ITO 28(3)(1), MUMBAI V. SADHANA JAISINGH PATEL, MUMBAI

ITA 1714/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9574 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Accommodation entries
• Section: 133(6); 195; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI SMC - I BENCH, MUMBAI [CORAM: PRAMOD KUMAR , VICE PRESIDENT - AS THIRD MEMBER] ITA NO. 1714 /MUM/ 2019 ASSESSMENT YEAR: 2010 - 11 INCOME TAX OFFICER - 28*3)(1) .APPELLANT ROOM NO. 316, 3 RD FLOOR, 6 TH TOWER, VASHI RAILWAY STATION COMPLEX, VASHI VS SADHANA JAISINGH PATEL ..........RESPONDENT C/6/6/2/1, NEEL KAMAL, SECTOR - 3, CBD BELAPUR, NAVI MUMBAI 400 614 [PAN: AEXPP 4021 M ] APPEARANCES BY UODAL RAJ SINGH FOR T HE AP P ELLANT S. L. RATNAPARIKH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 18 , 2020 DATE OF PRONOUNC EMENT : J ULY 08 , 2020 ORDER PER PRAMOD KUMAR, VP : 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 25.01.2019 PASSED BY THE LEARNED CIT(A) - 2 6 , MUMBAI IN THE MATTER OF ASSESSMENT U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 201 0 - 11. 2. GRIEVANCE RAISED BY THE ASSESSEE ARE AS FOLLOWS : (1) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO RESTRICT THE ADDITION OF BOGUS PURCHASES TO 12.5% AS AGAINST 100% ADDI TION MADE BY THE A. O., RELYING ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SETH, 356 ITR 451' ? (2) 'WHETHER ON THE FACTS AND IN TNE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N. K. PROTEINS LTD VS. DCIT (769 OF 2017), WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES'? ITA NO 1714/MUM/2019 ASSESSMENT Y EAR: 2010 - 11 PAGE 2 OF 4 (3) THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. (4) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, I SEE NO REASONS TO INTERFERE IN THE MATTER INASMUCH AS THE LEARNED CIT(A) HAS MERELY FOLLOWED THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SETH [2013] 356 ITR 451 (GUJ) AND THE ASSESSEES RELIANCE ON THE HON'BLE SUPREME COURTS DI SMISSAL OF SLP IN THE CASE OF N. K. PROTEINS LTD. VS. DCIT [2017] 84 TAXMANN.COM 195 (SC ) DOES NOT DILUTE THE LAW SO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN SIMIT P. SETH S CASE (SUPRA). THE LD. CIT(A) IS, THEREFORE, QUITE JUSTIFIED IN HIS CONCLUSIONS AS FOLLOWS: 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANT'S SUBMISSIONS. 6.1. AGAINST GROUND NO. 1, 2 & 4 NO SPECIFIC SUBMISSION WERE MADE IN THE WRITTEN REPL Y AND ALSO AT THE TIME OF HEARING. THEREFORE, THESE GROUNDS OF APPEALS ARE 'DISMISSED.' 7. GROUND NO. 3 OF THE APPEAL IS AGAINST ADDITION OF RS. 15,14,B69/ - AS UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT. AS PER THE INVESTIGATIONS CARRIED OUT BY THE SALES T AX AUTHORITIES, THE AFOREMENTIONED PARTIES WERE FOUND TO BE INVOLVED IN GIVING ACCOMMODATION ENTRIES ONLY WITHOUT ACTUALLY SUPPLYING THE GOODS. THE LOGICAL INFERENCE IS THAT THE PURCHASES MADE BY THE APPELLANT WOULD ALSO BE IN THE NATURE OF ACCOMMODATION E NTRIES ONLY. TO VERIFY THE SAME, THE AO HAD MADE ENQUIRIES BY ISSUING NOTICES U/S 133(6) WHICH WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THIS PARTY WAS FOUND TO BE NON EXISTENT AT THE ADDRESS GIVEN BY THE APPELLANT. THE APPELLANT ALSO FAILED TO PRO VIDE THE LATEST ADDRESS OF THE PARTY. DURING THE SCRUTINY ASSESSMENT THE APPELLANT FURNISHED DETAILS OF PURCHASES AND CORRESPONDING SALES. HOWEVER, THE APPELLANT COULD NOT PRODUCE THE PARTY BEFORE THE AO INSPITE OF OPPORTUNITY BEING GIVEN. THE APPELLANT AL SO FAILED TO PRODUCE DELIVERY CHALLANS OR TRANSPORTATION DETAILS. THE ONUS OF PROVING THE GENUINENESS OF SUCH PURCHASES IS ON THE APPELLANT WHICH THE APPELLANT HAD NOT BEEN ABLE TO DISCHARGE FULLY. WHEN THE HAWALA PARTY HAD ADMITTED ON OATH THAT IT HAD GIV EN ACCOMMODATION ENTRIES ONLY WITHOUT ACTUALLY SUPPLYING THE GOODS, THE GENUINENESS OF PURCHASES MADE FROM THESE PARTIES WILL HAVE TO BE CONSIDERED TAKING THIS INTO CONSIDERATION WHILE EXAMINING THE DOCUMENTATION SUBMITTED BY THE APPELLANT IN SUPPORT OF IT S CLAIM. THE DOCUMENTARY EVIDENCES SUCH AS PURCHASE BILLS, PAYMENTS BY CHEQUES, ETC. WOULD ALL HAVE BEEN ORCHESTRATED TO PRESENT A FACADE OF GENUINENESS AND DOES NOT NECESSARILY MEAN THAT THE PURCHASES FROM THESE PARTIES ARE GENUINE. THE COURTS HAVE HELD T HAT PAYMENT BY CHEQUE BY ITSELF IS NOT SACROSANCT SO AS TO PROVE GENUINENESS OF PURCHASES WHEN THE SURROUNDING CIRCUMSTANCES ARE SUSPECT. HOWEVER, THE APPELLANT HAS SHOWN ONWARD SALES WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. SINCE THERE CAN BE NO SALES WITHOUT CORRESPONDING PURCHASES, THE ONLY LOGICAL EXPLANATION IS THAT THE APPELLANT WOULD HAVE MADE PURCHASES FROM UNDISCLOSED PARTIES IN THE GREY MARKET AT LOWER RATES AND PURCHASES WERE SHOWN AS BEING MADE FROM THE IMPUGNED PARTIES TO SUPPRESS I TS PROFITS.. IN SUCH A SITUATION, THE VARIOUS COURTS INCLUDING THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH, 356 1TR 451 HAVE HELD THAT NOT THE ENTIRE PURCHASES BUT ONLY THE PROFIT ELEMENT EMBEDDED IN THESE PURCHASES WAS TO BE DISALL OWED.THE HON'BLE GUJRAT HIGH COURT IN THIS CASE HAS HELD THAT PROFIT MARGIN OF 12.5% OF THE BOGUS PURCHASES WILL BE REASONABLE. RESPECTFULLY FOLLOWING THE ORDER IN THE CASE OF SIMIT P. SHETH THE ADDITION IS RESTRICTED TO 12.5% OF THE BOGUS PURCHASES OF RS. 15,14,869/ - . THIS GROUND OF APPEAL IS 'PARTLY ALLOWED 1 . ITA NO 1714/MUM/2019 ASSESSMENT Y EAR: 2010 - 11 PAGE 3 OF 4 8. GROUND NO 5 OF THE APPEAL IS OF GENERAL NATURE AND THE OPTION MENTIONED THEREIN WAS NOT EXERCISED BY THE APPELLANT. THE GROUND IS OF ACADEMIC IN NATURE AND NO DECISION IS REQUIRED. FOR STATISTICAL PURPOSE, THIS SHOULD BE TREATED AS 'DISMISSED.' 4. I APPROVE THE CONCLUSIONS SO ARRIVED AT BY THE LD. CIT(A) INSOFAR AS GRIEVANCES RAISED AGAINST THE SAME, BY THE ASSESSEE ARE REJECTED. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/ - PRAMOD KUMAR (VICE PRESIDENT) MUMBAI , D ATED THE 08 TH D AY OF J ULY, 2020 ROSHANI, SR. PS COPIES TO : (1) THE APPLICANT (2) THE RESPONDEN T (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI