Assistant Commissioner of Income Tax -23(2), Mumbai V. M/s KTC Co, Mumbai

ITA 2703/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6910 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI , BEFORE VIKAS AWASTHY, JUDICIAL MEMBER . 2703 / / 20 19 ( . . 2007 - 08 ) ITA NO. 2703 /MUM/20 19 (A.Y. 2007 - 08 ) ASST. COMMISSIONER OF INCOME TAX 23(2), 1 ST FLOOR, ROOM NO. 114, MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007. ...... / APPELLANT VS. M/S. KTC CO. GE 3040, BHARAT D IAMOND BOURSE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400 051. PAN : AAGFK4725L ..... / RESPONDENT A SSESSEE BY : NONE REVENUE BY : SHRI SUSHIL KUMAR MISHRA / DATE OF HEARING : 31/12/2020 / DATE OF PRONOUNCEMENT : 26 /03/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI (IN SHORT THE CIT(A)) DATED 07/02/2019 FOR THE ASSESSMENT YEAR 2007 - 08. 2. SHRI SUSHIL KUMAR MISHRA REPRESENTING THE DEPARTMENT SUBMITTED THAT THE ASSESSEE IS ENGAGED IN DIAMOND BUSINESS. ON THE BASIS OF INFORMATION RECEIVED FR OM DGIT(INVN.), MUMBAI THAT THE ASSESSEE HAS INDULGED IN OBTAINING ACCOMMODATION 2 ITA NO. 2703 /MUM/2019 (A.Y.200 7 - 0 8 ) ENTRIES TO THE TUNE OF RS.89,36,609/ - DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSESSMENT WAS REOPENED. THE ASSESSEE HAS TAKEN THE BENEFIT OF ACCOMMOD ATION ENTRIES FROM M/S. MOHIT INTERNATIONAL, A COMPANY CONTROLLED BY PRAVEEN KUMAR JAIN, A DECLARED HAWALA OPERATOR. THE ASSESSEE FAILED TO PRODUCE DOCUMENTS TO SUBSTANTIATE GENUINENESS OF THE TRANSACTIONS. THE ASSESSING OFFICER MADE ADDITION OF 12.5% OF NON - GENUINE TRANSACTIONS. THE ASSESSEE CARRIED THE ISSUE IN FIRST APPEAL BEFORE THE CIT(A), WHO HAS REDUCED THE ADDITION TO 8% OF TOTAL BOGUS PURCHASES. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS BEEN QUITE CONSIDERATE IN MAKING THE ADDITION @ 12.5% OF BOGUS PURCHASES. THE ADDITION WAS MADE BY THE ASSESSING OFFICER IN ACCORDANCE WITH THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE BHOLANATH POLYFAB PVT. LTD., 40 TAXMAN 494. THE LD. DEPARTMENTAL REPRESENTATIVE P RAYED FOR REVERSING THE FINDINGS OF CIT(A) AND SUSTAINING THE ADDITION MADE IN ASSESSMENT ORDER. 3. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTATIVE HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. THE REVENUE IN APPEAL HAS RAISED SOLITARY GROUND ASSAILI NG THE FINDINGS OF CIT(A) IN RESTRICTING THE ADDITION ON ACCOUNT OF BOGUS PURCHASES TO 8% OF SUCH PURCHASES. THE ASSESSEE HAS ALLEGEDLY OBTAINED ACCOMMODATION ENTRIES AMOUNTING TO RS.89,36,609/ - FROM M/S. MOHIT INTERNATIONAL. DURING ASSESSMENT PROCEEDINGS , THE ASSESSEE PRODUCED LEDGER ACCOUNTS, INVOICES, COPY OF BANK STATEMENTS REFLECTING PAYMENTS MADE, ETC. HOWEVER, THE ASSESSEE NEITHER PRODUCED THE SUPPLIER NOR ANY CONFIRMATION FROM THE SUPPLIERS. FURTHER, THE ASSESSEE FAILED TO DISCHARGE IS ONUS IN PRO VING TRAIL OF GOODS. THE PROFIT ELEMENT EMBEDDED IN SUCH LIKE TRANSACTIONS HAS TO BE BROUGHT TO TAX. THE ASSESSING OFFICER MADE ADDITION OF RS.11,17,076/ - BY ESTIMATING GP ON BOGUS TRANSACTIONS @ 12.5%. IN FIRST APPEAL, THE CIT(A) AFTER TAKING COGNIZANCE OF G.P RATIO DECLARED BY THE ASSESSEE AT 5.36% RESTRICTED THE ADDITION TO 8% OF THE BOGUS PURCHASES. IN MY CONSIDERED OPINION, KEEPING IN VIEW THE BUSINESS OF ASSESSEE GP ESTIMATED BY THE ASSESSING 3 ITA NO. 2703 /MUM/2019 (A.Y.200 7 - 0 8 ) OFFICER IS ON HIGHER SIDE. I FIND NO INFIRMITY IN THE IM PUGNED ORDER, HENCE, THE SAME IS UPHELD AND THE APPEAL OF REVENUE IS DISMISSED BEING DEVOID OF MERIT. 4. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON F RIDAY THE 2 6 TH DAY OF MARCH , 2021. SD/ - (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI , / DATED 2 6 /0 3 /2021 VM , SR. PS (O/S) 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) ITAT, MUMBAI