HEMANT R SANGHAVI, MUMBAI V. ASST CIT 16(2), MUMBAI

ITA 2299/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8405 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 05-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2015
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH BEFORE S/SH RI . D.T. GARASIA, JUDICIAL MEMBER & ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO. 2299 /MUM/201 5 ASSESSMENT YEAR 20 10 1 1 MR. HEMANT R. SANGHAV I D - 502, KUKREJA PALACE VALLABH BAUG LANE RD., GHATKOPAR (E), MUMBAI 400 075 PAN NO. AAGPS 4816 C V. ASSISTANT COMMISSIONER OF INCOME TAX 16(2) 2 ND FLOOR MATRU MANDIR, TARDEO ROAD MUMBAI 400 007 (APPELLANT ) (RESPONDENT) APPELLANT BY SHRI RONAK G DOSHI RESPONDENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING : 2 4 .01.2017 DATE OF PRONOUNCEMENT : 17 . 0 2 .2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 21.01.2015 FOR THE ASSESSMENT YEAR 20 10 11. 2. FOLLOWING GROUNDS ARE RAISED IN THE APPEAL WHICH READ AS UNDER: - I. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN IN L AW, THE LD. CIT(A) ERRED IN MAKING (OR OSTENSIBLY UPHOLDING) AN ADDITION TO THE EXTENT OF 7.5% OF THE ALLEGED SUSPICIOUS PURCHASES. II. THE APPELLANT PRAYS THAT THE SAID ADDITION BE DELETED IN FULL . 3. THE ASSESSEE IS AN INDIVIDUAL DERIVED THE INCOME FROM H OUSE PROPERTY , BUSINESS, CAPITAL GAIN AND OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO OBSERVED THAT ASSESSEE HAS DEBITED PURCHASE OF RS. 30 , 26 , 81 ,545/ - TO PROFIT AND LOSS ACCOUNT. THE INFORMATION WAS RECEIVED FROM THE SALES TAX DEPARTM ENT REGARDING THE SUSPICIOUS PARTY PROVIDING THE ACCOMMODATION ENTRIES WITHOUT DOING ANY ACTUAL BUSINESS. THE PURCHASE MADE UP IS THROUGH TUL SIANI TRADING PRIVATE LIMITED AND NIDDHISH IMPEX PRIVATE LIMITED THAT THE ITA.NO. 2 299 /MUM/201 5 HEMANT R. SANGHVI 2 INFORMATION EVADE TO AO. THE A SSESSING O FFICER ASKED TO EXPLAIN THAT DOCUMENTARY EVIDENCE AS TO WHY THE AMOUNT OF RS.22 , 07 , 696 SHOULD NOT BE ADDED TO THE TOTAL INCOME AS BOGUS PURCHASE AFTER CONSIDERING THE REPLY THE A SSESSING OFFICER HAS TREATED RS.22 ,0 7 , 696 / - AS UNEXPLAINED U/S.69 C OF THE INC OME - TAX ACT . MATTER CARRIED TO CIT(A) AND CIT(A) H AS SUSTAINED THE GROSS PROFIT AT 12.5%. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. 4. THE LD.AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS MADE CERTAIN PURCHASES FR OM THE PARTY WHICH WAS TREATED H AS BOGUS PURCHASES. THE AO AND CIT(A) HAS TREATED THIS PURCHASES AS BOGUS PURCHASES. BUT WHEN ASSESSES HAS PROVIDED BANK STATEMENT REFLECTING THE PAYMENT MADE ACCOUNT PAY CHEQUE, STOCKS STATEMENT REFLECTING INWARD ENTRY OF THE G OODS AND THE ASSESSEE H AS EXPLAINED THE MODUS OPERA N DI OF THE BUSINESS AND WHEREIN ASSESSEE HAS MADE PURCHASE FROM THIRD PARTY AND THE PARTIES MENTIONED IN THE BILL WERE NOT GIVEN THE GOODS BUT SOME OTHER PARTY HAS GIVEN THE GOODS. THE LD.AR SUBMITTED THA T IN SUCH CASE WHEN ASSESSEE SUBMITTED STOCK STATEMENT MAINTAINED BY THE ASSESSEE CONFIRMING THE IN WARD AND MOVEMENT OF GOODS THESE GOODS HAS IN TURN SOLD TO THE THIRD PARTY, THE PROFIT IN RESPECT WHICH HAS BEEN OFFERED TO TAX BY THE ASSESSEE. MERELY ON THE STATEMENT OF SOME PARTIES BEFORE VAT AUTHORITY CANNOT BE TREATED AS BOGUS, WHEN ASSESSEE HAS SUBMITTED ALL THE DOCUMENTARY EVIDENCE INVOICES , BANK STATEMENTS, STOCK REGISTRY, TRANSPORT INVOICES LOADING AND UNLOADING INVOICES . THEREFORE ASSESSEE HAS SA VED ONLY VAT AND VAT ELEMENT IS ONLY 4% OF THE SALES. THEREFORE THE ADDITION MAINTAINED BY THE CIT(A) IS NOT JUSTIFIABLE. 5. WE HAVE HEARD THE RIVAL CONTENTION S OF BOTH THE PARTIES LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT IN TH IS CA SE THE CIT(A) HAS CONSIDERED THAT QUANTITY DETA ILS WERE MAINTAINED AND ASSESSING OFFICER HAS NO DOUBT ABOUT THE GENUINENESS OF THE SALES. THEREFORE ADDITION IN RESPECT OF THE MIX CREDIT BALANCES ON PURCHASE SUBJECT WHEN T HE AO HIMSELF RECORDED THE EVIDENC E THAT ASSESS EE HAS MADE THE PURCHASE FROM SOME OTHER PARTY. THEREFORE WHAT CAN BE ADDED IS THE PROFIT EMBEDDED IN BOGUS PURCHASES WHICH ARE TO BE ADDED. THE CIT(A) HAS CONSIDERED THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE B HOLANATH POLY FAB PVT. L TD. 355 ITR 290 (GUJ) WHEREIN THE GUJARATH HIGH COURT HAS HELD PURCHASES FROM THE BOGUS PARTY AND IF PARTY WAS NOT PRODUCED BEFORE THE AO FOR CONFIRMATION THE ONLY PROFIT ELEMENT CAN BE ADDED, IN THAT CASE THE TRIBUNAL HAS HELD THAT THE PURCHASE WERE MADE FROM THE BOGUS PARTIES, NE VERTHELESS , THE PURCHASE S THEMSELVES WERE NOT BOGUS TO THE ENTIRE QUANTITY OF OPENING STOCK , PURCHASE S AND SALES WERE TALLYING AND HENCE ONLY THE PROFIT ITA.NO. 2 299 /MUM/201 5 HEMANT R. SANGHVI 3 MARGIN EMB EDDED IN SUCH AMOUNT WOULD BE SUBJECT ED TO TAX. THE GUJARAT HIGH COURT HAS CONSIDERED THAT WHE THER PURCHASES THEMSELVES ARE BOGUS OR WHETHER THE PARTIES FROM WHOM SUCH PARTIES WERE MADE BOGUS AS ESSENTIAL QU ESTION OF FACT AND WHEN IT IS EVIDENCE OF RECORD THAT ASSESSEE HAD PRODUCED THE CLOTH AND S ELL THE FINISHED GOODS , THE ENTIRE AMOUNT COVERED UNDER SUCH PURCH A SE WOULD NOT BE SUBJECTED TO TAX. 6. IN THIS CASE THE CIT(A) HAS CATEGORICALLY HEARD THAT QUANTITY DETAILS WERE MAINTAINED AND ASSESSING OFFICER HAS NO DOUBT ABOUT THE GENUINENESS OF THE SALE. THEREFORE THIS FI NDING OF FACT THAT THE ASSESSEE HAS MADE PURCHASE BUT ASSESSEE HAD MADE THE PURCHASE FROM THE OTHER PARTIES. THEREFORE WE ARE OF THE VIEW THAT WHEN THE ASSESSEE SUBMITTED THE LEDGER ACCOUNT OF THE PARTIES, COPIES OF THE BILLS, TRANSPORT B ILLS, LOADING AND UNLOA DING BILLS ALONG WITH THE BANK STATEMENT IN WHICH THE PAYMENT IS MADE TO SUCH PARTY. THEREFORE ASSESSEE DID PURCHASE FROM DIFFERENT SOURCES. THEREFORE CONSIDERING THE SAME WE ARE OF THE VIEW THAT THE CIT(A) HAS JUSTIFIED. WE ALSO FIND FROM THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN CASE OF CIT V. S IMIT SHETH (2013) 38 TAXMANN.COM 385 (GUJ) WHEREIN THE SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE HIGH COURT AND WHEREIN THE TRIBUNAL HAS HELD THAT THE ALLEGED SUPPLIERS OF STEEL TO THE ASSESSEE ASSE SSEE HAVE NOT SUPPLIED THE GOO DS BUT ONLY PROVIDED SALE BILLS AND H ENCE THE PURCHASE S FROM THE SAID PART IES IS HELD TO BE BOGUS. THE CIT(A) HAS HELD THAT ASSESSEE INDEED HAS PURCHASED NOT FROM THE MENTIONED PARTIED FROM OTHER PARTIES FROM GRAY MARKET AND SUSTAIN ADDITION AS PROFIT OF THE ASSESS EE, SIMILAR I N THIS CASE THE FACTS ARE NEARER TO THE FACTS OF THIS CASE. ASSESSING OFFICER HIMSELF HAS STATED THAT ASSESSEE MIGHT HAVE PURCHASED FROM THE UNKNOWN SOURCES WHICH HAS KNOWN TO THE ASSESSEE. THEREFOR E WE ARE OF THE VIEW THAT THE CIT(A) HAS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. IN THE RESULT THE ASSESS EE APPEAL IS DISMISSED. 7. IN THE RESULT THE APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 17 /02/2017 SD/ - SD/ - ( ASHWANI TANEJA ) ( D.T. GARASIA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED : 17 .0 2 .2017 . VSSGB, SR. PS ITA.NO. 2 299 /MUM/201 5 HEMANT R. SANGHVI 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPOND ENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI