ITO-17(3)(5), MUMBAI V. UDAY TRADING CORPORATON , MUMBAI

ITA 1914/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0311 (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: 2010-2011
• Appeal Filed On: 02-04-2019
• 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. 1914 /MUM. /2019 ( ASSESSMENT YEAR : 20 10 11 ) INCOME TAX OFFICER WARD 17 ( 3 )( 5 ), MUMBAI . APPELLANT V/S UDAY TRADING CORPORATION 2 ND FLOOR, 243, NAGDEVI STREET MUMBAI 400 003 PAN AAAFU0724H . 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 AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 2 4 TH JANUARY 2019 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 28 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 10 11 . 2. WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESS EE. THEREFORE , I PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE 2 UDAY TRADING CORPORATION LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 3. THE SOLE ISSUE RAISED IN THE PRESENT APPEAL RELATES TO PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) IN RESPECT OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 4. BRIEF FACTS ARE, THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON BUSINESS OF TRADING IN HARDWARE, TOOLS, BALL BEARING AND OTHER ALLIED MATERIALS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME IN THE REGULAR COURSE ON 23 RD AUGUST 2010, DECLARING TOTAL INCOME OF ` 4,30,742 . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITI ES THROUGH THE INVESTIGATION WING OF THE DEPARTMENT INDICATING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY HAWALA OPERATORS THROUGH BOGUS PURCHASE BILLS, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE IN COME 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 ` 29,061 , CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM T WO PARTIES. FURTHER, TO INDEPEN DENTLY 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 3 UDAY TRADING CORPORATION NOTICES RETURNED BACK UNSERVED. FURTHER, THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE TO ESTABLISH THE GENUINENESS OF PURCHASES. THUS, ULTIMATELY, THE ASSESSING OFFICER TREATED THE PURCHASES WORTH ` 29,061 AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVE D WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 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 O F PURCHASES, THE ENTIRE AMOUNT REPRESENTING SUCH PURCHASES HAS TO BE ADDED. 7. HAVING CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, I FIND THAT THOUGH THE ASSESSEE MAY NOT HAVE BEEN ABLE 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 SALE S EFFECTED BY THE ASSESSEE. THEREFORE, IT GOES TO PROVE THAT THE ASSESSEE MUST HAVE PURCHASED GOODS FROM SOME OTHER UND ECLARED SOURCE. IN SUCH CIRCUMST ANCES, AS OBSERVE BY DIFFERENT 4 UDAY TRADING CORPORATION HIGH COURTS AND EVEN DIFFERENT BENCHES OF THE TRIBUNAL THE ENTIRE PURCHASES CANNOT BE DISALLOWED, BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, KEEPING IN VIEW THE DECISION OF THE TRIBUNAL IN IDENTICAL NATURE OF CASES, THE DECISION OF LEARNED COMMISSIONER (APPEALS) TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASE IS FAIR AND REASONABLE REQUIRING NO INTERFERENCE FROM THIS FORUM. ACCORDINGLY, I UPHOLD THE ORDER OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED THROUGH CIRCULATION IN NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962 . S 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