ITO 20(3)(5), MUMBAI V. ZARINA YUSUF SARA, MUMBAI

ITA 1948/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1227 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 11-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANUPAMA SINGLA LD
• Assessee Lawyers: ANUJ DESAI LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

ITA NO.1948/MUM/2015 SMT. ZARINA YUSUF SARA ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 1948/MUM/2015 ( / ASSESSMENT YEAR: 2010-2011) INCOME TAX OFFICER 20(3)(5) 205, 2 ND FLOOR PIRAMAL CHAMBERS LALBAUG MUMBAI 400 012 / VS. SMT. ZARINA YUSUF SARA C/O M/S SARA TIMBER CORPORATION SHOP NO. 101 MUSTAFA BAZAR SANT SAVTA MARG MUMBAI 400 010 ./ ./PAN/GIR NO. ANSPS-5676-F ( /APPELLANT ) : ( !' / RESPONDENT ) / APPELLANT BY : DR. ANUPAMA SINGLA, LD. DR !' / RESPONDENT BY : SHRI ANUJ DESAI, LD. AR / DATE OF HEARING : 11/04/2017 / DATE OF PRONOUNCEMENT : 12/04/2017 ITA NO.1948/MUM/2015 SMT. ZARINA YUSUF SARA ASSESSMENT YEAR 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT YE AR [AY] 2010-2011 ASSAILS ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-32 [CIT(A)], MUMBAI DATED 27/01/2015 QUA RELIEF PROVIDED BY LD. CIT(A) TO THE ASSESSEE ON ACCO UNT OF CERTAIN BOGUS PURCHASES. 2. BRIEFLY STATED, THE ASSESSEE, BEING RESIDENT IND IVIDUAL, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 VI DE ASSESSING OFFICER [AO] ORDER DATED 25/03/2013 WHERE THE TOTAL INCOME OF THE ASSE SSEE WAS DETERMINED AT RS.61,87,220/- AFTER CERTAIN ADJUSTMENTS AND DISALL OWANCES AS AGAINST RETURNED INCOME OF RS. 11,83,207/- FILED BY THE ASSESSEE ON 24/09/2010 . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TIMBER & PLYWOOD UNDER THE NAME & STYLE OF M/S SARA TIMBER CORPORATION . DURING THE ASSESSMENT PROCEEDINGS, AS PER INFORMATI ON RECEIVED FROM DGIT, MUMBAI, THE ASSESSEE WAS FOUND TO BE THE BENEFICIARY OF BOG US PURCHASES FROM CERTAIN SUSPICIOUS DEALERS FOR AN AMOUNT OF RS.1,30,82,100/-. TO CONFIR M THE SAME, NOTICES U/S 133(6) WERE ISSUED, HOWEVER, THE SAME WERE RETURNED BACK WHICH LED THE AO TO CONCLUDE THAT THE ASSESSEE FAILED TO SUBSTANTIATE THE PURCHASES AND D ISCHARGE THE INITIAL ONUS OF PROVING ITS CLAIM REGARDING PURCHASES. IN SUPPORT, THE ASSESSEE CONTENDED THAT ADEQUATE DETAILS OF SALE & PURCHASE WERE MAINTAINED BY THE ASSESSEE AND ALL THE PAYMENTS WERE THROUGH BANKING CHANNELS. HOWEVER, NOT FULLY CONVINCED WITH THE ARGUMENTS, AO SUSTAINED ADDITION TO THE EXTENT OF RS.49,31,792/- ON ACCOUNT OF THESE BOGUS PURCHASES. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WI TH PARTIAL SUCCESS VIDE ORDER DATED 25/03/2013 AND RAISED SIMILAR CONTENTIONS. THE LD. CI T(A) AFTER PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS RESTRICTED THE SAID DISALLOWANCE TO 12.5% OF THE ALLEGED BOGUS PURCHASES WHICH CAME TO RS.16,35,262/- AS AGA INST RS.49,31,792/- MADE BY THE LD. AO. AGGRIEVED BY THE STAND OF LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. ITA NO.1948/MUM/2015 SMT. ZARINA YUSUF SARA ASSESSMENT YEAR 2010-11 3 3. BEFORE US, THE LD. DR CONTENDED THAT THE ASSESSE E COULD NOT EVEN PROVIDE THE ADDRESSES OF THE SUPPLIERS AND THEREFORE, RIGHTLY S UFFERED THE SAID DISALLOWANCE AT THE HANDS OF AO. THE COMPLETE ONUS WAS ON THE ASSESSEE T O SUBSTANTIATE HIS PURCHASES WHICH HE FAILED TO DISCHARGE AND MOREOVER, THE GP RATE SH OWN BY THE ASSESSEE REFLECTED DOWNWARD TREND IN THE IMPUGNED AY AND THEREFORE, AD DITIONS MADE BY AO WERE TO BE CONFIRMED. PER CONTRA, LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE ACCEPTED THE ORDERS OF THE LD. CIT(A) O NLY TO COVER THE SHORTCOMINGS IN THE ACCOUNTS OF THE ASSESSEE AS NOTED BY THE REVENUE AN D DID NOT WENT IN FURTHER APPEAL AGAINST THE SAME. THE SALES WERE NOWHERE DISPUTED BY THE REVENUE AND THEREFORE, EVEN IF ALL THE PURCHASES WERE TO BE TREATED AS BOGUS, ENTI RE ADDITIONS THEREOF COULD NOT BE MADE RATHER THE ADDITION HAS TO BE RESTRICTED TO CERTAIN PERCENTAGE ONLY IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE LD. CIT(A) AFTER APPRECIATING THE V ARIOUS CONTENTIONS OF THE ASSESSEE AND PLACING RELIANCE ON VARIOUS JUDICIAL PRONOUNCEM ENTS, RESTRICTED THE IMPUGNED ADDITIONS TO 12.5% OF BOGUS PURCHASES, WHICH, IN OU R OPINION, IS QUITE FAIR AND REASONABLE KEEPING IN VIEW THE FACTS THAT THE SALES WERE NOT D ISPUTED BY THE REVENUE, ASSESSEE WAS IN POSSESSION OF THE SALE / PURCHASE INVOICES, PAYMENT S WERE THROUGH BANKING CHANNELS AND ADEQUATE STOCK DETAILS WERE MAINTAINED BY THE ASSES SEE. WE ALSO NOTE THE FACT THAT THE TRIBUNAL, IN ALL SUCH CASES, HAS MORE OR LESS, TAKEN A STAND THAT AN ADDITION RANGING FROM 5% TO 12.5% OF IMPUGNED BOGUS PURCHASES WOULD BE SU FFICIENT TO COVER UP THE REVENUE LOSS ON ACCOUNT OF SUCH BOGUS PURCHASES. THEREFORE, TAKING THE CONSISTENT STAND, WE SEE NO REASON TO INTERFERE WITH THE FINDINGS / CONCLUSI ONS OF THE LD. CIT(A) AND THEREFORE, NO HESITATION IN DISMISSING REVENUES APPEAL. 5. IN NUTSHELL, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) ITA NO.1948/MUM/2015 SMT. ZARINA YUSUF SARA ASSESSMENT YEAR 2010-11 4 / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 12.04.2017 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