Sanjay Popatlal Bedmutha, Manmad V. Income-tax Officer ,

ITA 2595/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9158 (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: 2011-2012
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Reasonable cause; Reassessment proceedings

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.2595/PUN/2016 / ASSESSMENT YEAR : 2011-12 SANJAY POPATLAL BEDMUTHA, PROP. B.N. STEEL & HARDWARE, 370, MALEGAON ROAD, HANUMAN NAGAR, MANMAD 423 104 PAN : AEOPB3680B . /APPELLANT VS. ITO, WARD-3, MALEGAON . / 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 11-12. 2. IN CONNECTION WITH DELAY OF 1 DAY IN FILING THE APPEAL, THE ASSESSEE FILED THE PETITION FOR CONDONATION OF THE DELAY. THE DELAY IS ATTRIBUTABLE TO THE COURIER COMPANY FOR DELIVERY OF THE APPEAL MEMO. A FTER CONSIDERING THE REASONABLE CAUSE GIVEN IN THE SAID PETITIO N, I AM OF THE OPINION THAT THE DELAY SHOULD BE CONDONED AND THEREFORE , THE APPEAL IS ADMITTED FOR ADJUDICATION. 2 3. 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)-I, NA SHIK, IS NOT JUSTIFIED IN CONFIRMING VALIDITY OF NOTICE ISSUED U/S.148 PAR TICULARLY WHEN AO HAS ISSUED THE SAID NOTICE ON THE BASIS OF INFORMATION 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 COMMISSIONER OF INCOME TAX, (APPEALS)-I, NA SHIK, IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF PURCHASES OF RS.5,55, 152/- BY TREATING THE SAME AS FICTITIOUS PARTICULARLY WHEN THE SAID PURCH ASES ARE SUPPORTED BY PURCHASE BILLS, TRANSPORTATION RECEIPTS, BANK ACCOU NT STATEMENTS FOR PAYMENTS THROUGH BANKING CHANNEL, QUANTITY ACCOUNT AND MORE PARTICULARLY WHEN THE CIT (A) IS NOT JUSTIFIED IN C ONFIRMING THE DISALLOWANCES OF PURCHASES OF RS.5,55,152/- WITHOUT CONSIDERING THE EVIDENCES. 3. 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. 4.THE APPELLANT CRAVES FOR ADDITION TO, DELETION, A LTERATION, MODIFICATION, CHANGE ANY OF THE GROUNDS. 4. BRIEFLY STATED RELEVANT FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF WHOLESALE TRADING OF STEEL AND HARDWARE MATERIAL. ASSESSEE FILED THE RETURN OF INCOME ON 29-09-2 011 DECLARING TOTAL INCOME OF RS.7,13,550/- FOR THE ASSESSMENT YEAR UN DER CONSIDERATION. ON THE BASIS OF INFORMATION RECEIVED FROM T HE INVESTIGATION SECTION OF SALES TAX DEPARTMENT, AO ISSUED NOTICE U/S.148 OF THE ACT TO THE ASSESSEE. AO FOUND THAT ASSE SSEE MADE PURCHASES FROM COUPLE OF SUPPLIERS NAMELY, ELEVEN IMPEX AN D OMKAR TRADING COMPANY AMOUNTING TO RS.5,55,152/-. EVENTUALLY , THE AO ADDED ENTIRE BOGUS PURCHASES TO THE TOTAL INCOME OF THE ASSESSEE AND DETERMINED THE INCOME AT RS.12,68,702/-. 5. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DISMISSED THE GROUNDS RELATING TO VALIDITY OF REASSESSMENT PROCEEDINGS. CONTENTS OF PARA NO. 4 TO 4.6 ARE RELEVANT. FURTHER, ON MERITS, THE CIT(A) UPHELD THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 3 5.2 THE ASSESSEE DID NOT PRODUCE THE DETAILS SOUGH T BY THE ASSESSING OFFICER NOR PRODUCE THE PARTIES FOR VERIFICATION OF PURCHASES IN FRONT OF THE AO. THE NOTICE ISSUED U/S.133(6) WAS RETURNED BACK TO THE ASSESSING OFFICER STATING THAT UNDELIVERED IN RESPECT OF OMK AR TRADING COMPANY AND NOT KNOWN IN RESPECT OF ELEVEN IMPEX. IN RES PONSE TO FINAL OPPORTUNITY GRANTED BY THE ASSESSING OFFICER TO PRO VE THE GENUINENESS OF IMPUGNED PURCHASES, THE ASSESSEE DID NOT ATTEND NOR FILE ANY WRITTEN SUBMISSION. AS THE ASSESSEE COULD NOT PRODUCE ANY PROOF RELATING TO MOVEMENT OF GOODS SUCH AS OCTROI RECEIPTS, TRANSPOR T RECEIPTS, INWARD AND OUTWARD REGISTER ETC. THE AO HELD THAT THE PURCHAS ES ARE BOGUS AND MADE AN ADDITION OF R.5,55,192/- AS BOGUS PURCHASES . 5.3 IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT T HE ASSESSEE HAS NEITHER COMPLIED TO THE NOTICES ISSUED BY THE ASSES SING OFFICER NOR TO THE FINAL SHOW CAUSE NOTICE ISSUED BY HIM. THE IMPUGNE D PURCHASE PARTIES HAVE NEITHER BEEN PRODUCED BEFORE THE ASSESSING OFF ICER NOR BEFORE ME. THE APPELLANT INSPITE OF GIVING REPEATED OPPORTUNIT Y BOTH THE ASSESSING OFFICER AND ME DID NOT PRODUCE QUANTITATIVE DETAILS OF THE GOODS PURCHASES, NOR CO-RELATED PURCHASE AND SALES, NOR P RODUCED PROOF FOR MOVEMENT OF GOODS, NOR PRODUCED PROOF OF PAYMENT TO IMPUGNED PURCHASES PARTIES. IN SUCH CIRCUMSTANCES, IN MY CO NSIDERED VIEW THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.5,55,1 42/- AS BOGUS PURCHASES IS IN ORDER AND IS UPHELD. 6. AGGRIEVED WITH THE ORDER OF THE CIT(A), THE ASSESSEE FIL ED THE PRESENT APPEAL BEFORE THE TRIBUNAL WITH THE GROUNDS EXTRACTED ABOVE. 7. 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 SUBMITTED A COPY OF IN VOICE OF OMKAR TRADING COMPANY WITH LEDGER ACCOUNTS, EXTRACT OF ASSESSE ES CURRENT ACCOUNT MAINTAINED WITH UNION BANK OF INDIA AND COPY OF ST OCK REGISTER, REJECTING THE ENTIRE PURCHASES AS BOGUS PURPO SES IS NOT TENABLE. THEREFORE, LD. COUNSEL SUBMITTED THAT IN VIEW OF TH E PLETHORA OF DECISIONS OF THE PUNE BENCH OF THE TRIBUNAL, THE ADDITION MAY BE 4 RESTRICTED TO 10% OF THE BOGUS PURCHASES. FURTHER, LD . AR FOR THE ASSESSEE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY T HE PUNE BENCH OF TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDER IN M/S. CHHAB I ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATIN G TO ASSESSMENT YEAR 2010-11, ORDER DATED 28.04.2017 AND PO INTED OUT THAT AT BEST 10% OF GP RATE MAY BE APPLIED ON ALLEGED BOGUS PURCHASES. 8. LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 9. 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. FOR TH E SAKE OF COMPLETENESS, I PROCEED TO EXTRACT THE RELEVANT PARA O F 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 GROUND OF APPEA L NO.1 RAISED BY THE ASSESSEE ON THIS ISSUE IS 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 5 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 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 UNDER : 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. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 10. GROUND NOS. 3 AND 4 ARE PRIMA-FACIE GENERAL IN NATURE AND NO SPECIFIC ARGUMENTS WERE RAISED BY BOTH THE PARTIES ON TH ESE GROUNDS. THEREFORE, THEY ARE DISMISSED AS GENERAL. 11. 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 6 / 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