INCOME TAX OFFICER 17(2)(3), MUMBAI V. M/S.MANILAL SANGHVI (BOMBAY), MUMBAI

ITA 1199/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4038 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY JAISWAL DR
• Keywords: Bogus purchase; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI , , $ BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER . 1199 //201 9 (. . 2009-10 ) ITA NO. 1199/MUM/2019 (A.Y.2009-10) ITO 17(2)(3), ROOM NO.123B, 1 ST FLOOR, AAYAKAR BHAVAN, MUMBAI 400003 ...... - / APPELLANT VS. M/S MANILAL SANGHVI (BOMBAY) 158/160, NARAYAN DHURU STREET, MASJID BUNDER, MUMBAI-400003. PAN: AAAFM2359N ..... ./ RESPONDENT - 0/ APPELLANT BY : SHRI VIJAY JAISWAL [DR (CIT)] . 0/ RESPONDENT BY : NONE 1 / DATE OF HEARING : 22/10/2020 1 / DATE OF PRONOUNCEMENT : 27/10/2020 / ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-57, MUMBAI [IN SHORT (THE CIT(A)] DATED 26.12.2018 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA 1199 MUM 2019-M/S MANILAL SANGHVI 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS A DEALER IN CONVEYOR BELTS, V BELTS AND ENGINEER ING PRODUCTS. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOV ERNMENT OF MAHARASHTRA, THE ASSESSMENT FOR A.Y. 2009-10 IN THE CASE OF ASSE SSEE WAS RE-OPENED. AS PER THE INFORMATION RECEIVED, THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS TO THE TUNE OF RS. 17,20,831/- FROM SUSPICIOUS DEALERS . THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS HELD THAT THE ASSESSEE COULD NOT PRODUCE THE PARTIES FROM WHOM PURCHASES WERE MADE AND THE DOCUMENTS TO PROVE TRAIL OF GOODS ALLEGEDLY PURCHASED. THE ASSESSING OFFICER ESTIMATE D GROSS PROFIT @ 12.5% ON BOGUS PURCHASES AND MADE ADDITION OF RS. 2,15,103/- . AGGRIEVED BY THE ASSESSMENT ORDER DATED 22.09.2014 PASSED UNDER SECT ION 143(3) R.W.SEC. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) RESTRICTED THE ADDITION TO 8% OF THE TOTAL PURCHASES AND THUS, CONFIRMED THE ADDITION OF RS. 1 ,37,666/-. AGAINST THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 3. SHRI VIJAY JAISWAL REPRESENTING THE DEPARTMENT S UBMITTED THAT THOUGH THE TAX EFFECT INVOLVED IN THE APPEAL IS LESS THAN THE MONETARY LIMIT PRESCRIBED BY THE BOARD VIDE CIRCULAR NO. 17/2019 DATED 08.08. 2019, HOWEVER, THE PRESENT CASE FALLS UNDER EXCEPTION-10(E) OF CIRCULA R DATED 11.07.2018 AND ITS SUBSEQUENT AMENDMENT DATED 20.08.2018. THE LD. DR V EHEMENTLY SUPPORTING THE ASSESSMENT ORDER SUBMITTED THAT THE ASSESSEE HA S FAILED TO PRODUCE PARTIES FROM WHOM ALLEGED PURCHASES WERE MADE AND DELIVERY CHALLAN, LORRY RECEIPTS ETC. TO SUBSTANTIATE THAT THE GOODS WERE RECEIVED B Y THE ASSESSEE. IN THE LIGHT OF THE FACTS, THE ASSESSING OFFICER WAS JUSTIFIED I N ESTIMATING GROSS PROFIT AT 12.5% OF BOGUS PURCHASES. THE LD. DR PRAYED FOR REV ERSING THE FINDINGS OF CIT(A) AND RESTORING THE ORDER OF ASSESSING OFFICER . 3 ITA 1199 MUM 2019-M/S MANILAL SANGHVI 4. WE HAVE HEARD THE SUBMISSIONS MADE BY LD. DR AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. IT IS AN UNDISPUTED FA CT THAT THE ASSESSEE HAS INDULGED IN PROCURING BOGUS PURCHASE BILLS FROM HAW ALA OPERATORS. SINCE THE SALES MADE BY ASSESSEE AGAINST ALLEGED BOGUS PURCHA SES ARE NOT QUESTIONED BY THE DEPARTMENT, THE POSSIBILITY IS THAT THE ASSESSE E MIGHT HAVE PROCURED GOODS FROM GREY MARKET AND THEREAFTER OBTAINED BOGUS BILL S FROM ENTRY PROVIDERS. IN THESE FACTS, IT IS ONLY THE PROFIT EMBEDDED IN BOGU S PURCHASE BILLS THAT HAS TO BE BROUGHT TO TAX. THE ESTIMATION OF GROSS PROFIT AT 1 2.5% BY THE ASSESSING OFFICER IS ON HIGHER SIDE, THEREFORE, THE CIT(A) ESTIMATED GROSS PROFIT AT 8% ON BOGUS PURCHASES. THE ESTIMATION OF GROSS PROFIT AT 8% BY CIT(A) IS FAIR AND REASONABLE. WE FIND NO REASON TO INTERFERE WITH THE SAME. THE I MPUGNED ORDER IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED. 5. NO APPEAL FILED BY THE ASSESSEE HAS BEEN BROUGHT TO OUR NOTICE BY THE OFFICE REGISTRY. IN CASE THERE IS CROSS APPEAL BY T HE ASSESSEE ASSAILING THE ORDER OF CIT(A) FOR THE IMPUGNED ASSESSMENT YEAR, THE PRE SENT ORDER MAY BE RECALLED AND BOTH THE APPEALS CAN BE DECIDED TOGETHER. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON TUESDAY THE 27 TH DAY OF OCTOBER, 2020. SD/- ./- SD/- SD./- (RAJESH KUMAR) (VIKAS AW ASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 5/ DATED: 27/10/2020 S.K., PS . 6 . 6 . 6 . 6 COPY OF THE ORDER FORWARDED TO : 4 ITA 1199 MUM 2019-M/S MANILAL SANGHVI 1. - / THE APPELLANT , 2. . / THE RESPONDENT. 3. 7 ( )/ THE CIT(A)- 4. 7 CIT 5. . , . . . , / DR, ITAT, MUMBAI 6. : / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI