ITO-27(2)(1), Mumbai V. SHRI. KAMAL RAMESH BHAI DOSHI , Mumbai

ITA 2552/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4081 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: RUCHI RATHOD
• Keywords: Bogus purchase; Unexplained expenditure; Corroborative evidences; Accommodation entries
• Section: 69C; 143(3); 133(6); 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI MAHAVIR SINGH (VICE PRESIDENT) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2552/MUM/2019 ASSESSMENT YEAR: 2009-10 ITO-27(2)(1), ROOM NO. 421, 4 TH FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI-400703. VS. SHRI KAMAL RAMESH BHAI DOSHI, M/S ALPA ENTERPRISES 15, PLATINUM, NEAR BMC OFFICE, JAWAHAR ROAD, OPP. GHATKOPAR, RAILWAY STATION, GHATKOPAR (E), MUMBAI-400077. PAN NO. AABPD5831H APPELLANT RESPONDENT REVENUE BY : MR. R. BHOOPATHI, DR ASSESSEE BY : MS. RUCHI RATHOD, AR DATE OF HEARING : 21/10/2020 DATE OF PRONOUNCEMENT : 02/11/2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-25, NAVI MUMBAI [IN SHORT CIT (A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 THE INCO ME TAX ACT 1961, (THE ACT). SHRI KAMAL RAMESH BHAI DOSHI ITA NO. 2552/MUM/2019 2 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO RESTRICT THE ADDITION TO RS.14, 72,494/- AS AGAINST ADDITION OF RS.1,73,42,35/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF BOGUS PURCHASES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AN D ALSO FAILED TO FURNISH CORROBORATIVE EVIDENCES IN SUPPORT OF THE CLAIM. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN ESTIMATING THE PROFIT FROM HAWALA PURCHASES BY DISA LLOWING ONLY RS . 14,72,494/- BEING 6% OF THE BOGUS PURCHASES AS EVEN THE BASIC ONUS OF PRODUCING DELIVERY CHALLANS, TRANSPORTATION DETAILS ETC. WERE NOT FULL FILED BY THE ASSESSEE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, A TRADER IN IRON & STEEL FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR (AY) 2009-10 ON 17.04.2014 DECLARING TOTAL INCOME OF RS.5,58,430/-. ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARA SHTRA THAT THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS BY ACCOMMODATION ENTRIES AMOUNTING TO RS.2,45,41,572/-, THE ASSESSING OFFICER (AO) RE-OPE NED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. IN RESPONSE TO I T, THE ASSESSEE SUBMITTED THAT THE RETURN FILED ON 17.04.2014 MAY BE TREATED AS RE TURNED FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF RE- ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) THE CONCERNED PARTIES T O VERIFY THE GENUINENESS OF THE PURCHASES. HOWEVER, THOSE NOTICES WERE RETUR NED BACK BY THE POSTAL AUTHORITIES. THEREAFTER, THE AO DEPUTED HIS INSPECT OR OF INCOME TAX TO LOCATE THE PARTIES. THE INSPECTOR, AFTER INQUIRY REPORTED THAT 13 PARTIES WERE NOT TRACEABLE. IT IS RECORDED BY THE AO THAT THE ASSESS EE FAILED TO PRODUCE THE PARTIES, BROKERS OR TRANSPORTERS, IN SPITE OF SPECI FIC OPPORTUNITY PROVIDED TO SHRI KAMAL RAMESH BHAI DOSHI ITA NO. 2552/MUM/2019 3 HIM. AS PER THE AO, THE ASSESSEE FAILED TO FILE BEF ORE HIM THE EVIDENCE OF PURCHASES LIKE DELIVERY CHALLANS, TRANSPORT BILLS E TC. THE ASSESSEE SUBMITTED BEFORE THE AO, AS RECORDED IN THE ASSESSMENT ORDER AT PAGE 4, RECONCILIATION OF SALES CORRESPONDING TO PURCHASE STATEMENT ALONG WIT H COPY OF BILLS OF THE SAID PARTIES. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. HOWEVER, THE AO WAS NOT C ONVINCED WITH THE ABOVE REPLY OF THE ASSESSEE AND CONSIDERING THE WORKING O F PEAK OF THE CUMULATIVE OUTSTANDING OF THE SAID PARTIES, MADE AN ADDITION O F RS.17,342,325/- AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 04.02.201 9, THE LD. CIT(A), BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR AY 2010-11 RESTRICTED THE DISALLOWANCE TO 6% OF THE SAID BOGUS PURCHASES. THEREBY THE LD. CIT(A) DIRECTED THE AO TO RESTRICT THE ADDITION TO RS.14,72,494/-. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) SUPPORTS THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR T HE ASSESSEE RELIES ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, AS MENTIONED EARLIE R THE ASSESSEE HAD FILED BEFORE THE AO RECONCILIATION OF SALES CORRESPONDING TO PURCHASE STATEMENT ALONG WITH COPIES OF BILLS OF THE SAID PARTIES. SIM ILAR ISSUE AROSE BEFORE THE ITAT H BENCH, MUMBAI IN ASSESSEES OWN CASE FOR T HE AY 2010-11. THE TRIBUNAL VIDE ORDER DATED 13.04.2018 HELD THAT : SHRI KAMAL RAMESH BHAI DOSHI ITA NO. 2552/MUM/2019 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS UNDOUBTEDLY A BENEFICIARY OF BOGUS PURCHASES AS HAS BEEN OBSERVED BY AO AND LD. CIT(A). THE UNDISPU TED FACTS ARE THAT ASSESSEE PURCHASED THE GOODS FROM THESE SEVEN HAWALA PARTIES , MADE THE PAYMENTS BY CHEQUES AND RECORDED THE PURCHASES IN THE BOOKS OF ACCOUNTS AS WELL AS THE CORRESPONDING SALES. AS A MATTER OF FACT, THE HAWAL A OPERATORS ARE VERY COMMON IN MARKET AND THERE IS EVERY LIKELIHOOD THAT ASSESSEE HAS RESORTED TO THE TAKING OF HAWALA ENTRIES FROM THE SAID PARTIES. BUT WHEN THE SALES OF THE ASSESSEE ARE NOT DISPUTED, THE ANOTHER THEORY WHICH COMES INTO PLAY IS THAT THE ASSESSEE PURCHASED GOODS FROM THE GREY MARKET AND THUS IN ORDER TO MAK E UP THE NON DELIVERY OF GOODS IN THE HAWALA PURCHASES, IN THE WHOLE PROCESS THE A SSESSEE IS LIKELY TO MAKE A SAVING BY WAY OF NON PAYMENT OF VAT AND OTHER INCIDENTAL L EVIES. THEREFORE, UNDER THESE CIRCUMSTANCES, THE AO HAS TO BRING TO TAX ON A REAS ONABLE BASIS CONSIDERING THE GROSS PROFIT RATES AND OTHER ATTENDANT FACTORS IN T HE PAST. IN THE PRESENT CASE, THE GP OF THE ASSESSEE RANGED BETWEEN 2.85% TO 1.89% FROM 2007-08 TO 2010-11. SO UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE DI SALLOWANCE AS SUSTAINED BY LD. CIT(A) IS EXCESSIVE AND NEEDS TO BE REDUCED FURTHER . CONSIDERING THE GROSS PROFIT RATE OF PAST THREE YEARS, WE ARE OF THE OPINION THA T RESTRICTION OF ADDITION TO 6% OF THE TOTAL PURCHASES IN ORDER TO BRING THE SAID PURC HASES TO TAX WHICH WOULD SUFFICE TO COVER ANY POSSIBLE LEAKAGE OF REVENUE. THE AO IS DI RECTED ACCORDINGLY. 6.1 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDE R OF THE CO-ORDINATE BENCH AND UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34 (4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (MAHAVIR SINGH) (N.K. PRADHAN) VICE PRESIDENT ACCOUNTANT MEMBER SHRI KAMAL RAMESH BHAI DOSHI ITA NO. 2552/MUM/2019 5 MUMBAI; DATED: 02/11/2020 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI