SHREYAS DIAMOND , Mumbai V. ITO WARD 19(3)(3), Mumbai

ITA 2306/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7839 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 12-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHOOPATHI
• Keywords: Bogus purchase; Search and seizure
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VIRTUAL COURT - I SMC , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI RAVISH SOOD, JM ITA NO. 2306 /MUM/201 9 ( ASSESSMENT YEAR : 2007 - 08 ) M/S. SHREYAS DIAMOND 225, SHREEJI CHAMBERS, TATA ROAD NO .2 OPERA HOUSE MUMBAI VS. INCOME TAX OFFICER - WARD 19(3)(3) MUMBAI - 400004 PAN/GIR NO. AACFS9211M (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI DHA RMESH SHAH REVENUE BY SHRI BHOOPATHI DATE OF HEARING 06 / 08 /2020 DATE OF PRONOUNCEMENT 13 / 08 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 2306/MUM/2019 FOR A.Y. 2007 - 08 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUMBAI IN APPEAL NO. CIT(A) - 3/IT - 10242/2017 - 18 DATED 11/02/2019 (LD . CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 25/03/2015 BY THE LD. I.T.O 19 (3)(3), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO. 2306/MUM/2019 SHREYAS DIAMOND 2 2. THE GROUND NOS. 1 & 2 RAISED BY THE ASSESSEE WERE STATED TO BE NOT PRESSED BY THE LD. AR AT THE TIME OF HEARING. THE SAME IS RECKONED AS STATEMENT MADE FROM THE BAR AND ACCORDINGLY, GROUND NOS. 1 & 2 ARE DISMISSED AS NOT PRESSED. 3. THE ONLY SURVIVING ISSUE TO BE DECIDED IN TH IS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF @8% ON THE VALUE OF ALLEGED BOGUS PURCHASES IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 3.1. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF CUT AND POLISHED DIAMONDS. THE LD. AO OBSERVED THAT ASSESSEE HAD MADE CERTAIN PURCHASES FROM M/S. KOTHARI AND CO. TO THE TUNE OF RS.1,03,07,460/ - AND M/S. LITTLE DIAM TOTAL OF RS.49,98,580/ - . THE LD. AO HAD OBSERVED IN THE ASSESSMENT ORDER THAT THESE PARTIES BELONG TO BHANWARLAL JAIN GROUP WHICH WAS FOUND DURING THE COURSE OF SEARCH ACTION IN THE CASE OF BHANWARLAL JAIN GROUP ON 03/10 /2013. THE LD. AR OBSERVED THAT THE INCOME TAX DEPARTMENT HAD CONDUCTED SEARCH AND SEIZURE ACTION IN THE CASE OF GROUP CONCERNS OF BHANWARLAL JAIN AND IT WAS PROVED THAT THESE PARTIES ALONGWITH VARIOUS OTHER PARTIES WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION BILLS ONLY AND THERE WAS NO PHYSICAL DELIVERY OF GOODS MADE BY THEM. ACCORDINGLY, THE LD. AO CONCLUDED THAT EVEN THOUGH THE ASSESSEE HAD MADE PAYMENTS TO THESE PARTIES BY ACCOUNT PAYEE CHEQUES , SINCE TRANSPORTATION BILLS WERE NOT PRODUCED BY THE ASSESSEE FOR DELIVERY OF GOODS , THE PURCHASES MADE FROM THESE PARTIES ARE TO BE TREATED AS BOGUS. THE LD. AO, HOWEVER, OBSERVED THAT ASSESSEE HAD ACTUALLY EXPORTED THE GOODS THAT WERE PURCHASED FROM THE GREY MARKET, HENCE, THE ONLY PROFIT ELEMENT EMBEDDED THEREON , COULD ITA NO. 2306/MUM/2019 SHREYAS DIAMOND 3 BE BROUGHT TO T AX. ACCORDINGLY, THE LD. AO DETERMINED THE PROFIT ELEMENT @8% ON THE VALUE OF ALLEGED BOGUS PURCHASES AND MADE AN ADDITION OF RS.12,24,483/ - IN THE ASSESSMENT, WHICH WAS CONFIRMED BY THE LD. CIT(A). 3.2. WE FIND THAT ASSESSEE HAD DISCLOSED TOTAL GROSS PRO FIT OF 3.6%. SINCE, ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF CUT AND POLISHED DIAMONDS, THERE IS NO QUESTION OF ANY VAT PORTION INCURRED BY THE ASSESSEE ON THE PURCHASES. WE ALSO FIND THAT THE GROSS PROFIT DISCLOSED BY THE ASSESSEE ON THE DISPUTED PURCHASES WAS 2.42%. THESE FACTS WERE NOT CONTROVERTED BY THE REVENUE BEFORE US. IN THESE CIRCUMSTANCES, WE HOLD THAT PROFIT ELEMENT DETERMINED @8% IS ON THE MUCH HIGHER SIDE AND WE DEEM IT FIT TO ESTIMATE THE PROFIT @3% ON THE VALUE OF PURCHASES TREATED A S NON - GENUINE BY PLACING RELIANCE ON THE CO - ORDINATE BENCH DECISION IN THE CASE OF R A LF J EMS PVT. LTD., VS. ITO IN ITA NO.1575 TO 1578/MUM/2018 DATED 30/09/2019. ACCORDINGLY, THE GROUND NO.3 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 4. IN THE RESULT, APPE AL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 08 /2020 SD/ - ( RAVISH SOOD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 08 / 2020 KARUNA , SR.PS ITA NO. 2306/MUM/2019 SHREYAS DIAMOND 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//