DURGARAM H. DESAI. PROP MONOLIKA METAL INDUSTRIES, MUMBAI V. INCOME TAX OFFICER 19(1)(4), MUMBAI

ITA 2255/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5825 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Keywords: Bogus purchase
• Section: 133(6); 147; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO. 2255 /MUM/201 8 (A.Y: 2009 - 10) SHRI DURGARAM H. DESAI PROP . MONOLIKA METAL INDUSTRIES OFFICE NO . 108, 1 ST FLOOR, 89/91, DURGADEVI STREET, MUMBAI 400 004 PAN: ACKPD 2996 A V. INCOME TAX OFFICER 19(1)(4) TARDEO, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH PANDIT DEPARTMENT BY : SHRI KUSUM BANSAL DATE OF HEARING : 21 .02 .2019 DATE OF PRONOUNCEMENT : 12 .04 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESS EE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 30, MUMBAI [HEREINAFTE R IN SHORT LD.CIT(A)] DATED 25 .01.2018 FOR THE ASSESSMENT YEAR 2009 - 10. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING A.O'S ACTION OF REOPENING THE ASSESSMENT UNDE R SECTION 147 R.W.S. 148 OF THE ACT. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ESTIMATING PROFIT AT 7.37% OF THE ALLEGED BOGUS PURCHASES OF 2 ITA NO. 2255/MUM/2018 (A.Y: 2009 - 10) SHRI DURGARAM H. DESAI RS.1,44,71,205 / - , WHEN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT REJECTED U/S. 145 OF THE INCOME TAX ACT 1961. (3) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN ESTIMATING PROFIT AT 7.37% OF THE ALLEGED BOGUS PURCHAS ES OF RS 1,44,71,205/ - . 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO.1 IS NOT PRESSED. IN VIEW OF THE SUBMISSIONS THIS GROUND IS DISMISSED AS NOT PRESSED. 4. COMING TO GROUND NOS.2 & 3 THE ONLY ISSUE IS THAT THE LD. CIT(A) ERRED IN SUSTAINING THE PROFIT ELEMENT @7.37% ON ALLEGED BOGUS PURCHAS ES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT REQUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM 17 DEALERS AS REFERRED TO IN THE ASSESSMENT ORDER , A S THESE DEALERS WERE REPORTED TO BE ONLY ACCOMMODATION ENTRY PROVIDE R S BASED ON THE REPORT OF INVESTIGATION DEPARTMENT OF THE SALES TAX DEPARTMENT OF MAHARASHTRA. ASSESSING OFFICER ALSO ISSUED NOTICES U/S. 133(6) OF THE ACT TO ALL THESE DEALERS AND THE NOTICES RETURNED UNSERVED WITH THE REMARK THAT EITHER LEFT, NOT TRACEA BLE AND NOT KNOWN . THIS WAS CONFRONTED TO THE ASSESSEE. THE ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEE DID NOT FILE VITAL DOCUMENTS LIKE DELIVERY CHALLANS, TRANSPORT RECEIPTS, GOODS INWARD REGISTER ETC., TO PROVE THE GENUINENESS OF THE PURCHASES. 5. THE ASSESSEE PRODUCED PURCHASE BILLS, LEDGER ACCOUNTS, BANK STATEMENTS, STOCK REGISTERS AND CONTENDED THAT ALL THESE PURCHASES WERE 3 ITA NO. 2255/MUM/2018 (A.Y: 2009 - 10) SHRI DURGARAM H. DESAI MADE IN THE REGULAR COURSE OF BUSINESS, PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES, GOODS HAVE BEEN PURCHASED AND SOLD, ASSESSEE MAINTAINS STOCK REGISTER AND THEREFORE THE PURCHASES MADE BY THE ASSESSEE FROM THESE DEALERS ARE GENUINE. 6. NOT CONVINCED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER OPINED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE PURCHASES MADE FROM THE ABOVE MENTIONED PARTIES REMAIN UNVERIFIABLE IN THE ABSENCE OF THE CONFIRMATIONS FROM THE DEALERS AND THEREFORE, HE REJECTED THE BOOKS OF ACCOUNT INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE ASSESSING OFFICER FURTHER E STIMATED THE PROFIT ELEMENT FROM SUCH PURCHASES @12.5% AND THE SAME WAS DISALLOWED. 7. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AVERMENTS OF THE ASSESSING OFFICER SUSTAINED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER AT 12.5% OF THE PURCHASES . HOWEVER, HE DIRECTED THE ASSESSING OFFICER TO REDUCE THE GROSS PROFIT ALREADY SHOWN BY THE ASSESSEE FROM SUCH PURCHASES . AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4 ITA NO. 2255/MUM/2018 (A.Y: 2009 - 10) SHRI DURGARAM H. DESAI 9. HEARD RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, I FIND THAT THE ASSESSEE CO U LD N EITHER PRODUCE THE CONFIRMATIONS NOR THE PARTIES FOR VERIFICATION. LD. CIT(A) AND ASSESSING OFFICER HELD THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE CLAIM OF THE PURCHASES. THE LD. CIT(A) C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE AVERMENTS OF THE ASSESSING OFFICER HELD THAT ASSESSING OFFICER IS JUSTIFIED IN ESTIMATI NG THE PROFIT ELEMENT @12.5% OF THE PURCHASES FROM THESE 17 DEALERS. HOWEVER, HE DIRECTED THE ASSESSING OFFICER TO RE DUCE THE PROFIT ELEMENT DECLARED BY THE ASSESSEE FROM THESE ALLEGED PURCHASES OBSERVING AS UNDER: - . 9.7. IN THE PRESENT CASE, AO CONCLUDED THAT THE ASSESSEE INDULGED IN NON - GENUINE TRANSACTION AND INTENTION OF INDULGING IN SUCH ACTIVITY IS TO SUPPRESS THE TRUE PROFITS AND TO REDUCE THE TAX LIABILITY. THEREFORE, IN SUCH CIRCUMSTANCES, ADDITION ON ACCOUNT OF A HIGHER MARGIN OF PROFIT WOULD BE FAIR AND EQUITABLE WHICH IS SUPPORTED BY THE ABOVE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. S IMIT SHETH 356 UR 451 (GUJ). THE FACTS OF THE PRESENT CASE ARE EXACTLY SIMILAR TO THE CITED CASE. THE APPELLANT MADE PURCHASES FROM TWENTY PARTIES WHO ARE SAID TO BE HAWALA OPERATORS, WHO ARE INDULGED IN PROVIDING BOGUS BILLS WITHOUT SUPPLY OF ANY MATERIA L. INDEPENDENT INQUIRIES CONDUCTED REVEALED THAT NO PARTIES EXISTED IN THE GIVEN ADDRESSES. WHEN ASKED TO PRODUCE THE PARTIES DURING THE ASSESSMENT PROCEEDINGS BY THE AO AS WELL AS IN THE PRESENT PROCEEDINGS BY THE UNDERSIGNED, APPELLANT EXPRESSED HIS INAB ILITY TO DO SO. UNDER THESE CIRCUMSTANCES, AS THE APPELLANT COULD NOT PROVE THE GENUINENESS OF THE CLAIM OF PURCHASES DEBITED TO THE PROFIT & LOSS ACCOUNT, THERE IS NO OTHER WAY TO THE AO, BUT TO ESTIMATE THE PROFIT ELEMENT EMBEDDED ON SUCH PURCHASES. AS S TATED EARLIER, THE FACTS OF THE CASE ARE EXACTLY SIMILAR TO THE CITED CASE, THEREFORE RESPECTFULLY FOLLOWING THE ABOVE CITED DECISION IN THE CASE OF SIMITH P. SHETH, THE ACTION OF THE AO IN ESTIMATING THE ADDITION @12.5% ON THE TOTAL NON - GENUINE PURCHASES FROM THE SEVENTEEN PARTIES IS CONFIRMED'. HOWEVER, THE AO IS DIRECTED TO REDUCE THE PROFIT ALREADY DECLARED BY THE ASSESSEE ON THE ALLEGED PURCHASES. ACCORDINGLY, GROUND NO. 5 & 6 OF THE APPEAL IS TREATED AS 'PARTLY ALLOWED'. 10. ON A CAREFUL READING OF THE F INDINGS OF THE LD. CIT(A), I DO NOT SEE ANY VALID REASON TO INTERFERE WITH THE DECISION OF THE LD. CIT(A). THUS, I 5 ITA NO. 2255/MUM/2018 (A.Y: 2009 - 10) SHRI DURGARAM H. DESAI SUSTAIN THE ORDER OF THE LD.CIT(A) AND REJECT THE GROUNDS RAISED BY THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH APRIL , 2019 SD / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 12 / 0 4 / 201 9 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM