KEYMAN TRADING COMPANY P.LTD, MUMBAI V. ITO WD 5(2)(2), MUMBAI

ITA 2684/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0202 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: BRIJMOHAN POORANMAL AGA RWAL
• Keywords: Bogus purchase
• Section: 148

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 2684/MUM/2017 (ASSESSMENT YEAR 2009 - 10) M/S. KEYMAN TRADING COMPANY PRIVATE LIMITED ROOM NO. 221 119 - JRAJMUDRA BUILDING BHANDARI STREET MUMBAI - 400 004. V S. ITO WARD 5(2)(2) ROOM NO. 526 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AACCK233G ASSESSEE BY SHRI BRIJMOHAN POORANMAL AGARWAL DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 2 4 . 8 . 201 7 DATE OF PRONOUNCEMENT 2 4 . 8 . 201 7 O R D E R T HE APPEAL FILED BY THE ASSESSE E IS DIR ECTED AGAINST THE ORDER DATED 27 - 12 - 2016 PASSED BY THE LEARNED CIT(A) - 10 , MUMBAI AND IT RELATE S TO A.Y. 200 9 - 1 0 . THE ASSESSE E IS AGGRIEVED BY THE DE CISION OF THE LEARNED CIT(A ) IN CONFIRM ING THE DISALLOWANCE RELATING TO BOGUS PURCHASES . 2. THE ASSESSEE IS A DEALER IN FERROUS AND NON - FERROUS METALS . CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT T HAT CERTAIN DEALERS ARE INDULGING IN PROVIDING ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING MATERIALS AND UPON NOTICING THAT THE ASSESSEE HAS PURCHASED GOODS FROM SUCH HAWALA DEALERS , THE ASSESSING OFFICER REOPENED THE ASSESSMENT THE YEAR UNDER CONSIDERATION BY ISSUING NOTICE S U/S. 148 OF THE ACT. THE AGGREGATE AMOUNT OF PURCHASES MADE WAS RS. 20 5. 24 LAKHS IN THE YEAR UNDER CONSIDERATION. IN THE REOPENED ASSESSMENT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH ALL RELEVANT DETAILS TO PROVE THE GENUINENESS OF THE PURCHASES. AFTER CONSIDERING T HE REPLIES, THE ASSESSING OFFICER HELD THAT THE GENUINENESS OF PURCHASES WAS M/S. KEYMAN TRADING COMPANY PRIVATE LIMITED 2 NOT PROVED AND ACCORDINGLY HE PROPOSED TO ADD 15% OF THE VALUE OF ALLEGED BOGUS PURCHASES LESS THE AMOUNT COMPUTED AT 3.19% OF THE VALUE OF BOGUS PURCHASES, BEING THE AVERAGE GROSS PROFIT DECLAR ED BY THE ASSESSEE. ACCORDINGLY HE DISALLOWED A SUM OF RS.24.23 LAKHS. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) CONFIRME D THE ADDITION . AGGRIEVED, THE ASSESSE E HAS FILED TH I S APPEAL . 3 . LEARNED AR SUBMITTED THAT THE ASSESSEE HAS FURNISHED TO TH E AO THE DETAILS OF PURCHASE S AND DETAILS OF SALES MADE OUT OF THOSE PURCHASE S. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED COPIES OF INVOICES, DELIVERY CHALLANS AND PAYMENT DETAILS TO PROVE THE GENUINENESS OF PURCHASES. ACCORDINGLY, LEARNED AR SUBMITTED THAT THE LD CIT(A) W AS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. THE LD A.R FURTHER SUBMITTED THAT THE G.P RATIO DECLARED IN THE EARLIER YEARS WAS IN THE RANGE OF 3 % ONLY. HOWEVER, THE TAX A UTHORITIES HAVE MADE ADDITION @ 11 .81 %. ACCORDING LY HE SUBMITTED THAT THE ADDITION IS ON THE HIGHER SIDE. 4 . LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, SUBMITTED THAT THE AO AS WELL AS LEARNED CIT(A) HAS GIVEN PROPER REASONING FOR CONFIRMING THE ADDITION. ACCORDINGLY, SHE SUBMITTED THAT ENTI RE ADDITION HAS BEEN RIGHTLY SUSTAINED BY LD CIT(A). 5 . I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICED THAT THE ASSESSEE HAS FURNISHED COPIES OF PURCHASE BILLS AND PAYMENT DETAILS . THE ASSESSEE HAS ALSO MADE ONE TO ONE RECONCILIATION OF PU RCHASES AND SALES. THE ASSESSEE HAS , HOWEVER, FAILED TO FURNISH ANY PROOF TO SHOW THAT THE MATERIALS WERE PHYSICALLY TRANSPORTED TO THE PREMISES OF THE ASSESSEE. SINCE THE ASSESSEE HAS RECONCILED THE PURCHASE AND SALES, I AM OF THE VIEW THAT THE AO HAS RI GHTLY ADDED THE PROFIT ELEMENT EMBEDDED IN THE PURCHASE S, AS GOODS CANNOT BE SOLD WITHOUT MAKING CORRESPONDING PURCHASES. SINCE THE IMPUGNED SUPPLIER S HA VE BEEN NAM ED AS HAWALA DEALER S AND SINCE THE ASSESS EE COULD NOT PRODUCE THOSE M/S. KEYMAN TRADING COMPANY PRIVATE LIMITED 3 PARTIES BEFORE THE AO , ONE OF THE POSSIBLE VIEW S IS THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL S FROM SOME OTHER PERSON. 6 . THE LD A.R SUBMITTED THAT THE ESTIMATION OF PROFIT @ 11 .81 % IS ON THE HIGHER SIDE, SINCE THE VAT RATE APPLICABLE TO THE ITEM S DEALT WITH BY THE ASSESSEE IS ONLY 4%. CONSIDERING THIS FACT AND ALSO THE RATE OF G.P DECLARED BY THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT THE ASSESSEE SHOULD HAVE SOURCED THE MATERIAL AT LOWER RATE, I AM OF THE VIEW THAT THE ADDITION MAY B E SUSTAINED TO THE EXT ENT OF 8 % OF THE VALUE OF ALLEGED BOGUS PURCHASE S . ACCORDINGLY I MODIFY THE ORDER S OF THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION TO THE EXTENT OF 8 % OF THE VALUE OF ALLEGED B OGUS PURCHASES . I ORDER ACCORDINGL Y. 7 . IN THE RESULT, THE APPEAL FILE D BY THE ASSESSE E IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 4 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 4 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI