ABHAY AMBALAL SHAH, MUMBAI V. ITO WD 3(1), KALYAN

ITA 1948/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2446 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 194 8 / MUM/20 17 ( ASSESSMENT YEAR : 2011 - 12 ) SHRI ABHAY AMBALAL SHAH FLAT NO.10, GURUDATTA HSG. SOCIETY, A - WING, 2 ND FLOOR, PATEL CHOW K GHATKOPAR EAST MUMBAI 400 075 VS. ITO WD. 3(1) KALYAN PAN/GIR NO. ACKPS4827P APPELLANT ) .. RESPONDENT ) ASSESSEE BY WRITTEN SUBMISSION REVENUE BY SHRI CHAITANYA ANJARIA DATE OF HEARING 27 / 08 /201 8 DATE OF PRONOUNCEMENT 29 / 08 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, THANE DATED 23/01/2017 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF THE IT ACT. 2. IN THIS APPEAL, ASSESSE E IS AGGRIEVED FOR THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES AMOUNTING TO RS.10,98,627/ - BY ESTIMATING 12.5% OF NET PROFIT OF ALLEGED UNPROVED PURCHASES. 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT CIT(A) HAS PASSED CON SOLIDATED ORDER FOR THE A.Y.2010 - 11 AND 2011 - 12 ON 23/01/2017. THE TRIBUNAL HAVE DISPOSED OF THE APPEAL FOR THE ITA NO. 1948/MUM/20 17 SHRI ABHAY AMBALAL SHAH 2 A.Y.2010 - 11 VIDE ORDER DATED 11/07/2017 AFTER HAVING THE FOLLOWING OBSERVATION: - 2. THE ISSUE RAISED IS THAT THE LEARNED CIT(A) ERRED IN DISALLO WING 12.5% OF THE ALLEGED BOGUS PURCHASES RESULTING INTO DISALLOWANCE OF RS.4,79,406. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF BUILDING MATERIAL, PROPRIETOR OF DHANSHREE ENTERPRISES. ON THE BASIS OF I NFORMATION RECEIVED FROM SALES TAX DEPARTMENT AND INVESTIGATION WING, THE AO NOTICED THAT THE ASSESSEE WAS A BENEFICIARY OF HAWALA ENTRY OPERATORS. THE ASSESSEE HAD SHOWN PURCHASES AMOUNTING TO RS. 38,35,252 FROM THREE PARTIES (PARA 1 OF AO ORDER), WHO WER E LISTED BY THE SATES TAX AUTHORITIES AS HAWALA OPERATORS I.E. ONLY PROVIDING BILLS WITHOUT THERE BEING ANY ACTUAL TRANSACTION OF PURCHASES OR SALES. THEREFORE, THE AO ISSUED NOTICE U/S. 148 OF THE I.T. ACT, TO THE ASSESSEE AND RE - OPENED THE ASSESSMENT PRO CEEDINGS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE PURCHASES SHOWN FROM ALL SUCH PARTIES. THE ASSESSEE FILED COPIES OF PURCHASE BILL, BANK BOOK, CASH BOOK, LEDGERS, FINANCIAL STATEMENTS AND ALSO STATED THAT THE PAYMENT TO ALL THE PARTIES HAD BEEN MADE THROUGH CHEQUES. DURING ENQUIRIES U/S 133(6), THE NOTICES ISSUED BY THE AO WERE RETURNED UNSERVED BY THE POSTAL DEPARTMENT WITH REMARKS 'LEFT AND NOT KNOWN' IN RESPECT OF TWO PARTIES AND IN RESPECT OF REMAINING THREE PARTIES NO RESPONSES WAS RECEIVED. THE ASSESSEE COULD NOT PRODUCE THE PARTIES OR LEDGER ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF THE SAID SUPPLIER. IN PARA 4.2 OF THE ORDER, THE AO STATED THAT THE HAWALA PARTIES HAVE IN THEIR AFF ADAVITS AFFIRMED THAT THEY HAD NOT DONE ANY ACTIVITY OF SALE AND PURCHASE. THE AO THEREFORE, AFTER REJECTING THE DOCKS OF ACCOUNTS OF THE ASSESSEE U/S. 145(3) OF THE IT. ACT FOR NOT BEING COMPLETE AND CORRECT, ADDED THE AMOUNT OF RS. 38,35,252 TO THE ASSES SEES INCOME BY RESTING ALL SUCH PURCHASES AS BOGUS PURCHASES. 4. UPON ASSESSEES APPEAL, THE LEARNED CIT(A) NOTED THAT SINCE THE SALES HAVE NOT BEEN DOUBTED, ONLY 12.5% OF THE BOGUS PURCHASES SHOULD BE DISALLOWED. AGAINST THIS ORDER, ASSESSEE IS IN APPEA L BEFORE THE ITAT. 5. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT ASSESSMENT IN THIS CASE HAVE BEEN REOPENED AFTER RECEIVING COGENT INFORMATION THE MAHARASHTRA SALES TAX DEPARTMENT WITH THE SUPPLIERS FROM WHOM THE ASSESSEE HAS CLAI MED TO HAVE MADE THE IMPUGNED PURCHASES ARE BOGUS. THE SUPPLIERS HAVE AFFIRMED THAT THEY HAVE NOT SUPPLIED GOODS RATHER THEY HAVE PROVIDED ONLY ACCOMMODATION BILLS. ITA NO. 1948/MUM/20 17 SHRI ABHAY AMBALAL SHAH 3 THE ASSESSING OFFICER ALSO MADE HIS OWN ENQUIRIES. HE HAS ALSO ISSUED NOTICES TO THESE PART IES. THEY HAVE NEITHER RESPONDED NOR THE ASSESSEE HAS BEEN ABLE TO PRODUCE THEM BEFORE THE REVENUE AUTHORITIES. THE ASSESSING OFFICER HAS ALSO NOTED THAT ASSESSEE HAS FAILED TO PRODUCE THE DELIVERY SLIP OF MATERIAL TRANSFERRED TO CUSTOMERS, COPY OF TRANSPO RT RECEIPT AND COPY OF OCTROI RECEIPT, STOCK REGISTER, DETAILS OF TRANSPORTATION EXPENSES. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAS DISALLOWED THE ALLEGED BOGUS PURCHASES AMOUNTING TO RS.38,35,252. 6. THE LEARNED CIT(A) HAS RESTRICTED THE DISAL LOWANCE TO 12.5%. 7. AGAINST THIS, ASSESSEE HAS NOW SUBMITTED THAT THE PURCHASES ARE GENUINE AND NO DISALLOWANCE SHOULD HAVE BEEN DONE. 8. I FIND THAT THE FINDINGS OF THE ASSESSING OFFICER CLEARLY STATES THAT ASSESSEE HAS BEEN INDULGING IN BOGUS PURCHAS ES. NO EVIDENCE REGARDING THE ACTUAL TRANSPORTATION OF GOODS HAS BEEN PROVIDED BY THE ASSESSEE. DESPITE THE ABOVE, THE LEARNED CIT(A) HAS ALLOWED SUBSTANTIAL RELIEF, BUT THE ASSESSEE IS STILL AGGRIEVED AND WANTS TO PROVE THAT THE PURCHASES ARE GENUINE. 9 . IN THIS REGARD, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V. M/S.CARPET MAHAL IN D.B.INCOME TAX APPEAL NO.170 OF 2009, WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER VIDE ORDER DATED 10.05.2017: - '3. CONSIDERING THE LAW DECLARED BY THE SUPREME COURT IN THE CASE OF VIJAY PROTEINS LTD. VS. COMMISSIONER OF INCOME TAX, SPECIAL LEAVE TO APPEAL (C) NO.8956/2015 DECIDED ON 06.04.2015 WHEREBY THE SUPREME COURT HAS DISMISSED THE SLP AND CONFIRMED THE ORDER DATED 09.12.2014 PASSED BY THE GUJARAT HIGH COURT AND OTHER DECISIONS OF THE HIGH COURT OF GUJARAT IN THE CASE OF SANJAY OILCAKE INDUSTRIES VS. COMMISSIONER OF INCOME TAX (2009) 316 ITR 274 .(GUJ) AND N.K. INDUSTRIES LTD. VS. D Y. C.I.T., TAX APPEAL NO.240/2003 DECIDED ON 20.06.2016, THE PARTIES ARE BOUND BY THE PRINCIPLE OF LAW PRONOUNCED IN THE AFORESAID THREE JUDGMENTS. 4. WE REMIT BACK THE CASE TO THE ASSESSING OFFICER FOR DECIDING AFRESH ON THE FACTUAL MATRIX. THE AUTHORITY WILL ACCEPT THE LAW BUT THE TRANSACTION WHETHER IT IS GENUINE OR NOT WILL BE VERIFIED BY THE ASSESSING OFFICER ON THE BASIS OF THE AFORESAID THREE JUDGMENTS. THE ISSUES ARE ANSWERED ACCORDINGLY. THE APPEAL IS ACCORDINGLY DISPOSED OF.' ITA NO. 1948/MUM/20 17 SHRI ABHAY AMBALAL SHAH 4 10. I FIND THAT SIN CE THE ASSESSEE WANTS AN OPPORTUNITY TO PROVE THE VERACITY OF THE PURCHASES, WHICH HE HAS FAILED TO DO SO, IT WILL BE IN THE INTEREST OF JUSTICE TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOLLOWING THE AFORESAID JUDGMENT OF THE HONBLE RAJAST HAN HIGH COURT. HENCE THE ISSUE STANDS REMITTED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE AFORESAID CASE LAW. 11. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE IS STANDS ALLOW ED FOR STATISTICAL PURPOSES. 4. WE HAD CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A. Y.2010 - 11 , WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING THE SAME IN TERMS OF THE DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 11/07/2017 FOR THE A.Y.2010 - 11. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 / 08 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 29 / 08 /201 8 KA RUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//