ITO 25 (3) (5), MUMBAI V. NISHA P. SHAH, MUMBAI

ITA 2249/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9538 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.2249/M/2016 ASSESSMENT YEARS: 2011-12 ITA NO.2250/M/2016 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER 25(3)(5), ROOM NO.609, C-10, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 VS. SMT. NISHA P SHAH, 21, GOVIND NAGAR, 88 DIXIT ROAD, VILE PARLE (E) MUMBAI- 400 057 PAN: ABIPS0043G (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI RAJESH KUMAR YADAV, D.R. DATE OF HEARING : 01.08.2017 DATE OF PRONOUNCEMENT : 15.09.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY TH E REVENUE AGAINST THE COMMON ORDER DATED 28.03.2014 OF THE COMMISSIONER O F INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEARS 2009-10 & 2011-12. ITA NO.2249/M/2016 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN BUSINESS OF DEALING PAPER BOARD AND RELATED ITEM S. DURING THE YEAR THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) FOUND THAT ASSESSEE HAD MADE PURCHASES FROM FOLLOWING PARTIES: ITA NO.2249/M/2016 ITA NO.2250/M/2016 SMT. NISHA P SHAH 2 SR. NO. NAME OF THE PARTY AMOUNT OF PURCHASE (RS) 1. M/S. DHANI PRODUCTS PVT. LTD. 14,20,766 2. M/S. MAHI SALES PVT. LTD. 13,99,693 3. M/S. REAL VALUE COMMU PVT. LTD. 17,77,705 4. M/S. IMPULSE IMPEX PVT. LTD. 19,27,550 5. M/S. SOHAM MERCANTILE PVT. LTD. 3,88,609 6. M/S. SONOTRON TRADING CO PVT. LTD. 4,42,444 7. M/S. R.R. TRADERS (CREDITOR) 1,01,56,187 3. THE ASSESSEE WAS ASKED TO PRODUCE THE ABOVE PART IES FOR VERIFICATION. THERE WAS NO COMPLIANCE OF NOTICE UNDER SECTION 133 (6). THEREFORE, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BOGUS PURCHASES OF RS.73,56,771/-. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 5.8 AFTER CONSIDERING THE TOTALITY OF THE FACTS, I AM OF THE VIEW THAT ESTIMATION OF PROFIT AT 12.5% WOULD MEET THE ENDS O F JUSTICE; THEREFORE, I DIRECT THE AO TO ESTIMATE PROFIT OF 12.5% ON THE TO TAL PURCHASES IN QUESTION WHICH WORKS OUT TO RS.9,19,595/- ( 12.5% OF RS. 73, 56,767/-). THE APPELLANT THEREFORE GETS RELIEF OF RS.64,37,1727- (RS.73,56,7 67/- - RS.9,19,595/-) .THE GROUNDS RAISED ARE PARTLY ALLOWED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LD. D.R. RELIED UPON THE DECISION OF SHWETAMBAR STEELS VS. ITO - IT AT AHMEDABAD AND GANESH RICE MILLS VS. CIT (294 ITR 316). THE FACTS IN THE PRESENT CASE SHOWS THAT APPELLANT COULD NOT PRODUCE THE PARTIES FROM W HOM GOODS ARE STATED TO HAVE BEEN PURCHASED. THE SUPPLIERS WERE FOUND TO BE ENGAGED IN PROVIDING BOGUS BILL WITHOUT ACTUAL DEALING OF GOODS. IN THIS REGARD, THE APPELLANT HAS STATED THAT THEY HAD SUBMITTED QUANTITATIVE DETAILS OF STOCK WITH RESPECT OF THE SALES WITH PURCHASES FROM THE PARTIES DURING THE AS SESSMENT PROCEEDINGS. THE APPELLANT HAS SUBMITTED THE DETAIL OF CORRESPONDING SALES IN RESPECT OF THE PURCHASE FROM THE SAID 8 PARTIES. AS MENTIONED ABOV E THE AO HAS NEVER DISPUTED OR EXAMINED THE ASPECT OF SALES RECEIPTS. SINCE THE SALES MADE BY THE APPELLANT WAS NOT DOUBTED OR DISPUTED BY THE AO AND HE HAS ACCEPTED THE SALES ITA NO.2249/M/2016 ITA NO.2250/M/2016 SMT. NISHA P SHAH 3 RECEIPTS OF THE APPELLANT AS IT IS, THEREFORE, THE AO CANNOT DENY THAT PURCHASES WERE NOT MADE BY THE APPELLANT AND THE MATERIAL WAS NOT USED FOR ITS SALES. WHAT IS UNDER DISPUTE IS THE PURCHASES FROM THE PAR TIES FROM WHOM BILLS HAVE BEEN TAKEN AND CHEQUES HAVE BEEN ISSUED TO THEM. PU RCHASES ARE NOT IN DISPUTE BUT THE PARTIES FROM WHOM PURCHASE ARE SHOWN TO HAV E BEEN MADE ARE DISPUTED AND SUSPICIOUS. THE AO HAD MADE THE ADDITION AS SO ME OF THE SUPPLIERS WERE DECLARED HAWALA DEALERS BY THE VAT DEPARTMENT. THIS MAY BE A GOOD REASON FOR MAKING FURTHER INVESTIGATION BUT THE AO DID NOT MAKE ANY FURTHER INVESTIGATION AND MERELY COMPLETED THE ASSESSMENT O N SUSPICION. ONCE THE ASSESSEE HAS BROUGHT ON RECORD THE DETAILS OF PAYME NTS BY ACCOUNT PAYEE CHEQUE, IT WAS. INCUMBENT ON THE AO TO HAVE VERIFIE D THE PAYMENT DETAILS FROM THE BANK OF THE ASSESSEE AND ALSO FROM THE BANK OF THE SUPPLIERS TO VERIFY WHETHER THERE WAS ANY IMMEDIATE CASH WITHDRAWAL FRO M THEIR ACCOUNT. NO SUCH EXERCISE HAS BEEN DONE OR FINDINGS RECORDED, THERE WAS NO DETAILED INVESTIGATION MADE BY THE AO HIMSELF. IT IS ALSO FO UND THAT THE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE WHICH ARE DULY RE FLECTED IN THE BANK STATEMENT OF THE ASSESSEE. THERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED CASH BOOK FROM THE SUPPLIERS. MERELY BECAU SE THE SUPPLIERS DID NOT APPEAR BEFORE THE AO OR SOME CONFIRMATION LETTERS W ERE NOT FURNISHED, ONE CANNOT CONCLUDE THAT THE PURCHASES WERE NOT MADE BY THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISION OF NIKUNJ EXIMP ENTERPRIS ES VS. CIT 216 TAXMAN 171 (BOM). TO THIS EXTENT I AM IN VIEW WITH THE APP ELLANT, IF APPELLANT HAS FULFILLED ITS ONUS MAKING THE PAYMENT BY CHEQUE AND HAS SUPPLIED THE ADDRESSES OF THE SELLERS THEN IT CANNOT BE PRESUMED THAT SUPP LIER WERE BOGUS SIMPLY BECAUSE THE SELLERS WERE NOT FOUND AT THE GIVEN ADD RESS. THERE IS A CONSIDERABLE TIME GAP BETWEEN THE PERIOD OF PURCHASE TRANSACTION AND PERIOD OF SCRUTINY PROCEEDINGS. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THERE IS SUPPRESSION OF SALES. IT IS BASIC RULE OF ACCOUN TANCY AS WELL AS OF TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINE D WITHOUT DEDUCTING COST OF ITA NO.2249/M/2016 ITA NO.2250/M/2016 SMT. NISHA P SHAH 4 PURCHASE FROM SALES. ESTIMATION OF PROFIT RANGING F ROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CAS E OF IT VS SIMIT P SHETH 356 ITR 451 (GUJ.). RESPECTFULLY FOLLOWING THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIMIT P. SHETH 38 TAXMAN 385 (GUJ), WE DISMISS THE DEPARTMENTAL APPEAL. 6. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ITA NO.2250/M/2016 7. IN THIS APPEAL, DURING THE YEAR, THE AO FOUND TH AT ASSESSEE HAD MADE PURCHASES FROM FOLLOWING PARTIES: SR. NO. NAME OF THE COMPANY AMOUNT OF PURCHASE (RS) 1. M/S. IMPULSE IMPEX P. LTD. 11,95,990/- 2. M/S. KEYSTONE COMMERCIAL P. LTD. 14,29,995/- 3. M/S. RAJESHWARI TRADING P. LTD. 12,39,984/- 4. M/S. SOHAM MERCANTILE PVT. LTD. 11,85,592/- 5. M/S. SONOTRON TRADING CO PVT. LTD. 11,69,981/- 6. M/S. MARUTI SALES CORPN. 18,43,095/- 7. M/S. VIJAY SAGAR TRADING P. LTD. TOTAL 12,04,013/- 1,04,86,951/- 8. WE FIND THAT THE REVENUE HAS TAKEN THE IDENTICAL GROUNDS IN ITA NO.2249/M/2016 AND THE SAME HAS ALREADY BEEN DECIDE D ABOVE. FOLLOWING THE SAME RATIO APPLIED IN ITA NO.2249/M/2016, WE DECIDE THIS APPEAL ALSO. 9. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.09.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 15.09.2017. * KISHORE, SR. P.S. ITA NO.2249/M/2016 ITA NO.2250/M/2016 SMT. NISHA P SHAH 5 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.