MIHIR BIPIN PAREKH, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 16(2), MUMBAI

ITA 2182/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9138 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIPIN PAREKH SHRI S K BEPARI
• Keywords: Bogus purchase; Corroborative evidences
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2182 / MUM/2018 ( ASSESSMENT YEAR : 20 11 12 ) MIHIR BIPIN PAREKH RUBY MANSION, 2 ND FLOOR 9, FORJET CROSS LAND BOWALIA TANK, MUMBAI 400 036 PAN AADPP4223D . APPELLANT V/S ASSTT . COMMISSIONER OF INCOME TAX CIRCLE 16 (2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI BIPIN PAREKH REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 0 4 . 12 .2018 DATE OF ORDER 14.12.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 09.06.2016 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) 30, MUMBAI FOR THE ASSESSMENT YEAR 2011 - 12. GROUND NUMBER (A) IS GENERAL IN NATURE, HENCE, DOES NOT REQUIRE ADJUDICATION. IN GROUND NUMBERS (B) AND (C) THE ASSESSEE HAS CHALLENGED THE ADDITION OF ` 3,42,932 ON ACCOUNT OF BOGUS PURCHASES. 2 MIHIR BIPIN PAREKH 2 . BRIEFLY THE FACT S ARE, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS REQUIRED BY ELECTROPLATING INDUSTRIES. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09,2011 DECLARING TOTAL INCOME OF ` 20,06,550. IN COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INVESTIGATION), MUMBA I, AND SALES TAX DEPARTMENT, MAHARASHTRA GOVERNMENT, THE ASSESSING OFFICER FOUND THAT PURCHASES WORTH ` 17,14,661 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE IN THE RELEVANT PREVIOUS YEAR ARE NOT GENUINE AS THE CONCERNED PARTIES WHO CLAIMED TO HAVE SOLD GOODS TO THE ASSESSEE HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS. IN VIEW OF TH E AFORESAID, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE. FURTHER, TO VERIFY THE GENUINENESS OF PURCHASES MADE, THE ASSESSING OFFICER INDEPENDENTLY CONDUCTED ENQUIRY BY ISSUING NOTICES UNDER SECTION 133(6) OF T HE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) . AS OBSERVED BY THE ASSESSING OFFICER, THE NOTICES ISSUED BY HIM RETURNED BACK UNSERVED DUE TO UNAVAILABILITY OF THE CONCERNED PARTIES IN THE GIVEN ADDRESSES. THE ASSESSING OFFICER ALSO ALLEGED THAT THE ASSESSE E FAILED TO PRODUCE ANY AUTHENTIC DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES MADE. ACCORDINGLY, HE DISALLOWED THE ENTIRE PURCHASES OF ` 17,14,,661 AND ADDED BACK TO THE INCOME OF THE 3 MIHIR BIPIN PAREKH ASSESSEE. BEING AGGRIEVED WITH THE AFORESAID ADDITION, TH E ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD LEARNED COMMISSIONER (APPEALS) REDUCED THE ADDITION TO 20% OF THE ALLEGED BOGUS PURCHASES. 3 . WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD. THE ONLY SUBMISSION MADE BY THE LEARNED AUTHORISED REPRESENTATIVE BEFORE US IS, ADOPTION OF PROFIT RATE @ 20% OF THE BOGUS PURCHASES IS HIGH AND EXCESSIVE, HENCE, SHOULD BE REDUCED TO 12.5%. TH E LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS). HAVING CONSIDERED RIVAL SUBMISSIONS AND EXAMINED MATERIAL ON RECORD WE ARE OF THE VIEW THAT ESTIMATION OF PROFIT @ 20% OF THE ALLEGED BOGUS PURCHASES IS O N A MUCH HIGHER SIDE. WHAT THE ASSESSEE MIGHT HAVE GAINED BY PURCHASING GOODS FROM GREY MARKET IS AVOIDING PAYMENT OF LOCAL TAXES AND SOME INCIDENTAL EXPENSES. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, ESTIMATION OF PROFIT @ 12.5% OF THE ALLEGED B OGUS PURCHASES WOULD BE FAIR AND REASONABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 12.5% OF THE BOGUS PURCHASES. THIS GROUND IS PARTLY ALLOWED. 4 . IN GROUND NUMBER (D) THE ASSESSEE HAS CHALLENGED PART 4 MIHIR BIPIN PAREKH DISALLOWANCE MADE FROM TELEPHONE EXPENSES, GENERAL EXPENSES, MOTOR CAR EXPENSES AND CONVEYANCE EXPENSES. 5 . BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS CLAIMED EXPENDITURE AGGREGATING TO `. 3, 63, 641 UNDER THE AFO RESAID HEADS CALLED UPON THE ASSESSEE TO FURNISH SUPPORTING EVIDENCES TO JUSTIFY THE CLAIM. AS OBSERVED BY THE ASSESSING OFFICER, IN RESPONSE TO THE QUERY MADE BY HIM THE ASSESSEE COULD NOT FURNISH EVIDENCES TO JUSTIFY THE EXPENDITURE CLAIMED. ACCORDINGLY, THE ASSESSING OFFICER BEING OF THE VIEW THAT THE NATURE OF EXPENDITURE CLAIMED BY THE ASSESSEE INVOLVES PERSONAL ELEMENT, DISALLOWED AN AMOUNT OF ` 70,000 OUT OF THE EXPENDITURE CLAIMED. THOUGH, THE ASSESSEE CONTESTED THE DISALLOWANCE BEFORE THE COMMISSI ONER (APPEALS), HOWEVER, HE ALSO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT, BEFORE THE DEPARTMENTAL AUTHORITIES THE ASSESSEE HAS FAILED TO CONTROVERT THE F ACT THAT THE NATURE OF EXPENDITURE CLAIMED INVOLVED PERSONAL ELEMENT. THE FACTUAL POSITION REMAINS THE SAME BEFORE US AS WELL. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS). THIS GROUND IS DISMISSED. 5 MIHIR BIPIN PAREKH 7 . IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 14.12.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI