ITO 32(1)(5), MUMBAI V. HITESH R SHAH, MUMBAI

ITA 2322/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0521 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 06-03-2017
• Assessment Year: misc
• Appeal Filed On: 23-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V IRAG H SHAH; VIDHYA CHANDRA
• Keywords: Bogus purchase; Accommodation entries
• Section: 142(1); 131; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, I MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NOS.2322 & 3148/MUM/2015 ASSESSMENT YEARS: 2005-06 & 2006-07 INCOME TAX OFFICER-32(1)(5), ROOM NO.203, C-11, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400051 / VS. SHRI HITESH R. SHAH, 1804, MAYUR TOWER, CHANDAVARKER ROAD, BORIVALI WEST, MUMBAI-400092 ( / REVENUE) ( #$% & /ASSESSEE) PAN. NO . AMCPS3162M ' & ( / DATE OF HEARING : 18/05/2017 ' & ( / DATE OF ORDER: 26/05/2017 ! / REVENUE BY SHRI SAURABH KUMAR RAI #$% & ! / ASSESSEE BY SHRI VIRAG H. SHAH & VIDHYA CHANDRA ITA NO.2322 & 3148/MUM/2015 HITESH R. SHAH 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THESE TWO APPEALS ARE BY THE REVENUE AGAINST THE IMPUGNED ORDERS DATED 04/02/2015 AND 20/02/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. THE COMMON G ROUND RAISED PERTAINS TO RESTRICTING THE PROFIT MARGIN TO RS.7,57,135/- I.E. AT THE RATE OF 0.1% (ASSESSMENT YEAR 2005- 06), INSTEAD OF RS.75,71,357/- AND RS.5,34,852/- IN STEAD OF RS.53,48,521/- I.E. AT THE RATE OF 1% CALCULATED BY THE ASSESSING OFFICER, WITHOUT APPRECIATING THE FACTS T HAT THE ASSESSEE HIMSELF ACCEPTED THAT HE INDULGED IN PROVI DING ACCOMMODATION ENTRIES AND CHARGING COMMISSION AND F URTHER OVERLOOKING THE STATEMENT TENDERED BY THE PARTIES A S IS EXPLICIT FROM THE INVESTIGATION CARRIED OUT BY THE SALES TAX DEPARTMENT. 2. DURING HEARING, THE LD. DR, SHRI SURABH KUMAR RAI, DEFENDED THE ASSESSMENT ORDER BY CONTENDING TH AT THE ASSESSING OFFICER MADE ENQUIRIES, RECORDED THE STAT EMENT, WHEREIN, IT WAS CATEGORICALLY ACCEPTED THAT HE WAS ENTRY PROVIDER. THE COMMISSION AT THE RATE OF 1%, THEREF ORE, WAS RIGHTLY ADDED BY THE ASSESSING OFFICER, SINCE, THES E ARE CASES OF BOGUS PURCHASES, THE ASSESSMENT ORDER MAY BE RES TORED. 2.1. ON THE OTHER HAND, SHRI VIRAG H. SHAH ALONG W ITH VIDHYA CHANDRA, LD. COUNSEL FOR THE ASSESSEE, DEFEN DED THE IMPUGNED ORDER BY CONTENDING THAT THE LD. COMMISSIO NER OF ITA NO.2322 & 3148/MUM/2015 HITESH R. SHAH 3 INCOME TAX (APPEAL) HAS PASSED A JUDICIOUS ORDER BY PLACING RELIANCE UPON THE DECISION IN GAURAV KUMAR SHARMA V S ACIT (2014) 49 TAXMAN.COM 189 (JAIPUR TRIB.). 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT FOR ASSESSMENT YEAR 2005-06, THE ASSESSEE DECLARED INCOME OF RS.5,66,524/-. THE ASSESSING OFFICER RECE IVED INFORMATION FROM INCOME TAX OFFICER-24(1)(3), MUMBA I, REGARDING BOGUS ENTRIES OF PURCHASE AND SALES BY TH E ASSESSEE (PROPRIETOR M/S JAINAM TRADING COMPANY), THEREFORE, THE LD. ASSESSING OFFICER RECORDED THE R EASONS AS MENTIONED IN THE ASSESSMENT ORDER. THE CASE OF THE ASSESSEE WAS REOPENED U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AND THEREAFTER NOTICES U/S 14 3(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISS UED ON 10/10/2012. THE ASSESSEE ATTENDED THE PROCEEDINGS A ND FILED OBJECTIONS AS HAS BEEN MENTIONED IN THE ASSES SMENT ORDER. SUMMONS U/S 131 OF THE ACT WERE ISSUED UPON THE ASSESSEE AND THE STATEMENT UNDER OATH WAS RECORDED ON 18/12/2009, WHICH HAS BEEN REPRODUCED IN THE ASSESS MENT ORDER. IN REPLY TO QUESTION NO.2, WITH RESPECT TO NATURE OF BUSINESS OF M/S JAINAM TRADING CO., IT WAS REPLIED THAT IT IS DEALING IN TRADING IRON AND STEEL. IN REPLY QUESTIO N NO. 3, IT WAS TENDERED AS UNDER:- M/S JAINAM TRADING COMPANY IS INDULGED IN THE BUSINESS OF TRADING IN IRON AND STEEL. HOWEVER, DUE TO DEEP FINANCIAL CRUNCH, I HAVE INDULGED IN THE BUSIN ESS ITA NO.2322 & 3148/MUM/2015 HITESH R. SHAH 4 OF BILLING TO CERTAIN PORTIONS. HOWEVER, I AM NOT ABLE TO ASCERTAIN THE PORTION OF BILLING AT THIS JUNCTURE. I WILL PROVIDE THE SAME ON 21/12/2009. 2.3. IN REPLY TO QUESTION NO.5, IT WAS EXPLAINED B Y THE ASSESSEE SAVING BANK ACCOUNT NO.79553 WAS NOT PART OF REGULAR BOOKS OF ACCOUNTS AND SOME PORTION OF THE TRANSACTION IN THESE BANK ACCOUNTS ARE MADE FOR ACCOMMODATION PURPOSES. IN PARA-8 OF THE ASSESSMENT ORDER, THERE IS A MENTION OF LETTER DATED 24/12/2009, THE ASSESSEE HAS STATED THAT THE EARLIER STATEMENT WAS FACTUALLY INCORRECT AND DENIED ACCOMMODATION BILLS OR ANY BUSINESS. TH E BENCH DURING HEARING, RAISED QUESTIONS WITH RESPECT TO TH E BUSINESS OF THE ASSESSEE, IT WAS FAIRLY AGREED THAT THE ASSE SSEE IS PARTIALLY INDULGED IN PROVIDING ACCOMMODATION ENTRI ES BUT THE BOOKS OF ACCOUNTS CLAIMED TO BE LOST. THE BENCH ASKED THE ASSESSEE AS TO HOW MUCH COULD BE THE PROFIT MAR GIN. THE LD. COUNSEL FAIRLY AGREED TO INCREASE THE PROFIT MA RGIN AT THE RATE OF 0.25% AS AGAINST 0.1% RESTRICTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AND 1% ADDED BY THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF FAC TS ADMISSION DURING RECORDING THE STATEMENT, THEREAFTER, RETRACT ING THE SAME AND THE MATERIAL FACTS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT IT WILL MEET THE END OF JUSTICE TO INCREA SE THE PROFIT MARGIN AT THE RATE OF 0.25% (AS AGREED BY THE LD. C OUNSEL FROM BOTH SIDES) AS AGAINST 0.1% ADOPTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). THUS, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. THIS ORD ER WAS ITA NO.2322 & 3148/MUM/2015 HITESH R. SHAH 5 ORALLY PRONOUNCED IN THE OPEN COURT AT THE CONCLUSI ON OF HEARING. FINALLY, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26/05/2017. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER MUMBAI; * DATED : 26 /05/2017 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-. / THE APPELLANT (RESPECTIVE ASSESSEE) 2. /0-. / THE RESPONDENT. 3. 1& ( , ) / THE CIT, MUMBAI. 4. 1& / CIT(A)- , MUMBAI, 5. 34 /&# , ,( # 5 , / DR, ITAT, MUMBAI 6. 6$ 7 / GUARD FILE. ! / BY ORDER, 03,& /& //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI