M/S A J M & CO., MUMBAI V. DCIT.15(1)(1), MUMBAI

ITA 225/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8543 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Assessee Lawyers: VIJAY KUMAR S BIYANI
• Keywords: Reopening of assessment; Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 225 /MUM/201 9 ( ASSESSMENT YEAR : 2009 - 10 ) M/S. A.J.M. & CO., DC - 8132, BHARAT DIAMOND BOURSE, BANDRA - KURLA COMPLEX, BANDRA EAST MUMBAI 400 051 VS. DY. CIT - 15(1)(1) AAYAKAR BHAVAN CHURCHGATE MUMBAI PAN/GIR NO. AAKFM0310R (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI VIJAY KUMAR S. BIYANI REVENUE BY SHRI MICHAEL JERALD DATE OF HEARING 08 / 01 /2020 DATE OF PRONOUNCEME NT 15 / 01 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 225/MUM/2019 FOR A.Y. 2009 - 10 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI IN APPEAL NO. CIT(A) - 24/DCIT - 15(1)(1)/IT - 26/2016 - 1 7 DATED 11/04/2016 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 18/11/2016 BY THE LD. DY. COMMISSIONER OF INCOME TAX 15(1)(1), MUMBAI (HEREINAFTER RE FERRED TO AS LD. AO). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF RS.16,36,417/ - ITA NO 225/MUM/2019 M/S. A.J.M. & CO., 2 COMPUTED AT 12.5% ON THE VALUE OF BOGUS PURCHASE OF RS.1,30,91,939/ - IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF DIAMONDS. IT IS NOT IN DISPUTE THAT ASSESSEE HAD MADE PURCHA SES FROM TWO PARTIES I.E. AADI IMPEX AND SPARSH EXPORTS PVT. LTD., AMOUNTING TO RS.1,12,96,602/ - AND RS.1,04,86,660/ - RESPECTIVELY WHOSE NAMES MATCHED WITH THE LIST OF HAVALA DEALERS PUBLISHED BY THE SALES TAX DEPARTMENT, MAHARASHTRA AND INFORMATION THEREO N WAS PASSED ON TO THE INCOME TAX INVESTIGATION WING WHICH INTURN TRIGGERED REOPENING OF ASSESSMENT IN THE CASE OF THE ASSESSEE. THE LD. AO ACCEPTED TO THE FACT THAT EVEN THOUGH THE ASSESSEE WAS ABLE TO FURNISH CERTAIN EVIDENCES WITH REGARD TO THE SAID PUR CHASES, HOWEVER, HE OBSERVED THAT ASSESSEE COULD NOT SUBSTANTIATE BEYOND ANY DOUBT , THE FACT OF DELIVERY OF THOSE GOODS BY THE SAID ALLEGED SUPPLIERS. WE FIND THAT THE LD. AO HAD FURTHER OBSERVED THAT HOWEVER, THE CONSUMPTION OF THESE GOODS IN THE MANUFACT URING PROCESS COULD NOT BE RULED OUT AS ADMITTEDLY THOSE GOODS HAVE BEEN SUBSEQUENTLY SOLD BY THE ASSESSEE. ACCORDINGLY, HE CONCLUDED THAT THE FACT OF PURCHASE OF THESE GOODS FROM GREY MARKET CANNOT BE RULED OUT AND IN WHICH CASE , THE ASSESSEE COULD HAVE MADE CERTAIN SAVINGS TOWARDS VAT AND CERTAIN INCIDENTAL PROFIT THEREON. HENCE, HE PROCEEDED TO TAX THE PROFIT ELEMENT EMBEDDED IN THE VALUE OF SUCH ALLEGED PURCHASES @12.5% ON ESTIMATED BASIS AND MADE AN ADDITION OF RS.16,36,417/ - . THIS ADDITION @12.5% ON THE VALUE OF ALLEGED BOGUS PURCHASES WAS UPHELD BY THE LD. CIT(A). WE FIND THAT THIS TRIBUNAL IN MOST OF THE CASES IN RESPECT OF ASSESSEE S ENGAGED IN MANUFACTURING AND TRADING OF DIAMONDS HAD ESTIMATED THE PROFIT ELEMENT AT 3%. TO MEET THE ENDS OF JUSTICE AND RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS, WE DIRECT THE LD. AO TO TAX 3% ITA NO 225/MUM/2019 M/S. A.J.M. & CO., 3 OF THE VALUE OF ALLEGED BOGUS PURCHASES AS PROFIT ELEMENT. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSE SSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 / 01 /2020 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 01 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//