INCOME TAX OFFICER 32(3)(1), MUMBAI V. RAJESH MADHUKAR INGALE, MUMBAI

ITA 1188/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2705 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RITESH G GATTA NI
• Keywords: Bogus purchase; Accommodation entries; Set aside
• Section: 133(6); 143(1); 13; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 1188 /MUM/201 9 (A.Y: 2009 - 10 ) INCOME TAX OFFICER - 32(3)(1) ROOM NO. 107, C - 11 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI - 400 051 V. SHRI RAJESH MADHUKAR INGALE A - 9, SAINATH WADI SUDASINI PAWASKAR ROAD GHARTAN PADA, DAHISAR ( E ) MUMBAI 400 068 PAN: AGGPD6265J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RITESH G. GATTA NI DEPARTMENT BY : SHRI KIRAN UNAVEKAR DATE OF HEARING : 27 .02.2020 DATE OF PRONOUNCEMENT : 13 .03 . 2020 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) 44 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 20.12.2018 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO RS.43,750/ - (@ 25% OF RS.1,74,998/ - ) ON ACCOUNT OF BOGUS PURCHASES, WITHOUT 2 ITA NO. 1188/MUM/2019 (A.Y: 2009 - 10) SHRI RAJESH MADHUKAR INGALE APPRECIATING THE FACT THAT THE SALES TAX DEPARTMENT HAS PROVED BEYOND DOUBT THAT THE PARTIES DECLARED AS HAWALA TRADER WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRY OF PURCHASES AND THE ASSESSEE WAS ONE OF THE BENEFICIARY OF ACCEPTING ACCOMMODATION FOR THE PURCHASE.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE RATIO OF THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF N.K. PROTIENS LTD. WHEREIN IT WAS CONFIRMED THAT IN THE EVENT OF BOGUS PURCHASES, THE ADDITION O N THE WHOLE OF SUCH PURCHASE WAS REQUIRED TO BE MADE AND THIS PARTICULAR RATIO WAS CONFIRMED BY THE HON'BLE SUPREME COURT IN SLP NO. CC NO.769 OF 2017 DATED 16.01.2017, BY DISMISSING THE SLP OF THAT ASSESSEE,' 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED'. 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND'. 3. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE IS AN INDIVIDUAL AND FILED RETURN OF INCOME FOR THE A.Y. 2009 - 10 ON 30.09.2009 DECLARING INCOME OF . 1,93,670 / - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATIO N FROM THE SALES TAX DEPARTMENT, MUMBAI AND DGIT(INV.) MUMBAI ABOUT THE ACCOMMODATION EN TRIES 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 REC EIVED FROM SALES TAX DEPARTMENT, MUMBAI AND DGIT(INV.), MUMBAI THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM THE DEALERS AS MENTIONED IN THE ASSESSMENT ORDER WHO ARE SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANSPORTATION OF ANY GOODS. IN THE RE - ASSESSMENT PROCEEDINGS, THE 3 ITA NO. 1188/MUM/2019 (A.Y: 2009 - 10) SHRI RAJESH MADHUKAR INGALE ASSESSEE WAS REQUIRED TO PRO VE THE GENUINENESS OF THE PURCHASES MADE FROM THE PARTIES WHICH ARE REFERRED IN THE ASSESSMENT ORDER. THE ASSESSEE NEITHER FURNISH ANY DETAILS AS CALLED FOR NOR PRODUCED THE PARTIES TO PROVE THE GENUINENESS OF THE PURCHASES. 4. 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. ASSESSING OFFICER OBSERVED THAT NOT ICE ISSUED U/S. 133(6) OF THE ACT TO THE PART IES AND NO REPLY HAS BEEN RECEIVED FROM THE PARTIES CONFIRMING THE TRANSACTION ENTERED WITH THE ASSESSEE AND THE ASSESSEE HAS NOT PRODUCED THE PARTY BEFORE THE ASSESSING OFFICER . THEREFORE, ASSESSING OFFICER TR EATED ENTIRE PURCHASES OF . 1,74,998 / - 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 THE EXTENT 25 % OF THE NON - GENUINE PURCH ASES. 5. LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND THE LD. COUNSEL FOR THE ASSESSEE STRONGLY PLACED RELIANCE ON THE ORDER OF THE LD.CIT(A). 4 ITA NO. 1188/MUM/2019 (A.Y: 2009 - 10) SHRI RAJESH MADHUKAR INGALE 6. HEARD BOTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENT S IN THE ASSESSMENT ORDER, REFERRING TO VARIOUS DECISIONS OF THE COORDINATE BENCHES AND ALSO THE DECISION OF THE ASSESSING OFFICER IN A SSESSEES OWN CASE FOR THE A.Y. 2010 - 11 RESTRICTED THE DISALLOWANCE TO 25 % OF THE NON - GENUINE PURCHASES WHILE ESTIMATING T HE PROFIT ELEMENT @ 25 %, THE LD.CIT(A) OBSERVED AS UNDER: - 8.4.7. THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL REMAIN SAME AS THAT OF IN THE APPELLANT'S OWN CASE FOR AY 2010 - 11, I.E. THEREIN ALSO THE ASSESSMENT WAS REOPENED AFTER RECEIVING INFORMATI ON FROM THE DGIT (INVESTIGATION) AND SALES TAX DEPARTMENT THAT THE APPELLANT IS BENEFICIARY OF BOGUS PURCHASE BILLS ISSUED BY CERTAIN PARTIES. IN FACT ONE OF THE PARTIES M/S GARIMA STEEL TRADERS IS INVOLVED IN BOTH THE ASSESSMENT YEARS. IN AY 2010 - 11, THE LD. AO HAS NOT DISALLOWED/ADDED THE ENTIRE AMOUNT OF BOGUS PURCHASES, BUT HAS DISALLOWED/ADDED ONLY PROFIT ELEMENT EMBEDDED THEREIN @ 25%. APPARENTLY, THE APPELLANT HAS ALSO ACCEPTED THE SAID DISALLOWANCE/ADDITION MADE IN. AY 2010 - 11. IN THE ASSESSMENT YEA R UNDER CONSIDERATION ALSO THE LD. AO HAS NOT DOUBTED THE GENUINENESS OF SALE EFFECTED AND HAS TAXED THE SAME AS SUCH. THE LD. AO HAS NOT EVEN REJECTED THE BOOKS OF THE APPELLANT AS HE DID IN APPELLANT'S OWN CASE FOR AY 2010 - 11. IN VIEW OF THE FACTS AND CI RCUMSTANCES, WHICH REMAIN SIMILAR AS THAT OF IN APPELLANT'S OWN CASE FOR AY 2010 - 11 WHEREIN THE LD. AO HAS DISALLOWED 25% OR PURCHASES HELD TO BE BOGUS BY HIM, I AM OF THE CONSIDERED OPINION THAT IN THE PRESENT ASSESSMENT YEAR THE LD. AO WAS NOT JUSTIFIED IN DISALLOWING/ADDING THE ENTIRE BOGUS PURCHASES, AS HELD BY HIM. I AM ALSO IN AGREEMENT WITH THE FINDING OF THE LD. AO IN APPELLANT'S OWN CASE FOR AY 2010 - 11 THAT IN SUCH CASES, THE PROFIT ELEMENT EMBEDDED IN OBTAINING SUCH BILLS NEED TO BE TAXED. SINCE, IN AY 2010 - 11, THE LD. AO HAS DISALLOWED 25% OF SUCH BOGUS PURCHASES AS HELD BY HIM AND APPARENTLY THE APPELLANT HAS ALSO ACCEPTED THE SAME, SO IN THE 5 ITA NO. 1188/MUM/2019 (A.Y: 2009 - 10) SHRI RAJESH MADHUKAR INGALE ASSESSMENT YEAR UNDER CONSIDERATION, THE LD. AO IS DIRECTED TO RESTRICT THE DISALLOWANCE/ADDITION TO THE EXTENT OF 25% OF BOGUS PURCHASES HELD BY HIM. HENCE, THE DISALLOWANCE/ADDITION TO THE EXTENT OF RS. 43,7507 - (BEING 25% OF RS. 1,74,998/ - ) IS CONFIRMED AND BALANCE DISALLOWANCE/ADDITION OF RS.L,31,248 / - (RS. 1,74,998 - RS. 43,750) IS DELETED. ACCORDINGLY, THE GROUND NOS. 3 TO 6 RAISED IN APPEAL ARE PARTLY ALLOWED. 7. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND THE REASONS GIVEN THEREIN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). NONE OF THE FINDINGS AND OBSERVA TIONS OF THE LD.CIT(A) HAVE BEEN REBUTTED WITH EVIDENCES BY THE REVENUE AND THUS WE DO NOT SEE ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN SUSTAINING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 25 % OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH MARCH, 2020 SD/ - SD/ - ( S. RIFAUR RAHMAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 13/ 0 3 / 2020 GIRIDHAR , S R. PS 6 ITA NO. 1188/MUM/2019 (A.Y: 2009 - 10) SHRI RAJESH MADHUKAR INGALE COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 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