RAJU AMARLAL VASWANI, THANE V. ITO WD 2(3), KALYAN

ITA 288/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1112 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2017
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Bogus purchase

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 288 /MUM/ 201 7 (ASSESSMENT YEAR 20 1 0 - 1 1 ) MR. RAJU AMARLAL VASWANI BUNGLOW NO.1, GAUTAM ARCADE CHS LTD. OPP. FIRE BRIGADE KOPARI COLONY THANE EAST VS. ITO WAR D 2(3) 2 ND FLOOR MOHAN PLAZA WAYALE NAGAR KHADAKPADA KALYAN WEST PIN - 421 301. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAJPV7577L ASSESSEE BY MISS NEHA PARANJPE DEPARTMENT BY MS. BEENA SANTOSH DATE OF HEARING 2 . 5. 201 7 DATE OF PRONOUNCEMENT 2 .5 . 201 7 O R D E R THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 03 - 10 - 2016 PASSED BY LD CIT(A) - 3, THANE AND IT RELATES TO THE ASSESSMENT YEAR 2010 - 11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE ADDI TION MADE ON ACCOUNT OF BOGUS PURCHASES. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN IRON & STEEL. THE REVENUE GOT INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN DEALERS ARE PROVIDING ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPL YING THE MATERIALS. THE INFORMATION SUPPLIED BY THE SALES TAX DEPARTMENT ALSO PROVIDED THE DETAILS OF BENEFICIARIES. THE ASSESSEE WAS NAMED AS ONE OF THE BENEFICIARIES IN RESPECT OF BILLS GIVEN BY M/S PARAS SALES CORPORATION. DURING THE YEAR UNDER CONSI DERATION, THE ASSESSEE HAS PURCHASED MATERIALS WORTH RS.4,22,548/ - FROM THE ABOVE SAID PARTY. THE AO ADDED THE ABOVE SAID AMOUNT TO THE TOTAL INCOME MR. RAJU AMARLAL 2 OF THE ASSESSEE BY DISALLOWING THE PURCHASES. THE LD CIT(A) GAVE PARTIAL RELIEF BY CONFIRMING THE ADDITIO N TO THE EXTENT OF 25% OF THE VALUE OF PURCHASES REFERRED ABOVE. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. 3. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS PURCHASED IRON AND STEEL ITEM FROM THE ABOVE SAID CONCERN FOR RESELLING THE SAME. SHE SUBMITTED THAT THE MATERIALS WERE SUPPLIED TO THE ASSESSEES PLACE AND THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE BY WAY OF CHEQUE. HE SUBMITTED THAT THERE IS NO EVIDENCE TO SHOW THAT THE MONEY HAS FLOWN BACK TO THE ASSESSEE. SHE SUBMITTED THAT THE GROSS PROFIT RATIO DECLARED BY THE ASSESSEE WAS 9.56% DURING THE YEAR UNDER CONSIDERATION AND THE SAME IS COMPARABLE TO 10.09% AND 8% DECLARED BY THE ASSESSEE IN THE PRECEDING TWO YEARS. SHE FURTHER SUBMITTED THAT THE ASSESSEE COULD NO T HAVE SOLD THE GOODS WITHOUT PURCHASING THE MATERIALS. SHE SUBMITTED THAT THE CONCERNED DEALER MIGHT HAVE GIVEN SUCH TYPE OF STATEMENT TO SUIT HIS OWN CONVENIENCE AND HENCE THE SAME SHOULD NOT HAVE BEEN RELIED UPON BY THE TAX AUTHORITIES. ACCORDINGLY SH E SUBMITTED THAT THERE IS NO JUSTIFICATION ON THE PART OF THE AO IN TREATING THE ENTIRE AMOUNT OF PURCHASES AS BOGUS MERELY BY PLACING RELIANCE ON THE GENERAL INFORMATION PROVIDED BY THE SALES TAX DEPARTMENT. SHE CONTENDED THAT THE LD CIT(A) SHOULD HAVE F ULLY DELETED THE ADDITION. 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE DID MAINTAIN STOCK REGISTER AND DID NOT PROVE TRANSPORT OF MATERIALS, PAYMENT OF TAXES ETC. SHE FURTHER SUBMITTED THAT THE ABOVE SAID SUPPLIER HAS CONFESSED BEFORE T HE SALES TAX DEPARTMENT THAT IT HAS GIVEN ONLY ACCOMMODATION BILLS. ACCORDINGLY SHE SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO. MR. RAJU AMARLAL 3 5. I HEARD THE PARTIES AND PERUSED THE RECORD. I NOTICE THAT THE ASSESSING OFFICER HAS MAINLY PLACED RELIANCE ON THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT TO TAKE ADVERSE DECISION AGAINST THE ASSESSEE. THE LD A.R SUBMITTED THAT THE GROSS PROFIT RATIO DECLARED BY THE ASSESSEE WAS COMPARABLE WITH THE PRECEDING YEARS. ACCORDINGLY THE LD A.R SUBMITTED THAT THE ADDITION MADE BY THE AO WOULD INCREASE THE G.P RATIO ABNORMALLY. I FIND MERIT IN THE SAID CONTENTIONS. HOWEVER, WE NOTICE THAT THE ASSESSEE HAS NOT MAINTAINED STOCK REGISTER NOR DID IT HAVE PROOF FOR TRANSPORTAT ION OF MATERIALS. THE ASSESSEE ALSO COULD NOT GET ANY CONFIRMATION LETTER FROM THE SUPPLIER NOR DID HE FURNISH ALL THE INFORMATION CALLED FOR BY THE AO. HENCE, I AM OF THE VIEW THAT THE ASSESSEE HAS NOT CONCLUSIVELY PROVED THE GENUINENESS OF THE PURCHASE S. AT THE SAME TIME, THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE ASSESSEE COULD NOT HAVE SOLD THE GOODS WITHOUT USING THE MATERIALS. ONE POSSIBILITY, AS CONCLUDED BY LD CIT(A) IS THAT THE ASSESSEE COULD HAVE PURCHASED THE GOODS FROM GREY M ARKET AT A LOWER RATE. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN SETTLING THE ISSUE BY ESTIMATING THE PROFIT, WHICH THE ASSESSEE COULD HAVE MADE FROM SUCH KIND OF PURCHASES. HOWEVER, THE ESTIMATE OF PROFIT @ 25% APPEAR S TO BE ON THE HIGHER SIDE. ACCORDINGLY I MODIFY THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO RESTRICT THE ADDITION TO 12.5% OF THE IMPUGNED PURCHASE AMOUNT IN ORDER TO TAKE CARE OF DEFICIENCIES, IF ANY. IN MY VIEW, THE SAME WOULD PUT THIS ISSUE AT REST. I ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 . 5 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 5 / 20 1 7 MR. RAJU AMARLAL 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGIS TRAR) PS ITAT, MUMBAI