MEHUL JAYANTILAL SHAH, MUMBAI V. ITO 32 (2) (3), MUMBAI

ITA 2738/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7541 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR RAI LD
• Keywords: Bogus purchase; Tangible material; Reassessment proceedings
• Section: 69C; 143(3); 133(6); 147; 148

Judgement Text

ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1317/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER - 32(2)(3) ROOM NO.305,3 RD FLOOR,C-11 PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA(E),MUMBAI-400 051 / VS. MEHUL JAYANTILAL SHAH 701,RATNADEEP BUILDING ROAD NO.5,DAULAT NAGAR BORIVALI(E),MUMBAI-400 066 !' ./ ./ PAN/GIR NO.AWZPS-2492-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) & ./I.T.A. NO.2738/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) MEHUL JAYANTILAL SHAH 701,RATNADEEP BUILDING ROAD NO.5,DAULAT NAGAR BORIVALI(E),MUMBAI-400 066 / VS. INCOME TAX OFFICER - 32(2)(3) ROOM NO.305,3 RD FLOOR,C-11 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BANDRA(E),MUMBAI-400 051 !' ./ ./ PAN/GIR NO. AWZPS-2492-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) REVENUE BY : SAURABH KUMAR RAI, LD.DR ASSESSEE BY : NONE / DATE OF HEARING : 02/04/2018 / DATE OF PRONOUNCEMENT : 04/04/2018 2 ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR [AY] 20 10-11 WHICH CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-44 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-44/ITO32(2)(3)/ITA149/14-15 DATED 29/01/2016 QUA CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. IN COME TAX OFFICER- 32(2)(3),MUMBAI [AO] U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT,1961 ON 28/02/2015 WHEREIN THE INCOME OF THE AS SESSEE HAS BEEN ASSESSED AT RS.78.30 LACS AFTER CERTAIN ADDITIONS U /S 69C ON ACCOUNT OF ALLEGED BOGUS PURCHASES AS AGAINST RETURNED INCOME OF RS.3.65 LACS FILED BY THE ASSESSEE ON 30/08/2010. NONE HAS APPEARED FO R ASSESSEE DESPITE NOTICE AND NO VALID ADJOURNMENT APPLICATION IS ON R ECORD. LEFT WITH NO OPTION WE PROCEED TO DECIDE THE APPEALS ON THE BASIS OF MA TERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMENTAL REPRESENT ATIVE [DR]. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF BUILDING CONSTRUCTION MATERIAL UNDER PROPRIETARY CONCERN NAMELY MEHUL TRADERS WAS SUBJECTED TO REASSESSMENT PROCEEDINGS FOR IMPUGNED AY VIDE ISSUA NCE OF NOTICE U/S 148 DATED 03/03/2014 WHICH WAS FOLLOWED BY STATUTOR Y NOTICES U/S 143(2) 3 ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 AND 142(1). THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE AT RS.3,65,239/-, WHICH WAS PROCESSED U/S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA & DGIT (INVESTIGATION) REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SU CH BOGUS PURCHASE BILLS TO THE TUNE OF RS.74,65,360/- FROM SEVEN SUCH PARTI ES. THE ASSESSEE DEFENDED THE PURCHASES MADE BY HIM BUT NOTICES ISSU ED U/S 133(6) TO THESE PARTIES TO CONFIRM THE TRANSACTIONS EITHER RE MAINED UN-SERVED OR REMAINED UN-COMPLIED WITH. AFTER CONSIDERING ASSESSEES SUBMISSIONS, DOCUMENTARY EVIDENCES AND CERTAIN JUDICIAL PRONOUNC EMENTS, LD. AO CAME TO CONCLUSION THAT THE SAID PURCHASES WERE NOT GENU INE AND THEREFORE, LD. AO ADDED THE SAME U/S 69C. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 29/01/2 016 WHERE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 18.22% OF ALLEGED BOGUS PURCHASES, BEING GROSS PROFIT RATE REFLECTED BY THE ASSESSEE WHICH RESULTED INTO CONF IRMATION OF DISALLOWANCE TO THE EXTENT OF RS.13,60,188/-. AG GRIEVED, THE ASSESSEE AS WELL AS REVENUE IS IN APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] SUBMITT ED THAT THE RELIEF PROVIDED BY LD.CIT(A) WAS NOT JUSTIFIED SINCE THE A SSESSEE DID NOT MAINTAINED ADEQUATE STOCK RECORDS. 4 ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 5. AFTER CONSIDERING THE SAME, WE FIND THAT THE ASS ESSEE WAS ENGAGED IN TRADING ACTIVITIES AND COULD NOT ACHIEVE THE SALES TURNOVER WITHOUT ACTUAL PURCHASE OF MATERIAL. THE TURNOVER OF THE ASSESSEE HAS NOT BEEN DOUBTED BY THE REVENUE AND THE ASSESSEE IS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS & FURTHER, THE PAYMENTS ARE THROUGH BANKI NG CHANNELS. THE ASSESSEE HAS ALREADY REFLECTED GROSS PROFIT RATE OF 18.22%. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY SINGLE PAR TY TO CONFIRM THE TRANSACTIONS AND NOTICES ISSUED U/S 133(6) WERE RET URNED BACK UN-SERVED WHICH CAST A SERIOUS DOUBT ON ASSESSEES CLAIM. THE ASSESSEE DID NOT MAINTAIN ADEQUATE STOCK RECORDS AND COULD NOT SUBST ANTIATE THE DELIVERY OF MATERIAL. THEREFORE, IN SUCH A SITUATION, THE ADDIT ION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST ALLEGED BOGUS PURCHASES, WHICH LD.CIT(A) HAS RIGHTLY DONE. THEREFORE, FINDING THE SAME TO BE QUITE FAIR AND REASONABLE, W E SEE NO REASON TO INTERFERE WITH THE SAME. RESULTANTLY, THE GROUNDS R AISED BY THE ASSESSEE AS WELL AS REVENUE IN THIS REGARD ARE DISMISSED. 6. THE ASSESSEE, IN HIS APPEAL, HAS RAISED ANOTHER GROUND OF APPEAL WHICH CHALLENGES THE REASSESSMENT PROCEEDINGS. HOWE VER, WE FIND THE REASSESSMENT PROCEEDINGS TO BE PERFECTLY VALID SINC E THE ORIGINAL RETURN WAS PROCESSED U/S 143(1) AND REASSESSMENT HAS BEEN INITIATED WITHIN A PERIOD OF FOUR YEARS FROM END OF RELEVANT AY AND TH EREFORE, THE ONLY 5 ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 REQUIREMENT TO BE FULFILLED IN SUCH A SCENARIO WAS THAT LD. AO HAD REASONS TO BELIEVE THAT CERTAIN INCOME CHARGEABLE TO TAX HAD ESCAPED A SSESSMENT AND NOTHING MORE. THE LD. AO CAME TO IN POSSESSION OF SUFFICIENT / ADEQUATE TANGIBLE MATERIAL SUGGESTING ESCAPEMENT OF INCOME IN THE FORM OF INFORMATION FROM DGIT (INVESTIGATION) SO AS TO TRIGGER REASSESSMENT PROCEEDINGS AND THEREFORE, THIS GROUND OF ASSESSEE S APPEAL STANDS DISMISSED. 7. THE ASSESSEE HAS BY WAY OF ANOTHER GROUND HAS CO NTESTED THAT THE PROVISIONS OF SECTION 69C HAD NO APPLICABILITY ON T HE FACTS OF THE CASE. WE ARE NOT CONVINCED WITH THE SAME SINCE WE HAVE ALREA DY OBSERVED THAT THE PURCHASES BEING REFLECTED BY THE ASSESSEE IN HIS BO OKS OF ACCOUNTS WERE IN GRAVE DOUBT AND THE ASSESSEE MISERABLY FAILED TO PR OVE THE SAME. THIS FACT LEADS US TO THE LOGICAL CONCLUSION THAT SINCE ASSES SEE WAS ENGAGED IN TRADING ACTIVITIES, THE GOODS MUST HAVE BEEN SOURCE D BY THE ASSESSEE FROM SOMEWHERE ELSE, THE SOURCE OF INVESTMENT OF WHICH R EMAINED UNEXPLAINED. THEREFORE, THIS GROUND OF ASSESSEES APPEAL ALSO ST ANDS DISMISSED. 8. RESULTANTLY, BOTH THE APPEALS STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH APRIL, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR A GGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :04. 04.2018 SR.PS:- THIRUMALESH 6 ITA NOS.1317&2738/MUM/2016 MEHUL JAYANTILAL SHAH ASSESSMENT YEAR 2010-11 ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. %- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI