DINESH T BHANSALI, Mumbai V. ITO 19(1)(4), Mumbai

ITA 2390/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7911 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Reopening of assessment; Bogus purchase
• Section: 142(1); 234B; 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2390 / / 2019 (%. .2011-12 ) ITA NO. 2390/MUM/2019 (A.Y.2011-12) . 2391 / / 2019/ (%. .2010-11 ) ITA NO. 2391/MUM/2019 (A.Y.2010-11) . 2392 / / 2019/ (%. .2009-10 ) ITA NO. 2392/MUM/2019 (A.Y.2009-10) DINESH T. BHANSALI, 2/27,SHIV SADAN, 154/156, 3 RD KUMBHARWADA, MUMBAI 400004 PAN:AFAPB5917L / VS. : / APPELLANT INCOME TAX OFFICER 19(1)(4), ROOM NO.222,2 ND FLOOR, MATRU MANDIR, TARDEO ROAD,MUMBAI 400 007 : / RESPONDENT ASSESSEE BY : SHRI JITENDRA SINGH REVENUE BY : SHRI AJAY PRATAP SINGH / DATE OF HEARING : 13/10/2020 / DATE OF PRONOUNCEMENT : 08/01/2021 / ORDER THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-54, MUMBAI (IN SHORT THE CIT(A)) FOR THE ASSESSMENT YEAR 2011-12, 2010-11 AND 2009-10, RESPE CTIVELY. IMPUGNED ORDERS FOR ASSESSMENT YEARS 2011-12 AND 2010-11 ARE DATED 22/ 01/2018 AND FOR ASSESSMENT 2 ITA NO. 2390 TO 2392/MUM/2019 YEAR 2009-10 IS DATED 05/01/2018. SINCE, THESE AP PEALS EMANATE FROM SAME SET OF FACTS AND THE ISSUES RAISED IN ALL THE THREE APPEA LS ARE IDENTICAL, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED VIDE THIS COMMON ORDER. 2. THE FACTS ARE NARRATED FROM THE APPEAL OF THE AS SESSEE IN ITA NO.2392/MUM/2019 FOR ASSESSMENT YEAR 2009-10. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A TRADE R IN FERROUS AND NON-FERROUS METALS. INFORMATION WAS RECEIVED FROM SALES TAX DEP ARTMENT, GOVERNMENT OF MAHARASHTRA BY DGIT(INV.), MUMBAI THAT DURING THE P ERIOD RELEVANT TO THE ASSESSMENT YEAR 2009-10 THE ASSESSEE HAS OBTAINED B OGUS PURCHASE BILLS AMOUNTING TO RS.80,82,203/- FROM VARIOUS HAWALA DEALERS. ON THE BASIS OF INFORMATION RECEIVED, ASSESSMENT FOR ASSESSMENT YEAR 2009-10 WAS REOPENED . NOTICES UNDER SECTION 143(2) R.W.S. 142(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) WERE ISSUED TO THE ASSESSEE. DESPITE SERVICE OF NOTICES THE ASSES SEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER EXA MINING THE DOCUMENTS ON RECORD AND INFORMATION AVAILABLE MADE ADDITION OF RS.12,12 ,330/- BY ESTIMATING GP ON NON- GENUINE PURCHASES @15%. AGGRIEVED BY THE ASSESSMEN T ORDER DATED 16/03/2015 PASSED UNDER SECTION 144 R.W.S. 147 OF THE ACT, T HE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING THE ADDITION MADE IN RESPECT OF BOGUS PURCHASES. THE CIT(A) AFTER EXAMINING THE FACTS OF THE CASE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO 12.5% OF THE BOGUS PURCH ASES. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE IN APPEAL BEFORE THE TRIBUNAL HAS ASSAILED REOPENING OF ASSESSMENT AS WELL AS ADDITION CONFIRMED BY THE CIT (A) IN RESPECT OF ALLEGED BOGUS PURCHASES. 4. SHRI JITENDRA SINGH, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE GROUND CHALLENGING THE REOPENING O F ASSESSMENT. IN RESPECT OF ADHOC ADDITIONS ON BOGUS PURCHASES THE LD.AUTHORIZE D REPRESENTATIVE OF THE 3 ITA NO. 2390 TO 2392/MUM/2019 ASSESSEE SUBMITTED THAT ESTIMATION OF GP BY CIT(A) AT 12.5% IS ON THE HIGHER SIDE. THE GP RATIO DECLARED BY THE ASSESSEE FOR THE IMPUG NED ASSESSMENT YEAR IS 5.42%. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FU RTHER SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2008 -09 THE GP WAS 4.9% AND PRIOR TO THAT IN ASSESSMENT YEAR 2007-08 WHEN THE BUSINES S WAS CONDUCTED UNDER PARTNERSHIP FIRM THE GP WAS 3.44%. THE LD.AUTHORIZ ED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ADDITION MAY BE RESTRIC TED ON BOGUS PURCHASES TO THE EXTENT GP RATE DECLARED BY THE ASSESSEE. 5. ON THE OTHER HAND, SHRI AJAY PRATAP SINGH, REPRE SENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED F OR CONFIRMING THE ORDER OF CIT(A). THE LD. DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY REDUCING THE DISALLOWAN CE ON BOGUS PURCHASES FROM 15% TO 12.5%. 6. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS TO THE TUNE OF RS.80, 80,203/- FROM DECLARED HAWALA DEALERS. THE ASSESSING OFFICER ESTIMATED GP ON S UCH BOGUS PURCHASES @15%. IN FIRST APPEAL, THE CIT(A) RESTRICTED THE ADDITION TO 12.5%. A PERUSAL OF SUBMISSIONS MADE BY ASSESSEE BEFORE CIT(A) REVEAL THAT GP RATIO DECLARED BY THE ASSESSEE DURING ASSESSMENT YEAR 2009-10 IS 5.42%. TAKING INTO CONS IDERATION ENTIRETY OF FACTS I AM OF THE CONSIDERED VIEW THAT ADHOC ADDITION MADE BY CIT(A) AT 12.5% IS ON HIGHER SIDE. THE GP IN THE TRADE OF FERROUS AND NON-FERROUS META L IS GENERALLY BETWEEN 5 TO 8%. THE ENDS OF JUSTICE WOULD MEET IF THE ADDITION IS R ESTRICTED TO 7.5%. I HOLD AND DIRECT ACCORDINGLY. THE GROUND NO.3 OF THE APPEAL IS PAR TLY ALLOWED IN THE AFORESAID TERMS. 7. THE GROUNDS NO.1 AND 5 OF THE APPEAL ARE GENERA L IN NATURE AND HENCE, REQUIRE NO ADJUDICATION. 4 ITA NO. 2390 TO 2392/MUM/2019 8. IN GROUND NO.2 OF THE APPEAL, ASSESSEE HAS ASSA ILED REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THE LD.AUTHORIZED RE PRESENTATIVE OF THE ASSESSEE HAS NOT PRESSED GROUND NO.2, ACCORDINGLY THE SAME IS DI SMISSED AS NOT PRESSED. 9. IN GROUND NO.4 OF THE APPEAL ASSESSEE HAS ASSAIL ED LEVY OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. THE CHARGI NG OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT ARE CONSEQUENTIAL AN D MANDATORY, ACCORDINGLY, GROUND NO.4 OF THE APPEAL IS DISMISSED. 10. IN THE RESULT, APPEAL OF ASSESSEE FOR ASSESSME NT YEAR 2009-10 IS PARTLY ALLOWED. ITA NOS.2390 &2391/MUM/2019, A.YS 2011-12 & 2010-1 1 11. THE FACTS IN BOTH THESE APPEALS ARE SIMILAR TO THE FACTS IN ITA NO.2392/MUM/2019 FOR ASSESSMENT YEAR 2009-10, EXCEP T FOR THE AMOUNTS OF BOGUS PURCHASES. THE QUANTUM OF BOGUS PURCHASES FOR IMPU GNED ASSESSMENT YEARS IS AS UNDER: ASSESSMENT YEAR AMOUNT OF BOGUS PURCHASES 2010-11 RS.56,00,057.00 2011-12 RS.32,29,798.00 12. IN BOTH THE IMPUGNED ASSESSMENT YEARS THE ASSES SING OFFICER MADE ADHOC DISALLOWANCE OF 15% ON NON-GENUINE PURCHASES AND TH E CIT(A) RESTRICTED IT TO 12.5%. THE GP DECLARED BY THE ASSESSEE IN ASSESSMENT YEAR 2010-11 IS 5.15% AND IN ASSESSMENT YEAR 2011-12 IS 3.23%. FOR PARITY OF REASONS GIVEN WHILE ADJUDICATING THE APPEAL OF ASSESSEE IN ASSESSMENT YEAR 2009-10, THE GP IS RESTRICTED TO 7.5% IN THE PRESENT ASSESSMENT YEARS AS WELL. AS A RESULT, GRO UND NO.3 RAISED IN THE RESPECTIVE APPEALS IS PARTLY ALLOWED IN THE TERMS AFORESAID. 5 ITA NO. 2390 TO 2392/MUM/2019 13. IN BOTH THE ABOVE APPEALS THE ASSESSEE HAS CHAL LENGED THE REOPENING OF ASSESSMENT. SINCE THIS GROUND HAS NOT BEEN PRESSE D BY THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, THE GROUND NO.2 IN BOTH THE APPEALS IS DISMISSED AS NOT PRESSED. 14. THE GROUND NO.4 IN BOTH THE APPEALS IN RESPECT OF CHARGING OF INTEREST 234A, 234B AND 234C OF THE ACT. THE CHARGING OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT ARE CONSEQUENTIAL AND MANDATORY, C ONSEQUENTLY, GROUND NO.4 OF THE APPEAL IS DISMISSED. 15. IN THE RESULT, APPEALS FOR ASSESSMENT YEAR 2010-11 AND 2011-12ARE PARTLY ALLOWED IN THE TERMS AFORESAID. 16. TO SUM UP, ALL THREE APPEALS BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 8 TH DAY OF JANUARY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 08/01/2021 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI