MR. KARIMULLAH KHAN, Mumbai V. ITO 22 (2)(1), Mumbai

ITA 2502/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5841 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2502 / / 2019 (%. .2009-10) ITA NO.2502/MUM/2019 (A.Y.2009-10) MR. KARIMULLAH KHAN, C/O. HABIB METAL WORKS, GALA NO.17, KHURAIYA ESTATE, CST ROAD, KALINA, SANTACRUZ(EAST), MUMBAI 400 098 PAN: AADPK9301P / VS. : / APPELLANT INCOME TAX OFFICER 21(2)(1), PIRAMAL CHAMBERS, LALBAUG, PAREL,MUMBAI 400 012 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY PRATAP SINGH / DATE OF HEARING : 15/10/2020 / DATE OF PRONOUNCEMENT : 11/01/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI ( IN SHORT THE CIT (A)) DATED 30/01/2019 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A MANUFACTURER OF WASHERS. THE ASSESSEE FILED HIS RE TURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29/09/2009 DECLARING TOTAL INCO ME OF RS.3,75,630/-. THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (IN 2 ITA NO. 2502/MUM/2019 (A.Y.2009-10) SHORT THE ACT). ON THE BASIS OF INFORMATION RE CEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA BY DGIT(INVESTIGATION), M UMBAI, THE ASSESSMENT FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF ASSESSEE WAS REOPENED. AS PER THE INFORMATION RECEIVED, THE ASSESSEE HAS OBTAINED BOG US PURCHASE BILLS AMOUNTING TO RS.22,73,181/- FROM VARIOUS (4) HAWALA DEALERS. I N THE COURSE OF REASSESSMENT PROCEEDINGS THE ASSESSEE WAS DIRECTED TO PRODUCE DO CUMENTS TO PROVE GENUINENESS OF THE PURCHASES. THE ASSESSEE FAILED TO FURNISH V ITAL DOCUMENTS SUCH AS DELIVERY CHALLAN, TRANSPORT RECEIPTS, OCTROI RECEIPTS, INWAR D REGISTER, STOCK REGISTER, ETC. TO PROVE TRAIL OF GOODS. FURTHER, THE ASSESSEE FAILED TO PRODUCE THE SUPPLIER OF GOODS. NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT BY TH E ASSESSING OFFICER TO THE SUPPLIERS WERE RECEIVED BACK UNSERVED. THUS, THE ASSESSING OFFICER MADE ADDITION OF ENTIRE BOGUS PURCHASES. AGGRIEVED BY THE ASSESS MENT ORDER DATED 10/03/2015 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) CHALLENGING ADDITION ON MERITS, AS W ELL AS REOPENING OF ASSESSMENT. THE CIT(A) AFTER EXAMINATION OF FACTS OF THE CASE AND C ONSIDERING VARIOUS DECISIONS UPHELD THE VALIDITY OF REOPENING OF ASSESSMENT. AS REGARD S THE ADDITION ON MERITS, THE CIT(A) GAVE PART RELIEF TO THE ASSESSEE BY RESTRICTING TH E ADDITION TO 25% OF THE TOTAL BOGUS PURCHASES. NOW, THE ASSESSEE IS IN SECOND APPEAL B EFORE THE TRIBUNAL ASSAILING THE FINDING OF CIT(A) IN CONFIRMING THE ADDITION @25%. 3. SHRI AJAY PRATAP SINGH, REPRESENTING THE DEPART MENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT NO ASSES SMENT IN THE CASE OF ASSESSEE WAS MADE BY THE ASSESSING OFFICER HENCE, NO OPINIO N WAS FORMED BY THE ASSESSING OFFICER. ON MERITS OF THE ADDITION, THE LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE FAILED TO PROVE GENUINENESS OF TH E PURCHASE OF GOODS AND THE SUPPLIERS, HENCE, THE ASSESSING OFFICER MADE 100% A DDITION OF UNPROVED PURCHASES . THE 3 ITA NO. 2502/MUM/2019 (A.Y.2009-10) CIT(A) RESTRICTED THE ADDITION TO 25%. THE CIT(A) WAS CONSIDERATE IN RESTRICTING THE ADDITION TO 25%. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. THE ASSESSEE IS A MANU FACTURER OF WASHERS. AS PER CONTENTIONS OF THE ASSESSEE THE RAW MATERIAL PURCHA SED IS UTILIZED FOR MANUFACTURING OF WASHERS. THE TURNOVER OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE NOR THE ACCOUNTS OF THE ASSESSEE HAVE BEEN REJECTED. W ITHOUT PURCHASE OF RAW MATERIAL MANUFACTURING PROCESS COULD NOT HAVE BEEN CARRIED O UT. THEREFORE, ENTIRE BOGUS PURCHASES COULD NOT BE ADDED. IT IS ONLY THE PROFI T ELEMENT EMBEDDED IN THE BOGUS PURCHASES THAT HAS TO BE BROUGHT TO TAX. THE CIT(A ) HAS RESTRICTED THE ADDITION TO 25% OF THE BOGUS PURCHASES. A PERUSAL OF THE DOCUME NTS ON RECORD DOES NOT REVEAL THE GP RATE OF THE ASSESSEE EITHER IN THE ASSESSMEN T YEAR UNDER APPEAL OR IN THE PRECEDING ASSESSMENT YEARS. I DEEM IT FIT AND PRO PER TO RESTORE THIS APPEAL BACK TO THE FILE OF ASSESSING OFFICER FOR READJUDICATION OF THE ISSUE IN LINE WITH JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT VS. M OHAMMED HAJI ADAM & CO IN INCOME TAX APPEAL NO.1004 OF 2016 DECIDED ON 11/02/ 2019. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, T HE 11 TH DAY OF JANUARY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, '%/ DATED: 11/01/2021 VM , SR. PS(O/S) 4 ITA NO. 2502/MUM/2019 (A.Y.2009-10) COPY OF THE ORDER FORWARDED TO : 1. ( / THE APPELLANT , 2. )* / THE RESPONDENT. 3. +* ( )/ THE CIT(A)- 4. +* CIT 5. -.)*% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI