ITO 21(3)(5), Mumbai V. SHRI. VINIT PRAVIN SAKARIA, Mumbai

ITA 240/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7652 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 17-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHIL
• Assessee Lawyers: VINIT PRAVIN SAKARIA
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings; Set aside
• Section: 142(1); 133(6); 48; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO S . 240 /MUM/2019 ASSESSMENT YEAR: 2011 - 12 ITO 21(3)(5 ) R OOM NO. 117 , 2 ND F LOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 4000 12. VS. SHRI VINIT PRAVIN SAKARIA MAHALAXMI METAL INDUSTRIES, 5/27, D WING, AMBEDKAR NAGAR CHS, OPP. WORLI POIICE STATION, WORLI, MUMBAI 4000 25. PAN NO. BESPS 6796 E APPELLANT RESPONDENT REVENUE BY : MR. R. BHOOPATHIL, DR ASSESSEE BY : MR. VINIT PRAVIN SAKARIA , THE ASSESSEE DATE OF HEARING : 20 /01/2020 DATE OF PRONOUNCEMENT : 29/01/2020 ORDER PER N.K. PRADHAN, A.M. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 48 [IN SHORT CIT(A)], MUMBAI AND ARISE S OUT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) U/S 144 R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE R EVENUE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING ONLY 12.5% ADDITION OF RS. 17,83,232 / - ON THE BOGUS PURCHASES AS AGAINST THE AO S STAND OF DISALLOWING 10 0% OF THE BOGUS PURCHASES, IGNORING THE FACT THAT SHRI VINIT PRAVIN SAKARIA ITA NOS. 240 /M/2019 2 THE ACTION OF THE ASSESSING OFFICER WAS ONLY BASED ON CREDIBLE INFORMATION RECEIVED FROM THE MAHARASHTRA SALES TAX DEPARTMENT, THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FAILED TO PROVE THE GENUINENESS OF THE PURCHASE TRANSACTIONS. 2. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) ON THE ABOVE GROUNDS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2011 - 12 ON 26.09.2011 DECLARING TOTAL INCOME OF RS. 2,47,041/ - . ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVT. OF MAHARASHTRA THAT THE ASSESSE E HAS OBTAINED BOGUS PURCHASE BILLS FROM 5 ENTRY PROVIDERS AMOUNTING TO RS. 17,83,232/ - , THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 ON 11.02.2015. THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE SAID NOTICE. DURING THE COUR SE OF REASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE CONCERNED 5 PARTIES FOR INFORMATION. HOWEVER, THOSE NOTICES WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT. THEREFORE, THE AO ISSUED A FINAL SHOW CAUSE NOTICE U /S 142(1) R.W.S. 144 OF THE ACT DATED 03.03.2016 TO PRODUCE DOCUMENTS IN SUPPORT OF THE SAID PURCHASES. HOWEVER THE ASSESSEE FAILED TO PRODUCE THOSE DOCUMENTS. THEREFORE, THE AO MADE AN ADDITION OF RS. 17,83,232/ - TO THE INCOME SHOWN BY THE ASSESSEE. 4. A GGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 11.10.2018 , THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF SUCH BOGUS PURCHASES OF RS. 17,83,232/ - . SHRI VINIT PRAVIN SAKARIA ITA NOS. 240 /M/2019 3 5. BEFORE US, THE LEARNED DEPAR TMENTAL REPRESENTATIVE (DR) SUBMITS THAT THE ORDER PASSED BY THE AO BE CONFIRMED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. INDISPUTABLY, THE PROFIT EMBEDDED IN SUCH PURCHASES BE ONLY BROUGHT TO TAX. IN THE INSTANT CASE, THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS. 17,83,232/ - FROM 5 ENTRY PROVIDERS. THE NOTICES ISSUED BY THE AO U/S 133(6) TO THE C ONCERNED ENTRY PROVIDERS WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS LEFT. THE ASSESSEE ALSO FAILED TO FILE BEFORE THE AO THE DOCUMENTS TO SUBSTANTIATE HIS PURCHASES. HOWEVER, IN SUCH A SITUATION ONLY THE PROFIT EMBEDDED IN SUCH P URCHASES BE BROUGHT TO TAX. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO WORK OUT PROFIT @ 12.5% OF SUCH BOGUS PURCHASES OF RS. 17,83,232/ - AND BRING IT TO TAX. WE CONFIRM THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2020. SD/ - SD/ - ( VIKAS AWASTHY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 29/01/2020 RAHUL SHARMA, SR. P.S. SHRI VINIT PRAVIN SAKARIA ITA NOS. 240 /M/2019 4 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