DHANERA METAL SUPPLY CORPORATION, MUMBAI V. ACIT-CIRCLE- 19 (1), MUMBAI

ITA 2294/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0115 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2294 / / 2019 (%. .2010-11 ) ITA NO. 2294/MUM/2019 (A.Y.2010-11) M/S.DHANERA METAL SUPPLY CORPORATION, 424, 4 TH FLOOR, B-WING, PLAZA PANCHSHIL, N.S.PATKAR MARG, GAMDEVI, GRANT ROAD, MUMBAI 400 007 PAN: AAAFD3399K / VS. : / APPELLANT THE ASSTT. COMMISSIONER OF INCOME-TAX- 19(1), ROOM NO.203, 2 ND FLOOR, MATRU MANDIR, MUMBAI 400 007 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY PRATAP SINGH / DATE OF HEARING : 12/10/2020 / DATE OF PRONOUNCEMENT : 16/12/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-29, MUMBAI (IN SHORT THE CIT( A)) DATED 20/02/2019 FOR THE ASSESSMENT YEAR 2010-11 . 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECO RDS ARE : THE ASSESSEE - FIRM IS ENGAGED IN TRADING OF FERROUS AND NON-FERR OUS METALS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 17/08/2020 DECLARING TOTAL 2 ITA NO. 2294/MUM/2019 (A.Y.2010-11) INCOME OF RS.23,69,402/-. THE RETURN OF THE ASSE SSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF M AHARASHTRA BY THE DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION), MUMBAI THE ASSESSMENT IN THE CASE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11 WAS REOPENED. AS PER THE INFORMATION RECEIVED, THE ASSESSEE HAD OBTAINED BOGUS PURCHAS E BILLS AMOUNTING TO RS.1,22,60,523/- FROM SHREE SUNDHA STEELS PVT. LTD. , A DECLARED HAWALA DEALER. THE ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS MADE ADDITION OF RS.15,32,565/- I.E. 12.5% OF THE ALLEGED BOGUS PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 19/02/2016 PASSED UNDER SECTION 143(3) R.W.S 147 O F THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING REOPENING, A S WELL AS ADDITION ON MERITS. THE CIT(A) AFTER CONSIDERING THE CONTENTIONS RAISED BY THE ASSESSEE DISMISSED THE APPEAL IN TOTO. HENCE, THE PRESENT APPEAL BY THE ASSESSEE . 3. SHRI AJAY PRATAP SINGH, REPRESENTING THE DEPARTM ENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DEPARTMENTAL REPRESENT ATIVE SUBMITTED THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS FROM DEC LARED ACCOMMODATION ENTRY PROVIDER. THE AUTHORITIES BELOW WERE FAIR AND JUST IFIED IN MAKING ADDITION TO THE EXTENT OF PROFIT EMBEDDED IN THE BOGUS TRANSACTIONS . THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION IN THE CASE OF SIMIT P. SHETH, 356 ITR 461 (GUJ) AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. THE ASSESSEE IN ITS AP PEAL HAS PRIMARILY RAISED TWO ISSUES, I.E. (I) AGAINST REOPENING OF ASSESSMENT; A ND (II) ADHOC ADDITION OF RS.15,32,565/- I.E. 12.5% OF ALLEGED BOGUS PURCHASE S. 5. IN SO FAR AS GROUND NO. 1 OF THE APPEAL IS CONCE RNED, THE CIT(A) HAS DEALT WITH THIS ISSUE IN DETAIL AND HAS REJECTED THE CONTENTIO NS OF THE ASSESSEE AGAINST REOPENING. IN THE ABSENCE OF ANY CONTRARY MATERIAL ON RECORD, I CONCUR WITH THE FINDINGS OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GRO UND NO.1 OF THE APPEAL IS DISMISSED. 3 ITA NO. 2294/MUM/2019 (A.Y.2010-11) 6. THE GROUND NO.2 OF THE APPEAL IS AGAINST ADDIT ION MADE ON ACCOUNT OF BOGUS PURCHASES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED VARIOUS DOCUMENTS VIZ. BANK STATEMENT, STOCK REGISTER AND O RIGINAL INVOICES TO PROVE THE GENUINENESS OF THE PURCHASES. HOWEVER, WE OBSERVE THAT NO DOCUMENTS WERE FURNISHED BY THE ASSESSEE TO SHOW TRAIL OF GOODS. MERE PAYMENTS MADE THROUGH CHEQUE/BANKING CHANNELS ARE NOT SACROSANCT AND HENC E, CANNOT BE TAKEN AS PROOF OF GENUINENESS OF THE TRANSACTION. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS. MOHAMMAD HAJI ADAM & CO, IN INCOME TAX APPEAL N O.1004 OF 2016 DECIDED ON 11/02/2019 HAS HELD THAT WHERE THE ENTITY HAS BEEN FOUND TO HAVE ENGAGED IN OBTAINING BOGUS PURCHASE BILLS, IT IS ONLY THE PROF IT ELEMENT EMBEDDED IN SUCH BOGUS TRANSACTIONS THAT HAS TO BE BROUGHT TO TAX. THE A DDITION BE MADE TO THE EXTENT OF G.P RATE ON PURCHASES AT THE SAME RATE OF OTHER GE NUINE PURCHASES. THE GROUND NO.2 OF THE APPEAL IS RESTORED TO ASSESSING OFFICER FOR RECOMPUTATION OF G.P ON BOGUS PURCHASES IN LINE WITH THE DECISION OF HONBLE JURI SDICTIONAL HIGH COURT (SUPRA). THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE AND SHALL ALLOW THE ASSESSEE TO PRODUCE RELEVANT RECOR DS TO SHOW G.P EARNED DURING THE RELEVANT PERIOD. CONSEQUENTLY, THE GROUND NO.2 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS AFORESAID. 7. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDA Y THE 16 TH DAY OF DECEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 16/12/2020 VM , SR. PS(O/S) 4 ITA NO. 2294/MUM/2019 (A.Y.2010-11) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI