MUKTAGIRI INDUSTRIAL CORPORATION, MUMBAI V. ITO 32(2)(3), MUMBAI

ITA 2789/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0370 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase; Cost of acquisition
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER ITA NO.2789/MUM/2017 ASSESSMENT YEAR : 2009-10 M/S. MUKTAGIRI INDUSTRIAL CORPORATION 606, GIRNAR APARTMENT, OFF S V ROAD, OPP HIMMAT NAGAR, BORIVALI (W), MUMBAI 400 092 PAN AAAFM0523G VS. ITO 32 (2)(3) MUMBAI (APPELLANT) RESPONDENT) APPELLANT BY : SHRI RAJESH KOTHARI RESPONDENT BY : SHRI T A KHAN DATE OF HEARING : 20 .0 6 .201 7 DATE OF PRONOUNCEMENT : 20 .0 6 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 02.03.2017, PASSED BY LD CIT(A)-44, MUMBAI AND IT R ELATES TO THE ASSESSMENT YEAR 2009-10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN SUSTAINING THE ADDITION RELATING TO ALLEG ED BOGUS PURCHASES TO THE EXTENT OF 12.5% OF VALUE OF BOGUS PURCHASES. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN YARN. THE AO NOTICED TH AT THE ASSESSEE HAS PURCHASED GOODS FROM CERTAIN DEALERS, WHO HAVE BEEN IDENTIFIED AS HAWALA DEALERS BY THE SALES TAX DEPARTMENT OF GOVERNMENT O F MAHARASHTRA. THE AGGREGATE AMOUNT OF PURCHASES WAS RS.1,03,03,830/-. THE AO TOOK THE VIEW THAT THE PROFIT EMBEDDED IN THE ABOVE SAID PURCHASE SHOULD BE ADDED. ACCORDINGLY HE ADOPTED A G.P RATE OF 17.17% AND APP LIED ON THE ENTIRE SALES VALUE OF RS.1,40,28,704/- AND COMPUTED A GROSS PROF IT OF RS.24,08,728/-. SINCE THE ASSESSEE HAS DECLARED A GROSS PROFIT OF R S.6,56,868/-, THE AO ADDED ITA NO.2789/MUM/2017 MUKTAGIRI INDUSTRIAL CORPORATION 2 THE DIFFERENCE AMOUNT OF RS.17,51,860/- TO THE TOTA L INCOME OF THE ASSESSEE. THE LD CIT(A) HOWEVER ESTIMATED THE PROFIT BY APPLY ING 12.5% ON THE ALLEGED BOGUS PURCHASES AND ACCORDINGLY SUSTAINED A DDITION TO THE EXTENT OF RS.12,87,978/-. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 3. THE LD A.R SUBMITTED THAT THE G.P RATE AVAIL ABLE IN THIS TRADE IS AROUND 4% - 5% ONLY. THE ASSESSEE IS DECLARING G.P RATE I N THAT RANGE ONLY. HE SUBMITTED THAT THE ASSESSEE HAS PROVED THE PURCHASE S BY FURNISHING ALL THE DOCUMENTS. HE FURTHER SUBMITTED THAT THE PURCHASE RATE OF THE ALLEGED BOGUS PURCHASES IS WELL COMPARABLE WITH THE GENUINE PURCH ASES AND, HENCE, THERE IS NO INFLATION OF PURCHASE COST. HE SUBMITTED THAT T HE ASSESSEE HAS ALSO MADE ONE TO ONE RECONCILIATION OF PURCHASES AND SALES. A CCORDINGLY, HE SUBMITTED THAT CONSIDERING THE RATE OF GROSS PROFIT AVAILABLE IN THIS TRADE, RECONCILIATION OF PURCHASE AND SALES, THE G.P RATE OF 12.5% SUSTAI NED BY LD CIT(A) IS ON THE HIGHER SIDE. 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE LD CIT(A) WAS FAIR ENOUGH TO MAKE ADDITION OF 12.5% OF THE ALLEGED BOGUS PURC HASES, INSTEAD OF DISALLOWING ENTIRE PURCHASE VALUE. 5. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE RECORD. I NOTICE THAT THE AO HAS ISSUED NOTICES U/S 133(6) OF THE ACT AND THE Y HAVE BEEN RETURNED BACK UN-SERVED. THE ASSESSEE HAS ALSO FAILED TO FU RNISH ANY CONFIRMATION LETTERS OBTAINED FROM THE SUPPLIERS AND HAS ALSO FA ILED TO PRODUCE THE SUPPLIERS BEFORE THE AO. EVEN THOUGH THE ASSESSEE HAS FURNISHED DOCUMENTARY EVIDENCES TO PROVE THE PURCHASES, YET I T CANNOT BE SAID THAT THE ASSESSEE HAS CONCLUSIVELY PROVED THE GENUINENESS OF PURCHASES, SINCE HE HAS FAILED TO PRODUCE CONFIRMATION LETTERS OR THE SUPPL IERS. THE QUESTION REALLY IS RELATED TO THE SOURCE OF PURCHASES. SINCE THE SUPP LIERS COULD NOT BE PRODUCED, THE PRESUMPTION IS THAT THE ASSESSEE HAS PURCHASED GOODS FROM ITA NO.2789/MUM/2017 MUKTAGIRI INDUSTRIAL CORPORATION 3 SOME OTHER SOURCE. HENCE, IN MY VIEW, SOME ADDITION IS CALLED FOR TO TAKE CARE OF THE REVENUE LEAKAGES. THE LD A.R SUBMITTED THAT THE APPLICABLE VAT RATE IS 4% ON THE YARN. HENCE, THE ASSESSEE WOULD HAVE SAVED VAT AND FURTHER THERE IS POSSIBILITY TO PURCHASE AT A LOWER RATE. CONSIDERING THE FACT THAT THE ASSESSEE HAS BEEN DECLARING G.P RATE OF 4% TO 5%, I AM OF THE VIEW THAT THE ADDITION OF 12.5% SUSTAINED BY THE LD CIT( A) IS ON THE HIGHER SIDE. HENCE, ON A CONSPECTUS OF THE MATTER, I AM OF THE V IEW THAT THE ADDITION MAY BE SUSTAINED TO THE EXTENT OF 6% OF THE IMPUGNED PU RCHASE VALUE AND IN MY VIEW, THE SAME WOULD MEET THE ENDS OF JUSTICE. I O RDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 0 TH JUNE 2017 SD/- (B R BASKARAN) ACCOUNTANT MEMBER MUMBAI, DATED : 20 TH JUNE, 2017. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI