M/S B VIJAY KUMAR & CO, Mumbai V. DY. CIT CENTRAL CIRCLE-3(3), Mumbai

ITA 2313/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3828 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure
• Section: 13

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI C. N. PRASAD , J M & SHRI S . RIFAUR RAHMAN, AM ./ I.T.A. NO . 2313 & 2314/MUM/2019 ( / ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) M/S B. VIJAYKUMAR & CO. THE PLAZA, 11 TH FLOOR, 55 GAMDEVI, MUMBAI - 400 007 / VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3 ), MUMBAI ROOM NO. 1913 , 19 TH FLOOR, AIR INDIA BLDG, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN NO. A A A FB0816F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SHASHI TULSIYAN, AR / RESPONDENTBY : SHRI RAHUL RAMAN, DR / DATE OF HEARING : 20.10 .20 20 / DATE OF PRONOUNCEMENT : 04.11.2020 / O R D E R PER S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) : THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) - 51 , IN SHORT LD. CIT(A), MUMBAI, D ATED 27.02.19 FOR AY 2012 - 13 & 2013 - 14 RESPECTIVELY. 2 I.T.A. NO. 2313 & 2314 /MUM/201 9 M/S B. VIJAYKUMAR & CO 2. SINC E THE ISSUES RAISED IN BOTH THE APPEALS ARE IDENTICAL, THEREFORE, FOR TH E SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDE R. 3 . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF DIAM OND TRADING AND REAL ESTATE. ON INFORMATION FROM SALES TAX DEPARTMENT, A SEARCH AND SEIZURE ACTION WAS TAKEN IN THE OFFICES AND RESIDENTIAL PREMISES OF ASSESSEE AND IT S GROUP CONCERN AND IT WAS ALLEGED THAT ASSESSEE AND ITS GROUP CONCERN ARE INDULGED IN BO GUS PURCHASES. ACCORDINGLY, ASSESSMENT WAS REOPENED AND AO MADE ADDITION @ 9% ON ACCOUNT OF BOGUS PURCHASES BY RELYING ON VARIOUS JUDGMENTS. 4. AGGRIEVED BY THE ABOVE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE, RESTRICTED THE ADDITI ON @ 6% AS AGAINST 9% AS WAS DONE BY THE AO BY RELYING ON THE PREVIOUS DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08. ACCORDINGLY, LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3 I.T.A. NO. 2313 & 2314 /MUM/201 9 M/S B. VIJAYKUMAR & CO 5. NOW BEFORE US, TH E ASSESSEE IS IN APPEAL CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION @ 6% ON ACCOUNT OF ALLEGED BOGUS PURCHASES . 6 . AT THE OUTSET, LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBM ITTED BEFORE US THAT THIS GROUND IS SQUARELY COVERED BY THE ORDER OF COORDINATE BENCH OF HONBLE ITAT IN ITA 2833 /MUM/201 7 FOR AY 2007 - 08 IN ASSESSEES OWN CASE, WHEREIN HONBLE ITAT HAS RESTRICTED THE BOGUS PURCHASE @ 3% . 7 . ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS PASSED BY REVENUE AUTHORITIES, HOWEVER HE CONCEDED THAT THIS GROUND IS COVERED BY THE ORDER OF ITAT. 8 . CONSIDERED THE RIVAL SUBMISSION AND MATERIAL PLACED ON RECORD. W E NOTICE FROM THE RECORDS THAT THE IDENTICAL GROUND RAISED IN THE PRESENT APPEAL HAS ALREADY BEEN DECIDED BY THE COORDINATE B ENCH OF ITAT IN ITA NO. 2833/MUM/2017 FOR AY 2007 - 08 IN ASSESSEES OWN CASE ON MERITS. FOR THE SAKE OF CLARITY, WHICH IS REPRODUCED BELOW: - 5. WE HAVE CONSIDERED THE ISSUE AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US, THE ASSESSEE HAS FILED COPY OF TRIBUNAL ORDER IN ASSESSEES 4 I.T.A. NO. 2313 & 2314 /MUM/201 9 M/S B. VIJAYKUMAR & CO SISTER CONCERN IN THE CASE OF B. VIJAYKUMAR JEWELLERS VS. DCIT IN ITA NO. 2835/MUM/2017 VIDE DATED 22.08.2017, WHEREIN TRIBUNAL HAS ACCEPTED THE RESTRICTION OF 3% NET PROFIT ON THE ALLEGED BOGUS PURCHASE AND FOR THIS TRIBUNAL OBSERVED IN PARA 5 AS UNDER: - 5. I NOTICE THAT THE ASSESSEE COULD NOT CONCLUSIVEL Y PROVE THAT THE DIAMONDS WERE PURCHASED ONLY FROM THE CONCERNS STATED ABOVE, SINCE THE ASSESSEE DID NOT PRODUCE THOSE PARTIES BEFORE THE AO. HENCE ONE OF THE POSSIBLE VIEWS IS THAT THE ASSESSEE COULD HAVE PURCHASED THE DIAMONDS FROM SOME OTHER PERSON AND COULD HAVE OBTAINED ONLY THE BILLS FROM THE ABOVE SAID CONCERNS. THERE IS ALSO A POSSIBILITY; IN THAT CASE, THE ASSESSEE COULD HAVE PURCHASED GOODS AT A PRICE LOWER THAN THE APPARENT CONSIDERATION. THE TASK OF THE TAX OFFICIALS WAS TO DETERMINE THE PROFIT ELEMENT EMBEDDED IN THE SAID PURCHASE. THE AO HAS ESTIMATED THE SAME AT 8% AND THE LD CIT(A) HAS ESTIMATED THE SAME AT 6%. ACCORDING TO LD A.R, THESE DIAMONDS HAVE BEEN EXPORTED AND HENCE THERE WILL NOT BE MUCH VARIATION IN THE PRICE AS THE PRICES OF DIAMO NDS WOULD DEPEND UPON THE QUALITY. THERE IS MERIT IN THIS SUBMISSION ALSO. THE LD A.R, IN THE ALTERNATIVE, SUBMITTED THAT THE PROFIT 5 I.T.A. NO. 2313 & 2314 /MUM/201 9 M/S B. VIJAYKUMAR & CO ELEMENT MAY BE ESTIMATED AT A REASONABLE RATE. I HAVE NOTICED EARLIER THAT THE ASSESSEE HAS DECLARED TRANSACTIONAL MARGIN O F 5.61% ON THE SALES. HENCE, CONSIDERING THESE ASPECTS, I AM OF THE VIEW THAT THE PROFIT ESTIMATED BY LD CIT(A) AT 6% IS ON THE HIGHER SIDE. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO SUSTAIN THE ADDITION TO 3% OF THE VALUE OF ALLEGED BOGUS PURCHASES AND IN MY VIEW, THE SAME WOULD MEET THE ENDS OF JUSTICE. I ORDER ACCORDINGLY. 6 HENCE, RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION IN ASSESSEES SISTER CONCERN (SUPRA), WE DIRECT THE AO TO RESTRICT THE NET PROFIT AT 3% OF THE BOG US PURCHASES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9 . T HEREFORE , RESPECTFULLY FOLLOWING THE ABOVE DECI SION OF COORDINATE BENCH IN ASSESSEES OWN CASE WHICH IS APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE, WE ARE INCLINED TO RESTRICT THE DISALLOWANCE @ 3 %. THEREFORE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE @ 3 % OF THE BOGUS PURCHASES. ACCORDINGLY , WE PARTLY A LLOW ED. 6 I.T.A. NO. 2313 & 2314 /MUM/201 9 M/S B. VIJAYKUMAR & CO 1 0 . IN THE NET RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE STA NDS PARTLY A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04.11.2020 . SD/ - SD/ - (C. N. PRASAD ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 04.11 .2020 SR.PS. DHANANJAY / 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 FILE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI