KHANGARAM K DEWASI, MUMBAI V. DCIT ,CC-2(3), MUMBAI

ITA 2807/MUM/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8522 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 142(1); 133(6); 143(1); 147

Judgement Text

1 ITA 2817/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO 2817/MUM/2018 (ASSESSMENT YEAR 2009-10) M/S DILIP VASTIMAL VANIGOTA 1 ST FLOOR, TINWALA BLDG, ROOM NO.6, TRIBHUVAN ROAD MUMBAI-400 004 PAN : ABTPV8160G VS ITO, WD.19(1)(4), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI DHARMIL JHAVERI RESPONDENT BY SHRI CHAUDHARY ARUNKUMAR SINGH DATE OF HEARING 18-12-2018 DATE OF PRONOUNCEMENT 31-12-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-53, MUMBAI DATED 03-04-2018 AND IT PERTAINS TO AY 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- GOA NO. 1 :- 12.5% ADDITION ON ACCOUNT OF BOGUS P URCHASES OF RS. 93.21,1027- THE LEARNED CIT (A), CONFIRMED THE AD'HOC ADDITION @ 12.5% ON THE QUANTUM OF PURCHASES AFFECTED FROM SUSPICIOUS HAWALA DEALER FO R RS 93,21,1027-, WHICH IS UNWARRANTED/ UNJUSTIFIED. 2 ITA 2817/MUM/2018 THE LEARNED CIT (A), CONFIRMED THE SALES FIGURE AS PER BOOKS OF ACCOUNTS BUT CONFIRMED THE ADDITION MADE THE LEARNED AO IN ASSES SMENT ORDER U/S 143(3) FOR GP ADDITION @ 12.5%. THE LEARNED CIT (A), NEITHER CONSIDERED THE FACT THAT WITHOUT PURCHASE HOW SALES CAN BE AFFECTED? NOR CONSIDERED THE FACTS THAT BOOK S OF ACCOUNTS WERE NEVER REJECTED U7S 145 BY THE DEPARTMENT NOR PROVED THE CASH TRAIL BY THE DEPARTMENT. THE LD. CIT(A) NOT CONSIDERED THE FACTS THAT THE HO N,BLE 1TAT DELETED THE ADHOC ADDITIONS FULLY IN SIMILAR CASES. WE RELIED ON THE FOLLOWING JUDGMENTS OF THE HIGHER FORUM ;- M/S FANCY WEAR V/S ITO WARD 24(3)(I), ITA NO. 15 96/1597/MUM/2016 DT. 20/09/2017. SHRI HIRALAL CHUNILAL JAIN V/S ITO WARD 14(1)(4), ITA NO. 4547/1275/MUM/2014 DT. 01/01/2016. M/S RAMESH KUMAR & CO. V7S AC1T WARD 21(1), ITA N O. 2959/MUM/20L4 DT. 28/11/2014. SHRI PRANHAT GUPTA V/S ITO, ITAT MUMBAI DT. 09/03 /2018. M/S PARAS ORGANIC PVT LTD VS DCIT 1 0(2). ITA NO. 2369/MUM/2014 DT 26/02/2016. M7S TALCO MARKETING VS ITO 14(2)(3) ITA NO. 33947 MUM/2014 DT 07/07/2016. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING IN COMPUTER PERIPHERALS, LAPTOP AND ACCESSORIES, FILED HIS RETURN OF INCOME FOR AY 2009-10 DECLARING TOTAL INC OME AT NIL, WHICH WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THEREA FTER, THE CASE HAS BEEN REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961, ON TH E BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV) WHICH WAS FURTHER SUPP ORTED BY THE REPORT OF SALES-TAX DEPARTMENT, AS PER WHICH, CERTAIN PARTIES WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES WITHOUT THERE BEING ANY BUSIN ESS ACTIVITY. THE SAID INFORMATION FURTHER STATES THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY HAWALA / SUSPICIO US DEALERS. ACCORDINGLY, THE AO OPINED THAT INCOME CHARGEABLE TO TAX HAD BEE N ESCAPED ASSESSMENT 3 ITA 2817/MUM/2018 WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. THEREAFTER, NOTICES U/S 143(2) AND 142(1) OF THE I.T. ACT WERE ISSUED. IN RESPONSE TO THE NOTICES, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO FIL E COMPLETE DETAILS OF PURCHASES IN RESPECT OF CERTAIN PARTIES FROM WHOM T HE ASSESSEE CLAIMS TO HAVE PURCHASED GOODS IN ORDER TO VERIFY GENUINENESS OF T RANSACTIONS IN THE LIGHT OF REPORT OF DGIT (INV). IN RESPONSE, THE ASSESSEE FI LED CERTAIN BASIC DETAILS INCLUDING PURCHASE BILLS AND PAYMENT PROOF. HOWEVE R, FURTHER DETAILS SOUGHT BY THE AO LIKE MODE OF TRANSPORTATION ALONG WITH LO RRY RECEIPTS, DETAILS OF MATERIAL PURCHASED FROM THE PARTIES WERE NOT PRODUC ED. THE AO, ON THE BASIS OF INFORMATION FURNISHED BY THE ASSESSEE, ISSUED NO TICES U/S 133(6) TO THE PARTIES AT THE GIVEN ADDRESS, BUT NOTICES WERE RETU RNED UNSERVED WITH THE REMARK, EITHER LEFT OR NOT TRACEABLE. THEREAFT ER, THE ASSESSEE WAS ASKED TO PRODUCE THE SAID PARTIES FOR EXAMINATION BUT THE AS SESSEE FAILED TO DO SO. THEREFORE, THE AO CAME TO THE CONCLUSION THAT THE A SSESSEE FAILED TO PROVE PURCHASES FROM THOSE PARTIES AND HENCE PURCHASES FR OM THOSE PARTIES ARE BOGUS IN NATURE AND ACCORDINGLY, MADE ADDITION TOWA RDS PROFIT ELEMENT EMBEDDED IN BOGUS PURCHASES BY ADOPTING 12.5% NET P ROFIT AND DETERMINED ADDITION OF RS.11,76,195. 4 ITA 2817/MUM/2018 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE RE-ITE RATED HIS SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT HE HAS FILED COMPLETE D ETAILS OF PURCHASES ALONGWITH PURCHASE BILLS, BANK STATEMENTS AND ITEM- WISE STOCK DETAILS. THE MATCHING OF PURCHASES AND SALES WAS PROVED. THE AS SESSEE FURTHER SUBMITTED THAT THE AO HAS MADE ADDITION ONLY ON THE BASIS OF INFORMATION RECEIVED FROM SALES-TAX DEPARTMENT WITHOUT ASCERTAINING WHETHER T HE PURCHASES MADE FROM THE ABOVE PARTIES ARE REALLY GENUINE OR NOT. THE A SSESSEE ALSO TAKEN A LEGAL PLEA TO ARGUE THAT THE AO HAS MADE ADDITION WITHOUT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE PARTIES AND ALSO TO REBUT EVIDENC ES USED AGAINST THE ASSESSEE. THE LD.CIT(A), AFTER CONSIDERING RELEVAN T SUBMISSIONS OF THE ASSESSEE AND ALSO BY FOLLOWING THE DECISION OF HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH (2013) 356 ITR 451 (GUJ) HELD THAT THE ASSESSEE MIGHT HAVE PURCHASED GOODS FROM GREY MARKET AND OBTAINED ACCOM MODATION ENTRIES FROM HAWALA OPERATORS IN ORDER TO COVER UP THE PURCHASES . THE LD.CIT(A) FURTHER OBSERVED THAT THE ASSESSEE BY PURCHASING THE GOOD F ROM GREY MARKET WOULD HAVE BENEFITTED BY SAVING THE APPLICABLE COMMERCIAL TAX. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CAS E AND ALSO BY FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHETH (2013) 356 ITR 451 (GUJ), DIRECTED THE AO TO ESTIMA TE 12.5% PROFIT ON ALLEGED 5 ITA 2817/MUM/2018 BOGUS PURCHASES. HOWEVER, IN RESPECT OF PURCHASES FROM M/S ANKIT IMPEX OF RS.88,460, THE LD.CIT(A) HAS DIRECTED THE AO TO DEL ETED ADDITION BECAUSE THE ASSESSEE PRODUCED THE PARTY IN PERSON BEFORE THE AO . AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN CONFIRMING ADDITION MADE BY THE AO TOWARDS 12.5% PR OFIT ON ALLEGED BOGUS PURCHASES WITHOUT APPRECIATING THE FACT THAT BEFORE MAKING ADDITION, THE AO NEVER REJECTED BOOKS OF ACCOUNT U/S 145 OF THE INC OME-TAX ACT, 1961. THE LD.AR FURTHER SUBMITTED THAT EVEN OTHERWISE, PURCHA SES FROM THOSE PARTIES ARE GENUINE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCES AND ALSO PAYMENT FOR SUCH PURCHASES HAS BEEN MADE THROUGH PROPER BANKING CHANNEL. IN ABSENCE OF ANY INCORRECTNESS IN BOOKS OF ACCOUNT OR MADE OUT A CASE OF SALES OUTSIDE THE BOOKS OF ACCOUNT MERELY FOR THE REASON THAT THE PAR TIES DID NOT RESPOND TO NOTICE U/S 133(6), ADDITION CANNOT BE MADE WHEN COM PLETE DETAILS ABOUT SAID PURCHASES HAVE BEEN FURNISHED BEFORE THE AO. 5. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE C LAIMS TO HAVE PURCHASED GOODS FROM PARTIES, WHOSE NAMES ARE APPEARED IN THE LIST OF HAWALA / SUSPICIOUS 6 ITA 2817/MUM/2018 DEALERS PREPARED BY SALES-TAX DEPARTMENT. IT IS AL SO AN ADMITTED FACT THAT THE ASSESSEE COULD NOT FILE COMPLETE DETAILS OF PURCHAS ES FROM THE ABOVE PARTIES EXCEPT FILING PURCHASE BILLS AND PAYMENT PROOF AGAI NST SUCH PURCHASES. THE AO HAS RECORDED CATEGORICAL FINDING THAT NOTICES ISSUE D U/S 133(6) WERE RETURNED UNSERVED WITH THE REMARK, LEFT OR NOT TRACEABLE . WHEN THESE INFORMATIONS HAVE BEEN CONFRONTED TO THE ASSESSEE AND ALSO TO PR ODUCE THE PARTIES IN PERSON FOR VERIFICATION, ASSESSEE COULD NOT PRODUCE THE PARTIES BEFORE THE AO. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT PURCHASES FROM THE A BOVE PARTIES ARE GENUINE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCES. WHEN P URCHASES ARE NOT SUPPORTED BY NECESSARY EVIDENCES AND ALSO THE PARTI ES ARE NOT RESPONDED TO THE NOTICES ISSUED U/S 133(6), OBVIOUSLY, THE AO CA ME TO THE CONCLUSION THAT THE PURCHASES FROM THE ABOVE PARTIES ARE BOGUS IN N ATURE ESPECIALLY WHEN THE REPORT RECEIVED FROM DGIT(INV) WHICH WAS FURTHER SU PPORTED BY REPORT OF SALES- TAX DEPARTMENT SUGGESTED THAT THOSE PARTIES ARE HAW ALA OPERATORS / SUSPICIOUS DEALERS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES . UNDER THESE CIRCUMSTANCES, IT IS FOR THE ASSESSEE TO PROVE THE PURCHASES CONCLUSIVELY WITH COMPLETE DETAILS TO OVERCOME THE SHADOW CAST IN THE LIGHT OF REPORT OF DGIT(INV). BUT, THE ASSESSEE FAILED TO DO SO. FUR THER, IN A CASE WHERE THE PURCHASES ARE CONSIDERED TO BE BOGUS OR THE ASSESSE E FAILED TO PROVE THE 7 ITA 2817/MUM/2018 PURCHASES WITH NECESSARY EVIDENCES, VARIOUS COURTS AND TRIBUNALS HAVE CONSISTENTLY HELD THAT IN ORDER TO SETTLE THE DISPU TE BETWEEN THE PARTIES, SOME PERCENTAGE OF PROFIT NEEDS TO BE TAXED DEPENDING UP ON FACTS AND CIRCUMSTANCES OF EACH CASE. THE HONBLE GUJARAT HI GH COURT IN THE CASE OF CIT VS SIMIT P SHETH (SUPRA) HAS HELD THAT NO UNIFORM Y ARDSTICK COULD BE APPLIED FOR ESTIMATING THE NET PROFIT ON ALLEGED BOGUS PURCHASE S. THE CO-ORDINATE BENCH OF MUMBAI ITAT IN NUMBER OF CASES, HAS TAKEN A CONS ISTENT VIEW AND ESTIMATED PROFIT OF 12.5% ON ALLEGED BOGUS PURCHASES CONSIDER ING FACTS OF EACH CASE. . IN THIS CASE, THE AO, CONSIDERING THE FACTS, HAS REASO NABLY ESTIMATED 12.5% PROFIT ON ALLEGED BOGUS PURCHASES. THE LD.CIT(A), AFTER C ONSIDERING RELEVANT FACTS HAS RIGHTLY UPHELD ADDITION MADE BY THE AO. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDING OF LD.CIT(A) AND HENCE, WE ARE INCLI NED TO UPHOLD THE ORDER OF LD.CIT(A) AND DISMISS APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 -12-2018 . SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 31 ST DECEMBER, 2018 PK/- 8 ITA 2817/MUM/2018 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI