DEVANG H KAPASI, MUMBAI V. ITO WD 22(1)(1), NAVI MUMBAI

ITA 2087/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92503 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 2087 /M/2013 ASSESSMENT YEAR: 2009 - 1 0 MR. DEVANG H. KAPASI, B - 607, ARIHANT BLDG., SUDHA PARK, BEHIN D GARODIA NAGAR, GHATKOPAR (E), MUMBAI 400 077 PAN: AAMPK 9893K VS. INCOME TAX OFFICER, WARD - 22(1)(1) , 6 TH TOWER, 4 TH FLOOR, VASHI RAILWAY STATION, VASHI, NAVI MUMBAI. (APPELLANT) (RESPONDENT) PRE SENT FOR: ASSESSEE BY : S HRI HARI S. RAHEJA, A.R. REVENUE BY : SHRI LOVE KUMAR , D.R. DATE OF HEARING : 2 9 .04. 201 5 DATE OF PRONOUNCEMENT : 08.05.2015 O R D E R PER VIJAY PAL RAO , JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 21 .0 1 .2013 OF CIT(A) FOR THE ASSESSMENT YEAR 200 9 - 1 0. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AS UNDER: ADDITION OF ESTIMATED GROSS PROFIT: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMM. OF INCOME TAX (APPEAL) ERRED IN CONFIRMING THE ADDITION OF RS.19,60,682/ - BEING THE PROFIT ESTIMATED BY THE ASSESSING OFFICER @ 5% OF THE TURNOVER OF RS.3,92,13,652/ - CONSIDERING THE SAME AS GENUINE TURNOVER. THE LEARNED COMM. OF INCOME TAX (APPEAL ) FAILED TO APPRECIATE THAT THE ACTUAL SURPLUS GENERATED ON ACCOUNT OF ACCOMMODATION TRANSACTIONS WAS ONLY 1% ON BUILDING MATERIAL COMPONENT OF TRANSACTIONS AND 0.5% ON TRANSPORTATION COMPONENT OF TRANSACTIONS. ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 2 2. THE ASSESSEE IS A PROPRIETOR OF A CON CERN NAMELY SIDDHI ENTERPRISES SHOWN TO BE IN THE BUSINESS OF BUILDING MATERIAL SUPPLY AND PROVIDING OF TRANS PORT SERVICES. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME AT RS.11,46,270/ - ON 30.09.09. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER (AO) RECORDED THE STATEMENT OF THE ASSESSEE UNDER SECTION 131 OF INCOME TAX ACT WHEREIN THE ASSESSEE HAS ADMITTED THAT BILLS FOR SALES ISSUED TO SOME OF THE ENTITIES DURING THE YEAR UNDER CONSIDERATION DO NOT REPRESENT GENUINE BUSINESS TRANSACTIONS AND ONLY ACCOMMODATION ENTRIES GIVEN ON DEMAND FROM THE VARIOUS PERSONS FOR WHICH COMMISSION OF 0.5% IN RESPECT OF TRANSPORT BILL AND 1% IN RESPECT OF BUILDING MATERIAL SUPPLY WAS RECEIVED. THE ASSESSEE HAS ALSO STATED IN THE STATEMENT THAT SALE TRANSACTION TO SOME OF THE PARTIES WERE GENUINE TRANSACTIONS. IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ON 21.12.11 THE AO HAS RECOMPUTED THE INCOME TAKEN INTO ACCOUNT 0.5% OF THE TURNOVER OF THE TRANSPORT BILLS + TDS THEREON AS COMMISSION IN RESPECT OF ACCOMMODATION BILLS AND 1% IN RESPECT OF SUPPLY OF MATERIALS. THE AO HAS ALSO MADE AN ADDITION OF RS. 19,60,682/ - BY ADOPTING ESTIMATED GP @ 5% OF THE BALANCE TURNOVER OF SUPPLY OF BUILDING MATERIAL TREATING THE SAME AS GENUINE TURNOVER. THE ASSESSEE HAS DISPUTED THE ADDITION MADE BY THE AO BY ADOPTING THE GP @ 5% ON THE ALLEGED GENUINE TURNOVER AND CONTENDED BEFORE THE LD. CIT(A) THAT THE ENTIRE TURNOVER SHOWN BY THE ASSESSEE IS ON ACCOUNT OF ACCOMMODATION ENTRIES AND AT THE TIME OF STATEMEN T RECORDED UNDER SECTION 131 THE ASSESSEE DID NOT DISCLOSE THE NAME OF VARIOUS PARTIES TO WHOM HE HAS ISSUED ACCOMMODATION BILL BECAUSE THEY WERE PRESSURIZING THE ASSESSEE NOT TO ADMIT THE ACCOMMODATION BOGUS TRANSACTIONS WITH THOSE PARTIES. 3. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO. ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 3 4. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS POINTED OUT THAT IN ANSWER TO QUESTION NO.14 THE ASSESSEE HAS STATED AND DISCLOSED 12 PARTIES IN RESPECT OF WHO M THE ASSESSEE ISSUED BOGUS TRANSPORT AND BUILDING MATERIAL BILLS BEING ACCOMMODATION ENTRIES. HOWEVER, THE REMAINING TURNOVER SHOWN BY THE ASSESSEE TO THE TUNE OF RS.3,92,13,652/ - ALSO REPRESENTS THE ACCOMMODATION ENTRY TO THE OTHER PARTIES. IN SUPPORT OF HIS CONTENTION HE HAS SUBMITTED THAT FOR THE ASSESSMENT YEAR 20 1 0 - 1 1 WHICH IS THE SUBSEQUENT ASSESSMENT YEAR THE AO ITSELF HAS TREATED THE TRANSACTION IN RESPECT OF THE OTHER PARTIES AS BOGUS TRANSACTION AND THEREFORE THE TURNOVER IN RESPECT OF THE TRAN SACTIONS WITH THE OTHER PARTIES TREATED BY THE AO AS GENUINE TRANSACTIONS AND ADOPTED THE GP @ 5% IS IN FACT REPRESENTS THE BOGUS TRANSACTION. THE LD. A.R. HAS INVITED OUR ATTENTION TO THE DETAILS AT PAGE 15 OF THE PAPER BOOK AND SUBMITTED THAT APART FROM THE TRANSACTIONS WITH 12 PARTIES WHICH WERE TREATED AS BOGUS TRANSACTIONS THE AO HAS ALSO TREATED THE TRANSACTIONS IN RESPECT OF 9 OTHER PARTIES AS BOGUS TRANSACTIONS FOR THE A.Y. 2010 - 11. HE HAS ALSO REFERRED THE ASSESSMENT ORDER FOR THE A.Y. 2010 - 11 AN D SUBMITTED THAT THE AO HAS ASSESSED THE INCOME OF THE ASSESSEE BY ACCEPTING THE CLAIM @ 0.5% ON TRANSPORT BILL AND 1% ON ACCOMMODATION BILLS OF BUILDING MATERIAL AND NO ADDITION HAS BEEN MADE BY ESTIMATING THE GP AS DONE BY THE AO IN THE ASSESSMENT YEAR U NDER CONSIDERATION. THUS, THE LD. A.R. HAS SUBMITTED THAT IN VIEW OF THE ASSESSMENT FOR THE A.Y. 2010 - 11 THE ADDITION MADE BY THE AO BY ESTIMATING THE GP ON A TURNOVER OF RS.3 , 92 , 13 , 652/ - IS UNJUSTIFIED AND LIABLE TO BE DELETED. 5. ON THE OTHER HAND, T HE LD. D.R. HAS SUBMITTED THAT THE ASSESSEE ITSELF HAS STATED IN THE STATEMENT THAT SOME OF THE SALE IS REPRESENTING THE GENUINE BUSINESS TRANSACTIONS OF THE ASSESSEE AND THEREFORE THE AO HAS ACCEPTED THE TURNOVER WHICH WAS DISCLOSED BY THE ASSESSEE IN THE STATEMENT AS BOGUS TRANSACTION AND THE REMAINING TURNOVER WAS TREATED AS GENUINE AS PER THE ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 4 ASSESSEES OWN ADMISSION AND SINCE THE BOOK RESULT OF THE ASSESSEES ARE REJECTED BY THE AO , THEREFORE THE ESTIMATION OF 5% GP ON THE ADMITTED GENUINE TRANSACTION IS VERY REASONABLE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THE AO HAS PROCEEDED ON THE BASIS OF THE STATEM ENT OF THE ASSESSEE RECORDED DURING THE ASSESSMENT PROCEEDINGS WHEREIN THE ASSESSEE HAS ADMITTED THAT THE MAJORITY OF THE TRANSACTIONS ARE NOT GENUINE BUT ONLY ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE IN RESPECT OF THE TRANSPORT SERVICES AS WELL AS S UPPLY OF BUILDING MATERIAL. THE ASSESSEE STATED BEFORE THE AO THAT THE ASSESSEE RECEIVED 0.5% COMMISSION ON TRANSPORT CHARGES AND 1% COMMISSION ON MATERIAL SUPPLY BILL PROVIDED AS ACCOMMODATION ENTRIES TO VARIOUS PARTIES WITHOUT BEING ACTUAL BUSINESS ACTI VITY. THE ASSESSEE DISCLOSED 12 NAMES DURING THE STATEMENT WHICH REPRESENTS THE TURNOVER OF RS.9 , 76 , 41 ,493/ - . THE AO ACCEPTED THE INCOME BY WAY OF COMMISSION @ 0.5% ON TRANSPORT BILLS AND 1% ON BUILDING MATERIAL BILLS ISSUED BY THE ASSESSEE AS ACCOMMODAT ION ENTRIES. SINCE THE ASSESSEE HAS SHOWN THE TOTAL TURNOVER WHICH IS MORE THAN THE TURNOVER IN RESPECT OF 12 PARTIES DISCLOSED BY THE ASSESSEE DURING THE STATEMENT RECORDED BY THE AO, THEREFORE THE AO HAS ESTIMATED THE INCOME OF THE ASSESSEE BY ADOPTING THE GP @5% ON THE BALANCE TURNOVER OF RS.3,92,13,652/ - . THE LD. A.R. OF THE ASSESSEE HAS POINTED OUT THAT FOR THE A.Y. 2010 - 11 THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF GP ESTIMATE AND TREATED THE ENTIRE TURNOVER BEING THE ACCOMMODATION BILLS PROVIDE D BY THE ASSESSEE. WE FIND THAT FOR THE A.Y. 2010 - 11 THE AO HAS ASSESSED THE INCOME OF THE ASSESSEE BY TREATING THE ENTIRE TURNOVER REPRESENTING THE ACCOMMODATION ENTRIES PROVIDED BY THE ASSESSEE BY ISSUING THE BOGUS BILL FOR TRANSPORT AND BUILDING MATERI AL TO THE VARIOUS PARTIES. ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 5 THE ASSESSEE HAS GIVEN THE DETAILS OF THE PARTIES WHICH WERE TREATED BY THE AO AS BOGUS TRANSACTIONS FOR THE A.Y. 2010 - 11 BUT TREATED AS GENUINE SALES FOR THE A.Y. 2009 - 10 AT PAGE NO.15 AS UNDER: 7. THE SECOND TABLE OF THE A BOVE DETAILS CONTAINS THE SIX PARTIES WHICH ARE COMMON FOR BOTH THE ASSESSMENT YEARS I.E. 2009 - 10 & 2010 - 11. FOR THE A.Y. 2010 - 11 THE AO HAS TREATED THESE PARTIES AS REPRESENTING THE BOGUS SALES AND ACCORDINGLY ASSESSED THE INCOME OF THE ASSESSEE ON THE B ASIS OF THE COMMISSION @ 0.5% ON TRANSPORT BILLS AND 1% ON BUILDING MATERIAL BILLS. THIS ASPECT IS ITA NO. 6932 /M/2013 M/S. ZYMA LABORATORIES LTD. 6 REQUIRED TO BE VERIFIED AND EXAMINED TO AVOID THE CONFLICTING FINDINGS OF THE AO FOR THESE TWO ASSESSMENT YEARS. 8. IN VIEW OF THE ABOVE FACTS AND CIRCUM STANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE OF ESTIMATION OF GP ON THE ALLEGED GENUINE TURNOVER TO THE RECORD OF THE AO TO VERIFY AND EXAMINE THE SAME IN THE LIGHT OF THE ASSESSMENT ORDER FOR THE A.Y. 2010 - 11. 9 . IN THE RES ULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 08. 05 . 201 5 . SD/ - SD/ - ( R.C. SHARMA ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 08 .05 .2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.