Income-Tax Officer, V. Jitendra Ravindra Malpure, Nashik

ITA 2478/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9166 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRANAV SHENDE
• Keywords: Bogus purchase

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.2478/PUN/2016 / ASSESSMENT YEAR : 2010-11 ITO, WARD-1(4), NASHIK . /APPELLANT VS. SHRI JITENDRA RAVINDRA MALPURE, SHOP NO.1, C-1, YASH ARCADE, RAMESHWAR NAGAR, KAMATWADE SHIVAR, NASHIK 422 008 PAN : AFDPM7516F . / RESPONDENT / APPELLANT BY : SHRI AJAY MODI, JCIT / RESPONDENT BY : SHRI SANKET JOSHI & SHRI PRANAV SHENDE / DATE OF HEARING : 13.03.2018 / DATE OF PRONOUNCEMENT: 23.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- 1, NASHIK, DATED 19-08-2016 FOR THE ASSESSMENT YEAR 2010-11. 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.19,26,253/- FOR A.Y.2010-11 ON ACCOUNT OF ALLEGE D BOGUS PURCHASES FROM HAWALA DEALERS/PARTIES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A)-1, NASHIK WAS JUSTIFIED IN DELETING THE PURC HASES TREATED AS BOGUS WHEN THE APPELLANT HAD NOT BEEN ABLE TO PRODUCE THE CERTAIN PARTIES FROM WHOM PURCHASES WERE MADE WHEN LETTERS SENT TO THE P ARTIES WERE RETURNED UNDELIVERED OR THE PARTIES DID NOT RESPOND ? 3. WHETHER THE LEARNED CIT(A)-1, NASHIK ERRED IN AS SUMING THAT THE PURCHASES WERE ONLY INFLATED WHEN IT WAS CLEAR FROM THE CONDUCT OF THE ASSESSEE, THE PARTIES FOUND MISSING AND RESULTS OF THE INVESTIGATION OF ANOTHER GOVT. DEPARTMENT (SALES TAX), THAT THE PURC HASES COULD NOT BE 2 PROVED AS GENUINE AND THEREFORE THE DISALLOWANCE BY THE AO WAS JUSTIFIED? 4. WHETHER THE LEARNED CIT(A)-1, NASHIK ERRED IN PR ESUMING THAT SIMPLY BECAUSE NO ADDITION WAS MADE IN THE CASE OF SALES, IT WAS ACCEPTED AS GENUINE AND FURTHER ASSUMING THAT THEREBY PURCHASES SHOULD BE GENUINE? 5. WHETHER THE LEARNED CIT(A)-1, NASHIK ERRED IN AC CEPTING THE AFFIDAVITS FROM SUPPLIERS WITHOUT ANY EXPLANATION FROM THE ASS ESSEE WHY THE SUPPLIERS COULD NOT APPEAR BEFORE THE AO WHEN THEY WERE CALLED FOR EXAMINATION? 6. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNE D CIT(A)-1, NASHIK MAY PLEASE BE CANCELLED AND THE ORDER OF ASSESSING OFFICER MAY PLEASE BE RESTORED. 7. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDE NCE TO SUBSTANTIATE HIS CASE. 8. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY , AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCA SION DEMANDS. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TRADING IN E LECTRICAL GOODS. ASSESSEE FILED THE RETURN OF INCOME ON 29-09-201 0 DECLARING TOTAL INCOME OF RS.6,76,940/- FOR THE ASSESSMENT YEAR UND ER CONSIDERATION. ON THE BASIS OF INFORMATION RECEIVED FROM T HE INVESTIGATION SECTION OF SALES TAX DEPARTMENT, AO ISSUED NOTICES U/S.148 OF THE ACT TO THE ASSESSEE. AO FOUND THAT ASSE SSEE MADE PURCHASES FROM THE FOLLOWING PARTIES. DETAILS ARE GIVEN BELOW : NAME OF THE PARTY AMOUNT OF ALLEGED BOGUS PURCHASES BHARAT ENTERPRISES 1,17,265/- KUSHAL IMPEX 17,035/- AROMA INDUSTRIES 45,007/- LEO IMPEX 5,53,540/- LAXMI ENTERPRISES 11,27,608/- PICASSO MERCANTILE COMPANY PVT. LTD. 37,461/- ASIAN IMPEX (INDIA) 28,337/ EVENTUALLY, AO CAME TO THE CONCLUSION THAT THE PURCHASE S MADE BY THE ASSESSEE ARE BOGUS ONES AND DETERMINED THE INCOME AT RS.26,03 ,190/-. 3 4. IN THE FIRST APPELLATE PROCEEDINGS, CIT(A) AFTER ELABORAT ELY DISCUSSING VARIOUS CASE LAWS CAME TO THE CONCLUSION THAT THIS IS NOT A CASE OF BOGUS PURCHASES BUT A CASE OF INFLATED PURCHASE S AND AT BEST FROM BOGUS PARTIES. THEREFORE, AO IS DIRECTED TO RESTRICT THE DISALLOWANCE OF PURCHASES TO 25% OF PURCHASES MADE BY T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE OPERATIONAL PARA N O.4.88.3 OF THE ORDER OF CIT(A) IS EXTRACTED HERE AS UNDER : 4.88.3 THUS, IN MY OPINION THE FACTS ON RECORD DEM ONSTRATE THAT THIS IS NOT A CASE OF BOGUS PURCHASE BUT A CASE OF INFLATED PURCHASES AND AT BEST FROM BOGUS PARTIES. THE APPELLANT HAS PURC HASED GOODS OF A.Y. 2010-11 RS.19,26,253/- AND A.Y. 2011-12 - RS.63, 43,426/-. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 25% OF PURCHASES FOR A .Y. 2010-11 RS.4,81,563/- & A.Y. 2011-12 OF RS.15,85,856/-. 5. AGGRIEVED WITH THE ORDER OF CIT(A) THE REVENUE FILED TH E PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED ABOVE. 6. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO STR ONGLY AND SUBMITTED FOR CONFIRMING THE ENTIRE ADDITION OF RS.19,26,253/- INSTEAD OF RESTRICTING TO 25% OF THE SAID PURCHASES. 7. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIE D ON THE ORDER OF CIT(A). HE SUBMITTED THAT IT IS A CASE WHERE ASS ESSEE SUCCESSIVELY DEMONSTRATED THE TRAIL OF GOODS AND PAYMEN T OF CONSIDERATION FOR PURCHASE OF THE GOODS. IN SUCH CASES, THE DISALLO WANCE IS UNCALLED FOR MERELY ON HIS FAILURE TO PRODUCE THE PARTIES BEFORE THE AUTHORITIES. 8. I HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE. THE ONLY ISSUE UNDER CONSIDERATION IS AGAINST RESTRICTION OF ADDITION TO 25% BY THE CIT(A). REVENUE DESIRES CONFIRMING OF 100% OF TH E ADDITION MADE BY THE AO. THIS IS A CASE WHERE INFACT THE ASSESSE E IS NOT IN APPEAL AGAINST THE ORDER OF CIT(A) RESTRICTING THE ADDITION TO 25%OF THE 4 PURCHASES. ON CONSIDERING THE FACT THAT THE ASSESSEE FU RNISHED RELEVANT DOCUMENTS IN RESPECT OF THE TRAIL OF GOODS FROM T HE PLACE OF PURCHASE TO THE ASSESSEES PREMISES BY VIRTUE OF COPIES OF BILLS, LEDGER ACCOUNT EXTRACTS, BANK ACCOUNT EXTRACTS ETC., IN MY VIEW , THE FACT OF TRANSACTION OF PURCHASE OF GOODS AND THE TRAIL OF THEM S TANDS ESTABLISHED. HOWEVER, IN ORDER TO BLOCK ANY LEAKAGE OF GRO SS PROFIT, WHERE THE GOODS MAY HAVE BEEN PURCHASED FROM OPEN MA RKET, I FIND THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND DOES NOT C ALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED BY THE REV ENUE ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 23 RD MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, NASHIK 4. / THE CIT-1, NASHIK 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE