DESIGN DEN, MUMBAI V. INCOME TAX OFFICER 17(1)(3), MUMBAI

ITA 2500/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8144 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-04-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2500 / MUM . /2018 ( ASSESSMENT YEAR : 20 10 11 ) DESIGN DEN 1107/08, ASHOK TOWER B DR. B.A. ROAD, PAREL MUMBAI 400 012 PAN AADFD8937C . APPELLANT V/S INCOME TAX OFFICER WARD 17 ( 1 ) ( 3 ) , MUMBAI . RESPONDENT ASSESSEE BY : NEELKANTH KHANDELWAL REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 06 . 12 .2018 DATE OF ORDER 26.12.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 30.11.2017 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 32, MUMBAI FOR THE ASSESSMENT YEAR 2009 - 10. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 05.03.2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 55, MUMBAI , FOR THE ASSESSMENT YEAR 2010 11. 2 SHRI VIJENDRA H. JAIN 2 . GROUND NO.1 IS NOT PRESSED, HENCE, DISMISSED. 3 . IN GROUND NO.2 ASSESSEE HAS CHALLENGED THE ADDITION SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) ON ACCOUNT OF AL LEGED BOGUS PURCHASES. 4 . BRIEFLY THE FACTS ARE THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF EXPORT AND LOCAL SALES OF MERCHANDISE. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2010 DECLARING TOTAL IN COME OF ` 10,78,073. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX ACT, 1961. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, MAHARASHTRA GOVERNMENT, THE ASSESSING OFFICER FOUND THAT PURCHASES WORTH ` 58,33,931 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM TWO PARTIES ARE NOT GENUINE AS THE CONCERNED PARTIES WERE IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS WITHOUT ENTERING INTO ACTUAL SALE TRANSACTION. ON THE BASIS OF SUCH INFORMATION AVAILABLE ON RECORD, THE ASSESSING OFFICER RE - OPENED THE ASSESSMENT UNDER SECTION 147 OF TH E ACT. DURING THE ASSESSMENT PROCEEDINGS, TO VERIFY THE GENUINENESS OF PURCHASES, THE ASSESSING OFFICER BESIDES CALLING UPON THE ASSESSEE TO FURNISH VARIOUS INFORMATION ALSO CONDUCTED ENQUIRY INDEPENDENTLY BY ISSUING NOTICES UNDER SECTION 133 (6) OF THE AC T TO THE CONCERNED PARTIES. AS OBSERVED BY THE ASSESSING OFFICER, NOT ONLY 3 SHRI VIJENDRA H. JAIN THE ASSESSEE FAILED TO PRODUCE ANY CREDIBLE EVIDENCE TO PROVE THE PURCHASES BUT IT ALSO FAILED IN PRODUCING THE CONCERNED PARTIES. HE ALSO OBSERVED, THE NOTICES ISSUED UNDER SECTION 133 (6) OF THE ACT TO THE CONCERNED PARTIES RETURNED BACK UNSERVED. ULTIMATELY, THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF PURCHASES AND ACCORDINGLY, HE TREATED SUCH PURCHASES AS NON GENUINE AND ESTIMATED PROFIT AT 12. 5% OF SUCH PURCHASES WHICH WORKED OUT TO ` 7,29,241. THE AFORESAID AMOUNT WAS CONSIDERED FOR ADDITION AT THE HANDS OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, THOUGH, LEARNED COMMISSIONER (APPEALS) AGREED WITH THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF PURCHASES MADE, HOWEVER, HE REDUCED THE ADDITI ON TO 8% OF THE NON GENUINE PURCHASES. 5 . LEARNED AUTHORISED REPRESENTATIVE CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY LEARNED COMMISSIONER (APPEALS) BY SUBMITTING THAT, WITHOUT REJECTING THE BOOKS OF ACCOUNTS THE ASSESSING OFFICER COULD NOT HAVE ESTIMATED THE PROFIT ON THE ALLEGED BOGUS PURCHASES. HOWEVER, ULTIMATELY HE SUBMITTED THAT ADDITION MADE AT THE RATE OF 8% OF THE BOGUS PURCHASES IS ON THE HIGHER SIDE, HENCE, SHOULD BE REDUCED TO A REASONABLE AMOUNT. 4 SHRI VIJENDRA H. JAIN 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OB SERVATIONS OF THE COMMISSIONER (APPEALS). 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT, NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE LEARNED COMMISSIONER (APPEALS) THE ASSESSEE HAS FURNISHED ANY CREDIBLE EVIDENCE TO CONCLUSIVELY PROVE THE GENUINENESS PURCHASES MADE OF ` 58,33,931. IN THE AFORESAID CIRCUMSTANCES, WE CANNOT FIND FAULT WITH THE DEPARTMENTAL AUTHORITIES IN BRINGING TO TAX THE PROFIT ELEMENT EMBEDDED IN THE NON GENUINE PURCHASES. HOWEVER, LOOKING AT TH E NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE AND KEEPING IN VIEW THE PECULIAR FACTS OF THE PRESENT CASE, WE ARE OF THE OPINION THAT ESTIMATION OF PROFIT @6% OF THE NON GENUINE PURCHASES WOULD BE REASONABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER T O RESTRICT THE ADDITION TO 6% OF THE NON GENUINE PURCHASES. GROUND RAISED IS PARTLY ALLOWED. 8 . GROUND NOS. 3 AND 4 BEING CONSEQUENTIAL IN NATURE DO NOT REQUIRE ADJUDICATION, HENCE, THESE GROUNDS ARE DISMISSED. 5 SHRI VIJENDRA H. JAIN 9 . IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 26.12.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI