NAVIN JAIDHAND DOSHI, MUMBAI V. DCIT-23(3), MUMBAI

ITA 2606/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9445 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: VIMAL PUNMIYA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 142(1); 148

Judgement Text

ITA NOS.2604-06/MUM/2016 NAVIN JAICHAND DOSHI 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.2606/MUM/2016 ( / ASSESSMENT YEAR : 2008-09) & ./ I.T.A. NO.2605/MUM/2016 ( / ASSESSMENT YEAR : 2010-11) & ./ I.T.A. NO.2604/MUM/2016 ( / ASSESSMENT YEAR : 2011-12) NAVIN JAI C HAND DOSHI D-705, KALP NAGRI B.R. ROAD, MULUND WEST MUMBAI-400 080. / VS. D CIT - 23(3), C-10, PRATYAKSHKAR BHAVAN BKC, BANDRA EAST MUMBAI-400 051. +, ./ ./PAN/GIR NO. ADDPD-0288-P ( ,. /APPELLANT ) : ( /0,. / RESPONDENT ) ASSESSEE BY : SHRI VIMAL PUNMIYA -LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK LD. DR / DATE OF HEARING : 25/11/2019 / DATE OF PRONOUNCEMENT : 07/01/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1.1 AFORESAID APPEALS ARE RECALLED MATTER SINCE THE APPEALS WERE INITIALLY DISPOSED-OFF EX-PARTE QUA THE ASSESSEE VIDE COMMON ORDER DATED 26/07/2018. HOWEVER, UPON ASSESSEES MISCELLA NEOUS ITA NOS.2604-06/MUM/2016 NAVIN JAICHAND DOSHI 2 APPLICATIONS, THE SAID ORDER HAS BEEN RECALLED VIDE MA NOS.343- 345/MUM/2019 COMMON ORDER DATED 20/08/2019. ACCORDI NGLY, THE APPEALS HAVE COME UP FOR FRESH HEARING BEFORE THIS BENCH. 1.2 AS EVIDENT FROM GROUNDS OF APPEAL RAISED BEFORE US, THE GRIEVANCE OF THE ASSESSEE IN ALL THE THREE YEARS IS COMMON I. E. ESTIMATED ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES. ALTHOUGH THE ASSESSEE HAS ALSO CHALLENGED THE REASSESSMENT PROCEEDINGS ON LEGAL GR OUNDS, HOWEVER, THESE GROUNDS HAVE NOT BEEN PRESSED BEFORE US BY LE ARNED AUTHORIZED REPRESENTATIVE FOR ASSESSEE AND ACCORDINGLY, THE SA ME STANDS DISMISSED. 1.3 WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED BY BOTH THE REPRESENTATIVES AND PERUSED RELEVANT MATERIAL IN RE CORD INCLUDING JUDICIAL PRONOUNCEMENTS CITED BEFORE US IN SUPPORT OF THE AR GUMENTS. 2.1 FACTS FOR AY 2008-09 ARE THAT ASSESSEE BEING RE SIDENT INDIVIDUAL STATED TO BE ENGAGED AS WHOLESALE DEALER OF IRON AN D STEEL UNDER PROPRIETORSHIP CONCERN NAMELY M/S CITIZEN STEEL COR PORATION WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S 143(3) R. W.S. 147 ON 27/03/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.221.20 LACS AFTER SOLE ADDITION OF ALLEGED BOGUS PURCHASES OF RS.218.12 LACS AS AGAINST RETURNED INCOME OF RS.3.0 7 LACS FILED BY THE ASSESSEE ON 24/09/2008 WHICH WAS PROCESSED U/S 143( 1). 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INVESTIGATION), MUMBAI, THE ASSESSEE WAS SUBJECTED TO SURVEY ACTION RESULTING INTO IMPOUNDING OF SOME INCRIMINATING DOCUMENTS INDICATI NG PURCHASES BY ASSESSEE FROM BOGUS PARTIES. ACCORDINGLY, THE CASE WAS REOPENED VIDE ITA NOS.2604-06/MUM/2016 NAVIN JAICHAND DOSHI 3 ISSUANCE OF NOTICE U/S 148 ON 12/03/2013 WHICH WAS FOLLOWED BY NOTICE U/S 142(1) DIRECTING ASSESSEE TO FILE THE REQUISITE INFORMATION / EVIDENCES. 2.3 UPON PERUSAL OF INFORMATION / DOCUMENTS, IT TRA NSPIRED THAT THE ASSESSEE OBTAINED ACCOMMODATION PURCHASE BILLS AGGR EGATING TO RS.218.12 LACS FROM 14 ENTITIES, THE DETAILS OF WHI CH HAVE ALREADY BEEN EXTRACTED AT PARA 5.1 OF THE QUANTUM ASSESSMENT ORD ER. ON THE BASIS OF STATEMENT RECORDED DURING SURVEY PROCEEDINGS, IT WA S CONCLUDED THAT THE ASSESSEE WAS ENGAGED IN OBTAINING BOGUS PURCHASE BI LLS WITHOUT ACTUALLY PURCHASING THE MATERIAL. 2.4 ALTHOUGH THE ASSESSEE DEFENDED THE PURCHASES BU T FAILED TO PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TIONS. THE FIELD INQUIRIES ESTABLISHED THAT NONE OF THE PARTIES WAS EXISTING AT THE GIVEN ADDRESSES. FINALLY, NOT SATISFIED WITH ASSESSEES SUBMISSIONS / EXPLANATIONS, THE STATED PURCHASES WERE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 3. THE LEARNED FIRST APPELLATE AUTHORITY AFTER EXAM INING THE FACTUAL MATRIX IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEME NTS RENDERED BY HIGHER AUTHORITIES, CAME TO A CONCLUSION THAT WHEN THE SAL ES WERE ACCEPTED, ENTIRE PURCHASES COULD NOT BE DISALLOWED BUT WHAT N EEDED TO BE TAXED WAS THE PROFIT ELEMENT EMBEDDED IN SUCH TRANSACTION S. THE SAME WAS ESTIMATED @12.5% OF ALLEGED BOGUS PURCHASES. STILL AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 4. AFTER CAREFUL CONSIDERATION, WE ARE OF THE CONSI DERED OPINION THERE COULD BE NO SALE WITHOUT ACTUAL PURCHASE OF MATERIA L KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. UNDISPUTEDLY THE ASS ESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PA YMENTS TO THE ITA NOS.2604-06/MUM/2016 NAVIN JAICHAND DOSHI 4 SUPPLIERS WERE THROUGH BANKING CHANNELS. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENU E. THE BOOKS OF ACCOUNTS WERE SUBJECT TO AUDIT. HOWEVER, AT THE SAM E TIME, THE ASSESSEE MISERABLY FAILED TO SUBSTANTIATE THE PURCH ASES AND COULD NOT PRODUCE ANY OF THE SUPPLIERS TO CONFIRM THE TRANSAC TIONS AND FIELD INQUIRIES INDICATED THAT NONE OF THE SUPPLIERS WAS EXISTING AT THE GIVEN ADDRESSES. THEREFORE, THE ONUS CASTED UPON ASSESSEE , IN THIS REGARD, REMAINED UNDISCHARGED. HENCE, ON THE GIVEN FACTS AN D CIRCUMSTANCES, THE ADDITIONS WHICH COULD BE SUSTAINED, WOULD BE TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LEARNED CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING I N VIEW THE FACT THAT THE ASSESSEE WAS DEALING IN THIN MARGIN ITEM LIKE I RON & STEEL AND THE ASSESSEE REFLECTED GROSS PROFIT RATE OF 3.27%, WE E STIMATE THE ADDITIONS @2% OF ALLEGED BOGUS PURCHASES OF RS.2,18 ,12,572/- WHICH COMES TO RS.4,36,251/-. THE IMPUGNED ORDER STAND MO DIFIED TO THAT EXTENT. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOW ED. 5. FACTS ARE PARI-MATERIA THE SAME IN AYS 2010-11 & 2011-12 WHEREIN THE ASSESSEE WAS SADDLED WITH ADDITIONS OF RS.313.73 LACS & RS.254.61 LACS RESPECTIVELY. THE ADDITIONS WERE RES TRICTED BY FIRST APPELLATE AUTHORITY TO 12.5% OF ALLEGED BOGUS PURCH ASES, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US WITH SI MILAR GROUNDS OF APPEAL. KEEPING IN LINE WITH ESTIMATION MADE BY US FOR AY 2008-09, WE RESTRICT THE ADDITIONS TO 2% OF ALLEGED BOGUS PURCH ASES WHICH COMES TO ITA NOS.2604-06/MUM/2016 NAVIN JAICHAND DOSHI 5 RS.6,27,465/- FOR AY 2010-11 AND RS.5,09,235/- FOR AY 2011-12. BOTH THESE APPEAL STANDS PARTLY ALLOWED. 6. IN THE RESULT, ALL THE THREE APPEALS STAND PARTL Y ALLOWED TO THE EXTENT INDICATED IN THE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JANUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 07/01/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. ,. / THE APPELLANT 2. /0,. / THE RESPONDENT 3. 7 ( ) / THE CIT(A) 4. 7 / CIT CONCERNED 5. 89/2: , : , / DR, ITAT, MUMBAI 6. 9;<= / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.