ITO 29(1)(3), MUMBAI V. DHARMESH VINAYKUMAR SHAH, MUMBAI

ITA 1129/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1260 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 28-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-02-2015
• Court: TRIBUNAL
• Department Lawyers: VIKASH KUMAR AGARWAL
• Keywords: Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SAKTIJIT DEY , JM ITA NO. 1129/ MUM/20 1 5 ( ASSESSMENT YEAR : 2010 - 11 ) ITO - 29(1)(3), MUMBAI VS. SHRI DHARMESH VINAYKUMAR SHAH, 1404, PARK ROYAL, OPP. SAMRIDHI H ALL, M.M.MALVIYA ROAD, MULUND (W), MUMBAI 400 080 PAN/GIR NO. AAIPS1584R APPELLANT ) .. RESPONDENT ) ITA NO. 4881/ MUM/20 15 ( ASSESSMENT YEAR : 2010 - 11 ) SHRI DHARMESH VINAYKUMAR SHAH, 1401, SUGEE HEIGHTS, DWARKESH NAGAR CHS LTD., NAHU R ROAD, MULUND (WEST), MUMBAI 400 080 VS. ITO 23(2) - 2, MUMBAI PAN/GIR NO. AAIPS1584R APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI VIKASH KUMAR AGARWAL ASSESSEE BY SHRI BHADRESH DOSHI DATE OF HEARING 12 / 04 /201 7 DATE OF PRON OUNCEME NT 21 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT( A ) - 40, MUMBAI DATED 15/12/2014 FOR THE A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. RIVAL CONTENTION S HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 2 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF M/ S. JATIN ENTER PRISES ENGAGED IN THE BUSINESS OF TRADING IN COMPUTER PARTS. THE R ETURN OF INCOME FOR THE ABOVE ASSESSMENT YEAR HAS BEEN FI LED BY THE ASSESSEE ON 15/10/2010 DECLARING A TOTAL INCOME OF RS. 485910/- . THE RETURN WAS PROCESSED U/S 143(1) OF THE IT ACT. THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT OF PROPRIETARY CONCERN, M/S. JATIN INTERNATIONAL HAS DEBITED PURCHASES OF RS.56040379.5 5 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE NOTICE UNDER SECTION 142 (1) OF ACT, THE ASSESSEE WAS CALLED UPON TO FILE THE DETAILS OF PURCHASES, TIN AND NAME & ADDRESSES OF PARTIES FROM WHOM PURCHASES WAS MADE. IN R EPLY, THE ASSESSEE FILED THE DETAI LS OF THE SAME ALONGWITH DOCUMENTARY EVIDENCES. MEANWHILE, INFORMATION WAS RECEIVED BY AO FROM THE SALES TAX DEPARTMENT, MUMBAI WHICH IS ALSO AVAILABLE ON THE OFFICIAL WEBSITE OF SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. WWW.MAHAWAT.GOV.IN REGARDING SUSPICIOUS PARTIES WHO ARE ONLY PROVIDING ACCOMMODATION ENTRIES WITHOUT DOING ANY ACTUAL BUSINESS. ON GOING THROUGH THE DETAILS SUBMITTED BY THE ASSESSEE, AO FOUND THAT NINE PARTIES ARE AMONG THE LIST OF BOGUS PARTIES WITH WHOM THE ASSESSEE HAS MADE PURCH ASES. THE TIN NUMBER AND AMOUNT OF TRANSACTION OF THE SAID PARTIES ARE AS UNDER: S.NO. NAME OF THE PARTY TIN AMOUNT 1 ANMOL INDUSTRIES 27420506930V 240926 2 ARYAN SALES CORPORATION 27630522965V 8117687 3 RAI TRADERS 27450 262425V 5293601 4 SHAKTI TRADING CO. 27300350341V 4412649 ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 3 5 SAVITA INTERNATIONAL 27460654736V 5665697 6 NAVDEEP TRADING CORPORATION 27540616280V 7980677 7 SHAH INDUSTRIES 27750503201V 601632 8 OM CORPORATION 27310540795V 24508 95 9 BLUE NILE ENTERPRISES 27340548975V 6314702 10 SUBHLAXMI SALES CORPORATION 27490615192V 1701941 TOTAL 42780407 4. THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED TOTAL PURCHASES OF RS.4 , 27 , 80 , 407 / - FROM THE ABOVE TEN PARTIES AND THE TIN NUMBER PROVIDED BY THE ASSESSEE IN THE ABOVE MENTIONED CASES ARE EXACTLY SAME AS IN THE INFORMATION AVAILABLE WITH THE OFFICE. 5. ON THE BASIS OF INFORMATION OF SALES TAX DEPARTMENT, AO FOUND THAT SUPPLIERS WERE BOGUS. THE AO ALSO ISSUED NOTICES U/S.133(6) TO THESE PARTIES BUT THE SAME WERE RETURNED WITH A REMARK NOT KNOWN, ACCORDINGLY AO TREATED ENTIRE PURCHASE AS BOGUS AND ADDED THE SAME IN ASSESSEES INCOME. HOWEVER, THE CORRESPONDING SALE MADE BY THE ASSESSEE WAS NOT DENIED BY THE AO. THE EN TIRE PURCHASES ARE SUPPORTED BY THE BILLS ISSUED BY THE ABOVE SUPPLIERS AND THE SAME HAVE BEEN PAID FOR BY ACCOUNT PAYEE CHEQUES EITHER FULLY OR PARTLY. WE ALSO FOUND THAT ASSESSEE HAS ASKED FOR STATEMENT OF THESE PARTIES GIVEN BEFORE SALES TAX AUTHORITIES ON THE BASIS OF WHICH AO TREATED THE PURCHASES AS BOGUS, HOWEVER COPY OF SUCH STATEMENT WAS NOT FURNISHED NOR ANY OPPORTUNITY TO CROSS EXAMINATION WAS PROVIDED TO THE ASSESSEE INSPITE OF HIS SPECIFIC REQUEST. IN THE ASSESSMENT ORDER ITSELF, AO ALSO NOTED THAT ASSESSEE HAS ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 4 ASKED FOR STATEMENT AND AN OPPORTUNITY TO CROSS EXAMINE THE ALLEGED BOGUS SUPPLIERS. WE FOUND THAT ASSESSEE HAS SUBMITTED LEDGER ACCOUNTS AND BILLS TO SUBSTANTIATE HIS CLAIM FOR GENUINE PURCHASES. SINCE CORRESPONDING SALES DONE BY THE ASS ESSEE HAS NOT BEEN DECLINED BY THE REVENUE AUTHORITIES, THERE IS NO REASON TO ADD THE ENTIRE PURCHASES IN THE INCOME OF THE ASSESSEE. FROM THE RECORD WE ALSO FOUND THAT GP AND NP RATE SHOWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS MUCH BETTER THAN THE GP AND NP RATE SHOWN BY THE ASSESSEE IN THE EARLIER FIVE YEARS WHICH ARE AS UNDER: - A.Y. SALES GP GP % NP NP % 2005 - 06 1,41,42,710 1,24,331 0.88% 1,23,580 0.87% 2006 - 07 9,94,45,187 12,36,126 1.24% 2,61,029 0.26% 2007 - 08 16,98,25,826 13,80,281 0.81% 4,05,330 0.24% 2008 - 09 22,61,71,179 12,20,517 0.54% 4,29,221 0.19% 2009 - 10 24,74,98,742 6,94,327 0.28% 4,99,176 0.20% 2010 - 11 5,68,03,899 12,18,504 2.15% 5,66,669 1.00% 6. FROM THE RECORD, WE ALSO FOUND THAT EVEN IN THE A.Y. 2011 - 12, PURCHASES FR OM SUSPICIOUS DEALERS WERE FOUND TO THE TUNE OF RS.3,64,41,970/ - , OUT OF WHICH AO HAS DISALLOWED 2.24% I.E., RS.8,16,300/ - . 7. FROM THE RECORD, WE ALSO FOUND THAT AO HAS RELIED UPON AN AFFIDAVIT DATED 18 .7.2011 OF PRAVIN MERAJ BISHNOI / SHAH STATING THAT HE IS THE PROPRIETOR OF FOUR CONCERNS I.E. BLUE NILE ENTERPRISES, RAJ TRADERS, OM CORPORATION & SHAKTI TRADING CORPORATION. HOWEVER, ALL THESE CONCERNS ARE HAVING DIFFERENT PROPRIETORS AND DIFFERENT PAN. AO HAS ALSO RELIED UPON A VISIT REPORT OF ASST. COMM ISSIONER, SANJAY S. PAWAR, MUMBAI IN RESPECT OF ONE CONCERN NAMELY JITENDRA ENTERPRISES. HOWEVER, THE ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 5 ASSESSEE HAS NOT PURCHASE D ANY GOODS FROM THE SAID CONCERN AT ALL. AS PER RECORD, THE ASSESSEE HAS ASKED FOR THE COPIES OF STATEMENTS OF THE DIFFERENT PER SONS UPON WHICH THE AO WAS RELYING UPON AS WELL AS THEIR CROSS EXAMINATION. IT HAS BEEN STATED IN THE ASSESSEE 'S SUBMISSION WHICH IS REPRODUCED IN THE ASSESSMENT ORDER ITSELF AT PAGE 6 (TOP). THIS OBSERVATION IN AOS ORDER CLEARLY INDICATES THAT GROUND NO. 3 TAKEN BY REVENUE IS NOT CORRECT. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF 2.5% OF SUCH ALLEGED PURCHASES. WE DIRECT ACCORDINGLY. 8. IN ITS APPEAL, ASSESSEE IS A LSO AGGRIEVED FOR THE ADDITION OF RS.5,63,224/ - MADE U/S. 69A OF THE ACT. 9 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 10 . FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO EXPLAIN SOURCES OF PAYMEN T TOWARDS PURCHASE OF PROPERTY. THE TOTAL COST OF THE PROPERTY COMPUTED BY THE A.O. IS RS.50,60,060/ - , INCLUDING STAMP DUTY AND REGISTRATION CH ARGES OF RS.2,22,900/ - & RS.31, 160/ - RESPECTIVELY. ACCORDINGLY AFTE R GIVING EFFECT TO THE HOUSING LOAN TAKEN FROM R ELIANCE AT RS.43,96,936/ - AND PAYMENT FORM CURRENT ACCOUNT AMOUNTING TO RS.1 , 00,000/ - , THE REMAINING AMOUNT OF RS.5, 63,224/ - WAS TREATED BY AO AS UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 1 1 . BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE AD DITION SO MADE BY THE AO. ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 6 12 . LEARNED AR HAS DRAWN OUR ATTENTION TO THE LOAN SANCTION LETTER IN RESPECT OF L OAN TAKEN FROM RELIANCE HOME FINANCE AMOUNTING TO RS.47,65,000/ - WHICH WAS TAKEN BY THE AO AT RS.43,96,936/ - . FURTHER, THE AO HAS OVERLOOKED THE DEB ITS FOR OBTAINING PAY ORDERS FOR STAMP DUTY AND REGISTRATION CHARGES ON 24.12.2009 IN THE SAME CURRENT ACCOUNT FROM WHERE AMOUNT OF RS.1,00,000 HAS BEEN PAID BY THE ASSESSEE AS DULY NOTED IN THE ASSESSMENT ORDER. 1 3 . OUR ATTENTION WAS ALSO INVITED TO THE L OAN SANCTION LETTER BY THE RELIANCE HOME FINANCE AND ALSO THE RELEVANT BANK STATEMENT. IT APPEARS THAT AO HAS NOT PROPERLY APPRECIATED THE DOCUMENTARY EVIDENCE PLACED ON RECORD. IN THE INTEREST OF JUSTICE, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO FOR VERIFYING THE CORRECT AMOUNT OF LOAN TAKEN FROM RELIANCE HOME FINANCE , PAY ORDERS MADE BY THE ASSESSEE FROM HIS OWN BANK ACCOUNT TOWARDS THE STAMP DUTY AND REGISTRATION CHARGES. ACCORDINGLY, AO IS TO DECIDE THE ISSUE AFRESH. NEEDLESS TO SAY THAT ASSES SEE SHOULD BE G IVEN FULL OPPORTUNITY BEFORE DECIDING THE ISSUE. 1 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 21 / 04 /2017 S D/ - ( SA KTIJIT DEY ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 21 / 04 /201 7 KARUNA SR. PS ITA NO. 1129 & 4881 /MUM/2015 SHRI DHARMESH VINAYKUMAR SHAH 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE A PPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//