M/S JAYESH METAL CORPORATION, Mumbai V. ITO 19(2)(1), Mumbai

ITA 2401/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0340 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVIT A PUNEET KAUSHIK
• Section: 143(1); 22; 147; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC III BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER I TA NO. 2401 & 2402 /MUM. /2019 ( ASSESSMENT YEAR : 20 10 11 AND 2011 12 ) JAY E SH METAL CORPORATION 110/112, 3 RD KUMBHARWADA LANE KUMBHARWADA, MUMBAI 400 004 PAN AACFJ3130G . APPELLANT V/S INCOME TAX OFFICER WARD 19(2)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI SATISH MODY REVENUE BY : S MT. KAVIT A PUNEET KAUSHIK DATE OF HEARING 1 5 . 0 6 .20 20 DATE OF ORDER 19.06.2020 O R D E R TH E AFORESAID APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS , BOTH DATED 22 ND FEBRUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2010 11 AND 2011 12. 2. THE SOLITARY COMMON DISPUTE IN BOTH THE APPEALS RELATES TO THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 3. BRIEF FACTS , WHICH ARE MORE OR LESS COMMON IN BOTH THE ASSESSMENT YEARS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS ENGAGED IN 2 JAYASH METAL CORPORATION THE BUSINESS OF TRADING IN FERROUS AND NON FERROUS METALS. FOR BOTH THE ASSESSMENT YEARS UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME IN REGULAR COURSE. RETURNS OF INCOME WERE INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ( FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALE S TAX AUTHORITIES THROUGH THE OFFICE O F THE DGIT (INV.), MUMBAI, THAT THE ASS ESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS PROVIDED BY CERTAIN HAWALA OPERA TOR S , THE ASSES SING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 1,39,50,645 AND ` 50,48,424 , CLAIMED TO HAVE BEEN MADE IN ASSESSMENT YEAR S 2010 11 AND 2011 12 RESPECTIVELY . THOUGH, THE ASSESSEE BY FURNISHING CERTAIN DOCUMENTARY EVIDENCES TRIED TO IMPRESS UPON THE ASSESSING OFFICER THAT THE PURCHASES ARE GENUINE, HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED. ULTIMATELY, TH OUGH , THE ASSESSING OFFICER TREATED THE PURCHASES MADE IN BOTH THE ASSESSMENT Y EARS AS NON GENUINE, HOWEVER, IN STEAD OF DISALLOWING THE ENTIRE PURCHASES, HE RESTRICTED THE DISALLOWANCE TO 12.5% OF THE PURCHASES. AGAINST THE DISALLOWANCE SO MADE, THE ASSESS EE PREFERRED APPEALS BEFORE THE FIRST A PPELLATE AUTHORITY. HOWEVER, LEARNED COMMISSIONER (APPEALS) SUSTAINED THE ADDITION S MADE BY THE ASSESSING OFFICER. 3 JAYASH METAL CORPORATION 4. I HAVE HEARD THE LEARNED COUNSEL S APPEARING FOR THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE O NLY SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE IS , THE DISALLOWANCE MADE @ 12.5% IS HIGH AND EXCESS IVE CONSIDERING THE PROFIT ELEMENT INVOLVED IN THIS PARTICULAR NATURE OF BUSINESS WHICH , ACCORDING TO HIM , VARIES BETWEEN 2% AND 5%. THUS, HE SU BMITTED , THE DISALLOWANCE S MADE @ 12.5% HAVE TO BE SUITABLY SCALED DOWN. 5. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE DISALLOWANCE S MADE BY THE ASSESSING OFFICER. 6. HAVING CONSIDERED RIVAL SUBMISSIONS, I MAY OBSERVE THAT THE DISPUTE I N THE PRESENT APPEAL IS ONLY CONFINED TO REASONABLE PERCENTAGE OF PROFIT ELEMENT EMBEDDED IN THE ALLEGED NON GENUINE PURCHASES WHICH CAN BE CONSIDERED FOR DISALLOWANCE. LOOKING AT THE FACT THAT THE ASSESSEE IS A DEALER IN FERROUS AND NON FERROUS METALS AND KEEPING IN VIEW THE DECISIONS OF THE TRIBUNAL IN CASE OF OTHER ASSESSEES INVOLVED IN SIMILAR NATURE OF BUSINESS, I AM OF THE CONSIDERED OPINION THAT DISALLOWANCE @ 5% OF THE ALLEGED NON GENUINE PURCHASES IN BOTH THE ASSESSMENT YEAR S WILL BE REASONABLE AND WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO 5% OF THE ALLEGED NON GENUINE PURCHASES 4 JAYASH METAL CORPORATION IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. GROUNDS ARE PARTLY ALLOWED. 7. IN THE RESULT, BOTH THE APPEALS AR E PARTLY ALLOWED. ORDER PRONOUNCED THROUGH CIRCULATION IN NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (AP PELLATE TRIBUNAL) RULES, 1963 ON 22.06.2020 . S SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 22.06.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE C I T(A); (4) THE C I T, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI