ITO 28 (1)(1), MUMBAI V. ANIL NARAYAN LOKRE, MUMBAI

ITA 1869/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVANEESH TIWARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC III BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER I TA NO. 1869 /MUM. /2019 ( ASSESSMENT YEAR : 20 11 12 ) INCOME TAX OFFICER WARD 28(1)(1), MUMBAI . APPELLANT V/S SHRI ANIL NARAYAN LOKRE (PROP. ANIL TRADING CO.) 205, BHAGTANI ENCLAVE BEHIND ASIAN PAINTS OFF. LBS MARG, BHANDUP (W) MUMBAI 400 703 AAPPL1426L . RESPONDENT REVENUE BY : S HRI AVANEESH TIWARI ASSESSEE BY : NONE DATE OF HEARING 10 . 0 6 .20 20 DATE OF ORDER 17.06.2020 O R D E R TH E CAPTIONED APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 21 ST JANUARY 2019 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2011 12. 2. WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE. THEREFORE , I PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE 2 SHRI ANIL NARAYAN LOKRE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 3. THE ISSUE RAISED IN THE PRESENT APPEAL RELATES TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN RESPECT OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 4. BRIEF FACTS ARE, THE ASSESSEE , A N INDIVIDUAL , IS ENGAGED IN THE BUSINE SS OF TRANSFORMER BUS H ING METAL PART S , HP, LT AND MACHINERY . FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME IN THE REGULAR COURSE ON 29 TH SEPTEMBER 20 11 , DECLARING TOTAL INCOME OF ` 8,30,575 . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES THROUGH THE INVESTIGATION WING OF THE DEPARTMENT INDICATING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY HAWALA OPERATORS BY WAY OF BOGUS PURCHASE BILLS, THE ASSESSING OFFICER R E OPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 12,43,329 , CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM TEN PARTIES . FURTHER, TO INDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO THE SELLING DEALERS CALLING FOR CERTAIN INFORMATION . H OWEVER, ALL SUCH NOTICES RE TURNED BACK UNSERVED. EVEN , THE EVIDENCES FURNISHED BY THE 3 SHRI ANIL NARAYAN LOKRE ASSESSEE WERE NOT ENOUGH TO CONVINCE THE ASSESSING OFFICER REGARDING THE GENUINENESS OF PURCHASES. THUS, ULTIMATELY, THE ASSESSING OFFICER DISALLOWED 25% OUT OF THE ALLEGED NON GENUINE PURCHASES OF ` 12,43,329, AND ACCORDINGLY, MADE AN ADDITION OF ` 3,10,832. ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE LEARNED COMMISSIONER (APPEALS). 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES. 6. BEFORE ME, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAVING FAILED TO PROVE THE GENUINENESS OF PURCHASES, THE ADDITION MADE BY THE ASSESSING OFFICER WAS PROPER . 7. HAVING CONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE, I FIND THAT THOUGH THE ASSESSEE MAY NOT HAVE BEEN ABL E TO PROVE THE GENUINENESS OF PURCHASES FROM THE DECLARED SOURCE, HOWEVER, IT IS A FACT ON RECORD THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE CONSUMPTION OF MATERIAL O R SALE S EFFECTED BY THE ASSESSEE. THEREFORE, IT GOES TO PROVE THAT THE ASSESSEE MUST HAVE PURCHASED GOODS FROM SOME OTHER UNDISCLOSED SOURCE. IN SUCH 4 SHRI ANIL NARAYAN LOKRE CIRCUMSTANCES, AS OBSERVE BY LEARNED COMMISSIONER (APPEALS), NOT ONLY DIFFERENT HIGH COURTS , EVEN , DIFFERENT BENCHES OF THE TRIBUNAL HA VE HELD THAT THE ENTIRE PURCHASES CANNOT BE DISALLOWED, BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN IDENTICAL NATURE OF CASES, I UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) TO RESTRICT THE DISALLOWA NCE TO 12.5% OF THE NON GENUINE PURCHASE S. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED THROUGH CIRCULATION IN NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE T RIBUNAL) RULES, 196 3 . SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 17.06.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE C I T(A); (4) THE C I T, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI