ANAND GOVIND VYAS, MUMBAI V. INCOME TAX OFFICER-19(1)(1), MUMBAI

ITA 1421/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5536 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 07-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Reopening of assessment; Bogus purchase
• Section: 133(6); 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 1421 /MUM/ 2018 (ASSESSMENT YEAR 20 10 - 11 ) MR. ANAND GOVIND VYAS BLOCK NO. 401, HAVELI CHANDAVARKAR KOS, CHANDAVARKAR ROAD BORIVALI WEST MUMBAI - 400 092. PAN : ABVPV2601C V S . ITO - 19(1)(1) MATRU MANDIR MUMBAI - 400 007. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAVINDRA POOJARY DEPARTMENT BY SHRI ARJU GARODIA DATE OF HEARING 5 . 11 . 201 8 DATE OF PRONOUNCEMENT 5 . 11 . 201 8 O R D E R THE ASSESSEE H AS FILED THIS APPEAL CHALLENGING THE ORDER DATED 22.12.2017 PASSED BY THE LEARNED CIT(A) - 53, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE VALIDITY OF REOPENING OF ASSESSMENT AND AL SO IN CONFIRMING THE ADDITION MADE TOWARDS ALLEGED BOGUS PURCHASES. 2. AT THE TIME OF HEARING, LEARNED AR DID NOT ADVANCE ARGUMENTS ON VALIDITY OF REOPENING AND HENCE THE SAID GROUND IS DISMISSED. 3. WITH REGARD TO ISSUE OF ADDITION RELATING TO BOGUS PUR CHASES, I NOTICED THAT THE REVENUE HAS RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN DEALERS ARE PROVIDING ONLY BOGUS BILLS WITHOUT ACTUALLY SUPPLYING THE MATERIAL S . THE ASSESSEE IS A TRADER IN IRON AND STEEL. IT WAS NOTICED THAT THE ASSE SSEE HAS PURCHASED MATERIAL S FROM ONE OF SUCH DEALER S NAMED M/S. GEETA BRIGHT TO THE TUNE OF RS 55.32 LAKHS. THE ASSESSING OFFICER ISSUED NOTICE TO THE SUPPLIER SATED ABOVE BUT THE SAME WAS RETURNED UNSERVED. THE ASSESSING MR. ANAND GOVIND VYAS 2 OFFICER ALSO ASKED THE ASSESSEE TO PRODUCE THE SUPPLIER BUT THE ASSESSEE COULD NOT OBTAIN CONFIRMATION LETTER AND HE COULD NOT PRODUCE THE SUPPLIER BEFORE THE ASSESSING OFFICER. THE ASSESSEE FURNISHED COPIES OF INVOICES AND DETAILS OF PAYMENT AND ALSO RECONCILED PURCHASES WITH SALES. TH E ASSESSEE ALSO COULD NOT FURNISH EVIDENCE FOR TRANSPOR T OF MATERIAL FROM SUPPLIERS PLACE TO ASSESSEES PLACE. ACCORDINGLY, THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE HAS NOT PROVED THE PURCHASE S AND ACCORDINGLY, PROPOSED TO ESTIMATE THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. THE ASSESSING OFFICER ESTIMATED THE PROFIT ELEMENT AT 12.5% AND ACCORDINGLY DISALLOWED A SUM OF RS 6.79 LAKHS AS ADDITION RELATING TO BOGUS PURCHASES. THE LEARNED CIT(A) CONFIRMED THE SAME BY FOLLOWING THE DECISION REND ERED BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (219 TAXAMAN 85). AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS DECLARED GROSS PROFIT IN THE RANGE OF 3.5% TO 4% CONSIS TENTLY OVER THE PAST AND SUBSEQUENT YEARS. ACCORDINGLY, LEARNED AR SUBMITTED THAT ADDITION MAY BE RESTRICTED TO GROSS PROFIT RATIO DECLARED BY THE ASSESSEE. 5. ON THE CONTRARY, LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE BOGUS PURCHASE S AND HENCE ENTIRE PURCHASES SHOULD HAVE BEEN DISALLOWED, WHEREAS, ASSESSING OFFICER WAS FAIR ENOUGH TO RESTRICT THE ADDITION TO 12.5% . A CCORDINGLY, SHE SUBMITTED THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 6. I HAVE HE ARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ADMITTEDLY THE ASSESSEE HAS PURCHASED THE GOODS FROM A DEALER WHO HAS FOUND TO BE A HAWAL DEALER . T HOUGH THE ASSESSEE COULD FURNISH COPIES OF INVOICES AND PAYMENT DETAILS, YET HE COULD NOT PRODUCE THE SUPPL IER BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO COULD NOT FURNISH CONFIRMATION LETTER FROM THE SUPPLIERS, EVIDENCE FOR TRANSPORT OF MATERIAL ETC. NOTICE ISSUED BY THE ASSESSING OFFICER U/S. 133(6) HAS BEEN RETURNED UNSERVED. UNDER THESE SET OF MR. ANAND GOVIND VYAS 3 FACTS, I AM OF THE VIEW THAT THE ASSESSEE CANNOT BE SAID TO HAVE PROVED PURCHASES CONCLUSIVELY. IN THIS VIEW OF THE MATTER, THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES IS REQUIRED TO BE ASSESSED. I NOTICED THAT THE ASSESSING OFFICER ESTIMATED THE PROFIT ELEMEN T AT 12.5%. I ALSO NOTICED THAT T HE VAT RATE APPLICABLE TO THE PRODUCTS DEALT WITH BY THE ASSESSEE IS 4%. CONSIDERING VAT RATE OF THE ASSESSEE, I AM OF THE VIEW THAT PROFIT RATE OF 12.5% ESTIMATED BY THE ASSESSING OFFICER IS ON HIGHER SIDE. ACCORDINGLY, I MODIFY THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO ADOPT PROFIT ELEMENT @ 6% OF THE V ALUE OF ALLEGED BOGUS PURCHASES AND SUSTAIN ADDITION TO THAT EXTENT. I ORDER ACCORDINGLY, 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 5 . 11 . 201 8 . SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 5 / 11/ 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI