ITO -27(2)(1), MUMBAI V. M/s KRISHNA TIMBER TRADERS, MUMBAI

ITA 2817/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2355 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries
• Section: 133(6); 143(1); 22; 147; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2817 /MUM. /201 9 ( ASSESSMENT YEAR : 20 09 10 ) INCOME TAX OFFICER WARD 27(2)(1), MUMBAI . APPELLANT V/S KRISHNA TIMBER TRADERS 8 9, PURUSHOTTAM NIWAS OPP. TELEPHONE EXCHANGE CHEMBUR NAKA, MUMBAI 400 071 PAN AAGFK8471K . RESPONDENT REVENUE BY : S HRI SANJAY J. SETHI ASSESSEE BY : NONE DATE OF HEARING 0 9 .11.2020 DATE OF ORDER 24.11.2020 O R D E R CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 22 ND FEBRUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER. CONSIDERING THE NATURE OF DISPUTE, I PROCEED TO DISPOSE OFF THE APPEALS EX PARTE QUA THE 2 KRISHNA TIMBER TRADERS RESPONDENT ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 4. B RI EF FACTS ARE, THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF TRADING IN TEAK WOOD , PLY WOOD , LAMINATIONS AND HARDWARE GOODS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 TH SEPTEMBER 2019, DECLAR ING TOTAL INCOME OF ` 11,350. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND THE DGIT (INV.), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY WAY OF BOGUS PURCHASE BILLS BY CERTAIN ENTITIES IDENTIFIED AS HAWALA OPERATOR S, 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 APPEAR AND PRODUCE SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. HOWEVER, AS ALLEGED BY THE ASSESSING OFFICER, THE ASSESSEE DID NOT APPEAR AND FURNISH ANY EVIDENCE TO PR OVE THE PURCHASE OF ` 1,11,052, CLAIMED TO HAVE BEEN 3 KRISHNA TIMBER TRADERS MADE FROM SUBHAM ENTERPRISES. HE FURTHER OBSERVED , THE INDEPENDENT ATTEMPT MADE BY HIM TO VERIFY THE GENUINENESS OF SUCH PURCHASES WAS NOT FRUITFUL AS THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT AN D LOCAL ENQUIRY CONDUCT ED DID NOT THROW ANY LIGHT ON THE WHEREABOUTS OF THE CONCERNED SELLING DEALER. THEREFORE, HE PROCEEDED TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT BY INVOKING THE PROVISIONS OF SECTION 144 OF THE ACT. WHILE DOING SO, HE TR EATED THE PURCHASE OF ` 1,11,052 AS NON GENUINE AND ADDED BACK TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 6. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDL Y, BEFORE THE ASSESS ING OFFICER THE ASSESSEE HAD NOT APPEARED AND PRODUCED SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. HOWEVER, BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAD APPEARED AND FURNISHED CER TAIN DOCUMENTARY EVIDENCES , SUCH AS , PURCHASE BILLS , DETAILS OF PAYMENT TO THE SELLING DEALERS THROUGH CHEQUE, ETC. THOUGH, FROM THE AFORESAID DOCUMENTS, THE GENUINENESS OF PURCHASE FROM THE 4 KRISHNA TIMBER TRADERS DECLARED SOURCE COULD NOT BE CONCLUSIVELY PROVED, HOWEVER, THE FACT THAT THE ASSESSEE HAD PURCHASED THE GOODS FROM U NVERIFIED SOURCES CANNOT BE DENIED AS THE SALES EFFECTED BY THE ASSESSEE HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE ENTIRE PURCHASE CANNOT BE DISALLOWED AND ADDED BACK BUT ONLY THE PROFIT ELEMENT EMBEDDED CAN BE CONSIDERED FOR ADDITION. CONSIDERING THE NATURE OF TRADE CARRIED ON BY THE ASSESSEE, I AM OF THE VIEW THAT THE DECISION OF LEARNED COMMISSIONER (APPEALS) TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASE IS FAIR AND REASONABLE, HENCE, DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGL Y, UPHOLDING THE DECISION OF LEARNED COMMISSIONER (APPEALS), I DISMISS THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 24.11.2020 5 KRISHNA TIMBER TRADERS 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 ASSISTANT REGISTRAR ITAT, MUMBAI