MR. SHASHIKANT M UDANI, Mumbai V. ACIT 26 (3), Mumbai

ITA 2231/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4701 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAYA BHASKAR JAKKE
• Keywords: Reopening of assessment; Tangible material
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI S AKTIJIT DEY (J M) ITA NO. 2231 /MUM/2019 ASSESSMENT Y EAR: 2010 - 11 SHASHIKANT M. UDANI, H - 210, ANSA INDUSTRIAL ESTATE, ANSA INDUSTRIAL ESTATE, SAKI VIHAR ROAD, ANDHERI (E) - 4 00072 PAN: AAAPU2812L VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 26(3), PRATYAKSHA KAR BHAVAN, C - 11, B.K.C., BANDRA (E), ROOM NO. 501 , MUMBAI - 400051 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI UDAYA BHASKAR JAKKE (DR) DATE OF HEARING: 08/10/2020 DATE OF PRONOUNCEMENT: 15 / 10/2020 O R D E R PER S AKTIJIT DEY , JM 1. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 31.12.2018 OF LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) - 12, MUMBAI PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 . 2. WHEN THE APPEAL WAS CALLED FOR HEARING , NO ONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OF THE APPEAL EX - PARTE QUA THE ASSESSEE AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND BASED ON MATERIAL AVAILABLE ON RECORD. 3. THE DISPUTE IN THE PRESENT APPEAL IS BASICALLY CONFINED TO ADDITION MADE ON ACCOUNT OF NON - GENUINE PURCHASES. O F COURSE, THE ASSESSEE HAS RAISED A LEGAL ISSUE CHALLENGING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT. 4. BRIEFLY THE FACTS ARE , THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS O F MANUFACTURING AND TRADING IN RIGID PVC C ONDUIT, PVC PI PES ETC. THROUGH HIS PROPRIETARY CONCERN M/S SUPER PLAST CO. FOR THE ASSESSMENT YEAR 2 ITA NO. 2231/ MUM/2 019 ASSESSMENT YEAR: 2010 - 11 UNDER DISPUTE THE ASSESSEE FILED HIS RETURN OF INCOME ON 06.09.2010 DECLARING TOTAL INCOME OF RS. 45,37,509/ - . THE RETURN OF INCOME WAS INITIALLY PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA AND DGIT (INV.), MUMBAI THAT THE GOODS WORTH RS. 11,49,200/ - CLAIMED TO HAVE BEEN PURCHASED DURING THE YEAR FROM TWO PARTIES ARE NON - GENUINE AS THE CONCERNED PARTIES HAVE BEEN IDENTIFIED AS HAWAL A OPERATORS, T HE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE AFORESAID PURCH ASES. HOWEVER, NOT BEING CONVINCED WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND EVIDENCE S FILED, THE ASSESSING OFFICER DISALLOWED 25% OUT OF SUCH PURCHASES , WORKING OUT TO RS. 2,87,300/ - , AND ADDED BACK TO THE INCOME OF THE ASSESSEE . BEING AGGRIEVED WITH SUCH ADDITION THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CO MMISSIONER (APPEALS). HOWEVER, LEARNED FIRST APPELLATE AUTHORITY SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. I HAVE C ONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRE SENTATIVE AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY , IN RESPONSE TO QUERY RAISED BY THE ASSESSING OFFICER , THOUGH , THE ASSESSEE FURNISHED SOME EVIDENCES TO PROVE THE GENUINENESS OF CERTAIN PURCHASES. HOWEVER, THE ASSESSING OFFICER WAS NOT FULLY SATI SFIED WITH SUCH EVIDENCES. FURTHER, IT IS A FACT THAT THE NOTICES ISSUED BY THE ASS ESSING OFFICER U/S 133 (6) OF THE ACT TO THE CONCERNED SELLING DEALERS RETURN ED BACK UNSERVED. THUS, FROM THE AFORESAID FACT S IT IS VERY MUCH CLEAR THAT THE ASSESSEE W AS UNAB LE TO CONCLUSIVELY PROVE THE FACT THAT THE PURCHASES WERE MADE FROM DECLARED SOURCES. THOUGH , THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PURCHASES ARE NON GENUINE, HOWEVER, INSTEAD OF DISALLOWING THE ENTIRE PURCHASES, HE DISALLOWED ONLY 25%. THE AFORES AID DECISION OF THE ASSESSING OFFICER CLEARLY INDICATES THAT HE WAS CONVINCED THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM SOME OTHER SOURCES. IN THE AFORESAID CIRCUMSTANCES , ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITI ON. IN MY CONSIDERED OPINION THE ESTIMATION OF PROFIT AT 25% IS ON THE HIGHER SIDE, H ENCE, NEEDS TO BE SCALED 3 ITA NO. 2231/ MUM/2 019 ASSESSMENT YEAR: 2010 - 11 DOWN. LOOKING AT THE NATURE OF BUSINESS AND OTHER RELEVANT FACTS , I AM OF THE VIEW THAT DISALLOWANCE @ 12.5% OF THE NON - GENUINE PURCHASES WOULD BE FAIR AND REASONABLE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES. 6 . AS REGARDS, THE VALIDITY OF REOPENING OF ASSESSMENT , ADMITTEDLY THE RETURN OF INCOME FILED BY THE ASSESSEE WAS N OT SUBJECTED TO SCRUTINY AND WAS ONLY PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM EXT ERNAL SOURCES I.E. SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA THAT CERTAIN PURCHASES MADE BY THE ASSESSEE ARE NON - G ENUINE. THUS, AS COULD BE SEEN , THE REOPENING OF ASSESSMENT IS ON THE BASIS OF TANGIBLE MATERIAL AVAILABLE ON RECORD. T HAT BEING THE CASE , THERE CANNOT BE ANY QUESTION IN SO FAR AS VALIDITY OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT. ACCORDINGLY, I DO N OT ENTERTAIN ASSESSEE S GROUND IN TH IS REGARD. GROUNDS ARE PARTLY ALLOWED. 7. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER , 2020 . SD/ - S AKTIJIT DEY ( JUDICIAL MEMBER ) MUMBAI ; DATED: 15 / 10/2020 ALINDRA, PS 4 ITA NO. 2231/ MUM/2 019 ASSESSMENT YEAR: 2010 - 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI