Navin Himmatlal Shah, Surat V. The Income Tax Officer, Ward-1(3)(3), Surat

ITA 2272/AHD/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3133 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Bogus purchase; Accommodation entries
• Section: 201; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH , SURAT BEFORE SHRI AMARJIT SINGH , JM & SHRI O.P. MEENA, AM ITA NO. 2272 / AHD / 201 6 ( ASSESSMENT YEAR 20 0 7 - 08 ) NAVIN HIMMATLAL SHAH, 7, SWASHRAY SOCIETY, DIWALI BAUG, ATHWAGATE, SURAT VS. INCOME TAX OFFICER, WAR D - 1(3)(3), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. AFSPS3575H APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SAPN ESH SHE TH - CA REVENUE BY SHRI B. P. K. PANDA (SR. D R) DATE OF HEARING 24 / 10 / 201 9 DATE OF PRONOUNCEMENT 27 / 11 / 20 1 9 O R D E R PER AMARJIT SINGH (J .M) : THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 13 . 0 6 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) MAJURA GATE, SURAT [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 0 7 - 08 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LA \ W ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING ASSESSMENT U/S 148 OF THE I. T. ACT, 1 961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LA \ W ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING PURCHASES OF RS.8,09,875/ - 3. IT IS THEREFORE, PRAYED THAT ABOVE THE ASSESSMENT ORDER MAY KINDLY BE QUASHED OR IN THE ALTERNATIVE ADDITIONS MADE BY AO AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT(INV.), MUMBAI THROUGH THE CIT - 1, SURAT AND THE ADDL. COMM ISSIONER OF INCOME TAX, RANGE - 3 SURAT IN WHICH IT WAS CONVEYED THAT THE ASSESSEE HAS TAKE N THE BOGUS PURCHASE ENTRIES IN SUM OF RS.8,09,875/ - FROM M/S. AVI EXPORTS. THEREAFTER, THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE, THE AO RAISED THE ADDITION AND ASSESSED THE INCOME ITA N0.2272 / AHD /201 6 A.Y.200 7 - 08 2 IN SUM OF RS.10,72,460/ - . FEELING AGGRIEVED, THE ASSESSEE F ILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AO , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 4. THIS ISSUE HAS NOT BEEN PRESSED BY THE LD. REPRESENTATIVE OF THE ASSESSEE, THEREFORE, THIS ISSUE IS BEING DEC IDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED . ISSUE NOS. 2 & 3 5 . UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITION IN SUM OF RS. 8,09,875/ - . AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF T HE ASSESSEE HAS AR GUED THAT IN THE CASE OF ASSESSEES BROTHER SHRI MAHENDRA HIMMATLAL SHAH (HUF) IN ITA. NO.2273/AHD/2016 DATED 15.07.2019, THE HON'BLE ITAT HAS RESTRICTED THE ADDITION TO THE EXTENT OF 5%, THEREFORE, ON THE BASIS OF THE FINDING OF THE HON'BLE ITAT , T HE PRES ENT CASE IS ALSO LIABLE TO BE DECIDED AND ACCORDINGLY THE 5% ADDITION OF THE BOGUS PURCHASE IS LIABLE TO BE RESTRICTED IN ACCORDANCE WITH LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE COPY OF ORD ER IN THE ASSESSEES BROTHER CASE SHRI MAHENDRA HIMMATLAL SHAH (HUF) IN ITA. NO.2273/AHD/2016 DATED 15.07.2019 IS ON THE FILE IN WHICH THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO.8 - 13 WHICH IS HEREBY REPRODUCED AS UNDER: - 8. I HAVE GONE THROUGH THE SUB MISSION OF THE ASSESSEE. THE CONTENTIONS RAISED BY THE ASSESSEE IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS: - (I) IT MAY BE MENTIONED THAT FROM THE DETAILS AND EVIDENCES FOUND DURING THE SEARCH MAKE IT CLEAR THAT THE ABOVE ENTITIES OF SHRI. RAJENDRA JAIN GROUP HAVE GIVEN ACCOMMODATION ENTRIES OF BOGUS PURCHASES TO THE ASSESSEE DURING THE YEAR. (II) AS FAR AS THE TRANSACTION OF BOGUS PURCHASE IS CONCERNED, IT MAY BE MENTIONED THAT M/S. AVI EXPORTS WAS THE BOGUS CONCERNS OF RAJENDRA JAM GROUP AS DISCUSSED AB OVE. (III) THE GROUP FLOATED BY SHRI RAJENDRA JAIN & OTHERS HAD INDULGED IN GIVING SUCH ACCOMMODATION ENTRIES. SHRI RAJENDRA JAIN & OTHERS HAS ADMITTED THE ENTIRE NATURE OF BOGUS, TRANSACTIONS IN HIS STATEMENT RECORDED U/S. 132(4) OF THE INCOME TAX ACT, 19 61. (IV) IT WAS FURTHER ADMITTED BY THE DUMMY PARTNERS/ DIRECTORS/ PROPRIETORS OF THE ENTITIES OF SHRI RAJENDRA JAIN 86 OTHERS GROUP THAT THEY WERE MERELY EMPLOYEES OF SHRI RAJENDRA JAIN 86 OTHERS AND THEIR FAMILY AND THAT THEY WERE LOOKING AFTER MISCELLAN EOUS OFFICE WORK LIKE DEPOSITING CHEQUES IN BANKS, HANDING OVER PARCELS TO CLIENTS, MAKING DATA ENTRY, ETC. ON BEING ASKED ABOUT VARIOUS ASPECTS OF THE BUSINESS OF THIS GROUP, THE ITA N0.2272 / AHD /201 6 A.Y.200 7 - 08 3 DUMMY PARTNERS/ DIRECTORS/ PROPRIETORS OF THE ENTITIES OF THIS GROUP, THEY E XPRESSED THEIR IGNORANCE AND STATED THAT THEY ARE NOT INVOLVED IN ANY SUCH ACTIVITIES AND THAT THEY ARE PAID LUMP SUM SALARY IN CASH. DURING THE COURSE OF SEARCH, BLANK CHEQUE BOOKS SIGNED BY THE DUMMY PARTNERS/ DIRECTORS/ PROPRIETORS OF THE ENTITIES OF TH IS GROUP WERE ALSO FOUND AND SEIZED. SIMILARLY, BOOKS OF ACCOUNT IN THE NAME OF THE DUMMY PARTNERS/ DIRECTORS/ PROPRIETORS OF THE ENTITIES OF THIS GROUP WERE ALSO FOUND AND SEIZED. (V) THE INVESTIGATIONS MADE BY THE INVESTIGATION WING REVEALED THAT ACTUAL IMPORTERS OF ROUGH DIAMONDS IMPORT PART OF THEIR DIAMOND REQUIREMENT THROUGH BENAMI ENTITIES OPERATED BY SHRI RAJENDRA JAIN & OTHERS & THEIR FAMILY, WHICH ENSURES BENEFIT OF SUPPRESSION OF TURNOVER, PROFITS AND CAPITAL REQUIREMENT OF THE FORMER. THE CONSI GNMENTS ARE SENT ON CREDIT BY THE SUPPLIERS IN THE NAMES OF THESE BENAMI ENTITIES AT THE INSTANCE OF THE ACTUAL IMPORTERS AND ON RECEIPT OF THE IMPORTED CONSIGNMENTS FROM CUSTOMS, THROUGH CHA, THE CONSIGNMENT IS HANDED OVER TO THE ACTUAL IMPORTER AND THE B OGUS STOCK IS ENTERED IN THE BOOKS OF THE BENAMI ENTITIES AND THE SAME IS NOT RECORDED IN THE BOOKS OF THE ACTUAL IMPORTER. THESE BENAMI ENTITIES OF SHRI. SHRI RAJENDRA JAIN & OTHERS GROUP THEREAFTER ISSUE BOGUS SALE BILIS AGAINST BOGUS STOCK. (VI) THE DE CISION OF HON'BLE ITAT, AHMEDABAD BENCH, IN THE CASE OF 'KAMALCHAND NATHMAL LUNIA' ALSO NEED MENTION WHEREIN ACCOMMODATION ENTRIES PROVIDED BY M/S. MAHASAGAR SECURITIES PVT. LTD. AND GROUP CONCERNS HAVE BEEN HELD TO BE BOGUS AND AFFIRMED. DECISION OF HON'B LE ITAT IS RE - PRODUCED BELOW: - (VII) THE ISSUE OF THE MUKESH CHOKSI GROUP OF COMPANIES BEING AN ENTRY PROVIDER HAS BEEN SETTLED BY JURISDICTIONAL ITAT, AHMADABAD IN THE CASE OF KAMALCHAND NATHMAL LUNIA IN THE ITA NO. 436/AHD/2013, 514 TAXPUNDIT 33 (2014); 40 CCH 199 AHDTNB; WHEREIN IT HAS HELD THAT THESE COMPANIES OF MUKESH CHOKSI GROUP ARE ENTRY PROVIDERS AND THEREFORE, THE TRANSACTIONS WITH THESE COMPANIES ARE FICTITIOUS. THE HON'BLE BENCH HELD THAT 'AFTER HEARING BOTH SIDES AND CONSIDERING THE TOTALITY O F THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE ALSO OF THE OPINION THAT THE PURCHASE AS WELL AS THE SALE TRANSACTIONS OF THE SCRIPS IN QUESTION WAS NOT GENUINE. THE REASON FOR TAKING THIS VIEW IS THAT THE PURCHASE RATE HAD NOT TAILED WITH THE RATE AS PE R BSE WEBSITE AND THAT THE PURCHASES HAVE ALSO BEEN MADE IN CASH. ONLY PAPER TRANSACTIONS HAVE BEEN MADE BECAUSE THERE WAS NO EVIDENCE OF PHYSICAL DELIVERY OF THE SHARES, THE AO WAS RIGHT IN ASKING THE DETAILS OF THE DIVIDEND IF ANY RECEIVED DURING THE HOL DING PERIOD. BUT NO SUCH INFORMATION WAS PROVIDED AT ANY STAGE OF PROCEEDING. EVEN, THE ENTRIES IN THE DEMAT ACCOUNT WERE NOT SACROSANCT BECAUSE THE AO HAD FOUND ON INVESTIGATION THAT THOSE WERE ALL 'OFF MARKET' TRANSACTIONS, IT WAS ALSO NOTED BY THE AO TH AT HON'BLE ITAT MUMBAI BENCH HAD HELD THAT THOSE COMPANIES WERE NOTHING BUIT ENTRY PROVIDERS. RATHER, IT WAS PROVED BEYOND DOUBT THAT MAHASAGAR GROUP WAS ENGAGED IN THE BUSINESS OF ISSUANCES OF FRAUDULENT BILLS. WE, THEREFORE, AFFIRM THE FINDING OF THE REV ENUE AUTHORITIES AND DISMISS THE GROUND OF THE ASSESSEE.' 9. AS DISCUSSED IN THE FOREGOING PARAS, THE EVIDENTIAL AND MATERIALS FACTS FOUND DURING THE COURSE OF SEARCH AND SURVEY IN THE CASE SHRI RAJENDRA JAIN 85 OTHERS GROUP PROVES THAT THEY HAVE PROVIDED ACCOMMODATION BOGUS PURCHASES ENTRIES OF RS.9,95,625/ - TO THE ASSESSEE, THIS GROUP DELIBERATELY CONDUCTED TRANSACTIONS IN SUCH A MANNER WHICH LEADS TO MISLEADING PICTURE AND A COLOUR OF GENUINENESS IS GIVEN TO THE ENTIRE TRANSACTION. ACCORDINGLY, THE AMOU NT OF RS,9,95,625/ - AS ITA N0.2272 / AHD /201 6 A.Y.200 7 - 08 4 BOGUS PURCHASES FROM M/S. AVI EXPORTS, A BENAMI CONCERN RUN BY SHRI RAJENDRA JAIN & OTHERS GROUP, IS ADDED TO THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. 10.AGAINST THE ADDITION OF RS. 9,95,625/ - , ASSESSEE PREFERRED FIRST STA TUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF ASSESSING OFFICER. 11.NOW BY WAY OF SECOND APPEAL, ASSESSEE HAS COME BEFORE US. 12. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER. ON THE BASIS OF INFORMATION RECEIVED FROM INV ESTIGATION WING, MUMBAI, THE A.O. FOUND THAT THE APPELLANT HAD TAKEN ACCOMMODATION ENTRY OF BOGUS PURCHASE BILLS FROM M/S AVI EXPORTS OF RS. 9,95,265/ - . BUT ASSESSEE REFUSED FOR BOGUS ALLEGATION AND IN ORDER TO AVOID THE FURTHER LITIGATION. LD. A.R. CITED AN ORDER OF THE BENCH IN ITA NO. 1396/AHD/2017 FOR ASSESSMENT YEAR 2007 - 08 WHEREIN SIMILAR CIRCUMSTANCES, MATTER WAS PARTLY ALLOWED BY THE TRIBUNAL. 13.THEREFORE, IN PARITY WITH THE ABOVE SAID ORDER, WE RESTRICT THE ADDITION OF 5% OF TOTAL SO CALLED BOGUS PURCHASE OF RS. 9,95,625/ - . AND ASSESSING OFFICER IS DIRECTED TO DISALLOW 5% OF TOTAL BOGUS PURCHASE OF RS. 9,95,625/ - . 6. SINCE THE FACTS OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACTS OF THE CASE DECIDED B Y THE HONBLE ITAT IN THE ASSESSEES BROTHER CASE, THEREFORE, BY HONORING THE DECISION OF THE HON'BLE ITAT, WE RESTRICTED THE ADDITION TO THE EXTENT OF 5% OF THE TOTAL BOGUS PURCHASE IN SUM OF RS. 8,09,875/ - . ACCORDINGLY, WE DECIDE THE ISSUES IN FAVOUR OF THE ASSESSEE PARTLY AGAINST THE REVENUE. 7 . I N THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER PRONO UN CE D IN THE OPEN COURT ON THIS 27 /11 /2019 SD/ - SD/ - ( O. P. MEENA ) (AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER / SURAT, DATED : 27 / 1 1 / 2019 / VIJAY PAL SINGH , SR.PS COPY OF ORDER SENT TO - ASSESSEE/ AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT