DHIRAJ BABULAL JAIN, MUMBAI V. INCOME TAX OFFICER 19(1)(4), MUMBAI

ITA 1843/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7115 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA LD
• Keywords: Bogus purchase; Tangible material; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 147; 148

Judgement Text

ITA.NO.1843/MUM/2018 DHIRAJ BABULAL JAIN ASSESSMENT YEAR- 2011-12 - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1843/MUM/2018 ( / ASSESSMENT YEAR:2011-12) DHIRAJ BABULAL JAIN C/O D.C.BOTHRA & CO. LLP,CA 297, TARDEO ROAD, WILLE MANSION,1 ST FLOOR OPP.BANK OF INDIA, NANA CHOWK MUMBAI-400 007 / VS. INCOME TAX OFFICER - 19(1)(4) 2 ND FLOOR, MATRU MANDIR TARDEO ROAD MUMBAI- 400 007 ! ./ ./PAN/GIR NO. ADYPJ-0420-A ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : N. HEMALATHA, LD. DR / DATE OF HEARING : 24/05/2018 / DATE OF PRONOUNCEMENT : 22/06/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)-54 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-54/IT-714/ITO- 19(1)(4)/2015-16 DATED 22/12/2017 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED ITA.NO.1843/MUM/2018 DHIRAJ BABULAL JAIN ASSESSMENT YEAR- 2011-12 2 AY WAS FRAMED BY LD. INCOME TAX OFFICER 19(1)(4), MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 12/03/2015 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMI NED AT RS.32.15 LACS AFTER CERTAIN ADDITIONS AS AGAINST RETURNED IN COME OF RS.18.37 LACS FILED BY THE ASSESSEE ON 30/09/2011 WHICH WAS PROCESSED U /S 143(1). NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJOURN MENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPO SE-OFF THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. THE ISSUE INVOLVE D UNDER APPEAL IS ESTIMATED ADDITION AGAINST CERTAIN ALLEGED BOGUS PURCHASES. 2.1 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.1,10,24,932/- FROM FIVE SUCH ENTITIES, THE DETAI LS OF WHICH HAS BEEN EXTRACTED IN PARA-2 OF THE QUANTUM ASSESSMENT ORDER. CONSEQUENTLY, STATUTORY NOTICE U/S 148 DATED 28/02/2014 WAS ISSUE D TO THE ASSESSEE WHICH WAS FOLLOWED BY NOTICES U/S 143(2) AND 142(1) . DURING IMPUGNED AY, THE ASSESSEE BEING RESIDENT FIRM WAS ENGAGED IN TRADING OF METALS ETC. 2.2 THE ASSESSEE DEFENDED THE PURCHASES MADE BY HIM AND SUBMITTED DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE PURCHASES . HOWEVER, NOTICES ISSUED U/S 133(6) TO ALL THE ENTITIES ELICITED NO S ATISFACTORY RESPONSE AND FURTHER THE ASSESSEE FAILED TO DEMONSTRATE DELIVERY OF GOODS. FINALLY, NOT CONVINCED WITH ASSESSEES SUBMISSIONS, LD. AO ESTIM ATED THE ADDITIONS ITA.NO.1843/MUM/2018 DHIRAJ BABULAL JAIN ASSESSMENT YEAR- 2011-12 3 AGAINST THESE PURCHASES @12.5% WHICH RESULTED INTO AN ADDITION OF RS.13,78,116/- IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME ON LE GAL GROUNDS AS WELL AS ON MERITS WITH PARTIAL SUCCESS BEFORE LD. C IT(A) VIDE IMPUGNED ORDER DATED 22/12/2017 WHERE LD. CIT(A) WHILE UPHOL DING THE REASSESSMENT PROCEEDINGS, RESTRICTED THE IMPUGNED A DDITIONS TO 8% OF ALLEGED BOGUS PURCHASES. STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. DR, MS. N.HEMALATHA SUPPORTED THE STAND OF LOWER AUTHORITIES. 4. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND MATERIAL ON RECORD. SO FAR AS THE LEGAL GROUNDS RAISED BY ASSES SEE, WE FIND THAT THE ORIGINAL RETURN WAS PROCESSED U/S 143(1) AND THEREF ORE, THE ONLY REQUIREMENT TO INITIATE THE REASSESSMENT PROCEEDING S WAS THAT LD. AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSESSMENT. THE TANGIBLE MATERIAL CAME IN THE POSSESSION OF LD. AO IN THE SHAPE OF INFORMATION FROM SALES TAX AUTHORITY WHICH SUGGESTED ESCAPEMENT OF INCOME. THEREFORE, THE PROCEEDINGS WERE VALIDLY INI TIATED AND WE CONCUR WITH THE STAND OF LOWER AUTHORITY IN THIS REGARD. T HIS GROUND OF ASSESSEES APPEAL STAND DISMISSED. 5. SO FAR AS THE MERITS OF THE CASE ARE CONCERNED, WE ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL SINCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASES DOC UMENTS. AT THE SAME TIME, THE ASSESSEE COULD NOT CONCLUSIVELY SUBS TANTIATE THE DELIVERY ITA.NO.1843/MUM/2018 DHIRAJ BABULAL JAIN ASSESSMENT YEAR- 2011-12 4 OF MATERIAL AND FAILED TO PRODUCE ANY OF THE PARTY TO CONFIRM THE TRANSACTIONS. NOTICES ISSUED U/S 133(6) ELICITED N O SATISFACTORY RESPONSE. ALL THESE FACTORS CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHA SE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POS SIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME IN ORDER, WE DISMISS THIS GROUND OF ASSESS EES APPEAL. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE,2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22.06.2018 SR.PS:- THIRUMALESH / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI