RASESH S. BHUTA, MUMBAI V. INCOME TAX OFFICER 30(3)(1), MUMBAI

ITA 2185/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9137 (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: 2009-2010
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Corroborative evidences
• Section: 147; 10

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. 2185 / MUM/2018 ( ASSESSMENT YEAR : 20 09 10 ) RASESH S. BHUTA I 437, RAJ ARCADE, NEAR JAIN TEMPLE MAHAVIR NAGAR, KANDIWALI (W) MUMBAI 100 067 PAN AADPP4223D . APPELLANT V/S INCOME TAX OFFICER WARD 30(3)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI VIJAY MEHTA 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 APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 09.01.2018 OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) 41, MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10. 2 . THE ONLY ISSUE ARISING FOR CONSIDERATION IN THIS APPEAL RELATES TO ADDITION MADE OF ` 12,95,407 ON ACCOUNT OF BOGUS PURCHASES. 2 RASESH S. BHUTA 3 . BRIEFLY THE FACTS ARE, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE HAD ORIGINALLY FILED HIS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME OF ` 4, 38,100. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV . ), MUMBAI , AND SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA, THE ASSE SSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT ). DURING THE ASSESSMENT PROCEEDINGS, ON THE BASIS OF INFORMATION AVAILABLE ON RECORD THE ASSESSING OFFICER FOUND THAT PURCHASES OF ` 1,29,54,067 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM CERTAIN PARTIES ARE NOT GENUINE. ACCORDINGLY, HE CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES BY FURNISHING SUPPORTING EVIDENCES. AS ALLEGED BY THE ASSESSING OFFICER, THE ASS ESSEE WAS UNABLE TO FURNISH ANY AUTHENTIC EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. FURTHER, THE NOTICES ISSUED UNDER SECTION 133 (6) OF THE ACT ALSO RETURNED UNSERVED DUE TO UNAVAILABILITY OF THE PARTIES IN THE GIVEN ADDRESSES. IN VIEW OF THE AFORES AID FACTS, THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE PROFIT AT THE RATE OF 10% OF THE BOGUS PURCHASES, WHICH WORKED OUT TO ` 12, 95,407. THE AFORESAID AMOUNT WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH THE ADDITION SO MADE ASSE SSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). HOWEVER, LEARNED 3 RASESH S. BHUTA COMMISSIONER (APPEALS) SUSTAINED THE ADDITION. 4 . LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE ADOPTION OF PROFIT RATE AT 10% IS HIGH AND EXCESSIVE CONSIDERING THE PROFIT R ATE GENERALLY ACHIEVED IN THIS LINE OF BUSINESS. HE SUBMITTED, AS PER THE INDUSTRY NORM PROFIT RATE VARIES BETWEEN 3% TO 5%. HE SUBMITTED, PROFIT ON THE ALLEGED BOGUS PURCHASES SHOULD BE ESTIMATED AT A REASONABLE RATE. 5 . THE LEARNED DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND COMMISSIONER (APPEALS). 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, IN COURSE OF PROCEEDINGS BEFORE THE DEPARTMENTAL AUTHORIT IES THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE PARTIES WHO HAVE BEEN IDENTIFIED AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. HOWEVER, THE ASSESSING OFFICER HAS NOT DISBELIEVE D THE FACT THAT PURCHASES WERE MADE BY THE ASSESSEE FROM SOME OTHER SOURCES AND CORRESPONDING SALES HAVE ALSO BEEN EFFECTED. FOR THAT REASON ONLY HE HAS ESTIMATED THE PROFIT @10%, WHICH HAS BEEN SUSTAINED BY THE COMMISSIONER (APPEALS). THEREFORE, CONSIDERI NG THE OVERALL FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT ESTIMATION OF PROFIT @5% 4 RASESH S. BHUTA ON THE ALLEGED BOGUS PURCHASES WOULD BE REASONABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF THE BOGUS PURCHA SES. IT IS ONCE AGAIN MADE CLEAR, OUR AFORESAID DECISION IS PURELY ON THE BASIS OF FACTS INVOLVED IN THE PRESENT CASE. GROUND RAISED IS PARTLY ALLOWED. 7 . IN THE RESULT ASSESSEE'S 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, MUM QW BAI