GAYATRI ENTERPRISES, MUMBAI V. ITO 32 (1)(5), MUMBAI

ITA 2573/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1217 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2573 /MUM. /201 9 ( ASSESSMENT YEAR : 20 11 12 ) ITA NO. 2572 /MUM. /2019 ( ASSESSMENT YEAR : 20 10 11 ) GAYATRI ENTERPRISES 59, MOHAMED ALI ROAD LOTUS BUILDING, 2 ND FLOOR MASJID BUNDER MUMBAI 400 003 PAN AAAFG2960P . APPELLANT V/S INCOME TAX OFFICER WORD 32 ( 1 )( 5 ), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : S HRI SANJAY J. SETHI DATE OF HEARING 2 5 .11.2020 DATE OF ORDER 08.12.2020 O R D E R THE AFORESAID APPEAL S HA VE BEEN FILED BY THE ASSESSEE CHALLENGING TWO SEPARATE ORDER S , BOTH DATED 7 TH FEBRUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 46 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 20 10 11 AND 2011 12. 2. WHEN THE SE APPEAL S W ERE CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE SE CASE S . THERE IS NO 2 GAYATRI ENTERPRISES APPLICATION SEEKING ADJOURNMENT EITHER. CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OFF THE APPE AL S EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. THE ONLY COMMON DISPUTE IN BOTH THESE APPEALS RELATE TO DISALLOWANCE MADE ON ACCOUNT OF NON GENUINE PURCHASES. 4. BRIEF FAC TS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN PIPE FITTING S REQUIRED FOR INDUSTRIAL PURPOSE S . FOR THE ASSESSMENT YEAR 2010 11, THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 TH AUGUST 2010, DECLARING TOTAL INCOME OF ` 2,72,34 0. WHEREAS FOR THE ASSESSMENT YEAR 2011 12, THE ASSESSEE FI LED ITS RETURN OF INCOME ON 21 ST SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 2,16,341. THE RETURN S OF INCOME FILED BY THE ASSESSEE WERE INITIALLY PROCESSED UNDER SECTION 143(1) OF THE INCOM E TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THROUGH DGIT (INV.), MUMBAI, INDICATING THAT PURCHASES WORTH ` 66,15,164, IN ASSESSMENT YEAR 2010 11 AND ` 23,34, 841, IN ASSESSMENT YEAR 2011 12 ARE NON GENUINE, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT S UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE AFORESAID 3 GAYATRI ENTERPRISES PURCHASES THROUGH SUPP ORTING EVIDENCES. SINCE , THE EVIDENCES PRODUCE D BY THE ASSESSEE WERE NOT TO THE SATISFACTION OF THE ASSESSING OFFICER, HE HELD THAT THE PURCHASES SHOWN BY THE ASSESSEE ARE NON GENUINE. FURTHER, HE OBSERVED THAT THE GROSS PROFI T SHOWN BY THE ASSESSEE IS ALS O LOW. THEREFORE, RELYING UPON CERTAIN JUDICIAL PRECEDENTS , HE PROCEEDED TO ESTIMATE THE PROFIT ON THE ALLEGED NON GENUINE PURCHASES BY APPLYING THE RATE OF 12.5%. ACCORDINGLY, HE MADE ADDITION S OF ` 8,26,896 AND ` 2,91,855, IN ASSESSMENT YEARS 2010 11 AND 2011 12 RESPECTIVELY. THOUGH , THE ASSESSEE CONTESTED THE AFORESAID ADDITION S BEFORE LEARNED COMMISSIONER (APPEALS), HOWEVER, IT DID NOT SUCCEED. 5. I HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. ON GOING THROUGH THE ORDERS OF THE DEPARTMENTAL AUTHORITIE S, IT IS MANIFEST THAT THERE WAS SPECIFIC INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT TO INDICATE THAT CERTAIN PURCHASES MADE BY THE ASSESSEE WERE NON GE NUINE AS CONCERNED SALLING DEALERS WER E IDENTIFIED AS HAWALA OPERATOR BY THE SALES TAX DEPARTMENT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD CALLED UPON THE ASSESSEE TO FURNISH CERTAIN DOCUMENTARY EVIDENCES , SUCH AS , DELIVERY CHALLAN, TRANSPORTATION BILLS, PURCHASE BIL LS, GOODS RECEIVED NOT ES , ETC. HOWEVER, THE DOCUMENTS CALLED FOR COULD NOT BE FURNISHED BY THE 4 GAYATRI ENTERPRISES ASSESSEE IN ITS ENTIRETY. FURTHER, THE NOTICE S ISSUED UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED SELLING DEALERS RETURNED BACK UNSERVED . THUS, FROM THE AF ORESAID FACTS, IT IS QUITE CLEAR THAT THE ASSESSEE FAILED TO CONCLUSIVELY PROVE THE FACT THAT THE PURCHASES WERE MADE FROM THE DECLARED SOURCE . HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE HAS EFFECTED CORRESPONDING SAL ES, DOUBT WAS ONLY WITH REGARD TO SOURCE OF PURCHASES. FOR THIS REASON ALONE, THE ASSESSING OFFICER H AS ESTIMATED THE PROFIT ELEMENT EMBEDDED I N NON GENUINE PURCHASES @ 12.5% AND LEARNED COMMISSIONER (APPEALS) HAS CONFIRMED THE ADDITIONS. THIS IS SOLELY FOR THE REASON THAT THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM UNVER IFIED SOURCES/ GREY MARKET BY NOT PAYING VAT AND THER EBY SUPPRESSING THE TRUE PROFIT . I DO NOT FIND ANY INFIRMITY IN THE AFORESAID CONCLUSION OF THE DEPARTMENTAL AUTHOR ITIES. THEREFORE, THE DECISION OF THE DEPARTMENTAL AUTHORITIES IN ESTIMATING THE PROFIT @ 12.5% ON THE NON GENUINE PURCHASES AND RESTRICTING THE DISALLOWANCE TO THAT EXTENT IS UPHELD AS IT IS IN CONFORMITY WITH THE VIEW TAKEN BY THE TRIBUNAL IN SIMILAR CAS ES . GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, APPEALS ARE DISMISSED. 5 GAYATRI ENTERPRISES ORDER PRONOUNCED OPEN COURT ON 08.12.2020 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 08.12.2020 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 ASSISTANT REGISTRAR ITAT, MUMBAI