RAJU KISHINCHAND MAHTANI, MUMBAI V. ERSTWHILE ACIT 19(3), PRESENTLY ACIT 23(3), MUMBAI

ITA 284/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4514 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 11-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS.284, 285 & 286/M/2018 ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 M/S. RAJU KISHINCHAND MAHTANI, 9, MANGAL DARSHAN, WATERFIELD ROAD, BANDRA (WEST), MUMBAI 400 050 PAN: AABPM7422R VS. ERSTSWHILE ACIT 19(3), PRESENTLY ACIT 23(3), MANTRU MANDIR, INCOME TAX OFFICE, NEAR BHATIA HOSPITAL, MUMBAI - 400007 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VINAY SINHA, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 21.02.2019 DATE OF PRONOUNCEMENT : 22.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED THREE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE COMMON ORDER DATED 24.10.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2009-10, 2 010-11 & 2011-12. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS IS AGAINST THE ORDER OF LD. CIT(A) CONFIRM ING THE ADDITION @ 25% OF THE ALLEGED BOGUS PURCHASES AS MA DE BY THE AO. IN ITA NO. 284/MUM/2018, THE ASSESSEE HAS ALSO CHALLENGED THE ENHANCEMENT OF ADDITION TO THE EXTEN T OF RS.4,67,188/- WHICH HAS HAPPENED DUE TO THE FACT TH AT AMOUNT ITA NOS.284, 285 & 286/M/2018 M/S. RAJU KISHINCHAND MAHTANI 2 OF BOGUS PURCHASES WERE TAKEN BY THE LD. CIT(A) AT RS.53,86,277/- AS AGAINST RS.35,17,524/- BY THE AO. 3. THE ITA NO 284/MUM/2018 IS TAKEN UP FIRST. THE F ACTS IN BRIEF THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF GOLD AND DIAMOND ORNAM ENTS. THE ASSESSEE HAS FILED THE INCOME TAX RETURN 30.9.2009 DECLARING AN INCOME OF RS.97,27,410/- WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT. THEREAFTER THE CASE WAS RE-OPENED U/S 147 OF T HE ACT BY ISSUING NOTICE U/S 148 OF THE ACT DATED 18.3.2014 A FTER THE AO RECEIVED INFORMATION FROM SALES TAX DEPTT. GOVT. OF MAHARASHTRA THAT ASSESSEE HAS TAKEN BOGUS BILLS WITHOUT TAKING ACTUAL DELIVERY OF GOODS TO THE TUNE OF RS. 53,86,277/- FR OM TWO PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CALLED FOR NECESSARY DETAILS WHICH WERE FILED BY THE ASSESSEE. THE ASSESSEE FILED BEFORE THE AO COPIES OF BILLS, DELIVERY SLIP S, EXTRACTS OF STOCK REGISTER AND COPIES OF BANK STATEMENTS ETC. T HE AO ALSO ISSUED NOTICE U/S 133(6) OF THE ACT TO ONE OF THE P ARTY NAMED LARCHAN TRADING CO. WHICH WAS RETURNED UNSERVED. TH E AO THEREAFTER MADE ADDITION TO THE TUNE OF 25% OF THE BOGUS PURCHASES TO THE INCOME OF THE ASSESSEE BY FRAMING ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 2 6.9.2014 HOWEVER THE AMOUNT OF BOGUS PURCHASES WAS TAKEN AT RS. 35,17,524/-INSTEAD OF RS. 53,86,277/-. 4. IN THE APPELLATE PROCEEDINGS THE LD CIT(A) UPHEL D THE ADDITION AT 25% OF THE BOGUS PURCHASES BUT THE BOGU S PURCHASES WERE TAKEN AT RS. 53,86,277/- WHICH WAS T HE CORRECT AMOUNT. ITA NOS.284, 285 & 286/M/2018 M/S. RAJU KISHINCHAND MAHTANI 3 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS ON RECORDS, WE OBSERVE THE ASSESSEE IS UNDISPUTABLY TAKEN BOGUS PURCHASE BILLS FROM TWO PARTIES. THE AO BROUG HT TO TAX THE BOGUS PURCHASES @ 25% OF THE BOGUS PURCHASES WH ICH WAS CONFIRMED BY THE LD CIT(A).IN THIS CASE THE AO HAS NOT DISPUTED THE SALES OF THE ASSESSEE MEANING THEREBY THAT THE ASSESSEE HAS MADE THE PURCHASES FROM GREY MARKETS THEREBY MAKING SAVINGS OF VAT AND OTHER INCIDENTAL EXPENSES. SO WE ARE CONC ERNED WITH ONLY AT WHAT RATE THE BOGUS PURCHASES SHOULD BE TAX ED. THE ASSESSEE IS A MANUFACTURER AND TRADERS OF GOLD AND DIAMOND ORNAMENTS AND HAS DECLARED A VERY GOOD GP AND NP IN THE BOOKS OF ACCOUNTS. SO UNDER THESE CIRCUMSTANCES, WE ARE N OT IN AGREEMENT WITH THE LD CIT(A) ON THE RATE WHICH IS TO BE APPLIED TO TAX THE PROFIT ON BOGUS PURCHASES. UNDER SIMILAR FACTS THE COORDINATE BENCHES HAVE TAKEN VIEW THAT ADDITION MA Y BE MADE AT RATE RANGING FROM 3% TO 12.5%. IN THE INSTANT CA SE WE DEEM IT REASONABLE TO DIRECT THE AO TO APPLY 8% TO THE BOGU S PURCHASES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ITA NO 285 & 286/MUM/2018 6. THE ISSUE RAISED IN THESE APPEALS IS IDENTICAL T O ONE AS DECIDED BY US IN ITA NO.284/MUM/2018 WHEREIN WE HAV E DIRECTED THE AO TO APPLY THE RATE OF 8% ON THE BOGU S PURCHASES. ACCORDINGLY, FOLLOWING THE SAME WE DIRECT THE AO TO APPLY SAME RATE IN THESE APPEALS AS WELL. THE APPEALS OF THE A SSESSEE ARE PARTLY ALLOWED. ITA NOS.284, 285 & 286/M/2018 M/S. RAJU KISHINCHAND MAHTANI 4 7. IN RESULT ALL THE THREE APPEALS ARE PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.