AJAYKUMAR SHROFF, MUMBAI V. ACIT - 31 (1), MUMBAI

ITA 2202/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0787 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: V H DAGA
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 2202/MUM/2016 : A.Y : 2010 - 11 SHRI AJAYKUMAR SHROFF PRATHAM FILTER INDUSTRIES, J - 106, ANSA INDUSTRIAL ESTATE, SAKI VIHAR ROAD, SAKINAKA, MUMBAI 400 072 (APPELLANT) PAN : ALJPS7101E VS. ACIT - 31(1), MUMBAI (RESPONDENT) APPELLANT BY : SHRI V.H. DAGA RESPONDENT BY : SHRI RAJESH KUMAR YADAV DATE OF HEARING : 26/10/2017 DATE OF PRONOUNCEMENT : 19 /01/2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 41 , MUMBAI DATED 11.01.2016 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 18.03.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE SOLE ISSUE IN THIS APPEAL IS WITH REGARD TO THE ADDITION OF RS.2,58,036/ - MADE BY THE ASSESSING OFFICER U/S 69C OF THE ACT TREATING THE PURCHASES TO THE ABOVE EXTENT AS UNEXPLAINED. 2 ITA NO. 2202/MUM/2016 SHRI AJAYKUMAR SHROFF 3. THE ASSESSEE IS AN INDIVIDUAL WHO IS CARRYING ON A PROPRIETARY BUSINESS OF MANUFACTURING AND TRADING OF INDUSTRIAL FILTERS. THE ASSESSING OFFICER TREATED THE PURCHASES OF RS.2,58,036/ - MAD E FROM ONE, M/S. RELIABLE METAL (INDIA) AS BEING UNEXPLAINED BASED ON THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA TO THE EFFECT THAT THE SUPPLIER IN QUESTION WAS A HAWALA DEALER, I.E. IT WAS INDULGING IN ISSUING ACCOMMODATION BILL S WITHOUT EFFECTING ACTUAL PURCHASES/SALES. THE ADDITION HAS ALSO BEEN SUSTAINED BY THE CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT APART FROM OTHER SUBMISSIONS , ASSESSEE HAD DEMONSTRATED BEFORE THE LOWER AUTHORITIES THAT THE MATERIALS PURCHASED IN QUESTION WERE THEREAFTER SOLD TO THIRD PARTIES AND THAT THE SALES HAVE NOT BEEN DOUBTED, THEREFORE, IT COULD NOT BE SAID THAT NO PURCHASES WERE EFFECTED. 5. THE LD. D R RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS, IN OUR CONSIDERED OPINION, THE FACTUM OF PURCHASES IN QUESTION REMAINING UNEXPLAINED IS CLEARLY EMERGING FROM THE RECORD. NO DOUBT, THE ASSESSING OFFICER HAS BASED HIS DECISION ON THE INFORMATION PROVIDED BY THE SA LES TAX DEPARTMENT OF MAHARASHTRA, BUT HE HAS ALSO CARRIED OUT A VERIFICATION EXERCISE AND NO RESPONSE WAS FORTHCOMING FROM THE SAID PARTY. THEREFORE, THE IMPUGNED PURCHASES BEING UNEXPLAINED , IS CLEARLY DISCERNABLE. SO, HOWEVER, THE OTHER POINT THAT IS SOUGHT TO BE MADE BY THE ASSESSEE IS THAT THE CORRESPONDING 3 ITA NO. 2202/MUM/2016 SHRI AJAYKUMAR SHROFF SALES HAVE NOT BEEN DOUBTED AND, THEREFORE, IT CAN AT BEST BE A CASE WHERE THE PURCHASES WOULD HAVE BEEN EFFECTED BY THE ASSESSEE IN GREY MARKET. UNDER THESE CIRCUMSTANCES, FOLLOWING THE RATIO OF THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH, 356 ITR 451 (GUJ) , WHAT IS LIABLE TO BE ASSESSED IS ONLY THE NET PROFIT/SAVINGS EFFECTED BY THE ASSESSEE I N MAKING THE PURCHASES IN GREY MARKET, AND NOT THE ENTIRE AMOUNT OF SUCH PURCHASES. TAKING A CUE FROM THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT, WE DEEM IT FIT AND PROPER TO DIRECT THE ASSESSING OFFICER TO RETAIN THE ADDITION ONLY TO THE EXTENT OF 12 .5% OF THE PURCHASES AND DELETE THE BALANCE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 T H JANUARY, 2018. SD/ - SD/ - (RAM LAL NEGI) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 1 9 T H JANUARY, 2018 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI