M/S JAYSKAY TRADING P. LTD, MUMBAI V. ITO WARD 1 (5), KALYAN

ITA 2744/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9541 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITRA
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained expenditure
• Section: 69C; 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2744 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 ) JAYSKAY TRADING PVT. LTD. SHOP NO.858, JAPANI BAZAR ULHASNAGAR 421 002 PAN AAACJ4266A . APPELLANT V/S INCOME TAX OFFICER WARD 1( 5 ), KALYAN . RESPONDENT ASSESSEE BY : SHRI M. SUBRAMANIAN REVENUE BY : SHRI S.K. MITRA DATE OF HEARING 11 . 12 .2018 DATE OF ORDER 19.1 2 .2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 26 TH FEBRUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2 , MUMBAI, FOR THE ASSESSMENT YEAR 20 11 12 . 2 . T HE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF ` 1,75,280, ON ACCOUNT OF NON GENUINE PURCHASES. 3 . B RIEF FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN TRADING IN READYMADE GARMENT AND HOSIERY. FOR THE ASSESSMENT YEAR UNDER 2 HANSA SHAH DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 8 TH SEPTEMBER 2011, DECLARING TOTAL INCOME OF ` 7,83,660. T HE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) ON 7 TH JANUARY 2012. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM SALES TAX DEPARTMEN T, GOVERNMENT OF MAHARASHTRA REVEALING THAT PURCHASES MADE BY THE ASSESSEE FROM TWO PARTIES AGGREGATING TO ` 1,75,280, ARE NOT GENUINE AS THOSE PARTIES HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODATION BILLS. ON THE BASIS OF SUCH INFORMATION , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES CLAIMED TO HAVE BEEN MADE FROM THE CONCERNED PARTIES. AS OBSERVED BY THE ASSESSING OFFICER, EXCEPT FILING PURCHASE BILLS ALONG WITH LEDGER EXTRACTS AND BANK STATEMENT , THE ASSESSEE COULD NOT SUBMIT TRANSPORT / OCTROI RECEIPTS, DELIVERY CHALLANS, ETC. FURTHER, THE ASSESSING OFFICER OBSERVED , INDEPENDENT ENQUIRY C ONDUCTED BY HIM BY ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF PURCHASES ALSO DID NOT BEAR ANY RESULT AS ALL SUCH NOTICES RETURNED BACK UN SERVED BY THE POSTAL AUTHORITIES. THUS, ULTIMATELY, THE ASSESSING OFFICER TREATED TH E PURCHASES MADE OF ` 1,75,280, AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 3 HANSA SHAH THE ADDITION SO MADE WAS ALSO SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS) WHILE DECIDING ASSESSEES APPEAL. 4 . THE LEARN ED AUTHORISED REPRESENTATIVE SUBMITTED , SINCE THE DEPARTMENTAL AUTHORITIES HAVE NOT DISPUTED THE SALES EFFECTED BY THE ASSESSEE , ADDITION OF ENTIRE PURCHASES IS IMPROPER. HENCE, ONLY PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES ESTIMATED AT 12.5% CAN BE ADDED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS) AND THE ASSESSING OFFICER. 6 . I HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. FROM THE FACTS AVAILABLE ON RECORD, THOUGH , IT EMERGES THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF PURCHASES MADE FROM CERTAIN PARTIES CONCLUSIVELY, HOWEVER, IT IS A FACT ON RECORD THAT THE SALES DECLARED BY THE ASSESSEE HAVE NOT BEEN DOUBTED OR DISPUTED BY THE DEPARTMENTAL AUTHORITIES. IN SUCH CIRCUMSTANCES , IT CAN BE PRESUMED THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM GREY MARKET. THEREFORE , ONLY THE PR OFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. KEEPING IN VIEW THE OVERALL FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL, I AM OF THE OPINION THAT PROFIT ESTIMATED @ 12.5% OF THE NON GENUINE PURCHASES SHOULD BE 4 HANSA SHAH CONSIDERED FOR ADDIT ION. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION @ 12.5% OF THE NON GENUINE PURCHASES. GROUND RAISED IS PARTLY ALLOWED. 7 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 19.12.2018 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