ITO 19(2)(3), MUMBAI V. M. SHAHSIKANT & CO, MUMBAI

ITA 2456/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9688 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.2456/M/2017 M.SHASHIKANT & CO ASSESSMENT YEAR 2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2456/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER 19(2)(3) R.NO.218 MATRU MANDIR MUMBAI 400 007 / VS. M. SHASHIKANT & CO 601, AMAN CHAMBERS 113, M.P MARG OPERA HOUSE MUMBAI 400 004 ./ ./PAN/GIR NO. AAHFM-9676-M ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 07/09/2017 / DATE OF PRONOUNCEMENT : 08 /09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2007- 08 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 30 [CIT(A)], MUMBAI DATED 16/01/2017 QUA RELIEF PROVIDED TO THE ITA NO.2456/M/2017 M.SHASHIKANT & CO ASSESSMENT YEAR 2007-08 2 ASSESSEE ON ACCOUNT OF CERTAIN BOGUS PURCHASES. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE. LEFT WITH NO OPTION, W E DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AF TER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN THE BUSINESS OF DIAMONDS, WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 26/03/2015 AT RS.61,80,350/- AFTER ADDITION OF CERTAIN BOGUS PURCHASES FOR RS.55,33,705/-. THE ORIGINAL RETURN WAS FILED ON 13/09/2007 AT RS.6,46,649/- WHICH WAS PROCESSED U/S 143(1). THE S OLITARY ADDITION OF BOGUS PURCHASES OF RS.55,33,705/- IS THE SUBJECT MATTER OF THIS APP EAL. NOTICE U/S 148 DATED 28/03/2014 WAS ISSUED TO THE A SSESSEE WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1). 2.2 PURSUANT TO SEARCH & SEIZURE ACTION ON RAJENDRA JAIN GROUP & OTHERS ON 03/10/2013 BY DGIT (INV.), IT WAS NOTED THAT THE ASSESSEE MADE IMPUGNED PURCHASES FROM THREE ENTITIES OF THE GROUP AS PER THE FOLLOWING DETAILS:- THE SEARCH / SURVEY ACTIONS ON THE SAID GROUP REVEA LED THAT THE SAID GROUP CONSISTING OF NUMEROUS BUSINESS ENTITIES WAS ENGAGED IN PROVIDING ACCOMMODATION PURCHASES BILLS & ACCOMMODATION LOANS & ADVANCES. CONSEQUENTLY, THE ASSESSEE WAS CALLED UPON TO SUBS TANTIATE THE PURCHASE TRANSACTIONS. THE ASSESSEE DEFENDED TH E PURCHASES MADE NO. NAME AMOUNT (RS.) 1. AVI EXPORTS 47,99,822/- 2. SUN DIAM 4,91,620/- 3. VITRAG JEWELS 2,42,263/- TOTAL 55,33,705/ - ITA NO.2456/M/2017 M.SHASHIKANT & CO ASSESSMENT YEAR 2007-08 3 BY HIM. HOWEVER, NOT CONVINCED, LD. AO DISALLOWED T HE SAME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 16/01/2 017 WHERE THE ASSESSEE CONTENDED THAT IT SUBMITTED LEDGER EXTRACTS, SALE/PURCHASE INVOICES, BANK STATEMENTS DURING ASSESSMENT PROCEEDINGS AND THEREFORE, DISCHARGED THE PRIMARY ONUS OF PROVING T HE SAME. THE ATTENTION WAS DRAWN TO THE HIGH GP RATE REFLECTED BY THE ASSESSEE. THE LD. CIT(A) NOTED THAT LD. AO DID NOT MAKE ANY INDEP ENDENT INQUIRIES AND VERIFICATION BY ISSUANCE OF NOTICES U/S 133(6) / 131. THE LD. CIT(A) FURTHER NOTED THAT THE ASSESSEE MADE SIMILAR PURCHA SES IN AY 2008-09 & 2009-10 WHERE LD. AO HIMSELF ESTIMATED THE ADDITION S AGAINST THE SAME @5%. FINALLY, AFTER APPRECIATING THE OVERALL FACTS, LD. CIT(A) RESTRICTED THE ADDITIONS TO 5% OF BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] PLACED RELIANCE ON THE STAND OF LD. AO AND CONTENDED THAT THE ASSESSEE COU LD NOT PRODUCE ANY OF THE PARTY FOR CONFIRMATION OF TRANSACTIONS. FURT HER, THE SEARCH / SURVEY ACTION ON THE CONCERNED GROUP CLEARLY REVEALED THAT THE TRANSACTIONS WERE MERELY ACCOMMODATION ENTRIES AND THEREFORE, LD . CIT(A) ERRED IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE. 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E ARE OF THE CONSIDERED OPINION THAT THERE COULD BE NO SALE WITH OUT PURCHASE OF MATERIAL KEEPING IN VIEW THE NATURE OF ASSESSEES B USINESS. THE TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISP UTED BY THE ITA NO.2456/M/2017 M.SHASHIKANT & CO ASSESSMENT YEAR 2007-08 4 REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANN ELS. THE ASSESSEE, TO SOME EXTENT, PRODUCED DETAILS OF PURCH ASE AND CORRESPONDING SALES BEFORE LD. AO. AT THE SAME TIME , THE ASSESSEE COULD NOT PRODUCE ANY OF THE SUPPLIER BEFORE LOWER AUTHORITIES AND THE SEARCH / SURVEY ACTION ON THE GROUP CASTED A SERIOU S DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. WE ALSO NOTE THAT THE SAID ESTIMATION IS IN TUNE WITH ESTIMATED ADDITION MADE BY LD. AO IN AY 2008-09 & 2 009-10 AND THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE S TAND OF LD. CIT(A). 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08 . 09.2017 SR.PS:- THIRUMALESH ITA NO.2456/M/2017 M.SHASHIKANT & CO ASSESSMENT YEAR 2007-08 5 / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. '%- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI