M/S PARUL INDUSTRIAL CORPORATION, MUMBAI V. INCOME TAX OFFICER 32 (2) (5), MUMBAI

ITA 2703/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8008 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Corroborative evidences
• Section: 147; 133(6); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2703 / MUM/2018 ( ASSESSMENT YEAR : 20 0 9 10 ) M/S. PARUL INDUSTRIAL CORPORATION Y 63, A 202, YOGI HERITAGE YOGI NAGAR, BORIVALI (WEST) MUMBAI 400 091 PAN AACFP3111F . APPELLANT V/S INCOME TAX OFFICER WARD 32(2)(5), MUMBAI . RESPONDENT ITA NO. 2704 / MUM/2018 ( ASSESSMENT YEAR : 20 10 11 ) M/S. PARUL INDUSTRIAL CORPORATION Y 63, A 202, YOGI HERITAGE YOGI NAGAR, BORIVALI (WEST) MUMBAI 400 091 PAN AACFP3111F . APPELLANT V/S INCOME TAX OFFICER WARD 32(2)(5), MUMBAI . RESPONDENT 2 M/S. PARUL INDUSTRIAL CORPORATION ITA NO. 2705 / MUM/2018 ( ASSESSMENT YEAR : 20 11 12 ) M/S. PARUL INDUSTRIAL CORPORATION Y 63, A 202, YOGI HERITAGE YOGI NAGAR, BORIVALI (WEST) MUMBAI 400 091 PAN AACFP3111F . APPELLANT V/S INCOME TAX OFFICER WARD 32(2)(5), MUMBAI . RESPONDENT ASSESSEE BY : SHRI SANJAY SHARMA REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 06 . 12 .2018 DATE OF ORDER 02.01.2019 O R D E R PER SAKTIJIT DEY, J.M. T HE AFORESAID APPEALS BY THE SAME ASSESSEE ARE AGAINST THREE SEPARATE ORDERS , ALL DATED 25 TH JANUARY 2018, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 44, MUMBAI, PERTAINING TO THE ASSESSMENT YEARS 2009 10, 2010 11 AND 2011 12. 2 . THE ONLY COMMON ISSUE INVOLVED IN THESE APPEALS RELATES TO THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN SUS TAINING THE ADDITION @ 12.5% O F THE NON GENUINE PURCHASES IN ALL THE ASSESSMENT YEARS UNDER APPEAL. 3 M/S. PARUL INDUSTRIAL CORPORATION 3 . SINCE , THE MATERIAL FACTS RELATING TO THE DISPUTED ISSUE ARE MORE OR LESS IDENTICAL IN ALL THE ASSESSMENT YEARS UNDER APPEAL, EXCEPT VARIATION IN FIGURES AND DATES , FOR THE SAKE OF BREVITY, WE PROPOSE TO TAKE UP ITA NO.2703/MUM./2018, FOR ASSESSMENT YEAR 2009 10 AS THE LEAD APPEAL AND DISCUSS THE FACTS INVOLVED THEREIN. 4 . BRIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS ENGAGED IN THE BUSINESS OF TRADI NG IN PIPES AND PIPE FITTING. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 24 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 55,277. INITIALLY, THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX AC T, 1961 (FOR SHORT THE ACT). SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM INVESTIGATION WING OF THE DEPARTMENT AS WELL AS SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT PURCHASES WORTH ` 61,63,859, CLAIMED TO HAVE BEEN MADE FROM F OUR PARTIES ARE NOT GENUINE AS SUCH PARTIES HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS ONLY. ON THE BASIS OF SUCH INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES THROUGH PROPER DOCUMENTARY EVIDENCES. FURTHER, TO VERIFY THE GENUINENESS OF THE TRANSACTIONS BETWEEN THE PARTIES THE ASSESSING OFFICER CONDUCTED INDEPENDENT ENQ UIRY BY ISSUING 4 M/S. PARUL INDUSTRIAL CORPORATION NOTICES UNDER SECTION 133(6) OF THE ACT. AS OBSERVED BY THE ASS ESSING OFFICER, ALL SUCH NOTICES RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER ALSO CALLED UPON THE ASSESSEE TO PRODUCE THE PARTI ES FROM WHOM THE ASSESSEE CLAIMED TO HAVE PURCHASED THE GOODS. SINCE THE ASSESSEE WAS UNABLE TO EITHER PRODUCE THE CONCERNED PARTIES OR ANY SUPPORTING EVIDENCE TO CONCLUSIVELY PROVE THE GENUINENESS OF PURCHASES THE ASSESSING OFFICER HELD THAT THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE CONCERNED PARTIES ARE NOT GENUINE. ACCORDINGLY, HE REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER SECTION 145(3) OF THE ACT. HAVING DONE SO, THE ASSESSING OFFICER RELYING UPON CERTAIN JUDICIAL PRECEDENTS , PROCEEDED TO ESTIMATE THE PROFIT @ 20% OF THE NON GENUINE PURCHASES WHICH WORKED TO ` 12,32,771, IN ASSESSMENT YEAR 2009 10. THE ASSESSING OFFICER ADDED BACK THE AFORESAID AMOUNT TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, THOUGH, THE LEARNED COMMISSIONER (APPEALS) AGREED WITH THE DECISION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT AND TREATING THE PURCHASES AS NON GENUINE, HOWEVER, HE ESTIMATED THE PROFIT @ 12.5% AND ACCORDINGLY RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 5 M/S. PARUL INDUSTRIAL CORPORATION 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. THE ONLY SUBMISSION MADE BY THE LEARNED AUTHORISED REPRESENTATIVE IS , LOOKING AT THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE ESTIMATION OF PROFIT @ 12.5% IS ON THE HIGHER SIDE. WHEREAS, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). HAVING DUE REGARD TO THE FACTS DISCUSSED HEREIN ABOVE, THE DISP UTE BEFORE US IS ONLY CONFINED TO THE RATE AT WHICH PROFIT ON THE NON GENUINE PURCHASES SHOULD BE ESTIMATED. WHILE THE ASSESSING OFFICER ESTIMATED THE PROFIT @ 20%, THE LEARNED COMMISSIONER (APPEALS) HAS REDUCED IT TO 12.5%. AFTER LOOKING AT THE NATURE OF THE BUSINESS CARRIED OUT BY THE ASSESSEE AND THE FACTS INVOLVED IN THE PRESENT APPEALS, WE ARE OF THE CONSIDERED OP I NION THAT ESTIMATION OF PROFIT @ 10% OF THE NON GENUINE PURCHASES WOULD BE REASONABLE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO RESTR ICT THE ADDITION TO 10% OF THE NON GENUINE PURCHASES. OUR AFORESAID DECISION WILL APPLY MUTATIS MUTANDIS TO ITA NO.2705 AND 2704/MUM./2018, FOR THE ASSESSMENT YEARS 2010 11 AND 2011 12. 6 . IN THE RESULT, ALL THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 6 M/S. PARUL INDUSTRIAL CORPORATION 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