ITO 27(2)(4), NAVI MUMBAI V. NILESH S. MEHTA (HUF), MUMBAI

ITA 1724/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9369 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: CO M; ANKITA N SATRA ITA NO MUM
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3); 142(1); 133(6); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH F MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM , , ITA NO. 17 24 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2 0 09 - 10 ) INCOME TAX OFFICER - 27( 2 )( 4 ), ROOM NO. 4 18 , 4TH FLOOR, TOWER NO.6, VASHI R LY. ST N. COMPLEX, VASHI, NAVI MUMBAI - 400703 / VS. NILESH S MEHTA (HUF) 8, ALKA BUILDING, TILAK ROAD, GHATKOPAR - ( E ), MUMBAI - 4000 77 ( / APPELLANT) : ( / RESPONDENT ) CROSS - OBJECTION NO.199/MUM/2017 ARISING OUT OF ITA NO. 1724/ MUM/ 2017 ( / ASSESSMENT YEAR: 2 009 - 10 ) NILESH S MEHTA (HUF) 8, ALKA BUILDING, TILAK ROAD, GHATKOPAR - (E), MUMBAI - 400077 / VS. INCOME TAX OFFICER - 27(2)(4), ROOM NO. 418 , 4TH FLOOR, TOWER NO.6, VASHI R LY. ST N. COMPLEX, VASHI, NAVI MUMBAI - 400703 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : A AEHN5766N ( / APPELLANT) : ( / RESPOND ENT ) / REVENUE BY : SHRI T A KHAN / ASSESSEE BY : MS.ANKITA N SATRA 2 ITA NO. 17 24/ /MUM/201 7 AND CO 199/M/17 / DATE OF HEARING : 2 4 .8. 2017 / DATE OF PRONOUNCEMENT : 27. 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 20 09 - 1 0 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 25 , MUMBAI, DATED 23 .12.2016 WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER DATED 19.3. 201 5 UNDER SECTION 143(3) R.W.S.147 OF THE ACT. THE ASSESSEE ALSO FILED CROSS - OBJECTION TO THIS APPEAL. 2. THE SOLE ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION TO THE TUNE OF RS. 1,86,68,739/ - BEING 98.22% OF THE BOGUS PURCHASES SUSTAI NING THEREBY SUSTAINING OF RS. 3,38,326/ - JUST 1.78% ON ACCOUNT OF BOGUS PURCHASE AS AGAINST 100 % DISALLOWANCE MADE BY THE AO. 3. FACTS OF THE CASE ARE THE AO RECEIV ED THE INFORMATION FROM THE DGIT(INV), SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTR A THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES FOR PURCHASE THROUGH THE PARTIES DECLARED AS HAWALA OPERATORS BY THE GOVERNMENT OF MAHARASHTRA, SALES TAX DEPARTMENT. ACCORDINGLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING NOTICE U/S 147 R.W.S. 148 OF THE ACT DATED 30.3.2014. THEREAFTER 3 ITA NO. 17 24/ /MUM/201 7 AND CO 199/M/17 THE STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE BEFORE THE AO MADE DECLARATION THAT HE HAS PURCHASED MATERIALS OF RS.2,31,12,904/ - OUT OF WHICH THE PURCHASES TO THE TUNE OF RS.1,90,07,065/ - WERE MADE FROM THE FOLLOWING 13 PARTIES: NAME OF THE PARTY AMOUNT (IN RS.) BALAJI TRADING 3,39,342 SIDDHIVINAYAK TRADING 21,41,400 DEEPALI ENTERPRISES 21, 44,412 MANAV IMPEX 9,90,220 REKHA TRADING CO 20,06,019 RENUKA SALES 20,22,377 AMAR ENTERPRISES 16,16,550 SUN ENTERPRISES 16,1 5,713 M R CORPORATION 20,70,292 GRIFTON INDIA RIDDHI 12,63,078 NAVDEEP TRADING 13,57,991 GAUTAM TRAD ERS 2,83,046 MAHAVIR ENTERPRISES 11,56,625 TOTAL 1,90,07,065 THE NAMES OF THE ABOVE PARTIES FIGURE D IN THE SALES TAX DEPARTMENT S LIST OF SUSPICIOUS DEALERS WHO HAVE ISSUED ACCOMMODATION ENTRIES WITHOUT ACTUAL DELIVERY OF THE MATERIALS. THE AO TRIED TO VERIFY THE PURCHASES BY ISSUING NOTICES U/S 133(6) TO THESE PARTIES BUT THE SAME RETURNED UNSERVED. ACCORDINGLY, THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE WHICH 4 ITA NO. 17 24/ /MUM/201 7 AND CO 199/M/17 WAS REPLIED BY THE ASSESSEE BY SUBMITTING THAT THE GOODS IN FACT RECEIVED AND EN TRIES WERE MADE IN THE BOOKS OF ACCOUNT AND THE SALES WERE DULY RECODED IN THE BOOKS OF ACCOUNT BESIDES THE PAYMENTS THROUGH ACCOUNT PAYEE CHEQUES. THE AO REJECTED THE SUBMISSIONS OF THE ASSESSEE AND WORKED OUT THE DISALLOWANCE AT RS. 75,58,057/ - ON T HE BASIS OF PEAK PURCHASES AS PER BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE AND ACCORDINGLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69C BY FRAMING ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT ASSESSING THE INCOME AT RS.78,42,506/ - . AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSEE APPEALED BEFORE THE FAA, WHO AFTER CONSIDERING THE SUBMISSIONS AND EXAMINING THE RECORD S PLACED BEFORE HIM PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : E. CONSIDERING THE FACT THAT IN N O. OF JUDGMENTS, IT HAS BEEN HELD THAT ONLY THE PROFIT EMBEDDED IN SUCH PURCHASES COULD BE ADDED TO THE APPELLANTS INCOME CONSIDERING THE NATURE OF BUSINESS. I AM OF THE CONSIDERED OPINION THAT GROSS PROFIT RATE, IS TO BE C ONSIDERED TO MAKE ADDITION ON A CCOUNT OF ALLEGED BOGUS PURCHASES FROM THIRTEEN PARTIES MADE BY THE ASSESSEE . FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS SHOWN GROSS PROFIT RA T E OF 1.78% AND TOTAL PURCHASE FROM THE ABOVE MENTION4ED PARTIES WHICH ARE CONSIDERED TO BE BOGUS IS RS. 1,90,07,065, THE GROSS PROFIT ON THE ABOVE TRANSACTION WORKS OUT OF RS. 3,38,326/ - WHICH IS CONFIRMED THAT NEEDS TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF ALLEGED BOGUS PURCHASE. IN VIEW OF T HE SAME, THE BALANCE ADDITION OF RS.72,19,7 31/ - IS DELETED . HENCE THIS GROUND OF APPEAL IS PARTLY ALLOWED 5 ITA NO. 17 24/ /MUM/201 7 AND CO 199/M/17 AGGRIEVED BY THE ORDER OF THE FAA, THE REVENUE IS IN APPEAL BEFORE US. 4 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT RECORDS AS PLACED BEFORE US WE FIND THAT THE ASS ESSEE WAS INDISPUTABLY AVAILED THE BOGUS ENTRIES OF PURCHASES FROM HAWALA TRADERS AND AO MADE THE ADDITIONS ON THE BASIS OF PEAK OF PURCHASES WHICH WAS REDUCED BY THE CIT(A) TO JUST 1.78% OF THE ALLEGED PURCHASES. IN OUR OPINION THE CIT(A) HAS BEEN TOO LIB ERAL AND EVEN NOT TAKEN INTO ACCOUNT THE DECISIONS OF THE C O - ORDINATE BENCHES OF T HE TRIBUNAL WHERE IN IDENTICAL FACTS AND CIRCUMSTANCES DIRECTED THE DISALLOWANCE OF REASONABLE AMOUNT. WE ARE THEREFORE NOT IN AGREEMENT WITH THE CONCLUSION OF THE LD CIT (A) AND DEEM IT FIT AND REASONABLE TO SUSTAIN THE ADDITIONS @5% OF THE ALLEGED BOGUS PURCHASE S . ACCORDINGLY, CONSIDERING THE LAW LAID DOWN BY THE TRIBUNAL AND MAINTAINING CONSISTENCY WITH THE SAID PRECEDENT, WE SET ASIDE THE ORDER OF LD.CIT(A) AND DIRE CT THE AO TO ADD 5% O F THE BOGUS PURCHASES . 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED TO THIS EXTENT. CROSS - OBJECTION : 6 . SINCE WE HAVE DECIDED THE ISSUE RAISED BY THE REVENUE AGAINST THE DECISION OF THE FAA AND PARTLY ALLOWED THE APPEAL , THE GROUND RAISED BY THE ASSESSEE IN CROSS - OBJECTION BECOMES INFRUCTUOUS AND HENCE DISMISSED. 6 ITA NO. 17 24/ /MUM/201 7 AND CO 199/M/17 7. RESULTANTLY, APPEAL OF THE REVENUE STANDS PARTLY ALLOWED AND CROSS OBJECTION FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH SEPT , 2017. S D SD ( / MAHAVIR SINGH ) ( / RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 27TH SEPT .2017 SRL,SR.PS / 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