MR.JATIN VASANT MADANI, MUMBAI V. INCOME TAX OFFICER 27(1)(5), Navi Mumbai

ITA 2365/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6136 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: N G RAO
• Keywords: Bogus purchase; Set aside
• Section: 69C; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE S HRI SHAMIM YAHYA ( AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 2365 /MUM/2018 ASSESSMENT Y EAR: 2010 - 11 MR. JATIN VASANT MADANI, PROP HINDUSTAN ALLOYS & TUBE INDUSTRIES, C/302, NILKANTH N AGAR, SAWANTWADI, CHIRAG NAGAR, LBS MARG, GHATKOPAR (W), MUMBAI - 400077 PAN: AGKPM 3623P VS. THE INCOME TAX OFFICER - 27(1)(5 ), 4 TH FLOOR, ROOM NO. 410, VASHI TOWER NO. 6, VASHI RAILWAY STATION, NAVI MUMBAI - 400703 (APPELLANT) (RESPONDENT) ASSES SEE BY : SHRI N.G. RAO (A R) REVENUE BY : SHRI C.S. ANJARIA (D R) DATE OF HEARING: 15 /01 /201 9 DATE OF PRONOUNCEMENT: 1 8/ 01 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 14.02.2018 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 25 (FOR SHORT THE CIT (A)) , MUMBAI, FOR THE ASSESSMENT YEAR 2010 - 11 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , PROPRIETOR OF M/S HINDUSTAN ALLOYS & TUBE INDUSTRIES, ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERROUS METALS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 2,29,206/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT TO THE EFFECT THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION BILLS FROM HAWALA 2 ITA NO. 2365 /MUM/2018 ASSESSMENT YEAR: 2010 - 11 DEALERS DURING THE PREVIOUS YEAR WITHOUT PURCHASING ANY GOODS, THE AO REOPEN THE ASSESSMENT U/S 147 AFTER ISSUING NOTICE U/S 148. IN RESPONSE TO THE NOTICES U/S 143 (2) AND 142 (1) OF THE ACT , T HE AUTH ORIZED REPRESENTATIVE (AR) APPEARED BEFORE THE AO AND FILED THE DETAILS CALLED FOR. 3. IT WAS NOTICED THAT, THE ASSESSEE HAD SHOWN PURCHASES AMOUNTING TO RS. 32,96,578/ - DURING THE PREVIOUS YEAR FROM SIX BOGUS PARTIES MENTIONED IN THE ASSESSMENT ORDER, WH O USED TO ISSUE ACCOMMODATION BILLS WITHOUT MAKING ACTUAL DELIVERY OF GOODS. ACCORDINGLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE TRANSACTION. BUT THE ASSESSEE FAILED TO ESTABLISH THE SAME . THE AS SESSEE , HOWEVER , CONTENDED THAT THERE CANNOT BE ANY SALE WITHOUT PURCHASES THEREFORE THERE IS NO JUSTIFICATION IN DOUBTING THE PURCHASES . T HE AO REJECTING THE CONTENTION OF THE ASSESSEE MADE ADDITION O F 12.5% OF THE TOTAL AMOUNT OF NON GENUINE PURCHASES AN D DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 6,41,070/ - . IN THE FIRST APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITION OF 12.5% MADE BY THE AO. AGAINST THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. T HE ASSESSEE HAS CHALLENGED TH E IMPUGNED ORDER BY RAISING THE FOLLOWING EFFECTIVE GROUNDS: 1) THE LEARNED INCOME TAX OFFICER ERRED IN ADDING TO THE INCOME OF THE ASSESSEE AN AMOUNT OF RS. 4,12,072/ - BEING 12.50% OF THE ALLEGED NON GENUINE PURCHASE OF RS. 32,96,578/ - ON ACCOUNT OF UNEXPLA INED PURCHASE U/S 69C AND CIT APPEALS ERRED IN CONFIRMING THE ADDITION. 2) YOUR PETITIONER HUMBLY SUBMITS THAT ALL DOCUMENTS AND EVIDENCES (WITHIN THE CONTROL OF YOUR PETITIONER) SUCH AS COPIES OF THE PURCHASE BILLS, COPIES OF LEDGER ACCOUNTS OF THE VARIOUS PARTIES IN THE BOOKS OF YOUR PETITIONER, COPIES OF BANK STATEMENTS CONFIRMING THE PAYMENTS MADE, THE QUANTITATIVE STATEMENT IN RESPECT OF ENTIRE PURCHASES AND CORRESPONDING 3 ITA NO. 2365 /MUM/2018 ASSESSMENT YEAR: 2010 - 11 SALES WERE FURNISHED TO THE LEARNED INCOME TAX OFFICER DURING THE SCRUTINY ASSESSME NT. 3) YOUR PETITIONER HUMBLY SUBMITS THAT ON THE BASIS OF INFORMATION RECEIVED (WHICH CANNOT BE CONFIRMED/AUTHENTICATED) FROM THE INVESTIGATION WING OF THE SALES TAX DEPARTMENT THE LEARNED INCOME TAX OFFICER UNFAIRLY AND UNJUSTLY ADDED TO THE INCOME OF YOUR PETITIONER U/S 69C THE AMOUNT OF RS. 4,12,072/ - AND THE CIT APPEALS CONFIRMED THE SAME. 4) YOUR PETITIONER HUMBLY SUBMITS THAT THE CASE LAWS CITED BY THE LEARNED INCOME TAX OFFICER ARE DISTINGUISHABLE ON FACTS. 5) YOUR PETITIONER PRAYS THAT THE DISALLOWANCE OF RS. 4,12,072/ - BE DELETED AND/OR SET ASIDE. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCE SUCH AS COPIES OF PURCHASE BILLS, COPIES OF LEDGER ACCOUNT OF THE PARTIES IN THE BOOKS OF THE AS SESSEE, COPIES OF BANK STATEMENT, QUANTITATIVE STATEMENT IN RESPECT OF ENTIRE PURCHASES AND CORRESPONDING SALES, THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF THE NON GENUINE PURCHASES DETERMINED BY THE AO. THE LD. COU NSEL FURTHER SUBMITTED THAT THE ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE SALES TAX DEPARTMENT WITHOUT CONDUCTING ANY INDEPENDENT ENQUIRY. THEREFORE, THE ADDITION CONFIRMED BY THE LD. CIT (A) IS LIABLE TO BE DELETED. WITHOUT PREJUDICE THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE SHOULD BE GIVEN BENEFIT OF GP DECLARED DURING THE RELEVANT YEAR . 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORIT IES BELOW SUBMITTED THAT SINCE THE ADDITION SUSTAINED BY THE LD. CIT (A) IS BASED ON THE DECISION OF THE VARIOUS BENCHES OF THE ITAT, THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE. 4 ITA NO. 2365 /MUM/2018 ASSESSMENT YEAR: 2010 - 11 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE RELEVAN T MATERIAL ON RECORD. WE NOTICE THAT THE AO HAS REOPENED THE ASSESSMENT U/S 147 ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT OF MAHARASHTRA. IN OUR CONSIDERED VIEW, THE INFORMATION RECEIVED BY THE AO WAS SUFFICIENT FOR FORMING A BELIE F THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. SO FAR AS THE CONTENTION OF THE ASSESSEE THAT THE AO HAS UNFAIRLY MADE ADDITION OF 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES IS CONCERNED, WE NOTICE THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION IN QUESTION EVEN AFTER AVAILING SUFFICIENT OPPORTUNITIES . IN OUR CONSIDERED VIEW, THE EVIDENCE ON RECORD IS NOT SUFFICIENT TO CONCLUDE THAT THE PURCHASES WERE ACTUALLY MADE FROM THE PARTIES CONCERNED. SINCE, THE AO HAS NOT DI SPUTED THE SALES, IT CAN BE INFERRED THAT THE ASSESSEE HAS PURCHASED THE GOODS IN QUESTION IN GREY MARKET. UNDER THESE CIRCUMSTANCES, THE ASSESSEE IS LIABLE TO PAY TAX ON THE PROFIT EMBEDDED IN THE SALE OF THE SAID GOODS. SINCE, THE AO HAS NOT REJECTED THE SALES AND ALSO NOT REJECTED THE GROSS PROFIT SHOWN BY THE ASSESSEE, WE CONSIDER IT FAIR IN THE INTEREST OF JUSTICE THAT THE ASSESSEE SHOULD BE GIVEN THE BENEFIT OF THE GROSS PROFIT SHOWN IN ITS BOOKS OF ACCOUNT IN THE SALES IN QUESTION. WE ACCORDINGLY MOD IFY THE IMPUGNED ORDER AND DIRECT THE AO TO MAKE ADDITION OF 12.5% MINUS THE GP SHOWN BY THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 TH JANUARY , 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 1 8 / 01 / 201 9 ALINDRA, PS 5 ITA NO. 2365 /MUM/2018 ASSESSMENT YEAR: 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. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI