JABARMAL JAIN, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 2505/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6304 (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: 23-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Reopening of assessment; Bogus purchase; Reassessment proceedings
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2505 / / 2019 (%. .2009-10) ITA NO. 2505/MUM/2019 (A.Y.2009-10) . 2506 / / 2019 (%. .2011-12) ITA NO. 2506/MUM/2019 (A.Y.2011-12) SHRI JABARMAL JAIN, 10, SILVER CINEMA BUILDING, KHETWADI BACK ROAD, MUMBAI 400 004 PAN: AACPJ6505F / VS. : / APPELLANT INCOME TAX OFFICER 19(2)(1), 2 ND FLOOR, MATRU MANDIR BUILDING, GRANT ROAD,MUMBAI 400 007 : / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY PRATAP SINGH / DATE OF HEARING : 15/10/2020 / DATE OF PRONOUNCEMENT : 11/01/2021 / ORDER THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI ( IN SHORT THE CIT(A)) FOR THE ASSESSMENT YEARS 2009-10 AND 2011-12, RESPECTIVELY. BOTH THE IMPUGNED ORDERS ARE OF EVEN DATE I.E. 28/03/2019. SINCE, THE FACTS GERM ANE TO BOTH APPEALS ARE SIMILAR AND THE GROUNDS RAISED IN THE APPEALS ARE IDENTI CAL THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THIS C OMMON ORDER. 2 ITA NO. 2505& 2506/MUM/2019 (A.Y.2009-10 &2011-12) 2. FOR THE SAKE OF CONVENIENCE THE FACTS ARE NARRAT ED FROM APPEAL IN ITA NO.2505/MUM/2019 FOR THE ASSESSMENT YEAR 2009-10. THE BRIEF FACTS AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADI NG OF FERROUS AND NON-FERROUS METALS. THE ASSESSEE FILED HIS RETURN OF INCOME FO R THE IMPUGNED ASSESSMENT YEAR ON 29/09/2009 DECLARING TOTAL INCOME OF RS.3,59,530/-. THE RETURN OF THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T,1961 (IN SHORT THE ACT). THEREAFTER, ON THE BASIS OF INFORMATION RECEIVED FR OM 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 INFORMATION RECEIVED, THE ASSESSEE HAS OBTAINED BOGUS PURCHASES BILLS AMOUNTING TO RS.22,54,556/- FROM M/S.SUNIL METAL (INDIA), A DECL ARED HAWALA DEALER. IN THE COURSE OF REASSESSMENT PROCEEDINGS THE ASSESSEE WAS DIRECT ED TO PRODUCE DOCUMENTS TO PROVE GENUINENESS OF THE PURCHASES. THE ASSESSEE FAILED TO FURNISH VITAL DOCUMENTS SUCH AS DELIVERY CHALLAN, TRANSPORT RECEIPTS, OCTRO I RECEIPTS, INWARD REGISTER, STOCK REGISTER, ETC. TO PROVE TRAIL OF GOODS. FURTHER, T HE ASSESSEE FAILED TO PRODUCE THE SUPPLIER OF GOODS. NOTICE ISSUED UNDER SECTION 133 (6) OF THE ACT, BY THE ASSESSING OFFICER WAS RECEIVED BACK UNSERVED. THE ASSESSING OFFICER MADE ADDITION OF RS.2,81,819/- BY ESTIMATING GP@12.5% ON TOTAL NON-G ENUINE PURCHASES. AGGRIEVED BY THE ASSESSMENT ORDER DATED 09/12/2016 PASSED UND ER SECTION 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE CIT(A). IN FIRST APPEAL, THE ASSESSEE CHALLENGED REOPENING OF ASSESSMENT, AS WELL AS THE ADDITION ON MERITS. THE CIT(A) AFTER EXAMINING THE FACTS OF THE CASE AND CONSIDERI NG VARIOUS CASE LAWS UPHELD THE VALIDITY OF REOPENING AND ADDITION MADE IN ASSESSME NT ORDER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL CHALLENGING THE F INDINGS OF CIT(A) ON REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT AND THE ADD ITION IN RESPECT OF BOGUS PURCHASES. 3. SHRI AJAY PRATAP SINGH, REPRESENTING THE DEPAR TMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. THE LD. 3 ITA NO. 2505& 2506/MUM/2019 (A.Y.2009-10 &2011-12) DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT NO ASSES SMENT IN THE CASE OF ASSESSEE WAS MADE BY THE ASSESSING OFFICER HENCE, THERE WAS NO FORMATION OF ANY OPINION BY THE ASSESSING OFFICER. THE CIT(A) IN A VERY REASON ED ORDER HAS REJECTED ASSESSEES CHALLENGE TO REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT . ON MERITS OF THE ADDITION THE LD. DEPARTMENTAL REPRESENTATIVE S UBMITTED THAT THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE PURCHASES OF GOODS AND THE SUPPLIER. THE ASSESSING OFFICER WAS FAIR IN ESTIMATING GP @ 12.5% ON BOGUS PURCHASES. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD, ORDERS OF THE AUTHORITIES BELOW EXAMINED. THE ASSESSEE IS ENGAGED IN TRADING OF FERROUS AND NON- FERROUS METALS. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.22,5 4,556/- FROM DECLARED HAWALA DEALER. UNDISPUTEDLY, THE ASSESSEE COULD NOT PROVE GENUINENESS OF THE PURCHASES FROM THE SAID DEALER. HENCE, THE PROFIT EMBEDDED I N SUCH BOGUS PURCHASES WAS BROUGHT TO TAX BY ASSESSING OFFICER BY ESTIMATING GP AT 12.5%. THE SAME HAS BEEN UPHELD BY THE CIT(A). I AM OF THE CONSIDERED VIEW THAT KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS, ESTIMATION OF GP AT 12.5% IS O N HIGHER SIDE. THE GP RATE IN TRADING OF FERROUS AND NON-FERROUS METALS IS GENERA LLY BETWEEN 5 TO 8%. TAKING INTO CONSIDERATION ENTIRETY OF FACTS ESTIMATION OF GP A T 6.5% ON THE TOTAL BOGUS PURCHASES WOULD BE FAIR AND MEET THE ENDS OF JUSTICE. I HOLD AND DIRECT ACCORDINGLY. THUS, THE GROUND NO.2 RAISED IN THE APPEAL IS PARTLY ALLOWED, IN THE TERMS AFORESAID. 5. IN GROUND NO.1 OF APPEAL, THE ASSESSEE HAS AS SAILED REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT . I HAVE EXAMINED THE FINDINGS OF CIT(A) ON THIS ISSUE. IN THE ABSENCE OF ANY CONTRARY MATERIAL I CONCUR WI TH THE FINDINGS OF FIRST APPELLATE AUTHORITY. CONSEQUENTLY, GROUND NO.1 RAISED IN THE APPEAL IS DISMISSED. 6. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. 4 ITA NO. 2505& 2506/MUM/2019 (A.Y.2009-10 &2011-12) ITA NO.2506/MUM/2019-2011-12: 7. IN ASSESSMENT YEAR 2011-12 THE FACTS ARE SIMILA R. THE ASSESSEE HAS PROCURED BOGUS PURCHASE BILLS AMOUNTING TO RS.1,19,89,417/- FROM VARIOUS HAWALA DEALERS. THE ASSESSING OFFICER MADE ADDITION BY ESTIMATING G P AT 12.5%. IN FIRST APPEAL, THE ASSESSEE CHALLENGED REOPENING OF ASSESSMENT AS WELL AS THE ADDITION ON MERITS. THE CIT(A) DISMISSED THE APPEAL OF ASSESSEE IN TOTO. 8. SINCE, THE FACTS IN THE IMPUGNED ASSESSMENT YEAR AND 2009-10 ARE PARIMATERIA, THE DETAILED FINDINGS GIVEN WHILE ADJU DICATING THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2009-10 WOULD MUTATIS MUTANDIS APPLY TO THE APPEAL IN ASSESSMENT YEAR 2011-12. CONSEQUENTLY, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. 9. TO SUM UP, THE APPEALS OF THE ASSESSEE ARE PARTL Y ALLOWED. 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) 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