Khan Afzalhusain Mohd.Saie, Nashik V. Deputy Commissioner of Income tax,

ITA 2709/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9164 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Reopening of assessment; Bogus purchase; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 27; 148; 10; 2

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO S . 2 7 08 & 27 09 /P U N/201 6 / ASSESSMENT YEAR S : 200 9 - 1 0 & 20 1 0 - 11 MR. KHAN AFZALHUSAIN MOHD. SAIE, PROP. AFKAAR STEEL, PLOT NO.67, SATPUR, AMBAD LINK ROAD, NASHIK 422010 . / APPELLANT PAN: AJE PK1750A VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI ANIL KUMAR CHAWARE / DATE OF HEARING : 20 . 0 3 .201 8 / DATE OF PRONOUNCEMENT: 23 . 0 3 .201 8 / ORDER PER SUSHMA CHOWLA, J M : BOTH THE APPEALS FILED BY ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 1 , NASHIK , DATED 09 . 0 9 .20 1 6 RELATING TO ASSESSMENT YEAR S 200 9 - 1 0 & 20 1 0 - 11 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO S . 27 08 & 27 09 /P U N/20 1 6 KHAN AFZALHUSAIN MOHD SAIE 2 2. THE APPEALS OF ASSESSEE WERE FIXED FOR HEARING BUT NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. HOWEVER, WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEALS STAND COVERED BY EARLIER ORDERS OF TRIBUNAL ON THE SAID ISSUE OF BOGUS PURCHASES. ACCORDINGLY, WE PROCEED TO DECIDE THE PRESENT APPEALS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FO R THE REVENUE. 3. BOTH THE APPEALS OF ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IN ORDER TO ADJUDICATE THE ISSUES, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.2 7 08 /P UN/2016, RELATING TO ASSESSMENT YEAR 200 9 - 1 0 . 4 . THE ASSESSEE IN ITA NO.2 7 08 /PUN/2016, RELATING TO ASSESSMENT YEAR 200 9 - 1 0 HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN INITIATING THE REASSESSMENT PROCEEDINGS U/S 147 IN ABSENCE OF ANY MATERIAL SHOWING ANY LIVE LINK WITH THE REASON TO BELIEVE THAT INCOME HAS ESCAPED THE ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AU THORITIES HAVE ERRED IN PASSING THE REASSESSMENT PROCEEDINGS U/S 147, WHEREIN NO NOTICE U/S 142(1) AND 143(2) BEING SERVED TO ASSESSEE AND NO REASONS TO BELIEVE WERE PROVIDED TO THE ASSESSEE APPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ESTIMATING THE GROSS PROFIT @ 20% FOR THE ASSESSMENT YEAR ESPECIALLY IN VIEW OF THE FACT THAT IN PRINCIPLE IT HAS BEEN ACCEPTED THAT THE PURCHASES ARE GENUINE UNDER SUCH CIRCUMSTANCE S THERE IS NO NEED OF ANY ESTIMATION OF GROSS PROFIT ON ALLEGED BOGUS PURCHASE. ENTIRE ADDITION NEEDS TO BE DELETED. 5. THE ISSUE IN GROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE ASSESSEE IS AGAINST RE - ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147 OF T HE ACT IN THE ABSENCE OF ANY MATERIAL SHOWING ANY LIVE LINK WITH THE REASON TO BELIEVE THAT INCOME HAS ESCAPED THE ASSESSMENT. ITA NO S . 27 08 & 27 09 /P U N/20 1 6 KHAN AFZALHUSAIN MOHD SAIE 3 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSING OFFICER HA D RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN PERSONS WERE INVOLVED IN PROVIDING BOGUS BILLS TO THE BENEFICIARIES. THE ASSESSEE IN THIS REGARD HAD RECEIVED TWO BILLS TOTALING 44,07,780/ - . THE ASSESSING OFFICER THUS, RECORDED REASONS FOR REOPENING THE ASSESSMENT AND INITIATED PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT. 7. THE CIT(A) UPHELD THE REOPENING OF ASSESSMENT IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREM E COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500 (SC). THE CIT(A) ALSO DECIDED CONNECTED ISSUE OF ASSESSEE CHALLENGING SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT AND AFTER GOING THROUGH ASSESSMENT RECORDS AND THE DISPAT CH REGISTER, CAME TO A FINDING THAT NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE AND WAS SENT BY SPEED POST. IN VIEW THEREOF, BOTH THESE PLEAS OF ASSESSEE WERE REJECTED. COMING TO THE MERITS OF ADDITION. THE ASSESSING OFFICER HAD MA DE ADDITION ON ACCOUNT OF BOGUS PURCHASES IN THE HANDS OF ASSESSEE TO THE TUNE OF 44,07,780/ - . THE CIT(A) HOWEVER, NOTED THAT THE ASSESSEE HAD MAINTAINED QUANTITATIVE DETAILS IN ASSESSMENT YEAR 2009 - 10 BUT IN ASSESSMENT YEAR 2010 - 11, THE ASSESSEE HAD CO MPUTED PROFIT ON GROSS PROFIT METHOD. THE CIT(A) THUS, RESTRICTED ADDITION TO 20% OF PURCHASES AS ADDITIONAL GROSS PROFIT FOR THE YEAR UNDER APPEAL. 8. THE ASSESSEE IS IN APPEAL BEFORE US ON ALL THE THREE ISSUES. 9. THE FIRST ISSUE RAISED BY THE ASSESSE E IS AGAINST RE - ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 147 / 148 OF THE ACT. WE FIND THAT THE SAID ITA NO S . 27 08 & 27 09 /P U N/20 1 6 KHAN AFZALHUSAIN MOHD SAIE 4 ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (S UPRA) AND REFERRING TO PARAS 4 AND 5 OF THE APPELLATE ORDER, WE UPHOLD THE SAME AND DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE. 10. COMING TO THE NEXT GROUND OF APPEAL RAISED BY THE ASSESSEE OF NON SERVICE OF NOTICE. THE CIT(A) IN PARAS 5 A ND 5.1 AT PAGES 9 AND 10 HAS GONE THROUGH THE ASSESSMENT RECORDS AND ALSO DISPATCH REGISTER AND VERIFIED NOT ONLY THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT BUT ALSO ITS DISPATCH ON 09.10.2014. NOTICES WERE SENT ON 20.10.2014 AS EVIDENT FROM SPEED P OST ENTRIES . ACCORDINGLY, THERE IS NO MERIT IN THE PLEA OF ASSESSEE VIS - - VIS NON SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT. 11. NOW, COMING TO THE MERITS OF ADDITION. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST BOGUS PURCHASES. WE HAVE A LREADY ADJUDICATED SIMILAR ISSUE IN SERIES OF DECISIONS WITH LEAD ORDER IN M/S. CHHABI ELECTRICALS PVT. LTD. VS. DCIT IN ITA NO.795/PUN/2014, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 28.04.2017 . THE ASSESSEE IN THE FIRST YEAR I.E. ASSESSMENT YEAR 2009 - 10 HAS MAINTAINED QUANTITATIVE DETAILS. IN OTHER WORDS, IT HAS THE EVIDENCE OF PURCHASING GOODS AND ITS SALES. IN SUCH CIRCUMSTANCES, AT BEST, HIGHER GROSS PROFIT RATE CAN BE APPLIED. FOLLOWING OUR DECISION IN EARLIER ORDERS, WE HOLD THAT GP RATE O F 10% OVER AND ABOVE GP DECLARED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, BE APPLIED TO WORK OUT THE ADDITIONAL INCOME IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. ITA NO S . 27 08 & 27 09 /P U N/20 1 6 KHAN AFZALHUSAIN MOHD SAIE 5 12 . THE FACTS AND ISSUES IN ITA NO.27 09 /PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.27 08 /PUN/2016 AND OUR DECISION IN ITA NO.27 08 /PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.27 09 /PUN/2016. 1 3 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE P ARTLY ALLOWED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 23 RD MARCH , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPEL LANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE