Chandrakant Ramchandra Pujari, Navi Mumbai V. Income-tax Officer,

ITA 2090/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9066 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Assessee Lawyers: KIRAN SANMANI
• Keywords: Bogus purchase; Rejection of books of accounts; Tangible material; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / ITA NO.2090/PUN/2016 / ASSESSMENT YEAR : 2009-10 CHANDRAKANT RAMCHANDRA PUJARI, PLOT NO.814, ROAD NO.8, KWC, STEEL MARKET, KALAMBOLI, NAVI MUMBAI 410218 PAN : AKMPP3455C . /APPELLANT VS. ITO, WARD-2, PANVEL . / RESPONDENT / APPELLANT BY : SHRI KIRAN SANMANI / RESPONDENT BY : DR. VIVEK AGGARWAL / DATE OF HEARING : 21.03.2018 / DATE OF PRONOUNCEMENT: 27.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF C IT(A)-2, THANE, DATED 27-06-2016 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1 . THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN UPHOLDING THE D ECISION OF THE AO FOR REOPENING THE ASSESSMENT U/S.148 OF THE ACT WITHOUT ANY PROPER REASONS AND/OR WITHOUT HAVING ADDITIONAL COG ENT EVIDENCE ON RECORDS. 2. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHOL DING ADDITION OF RS.13,51,065/- ON ACCOUNT OF ALLEGED BOGUS PURCHASE S BY THE ASSESSEE. THE LD.CIT(A) FAILED TO APPRECIATE THE FACTS AND EVIDEN CES SUBMITTED BEFORE THE LD. AO AS WELL AS LD.CIT(A). THE LD.CIT(A) FURTHER ERRED IN UPHOLDING REJECTION OF BOOKS OF ACCOUNTS AND TREATED GENUINE TRANSACTIONS AS HAWALA TRANSACTIONS. 3. THE LD.CIT(A) ERRED ON FACTS AND IN LAW IN UPHOL DING ADDITION OF RS.13,51,065/- CALCULATED BY CONSIDERING THE GROSS PROFIT RATIO OF NEXT ASSESSMENT YEAR AS AGAINST ESTIMATED GROSS PROFIT T HEREON FOR THE CURRENT ASSESSMENT YEAR. 2 3. CONDONATION OF DELAY OF 6 DAYS : AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE AFFIDAVIT DATED 04-10-2016 FILED B Y THE ASSESSEE AND SUBMITTED THAT THERE IS DELAY OF 6 DAYS IN FILING OF THIS APPEAL. THE DELAY IS ATTRIBUTED TO THE RESIGNATION OF THE PERSONS WO RKING IN ACCOUNTS DEPARTMENT AND THE THINGS BEYOND THE CONTROL OF THE AS SESSEE. THEREFORE, LD. COUNSEL PRAYED FOR ADMITTING THE APPEAL FOR ADJUDICATION BY CONDONING THE DELAY. 4. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE CONT ENTS IN THE AFFIDAVIT FILED BY THE ASSESSEE, WE ARE OF THE OPINION THAT TH E DELAY OF 6 DAYS IN FILING OF THE APPEAL IS REQUIRED TO BE CONDONED AND ADMIT THE APPEAL FOR ADJUDICATION. 5. REGARDING ADJUDICATION OF THE CORE GROUNDS, WE FIND THE ASSESSEE IS IN APPEAL AGAINST A COUPLE OF ISSUES, NAMELY, (1) THE RE-OPENIN G OF ASSESSMENT U/S.148 OF THE ACT AND AGAINST (2) THE ADDITION MADE ON AC COUNT OF ALLEGED BOGUS PURCHASES OF RS.13,51,065/-. 6. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRAINING IN IRON AND STEEL UNDER THE NAME AND STYLE OF M/S. RAJLAXMI ENTERPRISES. ASSESSEE FILED THE RETURN OF INCOME ON 22-09-2009 DECLARING TOTAL INCOME OF RS.4,79,280/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS, AO NOTICED THAT THE ASSESSEE MADE PURCHASES FROM M/S. K.R.C. TRADING COMPANY WHOSE NAME IS LISTED IN THE LIST OF BOGUS DEALERS BY THE SA LES TAX DEPARTMENT OF MAHARASHTRA GOVERNMENT. EVENTUALLY, THE AO MADE THE ADDITION OF ENTIRE BOGUS PURCHASES AMOUNTING TO RS.17,18,13 2/-. CIT(A) CONFIRMED THE SAME AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE. THE SUBMISSIONS OF THE ASSESSEE ARE EXTRACTE D IN PARA 5 OF THE ORDER OF CIT(A). CIT(A) ALSO RELIED ON VARIOUS DECISIONS AND D ISMISSED THE ASSESSEES REQUEST FOR CONFIRMING THE GROSS PROFIT PORTIO N OF THE SAID 3 PURCHASES. FURTHER, CIT(A) DID SOME CALCULATIONS COMPARING THE GROSS PROFIT RATES OF THE ASSESSEE FOR VARIOUS YEARS AND FOUND THAT THE 6.14% GROSS PROFIT RATE FOR THE YEAR UNDER CONSIDERATION IS FAR LESS THAN THE 11% GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE SUBSEQUEN T ASSESSMENT YEAR. ACCORDINGLY, HE WORKED OUT THE SUPPRESSION OF GROSS PRO FIT TO THE EXTENT OF RS.13,51,065/-. HE ATTRIBUTED THE SAID SUPPRESSED PROFIT TO THE BOGUS PURCHASES OF RS.17,18,132/-. EVENTUALLY, THE CIT(A) RESTRICT ED THE ADDITION TO RS.13,51,065/-. 7. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFOR E US AGAINST THE CONFIRMED ADDITION OF RS.13,51,065/-. 8. REGARDING THE ISSUE OF VALIDITY OF REASSESSMENT PROCEEDIN GS RAISED IN GROUND NO.1, LD. COUNSEL FOR THE ASSESSEE ARGUED THAT TH E ISSUE OF NOTICE U/S.147 OF THE ACT IS BAD IN LAW AS AO DOES NOT HAVE ANY TANGIBLE MATERIAL ON HIS HAND. 9. REGARDING MERITS OF ADDITION, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT ADOPTING 11% GROSS PROFIT RATE FOR THE YEAR UNDER CONSIDERATION IS NOT BASED ON FACTS AND THE SAME IS UNSUSTAINABLE WHEN THE BOOKS OF ACCOUNTS ARE NOT FORMALLY REJECTED U/S.145(3) OF THE ACT. FURTHER, HE SUBMITTED FOR RESTRICTING THE ADDITION TO 10% OF THE ALLEGED BOGUS PURC HASES. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT AND OTHER S IN ITA NO.795/PUN/2014 AND CONNECTED APPEALS , DATED 28-04-20 17 FOR THE A.Y. 2010-11. 10. LD. DR FOR THE REVENUE RELIED ON THE ORDER OF CIT(A) DU TIFULLY AND SUBMITTED FOR CONFIRMING THE ENTIRE ADDITION. LD. DR RELIED ON VARIOUS DECISIONS IN THIS REGARD. 4 11. WE HEARD BOTH THE SIDES ON THE LIMITED ISSUES UNDER CONSIDERATION AND PERUSED THE ORDERS OF THE REVENUE AND THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHHABI ELECTRICALS PVT. LT D. (SUPRA) RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. A. REGARDING THE ISSUE RELATING TO RE-ASSESSMENT AND ITS VALIDITY, WE FIND ON SIMILAR CIRCUMSTANCES, THE COORDINATE BENCH OF THE TRIBU NAL DISMISSED THE ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE BY RE LYING ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MR. KHA N AFZALHUSSAIN MOHD. SAIE VS. DCIT ITA NOS. 2708 AND 2709/PUN/2016, D ATED 23-03- 2018. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTR ACT THE RELEVANT PARA OF THE ORDER OF TRIBUNAL AND THE SAME IS EXTRACTED AS UNDER : 9. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAIN ST RE-ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT. WE FIND THAT THE SAID ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY T HE RATIO LAID DOWN BY HONBLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI ST OCK BROKERS PVT. LTD. (SUPRA) AND REFERRING TO PARAS 4 AND 5 OF THE APPEL LATE ORDER, WE UPHOLD THE SAME AND DISMISS THE GROUND OF APPEAL NO.1 RAISED B Y THE ASSESSEE. FOLLOWING THE SAME PARITY OF REASONING, THE GROUNDS OF APPE AL NO.1 RAISED BY THE ASSESSEE ON THIS ISSUE IS DISMISSED. B. REGARDING THE ISSUE OF CONFIRMING OF ENTIRE ADDITION OF BOG US PURCHASES BY THE CIT(A), WE FIND THAT SIMILAR ISSUE OF BOGUS PURCHASES HAS BEEN DECIDED BY THE TRIBUNAL IN SERIES OF DECISIONS. WE FIND T HE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MR. KHAN AFZALHUSSAIN MOHD. SAIE (SUPRA) HAS RESTRICTED THE ADDITION TO 10% OF SUCH ALLEGED BOGUS PURCHASES. WE THEREFORE FIND IT TO RELEVANT TO EXTRACT THE FINDINGS GIV EN BY THE TRIBUNAL IN PARA NO.11 OF ORDER OF TRIBUNAL HERE AS UNDER : 11. NOW, COMING TO THE MERITS OF ADDITION. THE IS SUE RAISED IN THE PRESENT APPEAL IS AGAINST BOGUS PURCHASES. WE HAVE ALREADY ADJUDICATED SIMILAR ISSUE IN SERIES OF DECISIONS WITH LEAD ORDER IN M/S . CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO A SSESSMENT YEAR 2010- 11, ORDER DATED 28.04.2017. THE ASSESSEE IN THE FI RST YEAR I.E. ASSESSMENT YEAR 2009-10 HAS MAINTAINED QUANTITATIVE DETAILS. IN OTHER WORDS, IT HAS THE EVIDENCE OF PURCHASING GOODS AND ITS SALES. IN SUC H CIRCUMSTANCES, AT BEST, 5 HIGHER GROSS PROFIT RATE CAN BE APPLIED. FOLLOWING OUR DECISION IN EARLIER ORDERS, WE HOLD THAT GP RATE OF 10% OVER AND ABOVE GP DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, BE APPLIED TO WOR K OUT THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO. 3 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. CONSIDERING THE SAME, WE DIRECT THE ASSESSING OFFICER TO M AKE ADDITION IN THE HANDS OF ASSESSEE BY ADOPTING GP RATE AT 10% OF BOGUS PURCHASES DECLARED BY THE ASSESSEE. ACCORDINGLY, GROU ND NOS. 2 AND 3 RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF MARCH, 2018. SD/- SD/- (SUSHMA CHOWLA) (D.KARUNAKAR A RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 27 TH MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, THANE 4. / THE CIT-2, THANE 5. , , / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE