Assistant Commissioner of Income-tax, V. Nitin Ramchandra Gite, Nashik

ITA 1732/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7343 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-10-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 31-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1732/PUN/2015 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-1, NASHIK . /APPELLANT VS. SHRI NITIN RAMCHANDRA GITE, IST FLOOR, PINGLE COMPLEX, GHANKAR LANE, NEAR OLD RAILWAY BOOK OFFICE, NASHIK 422 001 PAN : AATPG6415A . / RESPONDENT C.O. NO.46/PUN/2017 (ARISING OUT OF ITA NO.1732/PUN/2015) / ASSESSMENT YEAR : 2011-12 SHRI NITIN RAMCHANDRA GITE, IST FLOOR, PINGLE COMPLEX, GHANKAR LANE, NEAR OLD RAILWAY BOOK OFFICE, NASHIK 422 001 PAN : AATPG6415A . CROSS OBJECTOR VS. ACIT, CIRCLE-1, NASHIK . APPELLANT IN THE APPEAL ASSESSEE BY : SHRI SANKET JOSHI REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 12.10.2017 / DATE OF PRONOUNCEMENT: 13.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE TWO APPEALS UNDER CONSIDERATION. THE REVE NUE FILED THE MAIN APPEAL AGAINST THE ORDER OF CIT(A)-I, NASHIK DATED 01-10-2015 FOR THE A.Y. ITA NO.1732/PUN/2015 AND CO NO.46/PUN/2017 NITIN RAMCHANDRA GITE 2 2011-12. ASSESSEE FILED THE CROSS OBJECTION VIDE C O NO.46/PUN/2017 QUESTIONING THE PART RELIEF GRANTED TO THE ASSESSEE . 2. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE IS AN INDIVIDUAL AND I S ENGAGED IN THE TRADING OF COMPUTERS AND PERIPHERALS. ON FINDING, THE ASSESSE E PURCHASED THE SAID COMPUTERS AND PERIPHERALS FROM THE SUPPLIERS WHOSE NAMES ARE APPEARING IN THE WEBSITE MAINTAINED BY MAHARASHTRA SALES TAX DEP ARTMENT, THE AO CALLED FOR THE RELEVANT DETAILS AND HELD THAT THE TOTAL PU RCHASES FROM SUCH SUPPLIERS WORKS OUT TO RS.39,56,248/- AND CONSTITUTES BOGUS PURCHASES. DISCUSSION GIVEN IN PARA 3 OF THE ASSESSMENT ORDER IS RELEVANT . AO TREATED THE ENTIRE PURCHASES AS BOGUS PURCHASES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. DURING THE FIRST APPELLATE PROCEEDINGS, AFTER CO NSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE THE CIT(A) RESTRICTED THE DISA LLOWANCE TO THE GROSS PROFIT RATE OF 5% ON THE SAID BOGUS PURCHASES. IN THE PRO CESS, THE CIT(A) RELIED ON VARIOUS JUDGMENTS OF THE HONBLE HIGH COURTS AS WEL L AS THE ORDERS OF THE TRIBUNAL, THE LIST OF WHICH IS AVAILABLE IN PARA 5. 3.8 OF THE ORDER OF THE CIT(A). 4. SHRI SANKET JOSHI, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF THE DECISION OF THE CIT(A) IS UPHELD DISMISSING THE APP EAL OF THE REVENUE, HE WILL NOT PRESS FOR THE CROSS OBJECTION. FOR THE PURPOSE OF CONFIRMING THE PROFIT APPLYING THE GP RATE OF 5%, HE RELIED ON THE JUDGEMENT OF BOMBAY HIGH COURT JUDGMENT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PV T. LTD. VS. CIT 216 TAXMANN 171 (BOM,) (MAG.). FURTHER, IT IS THE SUBM ISSION OF LD. COUNSEL FOR THE ASSESSEE THAT THE HONBLE HIGH COURTS AND THE T RIBUNALS ARE CONSISTENTLY CONFIRMING THE GROSS PROFIT ADDITION IN THE EVENT O F SUCH BOGUS PURCHASES. ITA NO.1732/PUN/2015 AND CO NO.46/PUN/2017 NITIN RAMCHANDRA GITE 3 5. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO DUTIFULLY. 6. ON HEARING BOTH THE PARTIES AND AFTER GOING THR OUGH THE ELABORATE DISCUSSION GIVEN BY THE CIT(A) (PARA NOS. 5.3.1 TO 9.2) RELYING ON CATENA OF DECISIONS OF SUPREME COURT, HIGH COURTS, AND ALSO V ARIOUS TRIBUNALS, WE FIND THE CIT(A) HAS RIGHTLY CONSIDERED THE FOLLOWING FAC TS BEFORE COMING TO CONCLUSION OF ADOPTING 5% ON THE GROSS PROFIT RATE ON THE BOGUS PURCHASES : (I) IF PURCHASES ARE HELD BOGUS THE CORRESPONDING SALES MUST ALSO HELD TO BE BOGUS. OTHERWISE, THERE CANNOT BE ANY G ENUINE SALE OF MATERIAL WITHOUT CORRESPONDING PURCHASES. (II) THE ASSESSEE HAS FILED TAX INVOICE-CUM-CHALLAN FROM THE SUPPLIERS CONFIRMING THE SALES. (III) AO HAS NOT DISPUTED THE SALES. (IV) THERE IS MARGINAL INCREASE IN THE GP RATIO FROM 3.6 3% TO 3.69%. (V) TRADING OF PURCHASES & SALE IS NOT VERY HIGH. (VI) IT CAN BE INFERRED AS A CASE OF INFLATION WHICH SHO ULD BE MINIMUM TO 5%. 7. UNDISPUTEDLY, THE SALES ACCOUNT STANDS UNDISTURB ED BY THE AO. THE BINDING JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) IS RELEVANT. FURTHER, WE FIND TH IS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE JUDGMENT OF THE HONB LE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF CIT VS. SIMIT P. SETH 356 I TR 451. CONSIDERING THE LENGTHY REASONING GIVEN BY THE CIT(A) AND THE FACTU AL MATRIX OF THE PRESENT CASE, WE CONCUR WITH THE FINDING GIVEN BY THE CIT(A ) RESTRICTING THE DISALLOWANCE TO THE GROSS PROFIT RATE OF 5% OF BOGU S PURCHASES. THEREFORE, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO.1732/PUN/2015 AND CO NO.46/PUN/2017 NITIN RAMCHANDRA GITE 4 CO NO.46/PUN/2017 (BY ASSESSEE) : 9. SINCE WE DISMISSED THE MAIN APPEAL FILED BY THE REVENUE, ADJUDICATION OF THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES A N ACADEMIC EXERCISE. THEREFORE, THE CROSS OBJECTION IS DISMISSED AS ACAD EMIC. 10. TO SUM UP, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 13 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-I, NASHIK CIT-I, NASHIK % , , B BENCH PUNE; / GUARD FILE.