KETVAL GEMS , Mumbai V. ITO-21(2)(1), Mumbai

ITA 2131/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9962 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIDDRAM A PPA
• Assessee Lawyers: DRA SHTI SHAH
• Keywords: Bogus purchase
• Section: 201; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY (JM) ITA NO. 2131 /MUM/2019 ASSESSMENT Y EAR: 2008 - 09 KETWAL GEMS, 5/67, , ADARSH NAGAR HSG. SOCIETY, OPP. CENTURY BAZAR, MUMBAI - 400025 PAN : AAAFK1724D VS. ITO 21(2)(1), 110, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DRA SHTI SHAH (AR) REVENUE BY : SHRI SHIDDRAMAPPA (DR) DATE OF HEARING : 27 /05 /202 1 DATE OF PRONOUNCEMENT: 09 / 0 7 /202 1 O R D E R THIS IS AN AP PEAL BY THE ASSESSEE AGAINST OR DER DATED 20.02 .2019 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI. IN THE IMPUGNED ORDER , LEARNED COMMISSIO NER (APPEALS) , THOUGH , HAS DISPOSED OF THE APPEALS FOR THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2007 - 08 TO 2008 - 09 AND ASSESSMENT YEARS 2010 - 11 TO 2013 - 14, H OWEVER, PRESENTLY I AM CONCERNED WITH THE APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 ONLY. 2. THE DI SPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE/ADDITION OF RS. 4,23,491/ - ON ACCOUNT OF ALLEGED NON - GENUINE PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS ENGAGED IN MANUFACTURING , PROCESSING AND EXPORT OF DIAMONDS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED HI S RETURN OF INCOME ON 16.09.2008 DECLARING TOTAL INCOME OF RS. 6,26,060/ - . SUBSEQUENTLY, THE ASSESSING OFFICER ( AO ) RECEIVED INFORMATION FROM DGIT (INV.) THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATIO N ENTRIES PROVIDED BY BHANWARLAL JAIN GROUP BY WAY OF BOGUS PURCHASE BILLS. BASED ON SUCH INFORMATION, AO REOPEN ED THE ASSESSMENT UNDER 2 ITA NO. 2131 / MUM/2019 ASSESSMENT YEAR: 20 08 - 09 SECTION 147 OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THOUGH , THE ASSESSEE DISPUTED THE ALLEG ATIONS OF ALLEGED NO N - PURCHASES, H OWEVER, THE AO REJECTING THE CLAIM OF THE ASSESSEE CONCLUDED THAT THE PURCHASES ARE NON - GENUINE. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE MIGHT HAVE PURCHASED THE D IAMONDS FROM UNVERIFIED SOURCES, T HE AO DISALLOWED THE PROFIT ELEMENT E MBEDDED IN THE ALLEGED NON - GENUINE PURCHASES BY ESTIMATING AT 6%. THUS, HE WORKED OUT THE DISALLOWANCE AT RS. 6,40,937/ - . ASSESSEE CONTESTED THE AFORESAID DISALLOWANCE BEFORE FIRST APPELLATE AUTHORITY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEA RNED COMMISSIONER (APPEALS) DIRECTING THE AO TO RESTRICT THE DISALLOWANCE TO THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE AT 3.97%. THUS, HE REDUCED THE DISALLOWANCE TO RS. 4,23,491/ - . 4. I HAVE HEARD THE LEARNED C OUNSEL S APPEARING FOR THE PARTIES AND PERUS ED THE MATERIAL ON RECORD. AT THE OUTSET, LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010 - 11 TO 2013 - 14, WHEREIN , THE TRIBUNAL HAS DELETED THE DIS ALLOWANCE SUSTAINED BY LEARNED COMMISSIONER (APPEALS) BY APPLYING THE GROSS PROFIT RA TE. IN THIS CONTEXT, HE DREW MY ATTENTION TO THE RELEVANT OBSERVATIO NS OF THE TRIBUNAL. LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , FAIRLY AGREED THAT THE ISSUE IS COVERE D BY THE DECISION OF THE TRIBUNAL, H OWEVER, HE REL IED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS). 5. HAVING CONSIDERED RIVAL SUBMISSIONS, I FIND THAT IN ASSE SSMENT YEAR 2007 - 08 AND 2008 - 09 T HE AO HAD MADE DISALLOWANCE OF SIMILAR NATURE BY EST IMATING THE RATE OF PROFIT AT 6%. WHEREAS, IN ASSESSMENT YEARS 2010 - 11 TO 2013 - 14, HE HAS MADE IDENTICAL DISALLOWANCE APPLYING RESPECTIVE GROSS PROFIT RATE S . IN THE IMPUGNED ORDER, LEARNED COMMISSIONER (APPEALS) HAS SUSTAINED THE DISALLOWANCE MADE BY THE A O IN ASSESSMENT YEAR S 2010 - 11 TO 2013 - 14, WHEREAS , IN ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09, HE HAS RESTRICTED THE DISALLOWANCE TO THE GROSS PROFIT RATE SHOWN BY THE ASSESSEE . PERTINENTLY WHILE DECIDING ASSESSEE'S APPEALS F OR ASSESSMENT YEARS 2010 - 11 TO 201 3 - 14 THE C O - ORDINATE BENCH IN ITA NO. 1999/MUM/2019 AND OTHERS DATED 08.10.2020 HAS 3 ITA NO. 2131 / MUM/2019 ASSESSMENT YEAR: 20 08 - 09 DELETED THE DISALLOWANCE SUSTAINED BY LEARNED COMMISSIONER (APPEALS) APPLYING THE GROSS PRO FIT RATE SHOWN BY THE ASSESSEE. FACTS BEING IDENTICAL , FOLLOWING THE AFORESAID DE CISION OF C O - ORDINATE BENCH IN ASSESSEE'S OWN CASE , I DELETE THE DISALLOWANCE OF RS. 4,23,491/ - . GROUND NO. 1 IS ALLOWED. GROUND NO. 2 HAVING NOT BEEN PRESSED IS DISMISSED. 5. IN THE RESULT APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY , 2021 . SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI ; DATED: 09 / 07 /202 1 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI