GANESHLAL H. SHAH, THANE V. ITO 1(4) THANE, THANE

ITA 2275/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8835 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 09-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H M WANARE
• Keywords: Bogus purchase; Revised return
• Section: 133(6); 10; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ITA NO. 2274 AND 2275 / MUM/ 20 1 6 ( / ASSESSMENT YEAR S : 20 1 0 - 11 AND 2011 - 12 ) GANESHLAL H SHAH, SHOP NO.2, KESHRI NIWAS, KISAN NAGAR,NO.2, ROAD NO.16, WAGLE ESTATE, THANE (W) - 400604 / VS. INCOME TAX OFFICER 1(4), 6TH FLOOR, ASHAR IT PARK ROAD NO. 16Z WAGLE INDL.ESTATE. THANE(W) - 40060 4 ./ PAN : APSPS5101D ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : MS. NEHA PARANJPE / RESPONDENT BY : SHRI H M WANARE / DATE OF HEARING : 9 .1.2017 / DATE OF PRONOUNCEMENT : 20. 1. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THESE ARE THE TWO APPEALS FILED BY THE ASSESSEE CHALLENGING THE COMMON ORDER OF LD. CIT(A) - 1, THANE, DATED 24.2.2016 FOR THE A SSESSMENT YEARS 2010 - 11 AND 2011 - 12. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN BOTH THE APPEALS ARE COMMON EXCEPT FIGURES , THEREFORE , FOR THE SAKE OF CONVENIENCE, WE 2 ITA NO.2274 AND 2275/MUM/2016 REPRODUCE GROUNDS TAKEN BY THE ASSESSEE IN ASSESSMENT YEAR 2010 - 11 AND ADJUDICATE THIS APPEAL ACCORDINGLY . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, MUMBAI [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] ERRED IN PASSING THE ORDER DATED 24.02.2016 CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING T HE INTEREST EXPENDITURE WITHOUT APPRECIATI NG THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ORDER PASSED BY LD. CIT(A) IS WITHOUT ANY BASIS AND THE SAME MAY BE QUASHED. ADDITION ON ACCOUNT OF NON GENUIUNE PURCHASES RS.57,148/ - A. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A. O. IN MAKING ADDITION ON ACCOUNT OF NON GENU INE PURCHASE AMOUNTING TO RS. 57148/ - WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION ON ACCOUNT OF NON GENUINE PURCHASES IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. B. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ADDITION ON ACCOUNT OF NON GENUINE PURCHASE AMOUNTING TO RS. 57148/ - IS GENUINE.THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION ON ACCOUNT OF NON GENUI NE PURCHASES OF RS. 57148/ - IS WITHOUT ANY BASIS AND THE SAME MAY BE DELETED. 3 . AT THE TIME OF HEARING, THE LD.AR SUBMITTED BEFORE THE BENCH THAT GROUND NO.1 RAISED IN THESE APPEALS ARE NOT ARISING OUT OF CIT(A)S ORDER, AND ARE NOT BEING PRESSED. 4 . SINCE GROUND NO.1 TAKEN BY THE ASSESSEE DID NOT ARISE FROM THE APPELLATE ORDER AND AT THE TIME OF HEARING DID NOT PRESS, WE DISMISS IT AS NOT PRESSED. 3 ITA NO.2274 AND 2275/MUM/2016 5 . THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 24.9.2010 DECLARING TOTAL INCO ME OF RS.4,19,880/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ON 22.6.2011. THE ASSESSEE ALSO FILED REVISED RETURN ON 22.6.2011 DECLARING SAME INCOME AS MADE IN THE ORIGINAL RETURN OF INCOME. THE ASSESSEE WAS ENGAGED IN THE BU SINESS OF TRADING IN FERROUS AND NON FERROUS ME T AL, IRON AND STEEL. 6 . THE ISSUE RAISED IN THE GROUND OF APPEAL NO.2 IS AGAINST THE CONFIRMATION OF ADDITION TOWARDS NON GENUINE PURCHASE S BY LD.CIT(A) TO THE TUNE OF RS. 57148/ - 7 . THE BRIEF FACTS OF THE CAS E ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND ON THE BASIS OF INFORMATION FORWARDED BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS MADE SOME PURCHASES FROM ENTRY PROVIDE R AMOUNTING TO RS.4,57,190/ - W HO WAS HAWALA DEALERS AS PER THE LIST PUBLISHED IN THE WEBSITE OF SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA AND WAS ENGAGED IN THE BUSINESS OF SUPPLYING BOGUS BILLS ONLY WITHOUT DOING ANY ACTUAL BUSINESS. THE AO ALSO ISSUED NOTICES U/S 133(6) OF THE ACT TO THE SUPPLIERS WHICH WERE RETURNED UNSERVED WITH THE REMARKS NOT KNOWN. THEREFORE, THE AO ISSUED NOTICE TO THE ASSESSEE DATED 18.11.2011 TO PROVE GENUINENESS OF THE PURCHASE MADE BY THE ASSESSEE FROM THE SAID PART Y EITHER BY PRODUCING PAR T Y OR BY GIVING 4 ITA NO.2274 AND 2275/MUM/2016 CORRECT ADDRESS AT WHICH THE NOTICES COULD BE SERVED. WHEN THE ASSESSEE FAILED TO RESPOND , T HE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT DISCHARGED THE ONUS CAST UPON IT OF PROVING THE GENUINENESS OF PURCHASE AND THEREFORE TREA T ED THE SAID PURCHASES OF RS.4,57,190/ - AS BOGUS AND NON GENUINE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE . 8 . IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITION OF RS.54,148/ - BY OBSERVING THAT THE GP RATIO SHOWN BY THE APPELLANT DURING THE ASSESSMENT YEAR 2010 - 011 WAS BETTER THAN GP RATE OF PRECEDING YEAR AND THUS RESTRICTED THE DISALLOWANCE TO 12.5% OF THE TOTAL PURCHASES . 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED BEFORE US DURING THE COURSE OF HEARING INCLUDING THE DECISION OF AUTHORITIES BELOW AS ALSO THE DECISIONS RELIED UPON BY THE PARTIES. THE LD.AR VEHEMENTLY SUBMITTED BEFORE US THAT THE LD. CIT(A) ACCEPTED THE PURCH AS ES BUT MADE ADDITION ON ADHOC BASIS AND IN WHIMSICAL MANNER BY JUST MAKING DISALLOWANCE AT THE RA T E OF 12.5% OF TH E TAINTED TOTAL PURCHASE S FROM THE SAID DEALER. THE LD. AR FURTHER STA T ED THAT THE PURCHASE S WERE DULY RECORDED IN THE BOOKS OF ACCOUNT. THE LD. AR AL SO SUBMI TT ED THAT THE SALES WE R E NOT DISPUTED EITHER BY THE AO OR BY THE FAA . THE ASSESSEE IS A SMALL BUSINESSMAN DEALING IN MISCELLANEOUS ITEMS OF NON - FERROUS, COPPER, BRASS AND METAL, AISI SHEETS 5 ITA NO.2274 AND 2275/MUM/2016 BY PRODUCT ETC. THE ASSESSEE CUTS AND PREPARE THE MATER IAL IN CUSTOMIZED MANNER AS PER THE REQUIREMENT S OF THE CUSTOMERS. WE ALSO NOTICED THAT THE MOVEMENT OF THE MATERIAL AND FINAL S A LE WAS ALSO PLACED BEFORE THE AO BY THE ASSESSEE. WE FIND FROM THE SUBMISSIONS BEFORE THE AUTHORITIES THE ASSESSEE PRODUCED BILLS OF PURCHASE S AND SALES, MOVEMENT OF MATERIAL INTO FINAL SALES, PAYMENT THROUGH BANKING CHANNELS AND THUS, THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT BY THE STATUTE. ONCE, THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON IT ,THEN THE BURDEN SHIF TS TO THE REVENUE TO MAKE FURTHER INVESTIGATIONS AND UNPROVE THE CASE OF THE ASSESSEE AND ACTING ON THE INFORMATION OF THE SALES TAX DEPARTMENT, GOM ONLY WITHOUT MAKING OTHER INVESTIGATION AND VERIFICATION CANNOT BE A GROUND FOR HOLDING THAT THE PUR CHASES WERE BOGUS AND NON - GENUINE. UNDER THESE CIRCUMSTANCES, IN ORDER TO CUT LEAKAGE OF REVENUE THE ADDITION @ 2 % OF BOGUS PURCHA S ES I.E RS. 4,57,190/ - IS DIRECTED TO BE MADE BY T HE AO WHICH COMES TO RS. 9,144 / - BY SETTING ASIDE THE ORDER OF CIT(A). THE AO IS DIRECTED ACCORDINGLY. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ITA NO.2275/MUM/2016 11 . WE HAVE ALREADY DECIDED AN IDENTICAL ISSUE IN ITA NO.2274/MUM/2016 FOR THE ASSESSMENT YEAR 2010 - 11 W HEREIN WE HAVE 6 ITA NO.2274 AND 2275/MUM/2016 DIRECTED THE ADDITION TO BE MADE @ 2 % OF THE BOGUS PURCHASES . THE FACTS OF THE PRESENT CASE ARE ALSO IDENTICAL TO THE ONE AS DECIDED BY US IN 2274/MUM/2016(SUPRA) . THEREFORE, OUR FINDINGS IN ITA NO.2274/MUM/2016 WOULD , MUTATIS MUTANDIS, APPLY TO THIS APPEAL ALSO. 12 . RESULTANTLY, 2 % OF RS. 20,78,163 / - WOULD COME TO RS. 41,563 / - IS DISALLOWED. THE AO IS DIRECTED ACCORDINGLY. 13. IN THE RESULT, THE APPEAL S OF THE ASSESSEE STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 20TH JAN, 2017. S D SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 20. 1.2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI