ITO 20(2)(2), MUMBAI V. NISRIN DEESAWALA, MUMBAI

ITA 1960/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9815 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 29-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 69C; 143(3); 147; 148

Judgement Text

ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NOS. 1960 &1961/MUM/2016 ( / ASSESSMENT YEARS: 2010-11 & 2011-12) INCOME TAX OFFICER 20(2)(4) ROOM NO.212 PIRAMAL CHAMBER LALBAUG MUMBAI -400 012 / VS. NISRIN DEESAWALA PROP. SHABBIR TRADERS 602,6 TH FLOOR KETAN APARTMENTS 22,BELVEDRE ROAD, MAZGAON MUMBAI -400 010 ! ./ ./PAN/GIR NO. AKVPD-6997-J ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 17/08/2017 / DATE OF PRONOUNCEMENT : 23 /08/2017 ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE TWO APPEALS BY REVENUE FOR ASSESSMENT YEARS [AY] 2010-11 & 2011-12 WHICH ASSAILS SEPARATE ORDER OF F IRST APPELLATE AUTHORITY. SINCE COMMON ISSUES ARE INVOLVED, WE DIS POSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE & BREVITY. NONE HAS APPEARED ON BEHALF OF ASSESSEE DESPITE BEI NG PROVIDED WITH SEVERAL OPPORTUNITIES OF BEING HEARD AS PER ORDER S HEET ENTRIES. NO ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DECIDE THE APPEALS ON THE BASIS OF MATERIAL AVAILAB LE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE. THE LD. DR ALSO DREW OUR ATTENTION TO THE FACT THAT THERE ARE NO CROSS APPEA LS BY THE ASSESSEE. FIRST WE TAKE UP ITA NO. 1960/MUM/2016 FOR AY 2010- 11 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-32 [CIT(A)], MUMBAI DATED 05/01/2016. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN WHOLESALE TRADING OF COPPER WIRES, ELECTRICAL INSUL ATION MATERIAL & THINNERS THROUGH PROPRIETORSHIP CONCERN NAMELY SHABBIR TRADERS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 24/03/2014 WHERE THE INCOME OF THE A SSESSEE WAS DETERMINED AT RS.3,18,40,680/- AFTER ADDITION OF RS .3,12,86,655/- U/S 69C ON ACCOUNT OF CERTAIN BOGUS PURCHASES. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 19/09/2010 DECL ARING TOTAL INCOME OF RS.4,64,028/- WHICH WAS PROCESSED U/S 143(1). ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 3 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASES BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.3,12,86,655/- FROM 10 PARTIES. CONSEQUENTLY, NOT ICE U/S 148 DATED 27/02/2013 WAS ISSUED TO THE ASSESSEE WHICH WAS FOL LOWED BY STATUTORY NOTICES U/S 142(1)/143(2). 2.3 DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE PRO DUCED QUANTITATIVE DETAILS, DELIVERY CHALLANS, TRANSPORT RECEIPTS, LEDGER EXTRACTS ETC. TO CONTEND THAT THE PURCHASES WERE GENUINE BUT COULD NOT PRODUCE THE PARTIES FOR CONFIRMATION OF THE TRANSACTIONS AN D ATTRIBUTED THE SAME TO PAUCITY OF TIME AND IN VIEW OF THE FACT THAT THE PU RCHASES WERE MADE THROUGH BROKERS. HOWEVER, NOT CONVINCED, LD. AO TRE ATED THE SAME AS NON-GENUINE PURCHASES AND ADDED THE SAME TO THE INC OME OF THE ASSESSEE U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/01/2 016 AND REITERATED THAT THE PURCHASES WERE GENUINE AND PAYMENT WERE TH ROUGH BANKING CHANNELS AND THE ASSESSEE WAS IN POSSESSION OF PURC HASES DOCUMENTS. THE LD. CIT(A) NOTED THAT A SUBSTANTIAL PORTION OF PURCHASES MADE BY THE ASSESSEE WERE DISALLOWED BY THE LD. AO WHEREAS TURNOVER WAS NOT DISPUTED. THE LD. CIT(A) ALSO NOTED THAT THE PURCHA SES WERE MADE THROUGH BROKERS. FINALLY, AFTER PLACING RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS ON THE ISSUE, THE LD. CIT(A) RESTRIC TED THE DISALLOWANCE TO 2.06% OF THE ALLEGED BOGUS PURCHASES, BEING GP RATE REFLECTED BY THE ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 4 ASSESSEE DURING IMPUGNED AY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] ASSAILE D THE STAND OF LD. CIT(A) ON THE PREMISES THAT THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS OF SUBSTANTIATING THE PURCHASE TRANSAC TIONS AND THEREFORE, FULL ADDITION THEREOF WAS JUSTIFIED. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE R ELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASES. THE SALES TURNOVER ACHIEVED BY T HE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS W ERE THROUGH BANKING CHANNELS. THE ASSESSEE PROVIDED QUANTITATIV E RECONCILIATION OF THE MATERIAL ALONG WITH DELIVERY CHALLANS / TRANSPO RT RECEIPTS DURING ASSESSMENT PROCEEDINGS. ON THE OTHER HAND, THE ASSE SSEE COULD NOT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF THE TR ANSACTION. HOWEVER, WE ALSO NOTE LACK OF PROPER INVESTIGATION ON THE PA RT OF LD. AO. THE LD. AO, PRIMA FACIE, WITHOUT MAKING ANY INDEPENDENT INQUIRIES OR WITHOUT CALLING FOR ANY CONFIRMATIONS ETC. FROM THE ALLEGED BOGUS SUPPLIERS, REJECTED THE SAME STRAIGHTWAY AND MADE THE ADDITION S MERELY BY PLACING RELIANCE ON THE WEBSITE INFORMATION, WHICH, IN OUR OPINION, WAS NOT JUSTIFIED. IT IS SETTLED LAW THAT ADDITIONS COULD N OT BE MADE MERELY ON THE BASIS OF SUSPICION, CONJECTURES OR SURMISES. THE LD . AO FAILED TO BRING ON RECORD ANY COGENT MATERIAL TO ESTABLISH THE FACT THAT THE PURCHASES WERE NOT GENUINE AND NO INQUIRIES OR EFFORTS, WHATS OEVER OF ANY NATURE, WERE MADE BY LD. AO TO SUBSTANTIATE HIS STAND. THER EFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 5 EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. 6. IN VIEW OF THE ABOVE, THE STAND OF LD.CIT(A), BE ING FAIR & LOGICAL ONE, IS CONFIRMED WHICH RESULT INTO DISMISSAL OF RE VENUES APPEAL. 7. NOW WE TAKE UP ITA NO. 1961/MUM/2016 FOR AY 2011 -12. THE ASSESSEE HAS SUFFERED SIMILAR DISALLOWANCE OF RS.3, 74,31,110/- IN THIS YEAR ON ACCOUNT OF BOGUS PURCHASES WHICH WAS RESTRICTED TO 2.15% BY LD. CIT(A) VIDE IMPUGNED ORDER DATED 05/01/2016. AG GRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. THERE BEING NO CHANGE IN FACTS OR CIRCUMSTANCES EXCEPT FOR VARIATIONS IN FIGURES ETC. , TAKING THE SAME STAND, WE CONFIRM THE ORDER OF LD. CIT(A). RESULTAN TLY, THE REVENUES APPEAL STANDS DISMISSED. 8. RESULTANTLY, BOTH THE APPEALS FILED BY THE REV ENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 23. 08.2017 SR.PS:- THIRUMALESH ITA NO 1960 &1961/MUM/2016 NISRIN DEESAWALA ASSESSMENT YEARS- 2010-11 & 2011-12 6 ! / 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