LATE MR. DEVENDRA A. GANDHI, MUMBAI V. ITO 24(1)(5), MUMBAI

ITA 2138/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0104 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 27-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: NAVIN B GANDHI
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.2138/M/2017 ASSESSMENT YEAR: 2008-09 ITA NO.2139/M/2017 ASSESSMENT YEAR: 2010-11 ITA NO.2140/M/2017 ASSESSMENT YEAR: 2011-12 LATE MR. DEVENDRA A. GANDHI THROUGH LEGAL HEIR SMT. CHANDANBEN D. GANDHI, PHONEX INDUSTRIAL ENGINEERS, 32, OLD NAGARDAS ROAD, ANDHERI (EAST), MUMBAI-400 012 PAN: AABPG8605J VS. INCOME TAX OFFICER-24(1)(5), PIRAMAL CHAMBERS, MUMBAI 400 012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI NAVIN B. GANDHI, A.R. REVENUE BY : SMT. N. HEMALATHA, D.R. DATE OF HEARING : 07.08.2017 DATE OF PRONOUNCEMENT : 31.08.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E ASSESSEE AGAINST THE COMMON ORDER DATED 24.01.2017 OF THE COMMISSIONER O F INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEARS 2008-09, 2010-11 & 2011-12. 2. IN ASSESSMENT YEAR 2008-09, THE ASSESSMENT WAS C OMPLETED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2009-10, IT WAS FOUND FROM THE LEDGER VERIFICATION OF PURCHASE PARTIES THAT ASSESS EE HAS OBTAINED BOGUS BILLS FROM FEW OF THE PARTIES LISTED IN SALES TAX WEBSITE AND DECLARED AS HAWALA DEALER DURING THE PERIOD UNDER CONSIDERATION I.E. I N F.Y. 2007-08 RELATED TO ITA NO.2138, 2139 & 2140/M/2017 LATE MR. DEVENDRA A. GANDHI THROUGH LEGAL HEIR SMT. CHANDANBEN D. GANDHI 2 A.Y. 2008-09 THEREBY INFLATING ITS EXPENSES AND SUP PRESSING THE PROFITS FOR A.Y. 2008-09 WAS AS UNDER: NIRUSH TRADING CO. RS.3,74,020/- 3. IN ORDER TO VERIFY THE GENUINENESS OF THE PURCHA SES, NOTICE UNDER SECTION 133(B) WAS ISSUED TO ABOVE PARTY. IN RESPONSE TO T HE ABOVE PARTY, ASSESSEE FURNISHED DETAILED INVOICES AND BANK STATEMENT. AS SESSEE ALSO SUBMITTED AUDIT REPORT ALONG WITH PROFIT AND LOSS ACCOUNT, BALANCE SHEET, PARTY-WISE DETAILS OF PURCHASES AND SALES, COPY OF VAT RETURNS, COPY OF L EDGER, PURCHASE BILLS IN RESPECT OF HAWALA PARTY. THE ASSESSEE HAS ALSO SUB MITTED THE DETAIL OF LORRY RECEIPTS, BOOKS OF ACCOUNT, BANK STATEMENT OF PARTI ES REFLECTING THE PAYMENT RECEIPT OF GOODS SOLD TO THE ASSESSEE HIGHLIGHTED B UT ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) DID NOT CONSIDE R THE SAME AS GENUINE PURCHASE. THEREFORE, HE MADE THE ADDITION OF 25% O F THE TOTAL AMOUNT OF RS.3,74,020/- WHICH COMES TO RS.93,505/- AS NON GEN UINE PURCHASE AND ADDED TO THE INCOME OF THE ASSESSEE. IN A.Y. 2010-11, TH E AO MADE ADDITION OF 25% OF THE TOTAL AMOUNT OF PURCHASES AMOUNTING TO RS.8, 23,689/- WHICH COMES TO RS.2,05,920/-. IN A.Y. 2011-12 ALSO THE AO MADE TH E DISALLOWANCE OF RS.2,56,150/- ON ACCOUNT OF BOGUS PURCHASES. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS REDUCED TO 15%. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT I N ALL THESE CASES, THE LD. CIT(A) HAS RESTRICTED THE ADDITION ON ACCOUNT OF BO GUS PURCHASES AT 15% OF THE TOTAL PURCHASES. WE FIND THAT ASSESSEE HAS PURCHAS ED FROM NIRUSH TRADING CO.. THE NOTICES UNDER SECTION 133(6) WERE SERVED AND AS SESSEE HAS RESPONDED AND SUBMITTED ALL THE DETAILS. THE SUPPLIER NIRUSH TRA DING CO. HAS SUBMITTED THE LEDGER ACCOUNT OF MR. DEVENDRA GANDHI, SALES INVOIC ES OF NIRUSH TRADING CO., BANK STATEMENT FOR A.Y. 2008-09 AND A.Y. 2010-11 AN D CORRESPONDING ITA NO.2138, 2139 & 2140/M/2017 LATE MR. DEVENDRA A. GANDHI THROUGH LEGAL HEIR SMT. CHANDANBEN D. GANDHI 3 PAYMENT RECEIPTS FOR THE GOODS SUPPLIED TO DEVENDRA GANDHI FOR 2008-09 AND 2010-11. THE ASSESSEE ALSO SUBMITTED THE DETAIL OF PURCHASE INVOICES, DELIVERY CHALLANS AND TRANSPORT TRANSACTIONS OF NIRUSH TRADING CO. ALONG WITH DELIVERY CHALLANS AND LORRY RECEIPTS. THE ASSESSEE HAS ALSO SUBMITTED THE ACCOUNT PAYEE CHEQUE IN CONFIRMATION OF THE ACCOUNT. THE ASSESSEE WAS ABLE TO SHOW THAT NIRUSH TRADING CO. HAS FAILED TO PAY THE MVAT LIABI LITY, HENCE THE SAME WAS APPEARING IN WEBSITE OF MAHA VAT. SUBSEQUENTLY, SA LES TAX WAS PAID BY THE ASSESSEE BECAUSE THE SET OFF CLAIMED BY THE ASSESSE E ON THE PURCHASES FROM NIRUSH TRADING CO. WERE DISALLOWED. THEREFORE, WE ARE OF THE VIEW THAT ASSESSEE HAS ACTUALLY PURCHASED THE GOODS AND THE S AME ARE NOT BOGUS. WE FIND THAT THE ASSESSEE HAS MADE PURCHASES FROM THE PARTIES WHICH ARE NOT BOGUS BUT THEY FAILED TO PAY THE VAT. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIRPLAY, WE RESTRICT THE DISALLOWANCE AT 5% OF THE TOTAL PURCHASES IN ALL THE YEARS (I.E. RS.3,74,020/- + RS.10,24,598 + RS.8,23, 679/- = RS.22,22,297/-) WHICH COMES TO RS.1,11,115/-. 6. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 31.08.2017. * 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 ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.