Rekha Ganesh Malgi, Nashik V. Income-tax Officer ,

ITA 2594/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9149 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Reassessment proceedings

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.2594/PUN/2016 / ASSESSMENT YEAR : 2009-10 MRS. REKHA GANESH MALGI, PROP. M/S. REKHA ENTERPRISES, 6, GAJANAN SOCIETY, GORAKSHA NAGAR, DINDORI ROAD, NASHIK 422 003 PAN : AJDPM2913J . /APPELLANT VS. ITO, WARD-1(4), NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI AJAY MODI, JCIT / DATE OF HEARING : 13.03.2018 / DATE OF PRONOUNCEMENT: 23 .03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF CIT(A)-1, NASHIK, DATED 22-08-2016 FOR THE ASSESSMENT YEAR 20 09-10. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX(APPEALS)-1, NASH IK, IS NOT JUSTIFIED IN CONFIRMING VALIDITY OF NOTICE ISSUED U/S.148 PARTICULARLY WHEN AO HAS ISSUED THE SAID NOTICE ON THE BASIS OF INFORMAT ION RECEIVED FROM THIRD PARTY AND WITHOUT APPLICATION OF MIND. 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER LAW, THE APPELLANT ORDER PASSED U/S.250 OF THE ACT PLEASE BE QUASHED AS THE COMMISSIONER OF INCOME TAX (APPEALS)-1, NASHIK I S NOT JUSTIFIED IN UPHOLDING THE ORDER PASSED BY THE AO U/S.147 OF THE ACT AS THE AO HAS NOT REJECTED THE OBJECTIONS RAISED AGAINST REAS ONS RECORDED FOR THE NOTICE ISSUED U/S.148 OF THE ACT BY WAY OF SPEAKING ORDER. 2 3. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER LAW, THE DISALLOWANCE MADE BY THE COMMISSIONER OF IN COME TAX (APPEALS)-1, NASHIK OF THE PURCHASES MADE FROM SOME OF THE PARTIES AMOUNTING TO RS.15,20,355/- BY TREATING THE SAME AS FICTITIOUS PARTICULARLY WHEN THE SAID PURCHASES ARE SUPPORTED BY PURCHASE BILLS, TRANSPORTATION RECEIPTS, BANK ACCOUNT STATEMENTS FOR PAYMENTS THROUGH BANKING CHANNEL, QUANTITY ACCOUNT AND MORE PARTICUL ARLY WHEN THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCES OF PURCHASES OF RS.15,20,355/-WITHOUT CONSIDERING THE EVIDENCES. 4. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN THE INTEREST OF THE JUSTICE THE APPEAL MAY BE SET ASIDE TO THE FILE OF CIT(A) FOR RE-ADJUDICATION. 5. THE APPELLANT CRAVES FOR ADDITION TO, DELETION, ALTERATION, MODIFICATION, CHANGE OF THE GROUNDS. 3. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN PLASTIC SHEETS & W ORKS. ASSESSEE FILED THE RETURN OF INCOME ON 22-09-2009 DECLAR ING TOTAL INCOME OF RS.7,92,910/- FOR THE ASSESSMENT YEAR UNDER CO NSIDERATION. ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION SECTION OF SALES TAX DEPARTMENT, AO ISSUED NOTICE U/S.148 OF THE ACT TO THE ASSESSEE. AO FOUND THAT ASSESSEE MADE PURCHASES FROM COUPLE OF SUPPLIERS NAMELY, EXACT METAL PVT. LTD., SHUBHLABH METAL AN D ALLOYS PVT. LTD. AMOUNTING TO RS.15,20,355/-. EVENTUALLY, AO CA ME TO THE CONCLUSION THAT THE PURCHASES MADE BY THE ASSESSEE AR E BOGUS ONES AND THEREFORE ADDED ENTIRE SUM OF THOSE PURCHASES RS .15,20,355/- TO THE TOTAL INCOME OF THE ASSESSEE. THUS, THE AO DETERMINE D THE INCOME AT RS.23,13,270/-. 4. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE RAISED AN OBJECTION BEFORE HIM STATING THAT THE RE-ASSESSMENT PRO CEEDINGS ARE REQUIRED TO BE QUASHED AS IT IS A CASE WHERE THE AO SU MMARILY REJECTED THE OBJECTIONS RAISED AGAINST THE REASONS COMMUNICATED TO THE ASSESSEE. GROUND NO.2 BEFORE THE CIT(A) IS RELEVANT. CIT(A ) DISMISSED THE SAID SUBMISSION OF THE ASSESSEE FINDING NO INFIRMITY IN THE ORDER OF THE AO. FURTHER, ON MERITS AGAINST THE ADDITION OF RS.15,20 ,355/-, 3 ASSESSEE DID NOT APPEAR BEFORE THE AUTHORITIES DESPITE R EPEATED OPPORTUNITIES GRANTED TO HIM. CONTENTS OF PARA NO.5.5 OF T HE ORDER OF CIT(A) ARE RELEVANT AND THE SAME ARE EXTRACTED HERE AS UNDER : 5.5 THE IMPUGNED PURCHASE PARTIES HAVE NEITHER BEE N PRODUCED BEFORE THE ASSESSING OFFICER NOR BEFORE ME. THE APPELLANT INSPITE OF GIVING REPEATED OPPORTUNITY BOTH BY THE ASSESSING OFFICER AND ME DID NOT PRODUCE QUANTITATIVE DETAILS OF THE GOODS PURCHASES , NOR CO-RELATED PURCHASE AND SALES, NOR PRODUCED PROOF FOR MOVEMENT OF GOODS, NOR PRODUCED PROOF OF PAYMENT TO IMPUGNED PURCHASES PAR TIES. IN SUCH CIRCUMSTANCES, IN MY CONSIDERED VIEW THE ADDITION M ADE BY THE ASSESSING OFFICER OF RS.15,20,355/- AS BOGUS PURCHA SES IS IN ORDER AND IS UPHELD. CONSIDERING THE FACT THAT THE ASSESSEE DID NOT SUBMIT TH E RELEVANT DETAILS IN SUPPORT OF THE TRAIL OF GOODS, PROOF OF PAYMENTS ETC., CIT(A) CONFIRMED THE ENTIRE ADDITION OF RS.15,20,355/-. 5. AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSESSEE FILE D THE PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED A BOVE. 6. BEFORE US, ON THE LEGAL ISSUE, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT IS INVALID SINCE THE SAME IS INVOKED WITHOUT HAVING ANY INCRIMINA TING MATERIAL. ON MERITS, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT CONFIRMING THE ENTIRE PURCHASES MADE BY THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION IS UNSUSTAINABLE WH EN THE BOOKS OF ACCOUNTS ARE NOT FORMALLY REJECTED U/S.145(3) OF THE A CT. LD. COUNSEL SUBMITTED THAT WHEN THE ASSESSEE IS IN POSSESSION OF THE EVIDENCES BY WAY OF COPIES OF BILLS, TRANSPORT BILLS AND BANK STATEMENTS , ADDING THE ENTIRE PURCHASES AS BOGUS PURPOSES, IS NOT TENABLE. FUR THER, LD. COUNSEL SUBMITTED THAT IN VIEW OF THE PLETHORA OF DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL, THE ADDITION MAY BE RESTRICTED TO 1 0% OF THE BOGUS PURCHASES. THE LD. AR FOR THE ASSESSEE HAS PLA CED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN BUNCH OF APPEALS 4 WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010-11, OR DER DATED 28.04.2017 AND POINTED OUT THAT AT BEST 10% OF GP RATE MAY BE APPLIED ON ALLEGED BOGUS PURCHASES. 7. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 8. I HEARD BOTH THE SIDES ON THE COUPLE OF ISSUES UNDER CONSIDERATIO N AND PERUSED THE ORDERS OF THE REVENUE AND THE DECISION S RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. REGARDING THE ISSUE RELA TING TO RE- ASSESSMENT AND ITS VALIDITY, I FIND ON SIMILAR CIRCUMSTANCES, T HE COORDINATE BENCH OF THE TRIBUNAL DISMISSED THE ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE BY RELYING ON THE DECISION OF CO ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MR. KHAN AFZALHUSSAIN MOHD. SA IE VS. DCIT ITA NOS. 2708 AND 2709/PUN/2016, DATED 23-03-2 018. FOR THE SAKE OF COMPLETENESS, I PROCEED TO EXTRACT THE RELEVANT PARA OF THE ORDER OF TRIBUNAL AND THE SAME IS EXTRACTED AS UNDER : 9. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAIN ST RE-ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT. WE FIND THAT THE SAID ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN ACIT VS. RAJESH JH AVERI STOCK BROKERS PVT. LTD. (SUPRA) AND REFERRING TO PARAS 4 AND 5 OF THE APPELLATE ORDER, WE UPHOLD THE SAME AND DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE. FOLLOWING THE SAME PARITY OF REASONING, THE GROUNDS OF APPE AL NO.1 AND 2 RAISED BY THE ASSESSEE ON THIS ISSUE ARE DISMISSED. REGARDING THE ISSUE OF CONFIRMING OF ENTIRE ADDITION OF BOGUS PURCHASES BY THE CIT(A), I FIND THAT SIMILAR ISSUE OF BOGUS PURCHASES HAS BEEN DECIDED BY THE TRIBUNAL IN SERIES OF DECISIONS. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MR. KHAN AFZALHUSSAIN MOHD. SAIE (SUPRA) HAS RESTRICTED THE ADDITION TO 10% OF SU CH ALLEGED 5 BOGUS PURCHASES. I THEREFORE FIND IT TO RELEVANT TO EXTR ACT THE FINDINGS GIVEN BY THE TRIBUNAL IN PARA NO.11 OF ORDER OF TRIBUNAL HERE AS UND ER : 11. NOW, COMING TO THE MERITS OF ADDITION. THE IS SUE RAISED IN THE PRESENT APPEAL IS AGAINST BOGUS PURCHASES. WE HAVE ALREADY ADJUDICATED SIMILAR ISSUE IN SERIES OF DECISIONS WIT H LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795 /PUN/2014, RELATING TO ASSESSMENT YEAR 2010-11, ORDER DATED 28.04.2017. THE ASSESSEE IN THE FIRST YEAR I.E. ASSESSMENT YEAR 2009-10 HAS MAI NTAINED QUANTITATIVE DETAILS. IN OTHER WORDS, IT HAS THE EVIDENCE OF PU RCHASING GOODS AND ITS SALES. IN SUCH CIRCUMSTANCES, AT BEST, HIGHER GROS S PROFIT RATE CAN BE APPLIED. FOLLOWING OUR DECISION IN EARLIER ORDERS, WE HOLD THAT GP RATE OF 10% OVER AND ABOVE GP DECLARED BY THE ASSESSEE IN I TS BOOKS OF ACCOUNT, BE APPLIED TO WORK OUT THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. CONSIDERING THE SAME, I DIRECT THE ASSESSING OFFICER TO MA KE ADDITION IN THE HANDS OF ASSESSEE BY ADOPTING GP RATE AT 10% OF BOGUS PURCHASES DECLARED BY THE ASSESSEE. ACCORDINGLY, GROU ND NO. 3 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 23 RD MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-1, NASHIK 4. / THE CIT-1, NASHIK 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE