ITO 20 (1)(4), MUMBAI V. DHAVAL AJIT THODA, MUMBAI

ITA 2549/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4445 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER ITA NO. 2549 /MUM/201 9 ( A. Y : 2009 - 10) INCOME TAX OFFICER 20(1)(4) ROOM NO. 112 , 1 ST FLOOR PIRAMAL CHAMBERS, LALBAUG PAREL, MUMBAI - 400012 V. SHRI DHAVAL AJIT THODA PLOT NO. 441, DAYABHUVAN SHRADHANAND ROAD BEHIND MAHILA ASHRAM MATUNGA, MUMBAI 400019 PAN: ABOPT2540H ( A PPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY AMRITA SINGH DATE OF HEARING : 19.10.2020 DATE OF PRONOUNCEMENT : 23 .10.2020 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE R EVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 32 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 26.02.2019 FOR THE A.Y. 2009 - 10 IN RESTRICTING THE DISALLOWANCE TO 12.5 % OF PURCHASES OF . 2,66,448 / - AS AGAINST THE ENTIRE PURCHASES DISALLOWED AS NON - GENUINE/BOGUS BY THE ASSESSING OFFICER. 2 ITA NO. 2549/MUM/2019 (A.Y: 2009 - 10) SHRI DHAVAL AJIT THODA 2. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE AN INDIVIDUAL , ENGAGED IN THE BUSINESS OF DEALING IN CHEMICALS RUNNING A PROPRIETARY FIRM M /S. ESDEE POLYMER INDUSTRIES, FILED RETURN OF INCOME FOR THE A.Y. 2 009 - 10 ON 29.09.2009 DECLARING INCOME OF . 2,16,820 / - AND THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, ASSESSING OFFICER RECEIVED INFORMATION FROM THE DGIT (INV. ,) , MUMBAI ABOUT THE ACCOMMODATION ENTRIES PROVIDED BY VARIOUS DEALERS AND ASSESSEE WAS ALSO ONE OF THE BENEFICIARY FROM THOSE DEALERS. THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BASED ON THE INFORMATION RECEIVED FROM DGIT(INV.) MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES FROM VARIOUS DEALERS WHO ARE SAID TO BE PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING TRANS PORTATION OF ANY GOODS. IN THE RE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINENESS OF THE PURCHASES MADE FROM THE PARTIES I.E. SUMUKH CORPORATION AND INTERNATIONAL TRADE AGENCY. ASSESSEE VIDE LETTER DATED 17.09.2014 FU RNISHED COPY OF AUDITED BALANCE SHEET, COPIES OF PURCHASE INVOICES OF ALL THE PARTIES PROVIDING ITEM WISE DETAILS OF GOODS PURCHASED FROM THEM, CORRESPONDING SALES INVOICES PROVIDING QUANTITATIVE DETAILS, EVIDENCING SALE OF GOODS WHICH WERE PURCHASED FROM THE ALLEGED BOGUS PARTIES, COPIES OF BANK STATEMENTS DULY MARKING PAYMENTS MADE TO ALLEGED BOGUS PARTIES AND SUBMITTED THAT THE TRANSACTIONS ARE GENUINE. 3 ITA NO. 2549/MUM/2019 (A.Y: 2009 - 10) SHRI DHAVAL AJIT THODA ASSESSEE FURTHER SUBMITTED THAT THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUES A S SUCH CONTENDED THAT ALL THE PURCHASES ARE GENUINE. HOWEVER, PARTIES WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER . 3. NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER TREATED THE PURCHASES AS NON - GENUINE AND HE WAS O F THE OPINION THAT ASSESSEE HAD OBTAINED ONLY ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY TRANSPORTATION OF MATERIALS AND THE ASSESSEE MIGHT HAVE MADE PURCHASES IN THE GRAY MARKET. IT IS THE FINDING OF THE ASSESSING OFFICER SINCE THE PURCHASES MADE BY T HE ASSESSEE AND CLAIMED AS EXPENSES IN HIS PROFIT AND LOSS ACCOUNT ARE NOT GENUINE, THE PURCHASES TO THAT EXTENT REMAINED UNVERIFIABLE . ASSESSING O FFICER OBSERVED THAT THE WARD INSPECTOR DEPUTED TO LOCATE THE PARTIES ON THEIR ADDRESSES COULD NOT LOCATE TH E PARTIES ON THEIR ADDRESSES AND THE ASSESSEE DID NOT PRODUCED THE PART IES BEFORE THE ASSESSING OFFICER . THEREFORE, ASSESSING OFFICER TREATED PURCHASES OF . 2,66,448 / - AS NON - GENUINE AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL THE LD.CIT(A) CONSIDERING THE EVIDENCES AND VARIOUS SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO THE EXTENT 12.5% OF THE NON - GENUINE PURCHASES. 4 ITA NO. 2549/MUM/2019 (A.Y: 2009 - 10) SHRI DHAVAL AJIT THODA 4. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT BY THE ASSESSE E. THEREFOR E, I PROCEED TO DISPOSE OFF THIS APPEAL ON HEARING LD. DR ON MERITS. 5. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. 6. HEARD LD. DR , PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDER OF THE LD.CIT(A), I FIND THAT THE LD.CIT(A) CONSIDERED THIS ASPECT OF THE MATTER ELABORATELY WITH REFERENCE TO THE SUBMISSIONS OF THE ASSESSEE AND THE AVERM ENTS IN THE ASSESSMENT ORDER AND FOLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIMIT P . SHETH [356 ITR 451] RESTRICTED THE DISALLOWANCE TO 12.5% OF THE NON - GENUINE PURCHASES OF . 2,66,448 / - , WHILE HOLDING SO, THE LD.CIT(A) OBSERVED AS UNDER: - 4.3 DECISION: I HAVE CONSIDERED THE ASSESSM ENT ORDER OF A.O., SUBMISSION O F THE APPELLANT AND THE DETAILS FILED. I FIND THAT THE APPELLANT HAD PROVIDED THE A.O. WITH DETAILS OF PURCHASES MADE FROM SUMUKH CORPORATION. & INTERNATIONAL TRADE AGENCY ALONGWITH COPIES OF THEIR PURCHASE INVOICES, CORRESPONDING DETAILS OF SALES MADE OUT OF THE GOODS PURCHA SED FROM THEM ALONGWITH COPIES OF SALE INVOICES & COPIES OF BANK STATEMENTS DULY MARKING PAYMENTS MADE TO THEM. THE AO WAS NOT SATISFIED WITH THE SAID DETAILS AND CALLED FOR INFORMATION U/S 133(6) FROM THE SAID TWO PARTIES AND ALSO DEPUTED HER INSPECTOR TO LOCATE THEM ON THEIR ADDRESS. SINCE THE PARTIES WERE NOT AVAILABLE AT THEIR ADDRESS AND SINCE THE APPELLANT DID NOT REPLY TO FURTHER NOTICES, THE AO HAS ADDED THE ENTIRE PURCHASES OF RS.2,66 , 448/ - AS BOGUS. 4.3.1. I FIND THAT THE APPELLANT HAS NOT FILED ANY CONFIRMATIONS FROM THE SAID TWO PARTIES OR PRODUCED THEM BEFORE THE AO FOR VERIFICATION 5 ITA NO. 2549/MUM/2019 (A.Y: 2009 - 10) SHRI DHAVAL AJIT THODA OF THE PURCHASES. HOWEVER, THE AO HAS NOT CONSIDERED THAT THE APPELLANT HAS MADE SALES CORRESPONDING TO THE SAID NON - GENUINE PURCHASES. IN SIMILAR CASES OF BOGUS PURCHASES, BASED ON THE INFORMATION RECEIVED FROM SALES TAX AUTHORITIES THROUGH THE DGIT(INVESTIGATION), IT HAS BEEN HELD BY VARIOUS COURTS THAT THE PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASES MAY BE TAXED, CONSIDER ING THAT THE PURCHASES MAY HAVE BEEN MADE FROM THE GREY MARKET. I FIND THAT IN THE APPELLANT'S OWN CASE FOR THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2010 - 11, ON SIMILAR FACTS AND ON THE BASIS OF SIMILAR DOCUMENTARY EVIDENCES THE SAME A.O. HAS MADE ADDITION OF ONLY 12.5% OF SUCH BOGUS PURCHASES. CONSIDERING THESE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES, @12.5% OF SUCH BOGUS PURCHASES IS TO BE ADDED IN THE PRESENT ASSESSMENT YEAR ALSO, INSTEAD OF THE ENTIRE PURCHASE VALUE. ACCORDINGLY, THE ADDITION MADE BY THE AO IS RESTRICTED TO RS.33,306/ - AND THE BALANCE ADDITION OF RS.2,33,142/ - IS DELETED. THE GROUND IS PARTLY ALLOWED. 7. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD.CIT(A) AND TH E REASONS GIVEN THEREIN, I DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE ADDITION/DISALLOWANCE TO THE EXTENT OF 12.5% OF THE PURCHASES. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 23 . 10 .2020 AS PER RULE 34(4) OF ITAT RULES BY PLACING THE PRONOUNCEMENT LIST IN THE NOTICE BOARD. S D / - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 23 / 10 / 2020 GIRIDHAR , S R. PS 6 ITA NO. 2549/MUM/2019 (A.Y: 2009 - 10) SHRI DHAVAL AJIT THODA COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM