VIVEK SHYAM JOHARI, MUMBAI V. INCOME TAX OFFICER 23(3)(6), MUMBAI

ITA 1697/MUM/2023

AI Insights

The case involves Vivek Shyam Johari, a diamond trader, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition of 5% G.P. on alleged bogus purchases amounting to Rs.5,21,42,000 from Dharam Impex. The assessee argued that the G.P. addition was excessive compared to his declared G.P. of 0.116% for the financial year 2012-13 and provided various documents to substantiate the genuineness of the purchases. The Department defended the addition based on a statement from Rajendra Jain, admitting to providing accommodation entries. The Tribunal, after considering the facts and the assessee's consistent G.P. declarations, reduced the G.P. addition to 3% but dismissed the appeal regarding the cross-examination opportunity.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136083 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 14-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNNY KACHHWAHA
• Keywords: Bogus purchase
• Section: 132; 143(3)

Judgement Text

म ु ंबई ठ “एस एम स ” , म ु ंबई स , स सम! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER सं. 1697/म ु ं/2023 ( %. 2013-14) ITA NO.1697/MUM/2023(A.Y 2013-14) Vivek Shyam Johari, 13/15, Madanji Mohanji Bldg, 4 th Floor, Flat No.40, Anantwadi, Kalbadevi Road, Mumbai 400 002 PAN: AIDPJ-8746-K ...... ' /Appellant ब% म Vs. Income Tax Officer 23(3)(6), Mumbai Earnest House, Nariman Point, Mumbai. ..... ( ) /Respondent ' * / Appellant by : Shri S.M.Bandi ( ) * /Respondent by : Shri Sunny Kachhwaha स ु % ई + ) / Date of hearing : 25/07/2023 ,-. + ) / Date of pronouncement : 25/07/2023 श/ ORDER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’] dated 20/03/2023, for the Assessment Year 2013-14. 2. Shri S.M.Bandi appearing on behalf of the assessee submitted that the assessee is engaged in the business of polishing and trading of diamonds. During the course of assessment proceedings information was allegedly received by the Assessing Officer that the assessee has obtained accommodation entries from Dharam Impex amounting to Rs.5,21,42,000/-. 2 ITA NO.1617/MUM/2023(A.Y 13-14) The Assessing Officer made G.P. addition of 5% on the alleged bogus purchases. Against the assessment order dated 28/03/2016 passed u/s. 143(3) of the Income Tax Act,1961 [in short ‘the Act’], the assessee carried the issue before CIT(A). The CIT(A) dismissed the appeal of assessee and confirmed the addition, hence, the present appeal. The ld. Authorized Representative of the assessee submitted that the estimation of 5% G.P by the Assessing Officer and the CIT(A) is very much on the higher side. The assessee declared G,P of 0.116% for Financial Year 2012-13. In the preceding assessment years, the G.P of assessee was in the same range. He submitted that during the course of assessment proceedings the assessee had furnished various documents viz. copy of ledger of Dharam Impex, confirmation for purchase of transactions, copies of sale bills of Dharam Impex, copy of assessee’s bank statement, copy of bank statement of Dharam Impex, copy of stock register and copy of audited profit and loss account and balance sheet for financial year 2012-13 to show genuineness of purchases. However, the Assessing Officer failed to consider the documents furnished by the assessee. He submitted that though the assessee had discharged its onus to show genuineness of the purchases, however, to put an end to the litigation the addition may be restricted by estimating G.P as per market norm. 3. Per contra, Shri Sunny Kachhwaha representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. Referring to the assessment order he pointed that Rajendra Jain in the statement recorded during search action u/s. 132 of the Income Tax Act, 1961 [ in short ‘the Act’], on 03/10/2013 has admitted the fact that he is in the business of providing accommodation entries through group concerns. He supported the impugned order and prayed for dismissing appeal of the assessee. 3 ITA NO.1617/MUM/2023(A.Y 13-14) 4. Both sides heard, orders of authorities below examined. The assessee is a diamond trader and had made purchases from Dharam Impex amounting to Rs.5,21,42,000/-. The said purchases were stated to be bogus. The Assessing Officer made G.P addition of Rs.26,07,100/- by estimating G.P @5% on the bogus purchases. The assessee has declared G.P of 0.116% for the impugned assessment year on regular sales. The same has not been disputed by the Assessing Officer. Taking into consideration entire facts, I am of considered view that estimation of G.P at 5% on bogus purchases in the instant case is on the higher side. To meet the ends of justice, G.P on bogus purchases is restricted to 3%. The ground No.1 of appeal is partly allowed in the aforesaid terms. 5. In ground No.2 of appeal, the assessee has assailed that opportunity to cross examine the persons on whose statements addition is made was not allowed to the assessee. No submissions were advanced on ground No.2 of appeal, hence, the same is dismissed. 6. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on Tuesday the 25 th day of July, 2023. Sd/- (VIKAS AWASTHY) स /JUDICIAL MEMBER म ु ंबई/ Mumbai, 0 % ं /Dated 25/07/2023 Vm, Sr. PS (O/S) 4 ITA NO.1617/MUM/2023(A.Y 13-14) त ल प अ े षतCopy of the Order forwarded to : 1. '/The Appellant , 2. ( ) / The Respondent. 3. ु 1) CIT 4. 2 3 ( ) % , . . ., म ु बंई/DR, ITAT, Mumbai 5. 3 45 6 7 /Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar)/ Sr.Private Secretary ITAT, Mumbai