Shri Dipesh Prabhudas Kothari, HUF, Ahmedabad V. The Income Tax Officer, Ward-3(2), Ahmedabad

ITA 2798/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5991 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Keywords: Bogus purchase; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO. 2798/AHD/2013 (ASSESSMENT YEAR: 2009-10) DIPESH P. KOTHARI 315, ASTODIA, RANGATI BAZAR, AHMEDABAD 380002 APPELL ANT VS. ITO, WARD 3(2), AHMEDABAD RESPONDENT PAN: AABKH2547P /BY ASSESSEE : NONE /BY REVENUE : SHRI VILAS V. SHINDE, SR. D.R. /DATE OF HEARING : 03.05.2017 /DATE OF PRONOUNCEMENT : 05.05.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES AGAINST THE CIT(A)-6, AHMEDABADS ORDER DATED 23.09.2013, PASSE D IN APPEAL NO. CIT(A)-VI/WD.3(2)/284/11-12, IN PROCEEDINGS U/S. 1 43(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 2798/AHD/2013 (DIPESH P. KOTHARI VS. ITO) A.Y. 2009-10 - 2 - CASE CALLED TWICE. NONE APPEARS AT ASSESSEES BEH EST. THE REGISTRY HAS ALREADY ISSUED RPAD NOTICE DATED 27.02 .2017. THE SAME STANDS RECEIVED BACK UNSERVED. WE THUS PROCEED EX PARTE A GAINST THE ASSESSEE. ITS MAIN APPEAL IS TAKEN UP FOR ADJUDICATION ON MERITS. 2. IT IS EVIDENT FROM ASSESSEES PLEADINGS THAT ITS SOLE SUBSTANTIVE GRIEVANCE CHALLENGES CORRECTNESS OF THE CIT(A)S AC TION IN RESTRICTING BOGUS PURCHASES ADDITION OF RS.54,98,573/- AS MADE BY THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 29.12.2011 TO THAT @12.5% ON LY; COMING TO RS.6,87,321/-. 3. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E STRONGLY SUPPORTING THE ABOVE IMPUGNED ADDITION. HE INVITES OUR ATTENTION TO THE LOWER APPELLATE FINDINGS SUMMARIZING RELEVANT FACTS , ISSUE INVOLVED AND BOTH THE LOWER AUTHORITIES DISCUSSION AS UNDER: 3.3 GROUND NO.S 2, 3 AND 4 ARE AGAINST THE ADDITIO N OF RS. 54,98,573/- MADE TOWARDS BOGUS PURCHASES. IN THE ASSESSMENT ORD ER A.O OBSERVED THAT THE APPELLANT WAS ENGAGED IN THE BUSINESS OF TRADIN G IN CHEMICALS; APPELLANT CLAIMED TO HAVE MADE PURCHASES FROM M/S NIKI ENTERP RISE FOR RS,41,45,585/- & FROM M/S AMBICA SALES FOR RS, 13,5 2,988/-; IN RESPONSE TO NOTICES ISSUED U/S 133(6), M/S NIKI ENTERPRISE AN D M/S AMBICA SALES STATED THAT THEY HAD NOT MADE ANY TRANSACTIONS WITH T HE APPELLANT; AND FOR THE REASONS STATED AT PARA-3 OF THE ASSESSMENT ORDER THE PURCHASES FROM THESE 2 PARTIES WERE BEING TREATED AS BOGUS PURCHASES AND ACCORDINGLY, ADDITION OF THE SAID SUM WAS BEING MADE THE CONTENTIONS OF THE LD. A.R. ARE THAT SALES COUL D NOT HAVE BEEN MADE WITHOUT CORRESPONDING PURCHASES; THE PURCHASES WERE ACCOUNTED FOR IN THE STOCK BOOK AS WELL AS SALES BOOK; IN VIEW OF CASE-LAWS RELIED ON THIS IS CASE FOR ESTIMATION OF INCOME AND THEREFORE G.P RET URNED BY THE APPELLANT AT 3.05% MAY BE ADOPTED AND ADDITION BE RESTRICTED ACC ORDINGLY. IN THE CASE RELIED ON BY THE A.R. NAMELY CIT. VS. S ATYANARAYAN P. RATHI 351 ITR 150 (2013), THE JURISDICTIONAL GUJARA T HIGH COURT HELD AS UNDER: ITA NO. 2798/AHD/2013 (DIPESH P. KOTHARI VS. ITO) A.Y. 2009-10 - 3 - 'THE ISSUE PERTAINS TO BOGUS TRADE MADE BY THE RESP ONDENT-ASSESSEE. THE ASSESSEE IS IN THE BUSINESS OF TRADING IN IRON AND STEEL FOR THE ASSESSMENT YEAR 2003-04, DURING THE REASSESSMENT PR OCEEDINGS, IT WAS FOUND THAT THE PURCHASES WORTH RS. 61.40 LAKHS (ROUNDED O FF] WERE NOT SUPPORTED BY SUFFICIENT EVIDENCE. THE ASSESSEE'S CLAIM OF HAV ING PURCHASED SUCH GOODS FROM VARIOUS SUPPLIERS WAS VERIFIED, BUT WAS NOT FO UND GENUINE. IT WAS FOUND THAT SUCH PARTIES HAD NEVER SUPPLIED THE GOODS AS N AMED BY THE ASSESSEE. ON SUCH BASIS, THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE AMOUNT OF PURCHASES OF RS.61.40 LAKHS (ROUNDED OFF). . . 5. FROM THE RECORD, WE NOTICED THAT THE COMMISSIONE R (APPEALS) WELL AS THE TRIBUNAL FOUND THAT THAT THE PURCHASE OF RAW MA TERIAL, IN WHICH THE ASSESSEE WAS TRADING, WERE ONLY MADE, BUT NOT FROM THE DISCLOSED SOURCES. IN OTHER WORDS, THE CASE AGAINST THE ASSESSES WAS T HAT THE PURCHASES WERE MADE IN THE GREY MARKET THROUGH CASH PAYMENT AND SO ME ENTRIES WERE OBTAINED FROM CERTAIN SUPPLIERS WHO HAD NOT SOLD SU CH GOODS. 6. THE PRESENT CASE, THUS, BEING ONE OF ONLY PURCHA SE BUT NOT FROM DISCLOSED SOURCES, IT WOULD BE ONLY THE PROFIT ELEM ENT EMBODIED IN SUCH PURCHASE WHICH COULD BE ADDED IN THE INCOME OF THE ASSESSEE AND, THUS, RIGHTLY SO DONE BY THE COMMISSIONER (APPEALS) AND T HE TRIBUNAL. 7. IF THIS BE OUR CONCLUSION, THE ONLY QUESTION ARI SES WHETHER SUCH PROFIT ELEMENT SHOULD BE ESTIMATED AT THE RATE OF 30 PER C ENT OR 12 PER CENT. WHENEVER SUCH A QUESTION ARISES, SOME REASONABLE ES TIMATION IS ALWAYS PERMISSIBLE. HARDLY ANY QUESTION OF LAW ON SUCH ASP ECT WOULD ARISE. MERELY, IT IS POINTED OUT THAT THE ASSESSEE WAS A TRADER AN D THAT THE TRIBUNAL RETAINED 12 PERCENT OF THE PURCHASE TOWARDS ITS P OSSIBLE PROFIT, WE DO NOT FIND ANY REASON TO ENTERTAIN THE APPEAL. IN THE RES ULT, TAX APPEAL IS DISMISSED.' IN THE LIGHT OF THE SAID DECISION IT IS CONSIDERED REASONABLE TO ESTIMATE THE INCOME IN CONNECTION WITH THE BOGUS PURCHASES MADE. FOLLOWING THE ABOVE MENTIONED CASE-LAW, I CONSIDER IT REASONABLE TO RES TRICT THE ADDITION TO 12.5% OF THE UNVERIFIABLE PURCHASES TOTALING TO RS, 54,98,573/-, WHICH WORKS OUT TO RS. 6,87,321/-. ACCORDINGLY, ADDITION IS RES TRICTED TO THE SAID AMOUNT. BALANCE ADDITION IS DELETED. THESE GROUNDS OF APPEA L-ARE PARTLY ALLOWED. 4. THE ABOVE EXTRACTED FACTS REVEAL THAT THE ASSES SEE HAS ADMITTEDLY NOT BEEN ABLE TO GET THE PURCHASES IN QUESTION VERIFIED FROM THE PARTIES CONCERNED. THE SAME FACTUAL POSITION CONTINUES HEREIN AS WELL AS THERE IS NO EVIDENCE IN THE CASE FILE TO REBUT THE ABOVE FINDINGS. IT HAS ALREADY COME ON RECORD THAT ITA NO. 2798/AHD/2013 (DIPESH P. KOTHARI VS. ITO) A.Y. 2009-10 - 4 - THE LOWER APPELLATE AUTHORITY HAS CONSIDERED HONBL E JURISDICTIONAL HIGH COURTS DECISION (SUPRA) IN ADDING ONLY THE PROFIT COMPONENT @12.5%. WE THUS FIND NO REASON TO INTERFERE WITH THE SAME. 5. THIS ASSESSEES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 05 TH DAY OF MAY, 2017.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 05/05/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0