POLAR STAR, MUMBAI V. ACIT 19(2), MUMBAI

ITA 1995/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8691 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 31-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: VIJAY KUMAR S BIYANI
• Keywords: Accommodation entries
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1995/MUM/2017 : A.Y : 2007 - 08 M/S. POLAR STAR DW - 5040, BHARAT DIAMOND BOURSE, BKC, BANDRA (E), MUMBAI 400 051 (APPELLANT) PAN : AAAFP0525F VS. ACIT - 19(2), MUMBAI (RESPONDENT) APPELLANT BY : SHRI VIJAYKUMAR S. BIYANI RESPONDENT BY : MS. N. HEMALATHA DATE OF HEARING : 02/08/2017 DATE OF PRONOUNCEMENT : 25 /10/2017 O R D E R THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 30 , MUMBAI DATED 25.01.2017 , PERTAINING TO THE ASSESSMENT YEAR 2007 - 08 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 27.03.2015 UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS DISPUTED THE ADDITION OF RS.3,20,029/ - SUSTAINED BY THE CIT(A). 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESSING OFFICER FOUND THAT ASSESSEE HAD EFFECTED PURCHASES OF RS.1,60,01,444/ - FROM M/S. 2 ITA NO. 1995/MUM/2017 M/S. POLAR STAR MAHALAXMI GEMS PVT. LTD., A CONCERN BELONGING TO SHRI BHANWARLAL JAIN GROUP, WHICH WAS INDULGING IN GIVING ACCOMMODATION ENTRIES. IN THE ASSESSMENT FINALISED U/S 143(3) R.W.S 147 OF THE ACT, THE ASSESSING OFFICER TREATED THE AFORESAID PURCHASES TO BE BOG US, BUT CONCLUDED THAT IN VIEW OF THE GENUINENESS OF SALES EFFECTED, ASSESSEE MUST HAVE MADE PURCHASES OF THE CORRESPONDING QUANTITY, BUT FROM CONCERNS OTHER THAN M/S. MAHALAXMI GEMS PVT. LTD. THE ASSESSING OFFICER WAS OF THE OPINION THAT SUCH PURCHASES W OULD HAVE BEEN MADE FROM THE GREY MARKET WHICH WOULD HAVE RESULTED IN SAVINGS TO THE ASSESSEE . IN THIS SCENARIO, THE ASSESSING OFFICER TREATED 8% OF THE PURCHASES COST OF THE UNPROVED PURCHASES AS PROFIT ASSESSABLE IN THE HANDS OF THE ASSESSEE. ACCORDING LY, HE MADE AN ADDITION OF RS.12,80,116/ - , WHICH WAS 8% OF THE UNPROVED PURCHASES OF RS.1,60,01,444/ - . 4. BEFORE THE CIT(A) , ASSESSEE MADE VARIED SUBMISSIONS. THE CIT(A) HAS UPHELD THE STAND OF THE ASSESSING OFFICER IN PRINCIPLE, BUT INSTEAD OF ESTIMATIN G THE PROFIT @ 8% OF THE UNPROVED PURCHASES, HE SCALED DOWN THE SAME TO 2% BY NOTICING VARIOUS FACTORS. IN THIS MANNER, HE RESTRICTED THE ADDITION TO RS.3,20,029/ - . NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE TH E TRIBUNAL. 5. BEFORE ME, THE PLEA OF THE ASSESSEE IS THAT THE ADDITION SUSTAINED BY THE CIT(A) IS ON THE HIGHER SIDE AND THAT THE SAME SHOULD BE REDUCED. 6. AFTER HAVING CONSIDERED THE ORDER S OF THE AUTHORITIES BELOW, I FIND NO REASON TO INTERFERE WITH THE DECISION OF THE CIT(A). NOTABLY, THE CIT(A) HAS NOTED THAT IN THE CASE OF DIAMOND INDUSTRY, A TASK FORCE WAS 3 ITA NO. 1995/MUM/2017 M/S. POLAR STAR CONSTITUTED BY THE GOVERNMENT OF INDIA, MINISTRY OF COMMERCE & INDUSTRY, WHICH RECOMMENDED A BENIGN ASSESSMENT PROCEDURE (BAP) CONSISTING OF PRESUMPTIVE TAX ON NET PROFIT CALCULATED @ 2% OF TRADING ACTIVITY AND 3% FOR MANUFACTURING ACTIVITY OR @ 2.5% ACROSS THE BOARD. THE INSTANT ASSESSEE IS IN THE BUSINESS OF TRADING IN DIAMONDS AND, IN THIS VIEW OF THE MATTER, THE PROFIT ESTIMATED BY THE CIT (A) @ 2% OF THE UNPROVED PURCHASES CANNOT BE SAID TO BE UNREASONABLE BY ANY STANDARDS. THUS, I FIND NO REASONS TO INTERFERE WITH THE DECISION OF THE CIT(A) AND ACCORDINGLY, ASSESSEE HAS TO FAIL IN ITS APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 T H OCTOBER, 2017. SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 5 T H OCTOBER, 2017 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI