ITO 28 (3)(2), MUMBAI V. SHARWANSINGHATAR SINGH CHATARSINGH CHUNDAWAT, MUMBAI

ITA 2671/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Bogus purchase; Accommodation entries
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI MAHAVIR SINGH , VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 267 1 /MUM/2019 : A.Y : 20 09 - 10 INCOME TAX OFFICER 28(3)(2), MUMBAI. (APPELLANT) VS. SHARWANSINGHATAR SINGH CHATARSINGH CHUNDAWAT (PROP. NEW BHARAT TOOLS) SHOP NO. 2, PLOT NO. 80, SECTOR - 24, NR. BANK OF INDIA, TURBHE, NAVI MUMBAI 400 705. PAN : A FWPC2763H (RESPONDENT) A PPELLANT BY : SHRI T.S. KHALSA RE SPONDENT BY : SHRI SHASHANK A. MEHTA DATE OF HEARING : 01/02/2021 DATE OF PRONOUNCEMENT : 01/02/2021 O R D E R PER MAHAVIR SINGH , VP : THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE ORDER OF CIT(A) - 26, MUMBAI IN A PPEAL NO. CIT(A) - 26/IT/10145/2014 - 15 DATED 27.02.2019. THE ASSESSMENT WAS FRAMED BY THE INCOME TAX OFFICER - 28(3)(2), MUMBAI UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED NIL. 2. THE ONLY ISSUE IN THIS APPEAL OF REVEN UE IS AGAINST THE ORDER OF CIT(A) RESTRICTING THE DISALLOWANCE OF BOGUS PURCHASES TO THE EXTENT OF 12.5% AS AGAINST 100% MADE BY THE ASSESSING OFFICER. FOR THIS, THE REVENUE HAS RAISED THE FOLLOWING TWO EFFECTIVE GROUNDS : - 2 ITA NO. 2671/MUM/2019 SHARWANSINGHATAR SINGH CHATARSINGH CHUNDAWAT 1. WHETHER ON THE FACTS AND I N THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O TO RESTRICT THE ADDITION OF BOGUS PURCHASES TO 12.5% AS AGAINST 100% ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES WITHOUT APPRECIATING THE FAC T THAT PARTIES FROM WHOM THESE PURCHASES WERE MADE PROVEN ACCOMMODATION ENTRY PROVIDERS, AS CONCLUDED BY SALES TAX AUTHORITIES PURSUANT TO THE INVESTIGATION CARRIED OUT BY THEM? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LATEST APEX COURT DECISION IN THE CASE OF N.K. PROTEINS LTD VS DCIT (769 OF 2017), WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES? 3. WE HAVE HEARD THE RIVAL CO NTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTED THAT THE ASSESSING OFFICER RECEIVED INFORMATION FROM DGIT (INVESTIGATION), MUMBAI THAT ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM SKAND INDUSTRIES OF RS.13,275/ - AND J.K. AG ENCY OF RS.4,74,017/ - . THUS, THE TOTAL BOGUS PURCHASE DISCLOSED WAS RS.4,87,292/ - . THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THESE PARTIES FOR CONFIRMATION, BUT HE FAILED TO DO SO. ACCORDINGLY, THE ASSESSING OFFICER ADDED THE ENTIRE PURCHASES OF RS.4,87,292/ - AS UNEXPLAINED UNDER SECTION 69C OF THE ACT. THE CIT(A) NOTED THAT THESE ARE ACCOMMODATION ENTRIES, BUT ONCE THE SALES MADE OUT OF THE SAME ARE NOT DOUBTED, THE ENTIRE PURCHASES CANNOT BE DISALLOWED. HE ALSO NOTED THAT THE ASSESSEE HAS P RODUCED DOCUMENTARY EVIDENCE S SUCH AS PURCHASE BILLS, PAYMENT BY CHEQUE AND ALSO FURNISHED DETAILS OF PURCHASES AND COR RE SPONDING SALES. THE CIT(A), CONSIDERING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH, 356 ITR 451 ( GUJARAT) , HELD THAT THE ENTIRE PURCHASES CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND ONLY THE PROFIT ELEMENT CAN BE ADDED. THEREFORE, FOLLOWING THE HON'BLE GUJARAT HIGH COURT DECISION IN THE CASE OF SIMIT P. SHETH (SUPRA), THE 3 ITA NO. 2671/MUM/2019 SHARWANSINGHATAR SINGH CHATARSINGH CHUNDAWAT CIT(A) ESTIMATED THE PRO FIT AT 12.5% OF THE BOGUS PURCHASES. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL. 4. FROM THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSEE PROVIDED DETAILS OF PURCHASES AND CORRESPONDING SALES, PURCHASE BILLS, PAYMENT BY CHEQUES, ETC. ONCE THE SALES ARE NOT DOUBTED BY THE ASSESSING OFFICER, THE ENTIRE PURCHASES CANNOT BE ADDED. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) RESTRICTING THE PROFIT RATE AT 12.5% OF THE BOGUS PURCHASES. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND APPEAL O F THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEBRUARY, 2021. SD/ - SD/ - (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER ( MAHAVIR SINGH ) VICE PRESIDENT MUMBAI, DATE : 1 S T FEBRUARY, 20 21 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, G BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI