SUDHIR M.AMLANI, THANE V. ITO WD- 3(5), THANE

ITA 2135/MUM/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0716 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARRI
• Keywords: Bogus purchase; Corroborative evidences
• Section: 133(6); 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL SMC BENCH MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 2135/MUM/2018 (ASSESSMENT YEAR 2009-10 ) SUDHIR M. AMLANI (P ROP. OF M/S KRISHNA ENTERPRISES) B/401, GREENASH SWAPNA NAGARI, VASANT GARDEN, OPP. LBS MARG, BEHIND WILLOMS TOWER, MULUND (W), MUMBAI-400080. PAN: AAQPA7653R VS. ITO WARD - 3(5) THANE. APPELLANT RESPONDE NT APPELLANT BY : SHRI RAVINDRA POOJARY (AR) RESPONDENT BY : SHRI S.K. BEPARRI (DR) DATE OF HEARING : 03.10.2018 DATE OF PRONOUNCEMEN T : 03.10.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-2, PUNE DATED 15.02 .2017 FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. REOPENING IS BAD IN LAW 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTI ON OR THE A.O. ISSUING THE NOTICE U/S. 148 DT. 24-03-2014 MERELY ON THE BA SIS OR INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, THUS THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE A.O. IT IS BASED ON BORR OWED SATISFACTION OF SOME OTHER AUTHORITY, HENCE THE REOPENING IS BAD IN LA AND IS LIABLE TO BE QUASHED. II. ADDITION OF RS. 15,77,845/- OF ALLEGED BOGUS PU RCHASES IS HAD IN LAW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OR RS. 15,77,845/- ON THE BASIS OF INFORMATION RECEIVED FROM DG(INV.) TREATING THE PURCHASES AS BOGUS, WITHOUT APPRECIATING THAT THE DETAILS OF PURCHASE BILLS. PURCHASE REGISTER, DETAILS OF SALES, STOCK REGISTER, LEDGERS , CONFIRMATION FROM PARTIES, BANK STATEMENTS, QUANTITATIVE TALLY ETC. WERE FURNI SHED IN THE REASSESSMENT ITA NO. 2135 MUM 2018-SUDHIR M. AMLANI 2 PROCEEDINGS, THUS THE ADDITION OF RS.15,77,845/- MA Y BE DELETED AS THE GENUINENESS OF THE PURCHASES WERE PROVED BEYOND DOU BT AND SALES ARE ACCEPTED. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT ALL THE PURCHASES WERE BY ACCOUNT PAYEE CHEQUES AND THE DETAILS OF BANK STATE MENTS, QUANTITATIVE TALLY WERE FURNISHED BEFORE ASSESSING OFFICER, THER EFORE MERELY ON THE INFORMATION RECEIVED FROM THE DGIT(LLW.) PURCHASES CANNOT BE TREATED AS NON-GENUINE. MORE SO OVER, WHEN THE ASSESSE WAS NEV ER CONFRONTED WITH THE CONTENT OF ALLEGED INFORMATION/STATEMENT/AFFIDA VITS ETC. 4. WITHOUT PREJUDICE TO THE ABOVE, WHEN THE SALES A RE ACCEPTED AS A GENUINE AND THE ASSESSEE HAS PRODUCED COMPLETE DETA ILS OF PURCHASES, NO ADDITION CAN BE MADE ONCE THE BOOKS OF ACCOUNTS ARE ACCEPTED, THEN PURCHASES OF THE ASSESSEE CANNOT BE AID TO BE AS BO GUS PURCHASE, MERELY ON SOME ALLEGED INFORMATION, THEREFORE ADDITION OF RS.15,77,845/- MAY BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE, AS THE ASSESSEE HAS GP OF 15.38% ESTIMATING ADDITION OF RS. 15,77,845 IS NOT JUSTIFI ED AND ON VERY HIGHER SIDE. 6. THE LEARNED ELL' APPEAL HAS WRONGLY RELIED ON M/ S INDIAN WOOLLEN CARPET FACTORY (SUPRA) AS THE FACTS & CIRCUMSTANCES OF THAT CASE IS DIFFERENT FROM THAT OR THE APPELLANT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S KRISHNA ENTERPRISES AND ENGAGED IN TRADING OF HARDWARE ITEM AND GENERAL MERCHANT. THE ASSESSEE FILED HIS RETURN OF INCOME F OR ASSESSMENT YEAR 2009-10 ON 30.09.2009. THE RETURN OF INCOME WAS PRO CESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS RE-OPENED ON THE BASIS OF INFORMATION RECEIVED FROM SALE TAX DEPARTM ENT, GOVERNMENT OF MAHARASHTRA ABOUT THE HAWALA DEALERS, WHO WERE ENGA GED IN PROVIDING ACCOMMODATION ENTRY WITHOUT DELIVERY OF GOODS. AS P ER THE INFORMATION RECEIVED, THE ASSESSEE WAS ALSO SHOWN AS ONE OF THE BENEFICIARY WHO HAS OBTAINED BOGUS BILL OF RS. 15,77,148/- FROM SEVEN S UCH HAWALA DEALERS. THE ASSESSMENT WAS RE-OPENED ON 24.03.2014 BY RECOR DING THE REASONS OF REOPENING. THE ASSESSEE WAS SERVED WITH THE NOTICE UNDER SECTION 148 OF ITA NO. 2135 MUM 2018-SUDHIR M. AMLANI 3 THE ACT. IN RESPONSE TO THE SAID NOTICE, THE ASSESS EE FILED ITS REPLY DATED 18.04.2014 CONTENDING THE RETURN ALREADY FILED MAY BE TREATED AS RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148. THE ASSES SING OFFICER ISSUED NOTICE UNDER SECTION 133(6) TO ALL SEVEN PARTIES. T HE NOTICE SENT TO ONE OF THE PARTIES M/S K.C. ENTERPRISES WAS COMPLIED VIDE THEIR REPLY DATED 12.12.2014 WHEREIN THEY DENIED HAVING ANY BUSINESS WITH THE ASSESSEE. REMAINING NOTICES WERE RETURNED BACK BY POSTAL AUTH ORITIES WITH THE REMARK UNSERVED. DURING THE ASSESSMENT PROCEEDING , THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF PURCHASES AND TO PRODUCE THE PARTIES FOR VERIFICATION. THE ASSESSING OFFICER RECORDED THAT A SSESSEE COULD NOT PRODUCE THE PARTIES AND FAILED TO FURNISH THE COPY OF BILLS OR OTHER SUPPORTING EVIDENCE. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF ENTIRE PURCHASES FROM ALL SEVEN PARTIES, THEREBY MA DE 100% ADDITION OF THE ALLEGED BOGUS PURCHASES. ON APPEAL BEFORE THE LD. C IT(A), THE ACTION OF ASSESSING OFFICER CONFIRMED. THUS, FURTHER AGGRIEVE D BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL B EFORE US. 3. WE HAVE HEARD THE LD. AUTHORISED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO.1 RELATES T O VALIDITY OF RE- OPENING. THE LD. AR OF THE ASSESSEE HAS NOT MADE AN Y SUBMISSION IN SUPPORT OF THIS GROUND OF APPEAL. THEREFORE, THE GR OUND OF APPEAL IS TREATED AS NOT PRESSED AND HENCE DISMISSED. ITA NO. 2135 MUM 2018-SUDHIR M. AMLANI 4 4. GROUND NO.2 RELATES TO ADDITION OF RS. 15.77 LAKHS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSING OFFICER MADE THE ADDITION OF ENTIRE PURCHASES FROM SEVEN ALLEGED BOGUS PARTIES. THE LD. CIT(A) CONFIRMED THE ACTION OF ASS ESSING OFFICER. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE SALES OF ASSESS EE WERE NOT DISPUTED BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT RE JECTED THE BOOKS OF ACCOUNT OF ASSESSEE. IT WAS SUBMITTED THAT IN ABSEN CE OF PURCHASE, NO SALE CAN BE AFFECTED. THE LD. AR OF THE ASSESSEE SUBMITS THAT THOUGH THE ASSESSEE HAS MADE GENUINE PURCHASES FROM DEALERS. I N ALTERNATIVE, THE LD. AR OF THE ASSESSEE SUBMITS THAT A REASONABLE PERCEN TAGE OF ALLEGED BOGUS PURCHASE MAY BE CONFIRMED FOR AVOIDING THE POSSIBIL ITY OF REVENUE LEAKAGE. 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTH ER SUBMITTED THAT INVESTIGATION WING OF INCOME-TAX DEPARTMENT AND THE SALE TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA MADE A FULL-F LEDGED ENQUIRY, THE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN THE PURCHA SES ARE BOGUS HAWALA DEALERS. THE HAWALA DEALERS WERE ENGAGED IN ISSUING THE BOGUS BILLS WITHOUT DELIVERY OF ANY MATERIAL OR GOODS. THE ASSE SSEE IS ONE OF THE BENEFICIARIES WHO HAVE AVAILED ACCOMMODATION BILL O NLY TO INFLATE THE EXPENSES AND TO BRING OUT THE PROFITABILITY IN ORDE R TO AVOID THE TAX. ITA NO. 2135 MUM 2018-SUDHIR M. AMLANI 5 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE ORDER OF AUTHORITIES BELOW. WE HAVE NOTED THAT DURI NG THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER DISALLOWED THE EN TIRE PURCHASES THEREBY MADE 100% ADDITION OF THE ALLEGED BOGUS PURCHASES. THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS NOT DISPUTED THE SALE OF THE ASSESSEE. THE BASIS OF ADDITION IS INFORMATION RECEIVED FROM SALE TAX DEPARTMENT ABOUT THE HAWALA TRADERS. THE LD. CIT(A) ALSO CONFIRMED THE ADDITION HOLDING THAT THE FINDING OF SALE TAX DEPARTMENT ARE ADVERSE AND THAT THE ASSESSEE PROCUR ED ACCOMMODATION BILL WITHOUT ACTUAL TRANSACTIONS. WE HAVE NOTED THA T NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(A) REJECTED THE SALES OF AS SESSEE. THE BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE WERE NOT REJECTED. W E HAVE NOTED THAT LOWER AUTHORITIES DISALLOWED THE ENTIRE AMOUNT OF P URCHASES FROM SAID HAWALA DEALERS. WE HAVE ALSO NOTED THAT THE ASSESSE E HAS PLACED ON RECORD THE PARTY-WISE PURCHASE ALONG WITH CORRESPONDING SA LE WHICH CONSIST OF LEDGER ACCOUNT, PURCHASE BILL, BANK STATEMENT SHOWI NG THE PAYMENT AND SALES BILL (PAGE NO. 61 TO 173 OF PB). THE ASSESSEE HAS CERTIFIED THAT THESE DOCUMENTS WERE FURNISHED BEFORE THE ASSESSING OFFIC ER AS WELL AS BEFORE THE LD. CIT(A). WE HAVE NOTED THAT THE LOWER AUTHOR ITY HAS NOT DISCUSSED THE DOCUMENTARY EVIDENCES OF ALL THOSE DOCUMENTS. IN OUR VIEW, UNDER THE INCOME-TAX ACT ONLY REAL INCOME CAN BE TAXED BY THE REVENUE, EVEN IN CASES WHERE WHOLE TRANSACTION IS NOT VERIFIABLE DUE TO VARIOUS REASONS, THE ITA NO. 2135 MUM 2018-SUDHIR M. AMLANI 6 ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NO T THE ENTIRE TRANSACTION. THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. HARIAM BHAMBHANI IN ITA 313/2013 DECIDED ON 04.02.2015 ALS O HELD THAT REVENUE IS NOT ENTITLED TO BRING THE ENTIRE SALE CONSIDERAT ION TO TAX BUT ONLY PROFIT ATTRIBUTABLE ON SUCH UNRECORDED SALE CONSIDERATION ALONE CAN BE SUBJECT TO INCOME-TAX. AFTER CONSIDERING THE NATURE OF BUSINES S ACTIVITIES OF THE ASSESSEE CONDUCTED DURING THE RELEVANT PERIOD. WE A RE OF THE VIEW THAT IN ORDER TO FULFIL THE REVENUE LEAKAGE, THE DISALLOWAN CE OF REASONABLE PERCENTAGE OF IMPUGNED/DISPUTED PURCHASES WOULD MEE T THE END OF JUSTICE. THUS, WE ARE OF THE VIEW THAT DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASE BE RESTRICTED TO 12.5% OF THE IMPUGNED/DIS PUTED/BOGUS PURCHASES. THE ASSESSING OFFICER IS DIRECTED ACCORD INGLY. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2018. SD/- SD/- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 03 .10.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR SMC BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI