RAVINDRANATHAN NAIR, MUMBAI V. INCOME TAX OFFICER, WARD 3(2), MUMBAI

ITA 2662/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8517 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYUR J GOS RANI
• Assessee Lawyers: S K BEPARI
• Keywords: Bogus purchase
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMS BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2662/MUM./2018 ( ASSESSMENT YEAR : 20 10 11 ) RAVINDRANATHAN NAIR M/S. TECHNICA ENGINEERS 8A 1, KOTHARI COMPOUND 27 ACRES LAND, TIKUJINIWADI MANPADA, MUMBAI 400 610 PAN AAOPN8516E . APPELLANT V/S INCOME TAX OFFICER WARD 3(2), MUMBAI . RESPONDENT REVENUE BY : SHRI MAYUR J. GOSRANI ASSESSEE BY : SHRI S.K. BEPARI DATE OF HEARING 05 . 12 .2018 DATE OF ORDER 31.12.2018 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 03.10.2017 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 2, PUNE FOR THE ASSESSMENT YEAR 2010 - 11. THOUGH, THE ASSESSEE HAS RAISED EIGHT GROUNDS, HOWEVER, AT THE TIME OF HEARING LEARNED AUTHORISED R EPR ESENTATIVE PRESSED GROUND NO.5 ONLY. ACCORDINGLY, EXCEPT GROUND NO. 5 ALL OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. 2 RAVINDRANATHAN NAIR 2 . FACTS RELATING TO GROUND NO. 5 ARE, THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN MANUFACTURING AND SALE OF MACHINES, SPARE PARTS AND COMPO NENTS. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED HIS RETURN OF INCOME ON 20.09.2010 DECLARING TOTAL INCOME OF ` 4,83,600. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT IN THE RELEVANT PREVIOUS YEA R PURCHASES WORTH ` 5,74,021 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM M/S KANAK STEEL INDUSTRY IS NON GENUINE, AS THE SAID SELLING DEALER HAS BEEN IDENTIFIED AS A HAWALA OPERATOR PROVIDING ACCOMMODATION BILLS, ASSESSING OFFICER RE - OPENED THE ASSESSM ENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (ACT). IN COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES MADE BY FURNISHING SUPPORTING DOCUMENTARY EVIDENCE. AS OBSERVED BY THE ASS ESSING OFFICER, THOUGH, THE ASSESSEE FURNISHED COPY OF PURCHASE BILL AND LEDGER EXTRACT HOWEVER HE COULD NOT FURNISH TRANSPORTATION BILLS, DELIVERY CHALLANS, GOODS RECEIVED NOTES, OCTROI RECEIPTS ET CETERA. FURTHER, THE ASSESSING OFFICER OBSERVED, ENQUIRY CONDUCTED BY HIM INDEPENDENTLY BY ISSUING NOTICES UNDER SECTION 133 (6) OF THE ACT TO THE CONCERNED PARTY DID NOT BEAR ANY FRUITFUL RESULT AS THE NOTICE ISSUED RETURNED BACK UNSERVED BY THE POSTAL AUTHORITY. THUS, ULTIMATELY THE ASSESSING OFFICER HELD PURC HASES SHOWN OF ` 5,74,021 AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THOUGH, THE ASSESSEE CHALLENGED THE AFORESAID 3 RAVINDRANATHAN NAIR ADDITION BEFORE LEARNED COMMISSIONER (APPEALS), HOWEVER, HE WAS UNSUCCESSFUL. 3 . LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE DEPARTMENTAL AUTHORITIES ARE UNJUSTIFIED IN MAKING ADDITION OF THE ENTIRE PURCHASES SINCE THE SALES EFFECTED BY THE ASSESSEE ARE NOT DOUBTED. THUS, HE SUBMITTED, ADDITION SHOULD BE RESTRICTED TO 12.5% OF THE ALLEGED BOGUS PURCHASES. 4 . LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE COMMISSIONER (APPEALS). 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. THOUGH, IT MAY BE A FACT THAT THE ASSESSEE HAS FAILED TO FUR NISH RELEVANT DOCUMENTARY EVIDENCES TO CONCLUSIVELY PROVE THE GENUINENESS OF PURCHASES MADE FROM THE CONCERNED PARTY, HOWEVER, IT IS A FACT ON RECORD THAT THE SALES TURNOVER SHOWN BY THE ASSESSEE HAS NOT BEEN DISPUTED OR DOUBTED BY THE DEPARTMENTAL AUTHORI TIES. IN THESE CIRCUMSTANCES THE LOGICAL CONCLUSION WOULD BE, THE ASSESSEE MUST HAVE PURCHASED THE GOODS FROM GREY MARKET. THAT BEING THE CASE, ADDITION OF THE ENTIRE NON GENUINE PURCHASES WOULD BE IMPROPER. IN SUCH CIRCUMSTANCES WHAT THE ASSESSEE MIGHT HA VE SUPPRESSED IS THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES, WHICH MAY ALSO INCLUDE THE LOCAL TAX PAYABLE. THEREFORE, TO TAKE CARE OF ANY LEAKAGE IN REVENUE, ONLY 4 RAVINDRANATHAN NAIR THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THUS, CONSID ERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE VIEW THAT ADDITION AT THE RATE OF 12.5% OF THE NON GENUINE PURCHASES WOULD BE REASONABLE AND SERVE THE INTERESTS OF JUSTICE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTRIC T THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. GROUND RAISED IS PARTLY ALLOWED. 6 . IN THE RESULT ASSESSEE'S APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.12.2018 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 ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI