MUMTAZ ALI NASRUDDIN KAPOOR, MUMBAI V. INCOME TAX OFFICER 27(2)(3), MUMBAI

ITA 1171/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8023 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ARUNKUMAR SINGH
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1171/M/2018 ASSESSMENT YEAR: 2009-10 MRS. MUMTAZ ALI NASRUDDIN KAPOOR, 174, HILL NO.4, AZAD NAGAR, GHATKOPAR WEST, MUMBAI 400 086 PAN: AKCPK 4335N VS. INCOME TAX OFICER 27(2)(3), TOWER NO.6, 4 TH FLOOR, VASHI RAILWAY STATION COMPLEX, MUMBAI - 400703 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI DINESH SHAH, A.R. MS. SHREYA DOSHI, A.R. REVENUE BY : SHRI CHOUDHARY ARUNKUMAR SINGH, D.R . DATE OF HEARING : 06.09.2018 DATE OF PRONOUNCEMENT : 25.09.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.03.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE RAISED IN VARIOUS GROUNDS OF APPE AL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.11,41,66 1/- BY LD. CIT(A) THEREBY UPHOLDING THE ORDER OF AO CONFIRMING THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. ITA NO.1171/M/2018 MRS. MUMTAZ ALI NASRUDDIN KAPOOR 2 3. THE FACTS IN BRIEF ARE THAT THE CASE OF THE ASSE SSEE WAS REOPENED BY ISSUE OF NOTICE DATED 26.03.2014 AFTER RECEIVING INFORMATION FROM THE DGIT (INV.), MUMBAI WHO IN TUR N GOT INFORMATION FROM SALES TAX DEPARTMENT, GOVERNMENT O F MAHARASHTRA THAT ASSESSEE IS A BENEFICIARY OF ACCOM MODATION ENTRIES TO THE TUNE OF RS.11,41,661/- FROM FIVE PAR TIES AS STATED IN PARA 3 OF THE ASSESSMENT ORDER. THEREAFTER, THE ASSESSEE VIDE LETTER DATED 05.05.2014 SUBMITTED THAT THE RETURN F ILED ORIGINALLY MAY KINDLY BE TREATED AS RETURN FILED IN RESPONSE T O NOTICE UNDER SECTION 148 OF THE ACT. THE REASONS RECORDED U/S 1 48(2) OF THE ACT FORMING A BELIEF ON THE ISSUE OF REOPENING WAS ALSO SUPPLIED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE SUPPLIED THE INFORMATION AS DESIRED BY THE AO IN THE FORM OF PURCHASE INVOICE, BANK STATEMENTS EVIDE NCING THE PAYMENT BY ACCOUNT PAYEE CHEQUES ETC. HOWEVER, THE NOTICE ISSUED UNDER SECTION 133(6) BY THE AO IN ORDER TO V ERIFY ALL THESE PARTIES WERE RETURNED UNSERVED. FINALLY, THE AO N OT BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS TAKEN ACCOMMODATIO N ENTRIES FROM THE HAWALA PARTIES AS ARE BROUGHT OUT BY THE S ALES TAX DEPARTMENT AS STATED IN PARA 3 OF THE ASSESSMENT OR DER AND ADDED THE ENTIRE PURCHASES TO THE TUNE OF RS.11,41, 661/- BY FRAMING THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 25.03.2015. 4. THE LD. CIT(A) ALSO AFFIRMED THE ADDITION AS MAD E BY THE AO BY OBSERVING THAT THE ASSESSEE IS A BENEFICIARY OF HAWALA ENTRY OPERATOR AND THE NECESSARY VERIFICATION BY TH E AO COULD NOT BE CARRIED OUT DUE TO NON SERVICE OF NOTICES UN DER SECTION ITA NO.1171/M/2018 MRS. MUMTAZ ALI NASRUDDIN KAPOOR 3 133(6) OF THE ACT AS THE PARTIES WERE NOT AVAILABLE AT ADDRESSES SUPPLIED BY THE ASSESSEE. THE LD. CIT(A) FURTHER O BSERVED THAT IT IS NOT ENOUGH THAT COPIES OF PURCHASE BILLS AND BAN K STATEMENTS TO SUBSTANTIATE THE SAID PURCHASES AND THUS THE ASS ESSEE HAS NOT DISCHARGED THE ONUS CAST UPON HIM TO PROVE THE GENUINENESS OF THE PURCHASES. FURTHER, THE ASSESSEE HAS ALSO N OT MAINTAINED THE STOCK REGISTER. FINALLY, THE ADDITION OF RS.11 ,41,661/- WAS AFFIRMED ON ACCOUNT OF NON GENUINE PURCHASES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE IS A BENEFICIARY OF HAWALA ENTRIE S AND COULD NOT PRODUCE THE NECESSARY EVIDENCES AS REQUIRED BY THE AO FOR THE PURPOSE OF CARRYING OUT THE VERIFICATION AS TO GENUINENESS OF THE SAID PURCHASES. THOUGH THE ASSESSEE PRODUCED T HE PURCHASE BILLS, INVOICES AND COPIES OF BANK STATEME NT BUT IN ABSENCE OF ANY STOCK REGISTER BY THE ASSESSEE, THE VERIFICATION COULD NOT BE CARRIED OUT. THE LD. CIT(A) AFFIRMED THE ORDER OF AO TREATING THE ENTIRE PURCHASES AS NON GENUINE. NORM ALLY IN THE BUSINESS OF HAWALA PURCHASES THE MODUS OPERANDI OF THE BENEFICIARY IS THAT THE ACCOMMODATION BILLS ARE OBT AINED FROM THE HAWALA OPERATOR WHEREAS THE MATERIAL IS PROCURE D FROM THE GREY MARKET AND THUS THE ASSESSEE MAKES SAVINGS OF VAT AND OTHER INCIDENTAL CHARGES THEREON. IN SUCH A SCENAR IO THE CO- ORDINATE BENCHES OF THE TRIBUNAL HAVE TAKEN A CONSI STENT VIEW THAT ENTIRE PURCHASES CAN NOT BE ADDED TO THE INCOM E OF THE ASSESSEE AND IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN THE SAID ALLEGED BOGUS PURCHASES WHICH HAS TO BE BROUGHT TO TAX. DURING THE YEAR THE ASSESSEE HAS SHOWN A GROSS PROFIT OF 1 4.93% VIS-- VIS THE GP IN THE PRECEDING YEAR OF 10.34%. THERE FORE, WE ARE OF ITA NO.1171/M/2018 MRS. MUMTAZ ALI NASRUDDIN KAPOOR 4 THE OPINION THAT ADDING 100% PURCHASES TO THE INCOM E OF THE ASSESSEE IS NOT JUSTIFIED AND HAS TO BE DELETED. H OWEVER, AT THE SAME TIME, WE ARE OF THE VIEW THAT SOME REASONABLE PROFIT HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE. IN VIEW OF THE DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL, WE ARE OF THE VIEW THAT IT WOULD BE REASONABLE IF THESE PURCHASES ARE BROUGHT TO TAX @ 12.5%. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD . CIT(A) AND DIRECT THE AO TO ADD 12.5% OF THE PURCHASE INSTEAD OF 100%. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.09.2018. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25.09.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.