ITO 27(3)(3), NAVI MUMBAI V. SHARMISTA MAFATLAL MEHTA, MUMBAI

ITA 1710/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9548 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: HEMANTA MEHTA
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3); 133A; 133(6); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH F MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 1710 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2 0 10 - 11 ) INCOME TAX OFFICER - 27(3)(3), ROOM NO. 426 , 4TH FLOOR, TOWER NO.6, VASHI R LY. ST N. COMPLEX, VASHI, NAVI MUMBAI - 400703 / VS. SMT SHARMISTA MAFATLAL MEHTA, 404, REKHA APT, AMRUT NAGAR, GHATKOPAR,(W), M UMBAI - 400086 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AFAPM1923P ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI T A KHAN / ASSESSEE BY : SHRI HEMANTA MEHTA / DATE OF HEARING : 2 4 .8. 2017 / DATE OF PRONOUNCEMENT : 1 5 . 9 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS APPEAL BY THE REVENUE PERTAINING TO ASSESSMENT YEAR S 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 25 , MUMBAI, DATED 12.12.2016 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED 2 ITA NO. 1710 /MUM/201 7 BY THE ASSESSING OFFICER DATED 7.10.2013 UNDER SECTION 143(3) R.W.S.147 OF THE ACT. 2. THE ISSUE RAISED BY THE REVENUE IS AGAINST RESTRICTING THE DISALLOWANCE TO RS.1,29,61,913/ - ON ACCOUNT OF BOGUS PURCHASE BEING 25% OF THE ALLEGED BOGUS PURCHASES ON ADHOC BASIS WITHOUT APPRECIATING THE FACT THAT THE AO WORKED OUT COMPONENT OF SUPPRESSED PROFIT AT RS.1,67,41,917/ - . 3. FACTS OF THE CASE ARE THE AO RECEIV ED THE INFORMATION FROM THE DGIT(INV), SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES TO THE EXTENT OF RS.5.18 CRORES FROM HAWALA OPERATORS. THE AO CONDUCTED A SURVEY U/S 133A OF THE ACT ON 22.1.2013 AND INCRIMINATING DOCUMENTS WERE SEIZE D AND NOTICED THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES FROM HAWALA OPERATORS. ACCORDINGLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING NOTICE U/S 147 R.W.S . 148 OF THE ACT . DURING THE COUR SE OF RE - ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FILE DETAILS OF PURCHASE S . THEREAFTER THE AO ISSUED NOTICE U/S 133(6) TO THE 22 PARTIES TO VERIFY THE GENUINENESS OF THE PURCHASE S FROM WHOM THE ASSESSEE PURCHASED GOODS TO THE TUNE OF RS.5,1 8,47,653/ - AND ALSO ASKED TO THE ASSESSEE TO PRODUCE 3 ITA NO. 1710 /MUM/201 7 THE PARTIES FAILING WHICH THE SAME SHOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IT WAS SUBMITTED BEFORE THE AO THA T THE PURCHASES WERE MADE DURING T HE YEAR AND DULY ENTERED IN THE STOCK REGISTER . LIKEWISE WHEN THE RE CEIVED MATERIAL WAS SOLD, THE SAME WAS DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. MOREOVER, PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES . THE AO NO T CONVINCED WITH THE REPLY OF THE ASSESSEE , ADDED THE SAME TO THE INC OME OF THE ASSESSEE U/S 69C OF THE ACT TO THE TUNE OF RS.1,67,41,917/ - BY FRAMING THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 26.3.2014 BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.1,71,31,360/ - . THE MATTER CARRIED TO THE FI RST APPELLATE AUTHORITY, WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION TO THE EXTENT OF 25% OF RS. RS.5,18,47,653/ - THEREBY CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.1,29,61,913/ - RESULTING INTO DELETION OF THE ADDITION OF RS.37,80,004/ - . AGGRIEVED BY THE ORDER OF FAA, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. T HE UNDISPUTED FACTS ARE THAT THE ASSESSEE WAS INVOLVED IN TAKING ACCOMMODATION ENTRIES TO THE EXTENT OF RS.5,18,47,653/ - FROM 22 HAWALA PARTIES TO WHOM THE AO ISSUED NOTICE AND ALSO CALLED FOR THE RECORDS FROM 4 ITA NO. 1710 /MUM/201 7 THE ASSESSEE . UPON HAVING FAILED TO FILE THE NECESSARY DETAILS AN D PROVE THE GENUINENESS OF PURCHASES, THE AO DISALLOWED AND ADDED THE ENTIRE PURCHASES. THE FAA PARTLY ALLOWED THE APPEALS OF THE ASSESSEE BY SUSTAINING THE ADDITION TO THE EXTENT OF 25% OF THE ALLEGED PURCHASE S AND CONFIRMED THE ADDITION OF RS.1,29,61, 913/ - BY ALLOWING THE BENEFIT TO THE ASSESSEE TO THE EXTENT OF RS.37,80,004/ - . IN THIS CASE, THE AO HAS NOT DISPUTED THE SALE S OF THE ASSESSEE AND ASSESSEE HAS DULY PRODUCED THE RECORD OF GOODS RECEIVED AND MAINTAINED IN THE STOCK REGISTER WHICH WERE SU BSEQUENTLY SOLD. IN VIEW OF THIS BACKGROUND, WE FIND THAT THE LD.CIT(A) HAS TAKEN CORRECT VIEW BY SUSTAINING THE ADDITION TO THE EXTENT OF 25% OF BOGUS PURCHASES TO COVER THE LEAKAGE OF REVENUE . WE, THEREFORE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE FAA AND ACCORDINGLY DISMISS THE APPEAL OF THE REVENUE. 5 . IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH SEPT , 2017. S D SD ( / MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 15TH SEPT .2017 SRL,SR.PS 5 ITA NO. 1710 /MUM/201 7 / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI