09.2020 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNC EMENT LIST IN THE NOTICE BOARD. SD/ - SD/ - ( RAJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 29 / 09 / 2020 GIRIDHAR , S R. PS 6 ITA NO. 1128/MUM/2019 (A.Y: 2009 - 10) JITENDRA D. SHAH HUF COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM