ITO 28 (1)(1), Mumbai V. SHRI. AMEER MOHD. ISMALL BASHA, Mumbai

ITA 1325/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5858 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ITA NO. 1325 & 1326 /MUM/201 9 ( ASSESSMENT YEAR: 2010 - 11 & 2011 - 12 ) I.T.O. - 28 ( 1 )( 1 ), ROOM NO. 329, 3 RD FLOOR, 6 TH TOWER, VASHI RAILWAY STATION COMPLEX , VASHI, NAVI MUMBAI - 400703. VS. SHRI AMEER MOHD. ISMAIL BASHA, NL/6, BUILDING NO. 5, ROOM NO. 2, GREEN PARK OWNERS ASSOCIATION, SECTOR - 15, NERUL, NAVI MUMBAI - 400706. PAN/GIR NO. AZBPS 4257 K (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI MOHAMMED RIZWAN ( ADDL.CIT ) ASSESSEE BY NONE DATE OF HEARING 05/03 /2020 DATE OF PRONOUNCEMENT 11 / 0 3 /20 20 / O R D E R PER: R.C. SHARMA, A.M. THESE ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S OF THE LD. CIT(A) - 26 , MUMBAI DATED 21/12/ 2018 FOR THE A.Y. 2010 - 11 & 2011 - 12 IN THE MATTER OF ORDER PASSED U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN BOTH THESE APPEALS, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) FOR RESTRICTING THE ADDITION O N ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF 12.5% . 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. GOT INFORMATION FROM THE SALES TAX DEPARTMENT ITA NO. 1325 & 1326 /MUM/2019 ITO VS SHRI AMEER MOHD. ISMAIL BASHA 2 REGARDING ASSESSEE BEING ENGAGED IN TAKING ACCOMMODATION BILL WITH REGAR D TO BOGUS PURCHASES. THE A.O. REOPENED THE ASSESSMENT AND ADDED 28.79% OF SUCH PURCHASES IN ASSESSEES INCOME. 4 . BY THE IM PUGNED ORDER, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% AFTER OBSERVING AS UNDER: 6. I HAVE CONS IDERED THE FACTS OF THE CASE AND THE APPELLANT'S SUBMISSIONS. 6.1. GROUND OF THE APPEAL IS AGAINST ADDITION OF RS. 7,54,605/ - BEING 28.29% OF NON - GENUINE PURCHASES OF RS 26,21,0697 - . AS PER THE INVESTIGATIONS CARRIED OUT BY THE SALES TAX AUTHORITIES, THE AFOREMENTIONED PARTY WAS FOUND TO BE INVOLVED IN GIVING ACCOMMODATION ENTRIES ONLY WITHOUT ACTUALLY SUPPLYING THE GOODS. THE LOGICAL INFERENCE IS THAT THE PURCHASES MADE BY THE APPELLANT WOULD ALSO BE IN THE NATURE OF ACCOMMODATION E NTRIES ONLY. TO VERIFY THE SAME, THE AO HAD MADE ENQUIRIES BY ISSUING NOTICES U/S 133(6) WHICH WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THIS PARTY WAS FOUND TO BE NONEXISTENT AT THE ADDRESS GIVEN BY THE APPELLANT. THE APPELLANT ALSO FAILED TO PROV IDE THE LATEST ADDRESS OF THE PARTY. DURING THE SCRUTINY ASSESSMENT THE APPELLANT FURNISHED DETAILS OF PURCHASES AND CORRESPONDING SALES. HOWEVER, THE APPELLANT COULD NOT PRODUCE THE PARTY BEFORE THE AO IN SPITE OF OPPORTUNITY BEING GIVEN. THE APPELLANT AL SO FAILED TO PRODUCE DELIVERY CHALLANS OR TRANSPORTATION DETAILS. THE ONUS OF PROVING THE GENUINENESS OF SUCH PURCHASES IS ON THE APPELLANT WHICH THE APPELLANT HAD NOT BEEN ABLE TO DISCHARGE 'FULLY. WHEN THE HAWALA PARTY HAD ADMITTED ON OATH THAT IT HAD GI VEN ACCOMMODATION ENTRIES ONLY WITHOUT ACTUALLY SUPPLYING THE GOODS, THE GENUINENESS OF PURCHASES MADE FROM THESE PARTIES WILL HAVE TO BE CONSIDERED TAKING THIS INTO CONSIDERATION WHILE EXAMINING THE DOCUMENTATION 1 P ITA NO. 1325 & 1326 /MUM/2019 ITO VS SHRI AMEER MOHD. ISMAIL BASHA 3 SUBMITTED BY THE APPELLANT IN SUPPORT O F ITS CLAIM. THE DOCUMENTARY EVIDENCES SUCH AS PURCHASE BILLS, PAYMENTS BY CHEQUES, ETC. WOULD ALL HAVE BEEN ORCHESTRATED TO PRESENT A FACADE OF GENUINENESS AND DOES NOT NECESSARILY MEAN THAT THE PURCHASES FROM THESE PARTIES ARE GENUINE. THE COURTS HAVE HE LD THAT PAYMENT BY CHEQUE BY ITSELF IS NOT SACROSANCT SO AS TO PROVE GENUINENESS OF PURCHASES WHEN THE SURROUNDING CIRCUMSTANCES ARE SUSPECTED. HOWEVER, THE ASSESSEE HAS SHOWN ONWARD SALES WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. SINCE THERE CA N BE NO SALES WITHOUT CORRESPONDING PURCHASES, THE ONLY LOGICAL EXPLANATION IS THAT THE APPELLANT WOULD HAVE MADE PURCHASES FROM UNDISCLOSED PARTIES IN THE GREY MARKET AT LOWER RATES AND PURCHASES , WERE SHOWN AS BEING MADE FROM THE IMPUGNED PARTIES TO SUP PRESS ITS PROFITS. IN SUCH A SITUATION, THE VARIOUS COURTS INCLUDING THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH, 356 ITR 451 HAVE HELD THAT NOT THE ENTIRE PURCHASES BUT ONLY THE PROFIT ELEMENT EMBEDDED IN THESE PURCHASES WAS TO BE DISALLOWED AND ACCORDINGLY HELD THAT 12.5% OF THE PURCHASES WILL BE REASONABLE AS PROFIT ON MARGIN AGAINST THE BOGUS PURCHASES. IN VIEW OF THIS DECISION OF HON'BLE GUJARAT HIGH COURT (SUPRA), THE ADDITION MADE BY THE AO IS RESTRICTED TO 12.5% OF THE TOTAL ALLEGED BOGUS PURCHASES AMOUNTING TO RS. 26,21,069 / - WHICH SHOULD SUFFICIENTLY COVER THE PROFIT ELEMENT EMBEDDED IN THE IMPUGNED PURCHASES. THE APPELLANT'S GROUNDS OF APPEAL ARE PARTLY ALLOWED. 5 . WE FOUND FROM THE RECORD THAT THE LD. CIT(A) AFTER CONSID ERING VARIOUS JUDICIAL PRONOUNCEMENTS AND APPLYING THE SAME TO THE FACTS OF THE CASE, THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5%. THE DETAILED FINDING SO RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD DR BY BRINGING A NY POSITIVE MATERIAL ON RECORD. ITA NO. 1325 & 1326 /MUM/2019 ITO VS SHRI AMEER MOHD. ISMAIL BASHA 4 ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) FOR UPHOLDING THE ADDITION TO THE EXTENT OF 12.5% . HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A). 6. SINCE THE FACTS AND CIRCUMSTANCES OF BO TH THE YEARS ARE SAME, THEREFORE, BY FOLLOWING THE REASONING GIVING IN TH E APPEAL FOR THE A.Y. 2010 - 11, WE ALSO UPHOLD THE ACTION OF THE LD. CIT(A) FOR THE A.Y. 2011 - 12. 7 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 1 1 TH MARCH , 2020 . SD/ - ( PAWAN SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 11 /0 3 /2020 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//