ITO, 28(1)(2), MUMBAI V. SHRI BABASAHEB ASHOK JAGTAP, MUMBAI

ITA 1424/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4226 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UDAYA BHASKAR JAKKE
• Keywords: Corroborative evidences
• Section: 142(1); 133(6); 143(1); 143(2); 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC ' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 1424 /MUM. /2019 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 2 8 (1)( 2 ), MUMBAI . APPELLANT V/S SHRI BABASAHEB ASHOK JAGTAP A TYPE, 8/10, OPP. NAV PRERNA CHS SECTOR 15, MARATHA BHAWAN ROAD NEAR SABRI HOTEL, VASHI MUMBAI 400 703 PAN AFJPJ3397R . RESPONDENT REVENUE BY : SHRI UDAYA BHASKAR JAKKE ASSESSEE BY : SHRI NAVIN GANDHI DATE OF HEARING 05 . 10 .2020 DATE OF ORDER 08.10.2020 O R D E R THE AFORESAID APPEAL HA S BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 19 TH DECEMBER 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26 , MUMBAI , PERTAINING TO THE ASSESSMENT YEAR 20 09 10 . 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON GENUINE PURCHASES. 2 SHRI BABASAHEB ASHOK JAGTAP 3. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF TRADING IN CONSTRUCTION MATERIAL , CHEMICALS, SILICON AND BUILDING MATERIAL THROUGH I T S PROPRIET ARY CONCERN BEACON ENTERPRISES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 30 TH SEPTEMBER 2 0 09 , DECLARING TOTAL INCOME OF ` 5, 0 1,0 92 . T HE RETURN OF INCOME SO FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, T HROUGH DGIT (INV.), MUMBAI, THAT PURCHASES WORTH ` 4,75,004 , CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM THREE PARTIES , ARE NON GENUINE AS THE CONCERNED PARTIES WERE IDENTIFIED AS A HAWALA OPERATOR S , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER THROUGH NOTICE ISSUED UNDER SECTION 142(1) AND 143(2) OF THE ACT CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES THROUGH SUPPORTING EVIDENCE. FURTHER, TO I NDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER ALSO ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES. HOWEVER, AS ALLEGED BY THE ASSESSING OFFICER, ALL SUCH NOTICES RETURNED BACK UN SERVED. FURTHER, IT I S ALLEGED BY THE ASSESSING OFFICER THAT IN RESPONSE TO THE STATUTORY NOTIC E S ISSUED, NO ONE APPEARED ON BEHALF OF THE ASSESSEE TO PROVE THE GENUINENESS OF 3 SHRI BABASAHEB ASHOK JAGTAP SUCH PURCHASES. ACCORDINGLY, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT TO THE BEST O F HIS JUDGMENT BY INVOKING THE PROVISIONS OF SECTION 144 OF THE ACT. WHILE DOING SO, HE TREATED THE ENTIRE PURCHASES OF ` 4,75,004, AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. IN THE COURSE OF PROCEEDINGS BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESS EE FURNISHED PURCHASE BILLS, BANK STATEMENT, ETC. TO PROVE THE GENUINENESS OF PURCHASES. L EARNED COMMISSIONER (APPEALS), THOUGH , WAS NOT CONVINCED WITH SUCH EVIDENCES, HOWEVER, CONSIDERING THE FACT THAT THE SALES EFFECTED BY THE ASSESSEE WERE NOT DOUBTED O R PROVED TO BE NON GENUINE, HE CONCLUDED THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GREY MARKET , AS OTHERWISE , IN THE ABSENCE OF SUCH PURCHASES, THE ASSESSEE COULD NOT HAVE EFFECTED CORRESPONDING SALES. THEREFORE, RELYING UPON THE DECISION OF TH E HONBLE GUJARAT HIGH COURT, IN CIT V/S SIMIT P. SHETH, 356 ITR 451 (GUJ.), HE PROCEEDED TO RESTRICT THE ADDITION TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES BY ESTIMATING @ 12.5% OF SUCH PURCHASES. 5. I HAVE CONSIDERED RIVAL SUBMISS IONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, SINCE IN RESPONSE TO THE STATUTORY NOTICE S ISSUED 4 SHRI BABASAHEB ASHOK JAGTAP BY THE ASSESSING OFFICER NO ONE APP EARED ON BEHALF OF THE ASSESSEE, H E PROCEEDED TO COMPLETE THE ASSESSMENT EX PARTE , TO THE BEST OF HIS JUDGMENT UNDER SECTION 144 R/W SECTION 147 OF THE ACT BY TREATING THE DISPUTED PURCHASES AS NON GENUINE AND ADDING BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, IT IS A FACT THAT BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE APPEARED AND FURNISHED SOME DOCUMENTARY EVIDENCES , SUCH AS , PURCHASE INVOICES, EVIDENCE OF PAYMENT MADE THROUGH CHEQUE, ETC., TO PROVE THE GENUINENESS OF SUCH PURCHASES. THOUGH, SUCH EVI DENCES COULD NOT FULLY CONVINCE LEARNED COMMISSIONER (APPEALS) WITH REGARD TO THE GENUINENESS OF PURCHASES, HO WEVER, IT IS A FACT ON RECORD THAT THE SALES EFFECTED BY THE ASSESSEE DURING THE YEAR WERE NOT DISPUTED OR DOUBTED BY THE ASSESSING OFFICER. THEREFORE, LOGICAL CONCLUSION WOULD BE , THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM SOME UNVERIFIED SOURCES. IN SUCH SITUATION, THE ENTIRE PURCHASES CANNOT BE DISALLOWED , AS , BY INDULGING IN SUCH ACTIVITY WHAT THE ASSESSEE MIGHT HAVE GAINED IS SOME PROFIT MARGIN. THEREFORE, IN MY CONSIDERED OPINION, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN RESTRICTING THE AD DITION TO THE PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES . THEREFORE, BY UPHOLDING THE DECISION OF L EARNED COMMISSIONER (APPEALS), I DISMISS THE GROUND S RAISED BY THE REVENUE. 5 SHRI BABASAHEB ASHOK JAGTAP 6. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, ON 08.10.2020 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.10.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI