INTER CARAT JEWELLERY PRIVATE LIMITED, MUMBAI V. DY. COMM. OF INCOME TAX - 10(1)(1), MUMBAI

ITA 1623/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8509 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Tangible material

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM ITA NO. 1623 /MUM/ 2018 (ASSESSMENT YEAR: 2009 - 10 ) M/S. INTER CARAT JEWELLERY PVT. LTD. UNIT NO. 14, NEW NANDU INDUSTRIAL ESTATE, SHANTI NAGAR, MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI - 400 093 VS. DY. CIT - 10(1)(1) ROOM NO. 209, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 PAN/GIR NO. AABCI 1023 K ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI PRAKASH JOTWANI RESPONDENT BY : SHRI S. K. BEPARI DATE OF HEARING : 18.10.2018 DATE OF PRONOUNCEMENT : 01.01 .201 9 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 17 (LD .CIT(A) FOR SHORT) DATED 22.12.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2009 - 10. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1) THE LEARNED CLT(APPEAL) ERRED IN CONFIRMING RE - ASSESSMENT MADE BY THE ASSESSING OFFICER WHEN THERE WAS NO TANGIBLE MATERIAL TO DISPROVE THE GENUINENESS AND BON AFIDE FOR THE PURCHASES FOR REOPENING AND WHEN THERE WAS NO FAILURE ON PART OF THE APPELLANT TO DISCLOSE FULL AND COMPLETE PARTICULARS OF HIS INCOME. 2) THE LEARNED CIT(APPEAL) ERRED IN CONFIRMINGDISALLOWANCE AT 12.5% OF TOTAL PURCHASES OF RS.21,28,934/ - MADE FROM M/S ADI IMPEX AS BOGUS PURCHASES. HOWEVER, THE LEARNED CIT (APPEAL)OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD FURNISHED FULL AND COMPLETE DETAILS OF THE PURCHASES AND HAD DISCHARGED THE ONUS OF PROVING GENUINENESS OF THE TRANSACTIONS. ALSO, THE LEARNED CIT (APPEAL) OUGHT TO ACCEPT THE FACT,THAT THERE CAN BE NO SALES WITHOUT PURCHASES AND THAT ON THE SAID PURCHASE OF DIAMONDS, THERE HAS BEEN A SALE TOO WHICH HAS BEEN ASSESSED TO TAX, WHEN THE SALES OF THE APPELLANT ARE FULLY ALLOWEDTHE PURCHA SES MADE FROM THE ABOVE PARTY CANNOT BE QUESTIONNED. 2 ITA NO. 1623/MUM/2018 3) THE LEARNED CIT(APPEAL) HAS ERRED IN NOT RELYING ON INSTRUCTION NO.2/2008 OF CBDT, TASK FORCE REPORT ON DIAMOND SECTOR SUGGESTING THAT THE PROFIT MARGIN IN TRADING IN DIAMOND SHOULD BE BETWEEN THE RA NGE OF 1% TO 3% AND HENCE ESTIMATION OF 12.5% OF PURCHASES IS UNJUST AND OUGHT TO BE DELETED IN FULL. 3. AT THE OUTSET, IN THIS CASE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT ORDER IN ASSESSEES OWN CASE FOR A.Y. 2006 - 07, WHEREIN BY AN ELABORATE ORDER, THE ITAT VIDE ORDER DATED 07.03.2018 HAS RE D UCED THE DISALLOWANCE TO 3%. THE ITAT HAS CONCLUDED AS UNDER: 16. WE HAVE NOTICED THAT THE TASK FORCE COMMITTEE HAS RECOMMENDED PROFIT RANG E OF 1.5% TO 4.5% FOR MANUFACTURING ACTIVITIES AND PROFIT RANGE OF 1% TO 3% WAS RECOMMENDED FOR TRADING ACTIVITIES. THE ASSESSEE HAS UNDERTAKEN BOTH TRADING AND MANUFACTURING ACTIVITIES. ACCORDINGLY WE ARE OF THE VIEW THAT THE PROFIT ELEMENT EMBEDDED IN TH E IMPUGNED PURCHASES MAY BE ESTIMATED AT 3%. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO SUSTAIN THE ADDITION TO 3% OF THE VALUE OF ALLEGED BOGUS PURCHASES AND IN OUR VIEW, THE SAME WOULD MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 4. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) COULD NOT DISPUTE THAT ITAT IN ASSESSEES OWN CASE HAS DECIDED THE SAME ISSUE BY DISALLOWING 3% OF THE BOGUS PURCHASE. 5. UPON CAREFUL CONSIDERATION, I FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION IN ASSESSEES OWN CASE AS ABOVE. FOLLOWING THE SAME, I DIRECT THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RED UC ED TO 3%. 6. IN THE RESULT, THIS A PPEAL BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 . 0 1 . 2 0 1 9 S D / - (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI ; DATED : 0 1 . 0 1 . 2 0 1 9 ROSHANI , SR. PS 3 ITA NO. 1623/MUM/2018 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI