SHRI. DEEPAK KUMAR KANJIBHAI PATEL, Mumbai V. ITO 24(1)(5), Mumbai

ITA 195/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6964 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MRS RUCHI M RATHODLD
• Keywords: Bogus purchase
• Section: 69C; 143(3); 133(6); 148

Judgement Text

ITA NO.195/MUM/2019 SHRI DEEPAK KUMAR KANJIBHAI PATEL ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO 195/MUM/2019 ( / ASSESSMENT YEAR : 2011-12 ) SHRI DEEPAK KUMAR KANJIBHAI PATE L 503, 5 TH FLOOR, SHIVALAYA HEIGHTS, VEERA DESAI ROAD, ANDHERI WEST, MUMBAI 400058. / VS. I TO - 24(1)(5), ROOM NO. 523, 5 TH FLOOR PIRAMAL CHAMBERS, LALBAUGH PAREL, MUMBAI 400012. %& ./ ./PAN/GIR NO. AYRPP-4225-F ( &( /APPELLANT ) : ( )*&( / RESPONDENT ) ASSESSEE BY : MRS. RUCHI M RATHOD-LD. AR REVENUE BY : MS. JOTHILAKSHMI NAYAK- LD.DR / DATE OF HEARING : 28/01/2020 / DATE OF PRONOUNCEMENT : 05/02/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2011-12 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-36, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-36/IT-35/ITO-24(1)(5)/2016-17 DAT ED 27/09/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. LEARNED CIT(APPEAL) ERRED IN CONFIRMING THE ENTI RE ADDITIONS MADE BY THE AO FOR AN AMOUNT OF RS. 4437459/- (12.5% OF RS. 35499673/- ) AND ERRED IN TREATING THE SAME AS BOGUS PURCHASE. ITA NO.195/MUM/2019 SHRI DEEPAK KUMAR KANJIBHAI PATEL ASSESSMENT YEAR :2011-12 2 2. LEARNED CIT(APPEAL) ERRED IN NOT CONSIDERING THE DOCUMENTS SUBMITTED AND FAILED TO APPRECIATE THE SUBMISSION BROUGHT ON RECORD. 3. LEARNED CIT(APPEAL) ERRED IN NOT CONSIDERING THE JUDGMENTS BROUGHT ON RECORD. 4. LEARNED CIT(APPEAL) ERRED IN CONFIRMING THE ASSE SSMENT WHEREIN THE BASIS OF INFORMATION RECEIVED FROM SALES TAX AUTHORITIES WHI CH CONTRARY TO THE MATERIAL FACT ON RECORD AND MORE PARTICULARLY DISALLOWANCE IS CON TRARY TO THE PROVISIONS OF SECTION 69C SINCE THE SOURCE IS IN DISPUTE AND NOT THE PURC HASE EXPENDITURE. AS EVIDENT FROM GROUNDS OF APPEAL, THE SOLE SUBJECT MATTER OF THE APPEAL IS ESTIMATED ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. WE HAVE CAREFULLY HEARD THE SUBMISSIONS MADE BY BOTH THE REPRESENTATIVES. WE HAVE ALSO PERUSED RELEVANT MATE RIAL ON RECORD. OUR ADJUDICATION TO ISSUE RAISED IN THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL STATED TO BE ENGAGED IN TRADING OF PLYWO OD, FIREWOOD, PLY ETC. UNDER PROPRIETORSHIP CONCERN NAMELY M/S EKAL TRADERS, WAS ASSESSED FOR YEAR UNDER CONSIDERATION 143(3) R.W.S. 147 ON 1 4/03/2016 WHEREIN THE ASSESSEE WAS SADDLED WITH IMPUGNED ESTIMATED AD DITIONS OF RS.44.37 LACS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/09 /2011 AT RS.10.17 LACS, WHICH WAS PROCESSED U/S 143(1). 3.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INV.) / SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, IT TRANSPIRED THAT THE ASSESSEE OBTAINED BOGUS PURCHASES BILLS AGGREGATING TO RS.35 4.99 LACS FROM AS MANY AS 17 ENTITIES, THE DETAILS OF WHICH HAVE ALRE ADY BEEN EXTRACTED IN PARA-2.1 OF THE QUANTUM ASSESSMENT ORDER. ACCORDING LY, THE CASE WAS REOPENED AS PER DUE PROCESS OF LAW VIDE ISSUANCE OF NOTICE U/S 148 ON ITA NO.195/MUM/2019 SHRI DEEPAK KUMAR KANJIBHAI PATEL ASSESSMENT YEAR :2011-12 3 02/03/2015 WHICH WAS FOLLOWED BY STATUTORY NOTICES WHEREIN THE ASSESSEE WAS DIRECTED TO SUBSTANTIATE THE PURCHASE TRANSACTIONS. 3.3 THE ASSESSEE DEFENDED THE PURCHASES VIDE ITS RE PLY FILED ON 19/01/2016. HOWEVER, NOTICES ISSUED U/S 133(6) TO A LL THE ABOVE PARTIES, TO CONFIRM THE TRANSACTIONS, WERE RETURNED BACK UND ELIVERED BY POSTAL AUTHORITIES. THEREFORE, LD. AO FORMED A BELIEF THAT THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS OF PROVING THE PURCHASE TRANSACTIONS. CONSEQUENTLY, LD. AO MADE AN ESTIMATED ADDITION OF 12.5% AGAINST THESE PURCHASES, WHICH CAME TO RS.44.37 LACS. 4. BEFORE LD. CIT(A), THE ASSESSEE DREW ATTENTION T O THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT HAD FURNISHED PURCHASE INVOICES, LEDGER EXTRACTS, STATEMENT OF CORRESPONDI NG SALES MADE AGAINST THESE PURCHASES, BANK STATEMENTS EVIDENCING PAYMENT THROUGH BANKING CHANNELS AND THEREFORE, THE ADDITIONS WERE NOT JUST IFIED. HOWEVER, LD. CIT(A), AFTER APPRECIATING THE FACTUAL MATRIX, FORM ED AN OPINION THAT THE CORRECT APPROACH WOULD BE TO ESTIMATE THE ADDITIONA L PROFIT EARNED ON THESE PURCHASES. THEREFORE, FINDING THE ESTIMATION OF 12.5% TO BE QUITE FAIR & REASONABLE, THE ADDITIONS WERE CONFIRMED. AG GRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 5. THE LD. AR HAS PLEADED FOR REASONABLE ESTIMATION KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAS ALREADY DECLARED GRO SS PROFIT OF MORE THAN 5% IN THE YEAR UNDER CONSIDERATION. THE LD. DR HAS SUBMITTED THAT ESTIMATE WAS QUITE FAIR AND REASONABLE AND THEREFOR E, THE IMPUGNED ORDER WOULD NOT REQUIRE ANY INDULGENCE ON OUR PART. 6. UPON DUE CONSIDERATION, WE ARE OF THE OPINION TH AT THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIAL PARTICU LARLY WHEN THE ITA NO.195/MUM/2019 SHRI DEEPAK KUMAR KANJIBHAI PATEL ASSESSMENT YEAR :2011-12 4 ASSESSEE WAS INTO TRADING ACTIVITIES. THE SALES TUR NOVER HAS NOT BEEN DISPUTED / DISTURBED BY THE REVENUE. THE ASSESSEE W AS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. HOWEVER, AT THE SAME TIME , THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE SUPPLIER OUT OF 17 SUPPLIERS TO CONFIRM THE TRANSACTIONS. NOTICES ISSUED U/S 133(6) DID NOT ELI CIT ANY SATISFACTORY RESPONSE. THE STATED FACTUAL MATRIX, IN OUR CONSIDE RED OPINION, WOULD MAKE IT A FIT CASE TO MAKE ESTIMATED ADDITIONS TO A CCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY / UNORGANIZED MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES. KEEPING IN VIEW THE FACT THAT THE ASSESS EE HAD ALREADY REFLECTED GROSS PROFIT RATE OF MORE THAN 5% DURING THE YEAR, WE REDUCE THE ESTIMATION TO 8% OF ALLEGED BOGUS PURCHASES OF RS.3,54,99,673/- WHICH COMES TO RS.28,39,974/-. THE ORDERS OF LOWER AUTHORITIES STAND MODIFIED TO THAT EXTENT. THE LD.AO IS DIRECTED TO R ECOMPUTE THE INCOME OF THE ASSESSEE IN TERMS OF THIS ORDER. 7. THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 05/02/2020 SR.PS. JAISY VARGHESE ITA NO.195/MUM/2019 SHRI DEEPAK KUMAR KANJIBHAI PATEL ASSESSMENT YEAR :2011-12 5 !'#' / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT 3. 1 ( ) / THE CIT(A) 4. 1 / CIT CONCERNED 5. 23),4 , 4 , / DR, ITAT, MUMBAI 6. 356 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.