ITO-17(3)(5), MUMBAI V. UDAY TRADING CORPORATON , MUMBAI

ITA 2906/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1166 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Bogus purchase; Accommodation entries; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2906 / / 2019 (%. .2011-12 ) ITA NO. 2906/MUM/2019 (A.Y.2011-12) ITO-17(3)(5), ROOM NO.137, 1 ST FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020. / VS. : / APPELLANT UDAY TRADING CORPORATION, 2 ND FLOOR, 243, NAGDEVI STREET, MUMBAI- 400 003 PAN: AAAFU0724H : / RESPONDENT REVENUE BY : SHRI AJAY PRATAP SINGH ASSESSEE BY : SHRI RAJESH SHAH / DATE OF HEARING : 12/10/2020 / DATE OF PRONOUNCEMENT : 14/12/2020 / ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-28, MUMBAI (IN SHORT THE CIT( A)) DATED 08/02/2019 FOR THE ASSESSMENT YEAR 2011-12. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM R ECORDS ARE: THE ASSESSEE IS ENGAGED IN TRADING OF HARDWARE, TOOLS, BALL BEARIN G AND OTHER ALLIED PRODUCTS. ON THE BASIS OF INFORMATION RECEIVED FROM SALES TAX DEPART MENT, GOVERNMENT OF 2 ITA NO. 2906/MUM/2019 (A.Y.2011-12) MAHARASHTRA BY DGIT(INVESTIGATION), MUMBAI, THE ASS ESSMENT FOR ASSESSMENT YEAR 2011-12 IN THE CASE OF ASSESSEE WAS REOPENED. AS PER INFORMATION RECEIVED, THE ASSESSEE ALLEGEDLY OBTAINED BOGUS PURCHASE BILLS A MOUNTING TO RS.4200/- FROM M/S. MAHAVIR TRADING, ONE OF THE SUSPICIOUS DEALERS ENGA GED IN PROVIDING ACCOMMODATION ENTRIES. THE ASSESSING OFFICER IN REASSESSMENT PR OCEEDINGS MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES. AGGRIEVED BY THE AS SESSMENT ORDER DATED 30/11/2016, PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER EXAMINING THE FACTS, RESTRICTED THE DISALLOWANCE TO 12.5%. AGAINST THE FINDINGS OF CIT(A), THE REVENUE IS IN APPEAL. 3. SHRI AJAY PRATAP SINGH, REPRESENTING THE DEPARTM ENT SUBMITTED THAT THOUGH THE TAX EFFECT INVOLVED IN THE APPEAL IS LESS THAN THE MONETARY LIMIT SPECIFIED VIDE CBDT CIRCULAR NO. 17/2019, DATED 08-08-2019 BUT THE CASE OF ASSESSEE FALLS UNDER EXCEPTION SPECIFIED IN PARA 10(E) OF CIRCULAR NO. 03 OF 2018 DATED 11/07/2018 AND AMENDED ON 20/08/2018 . THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD OBTAINED ACCOMMODATIONS ENTRIES FROM D ECLARED HAWALA DEALER. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO PROVE GENUINENESS OF THE PURCHASES, THEREFORE, THE ASSESSING OFFICER MADE AD DITION OF THE ENTIRE SUCH BOGUS PURCHASES. THE LD.DEPARTMENTAL REPRESENTATIVE PRAY ED FOR REVERSING THE FINDINGS OF CIT(A) AND RESTORING THE FINDING OF ASSESSING OFFIC ER. 4. PER CONTRA, SHRI RAJESH SHAH, APPEARING ON BEHAL F OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF CIT(A) IN RESTRICTING THE DIS ALLOWANCE ON ALLEGED BOGUS PURCHASES TO 12.5%. THE LD.AUTHORIZED REPRESENTATI VE OF THE ASSESSEE SUBMITTED THAT SALES MADE BY THE ASSESSEE HAVE NOT BEEN DOUB TED BY THE ASSESSING OFFICER, THEREFORE, THE ENTIRE ALLEGED BOGUS PURCHASES CANNO T BE ADDED. WITHOUT CORRESPONDING PURCHASES THERE CANNOT BE SALES. TH E LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PRAYED FOR CONFIRMING THE FINDINGS OF CIT(A) AND DISMISSING THE APPEAL OF REVENUE. 3 ITA NO. 2906/MUM/2019 (A.Y.2011-12) 5. BOTH SIDES HEARD, ORDERS OF AUTHORITIES BELOW EX AMINED. THE ASSESSEE IS STATED TO HAVE OBTAINED BOGUS PURCHASE BILLS AMOUNTING TO RS.4,200/- FROM HAWALA DEALERS. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE B OGUS PURCHASES. THE CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% OF SUCH BOGUS PURCHASES. UNDISPUTEDLY, THE REVENUE ACCEPTED THE SALES DECLARED BY THE ASSESSEE . WITHOUT CORRESPONDING PURCHASES THERE CANNOT BE SALES, THEREFORE, IN SUCH LIKE SUSPICIOUS TRANSACTIONS IT IS ONLY THE PROFIT ELEMENT EMBEDDED IN BOGUS PURCHASES THAT HAS TO BE BROUGHT TO TAX.[ RE.PCIT VS. PARAMSAKHTI DISTRIBUTORS PVT. LTD., INC OME TAX APPEAL NO.413 OF 2017 DECIDED ON 15/07/2019 BY HON'BLE BOMBAY HIGH COURT] . I FIND NO INFIRMITY IN THE IMPUGNED ORDER, HENCE, THE SAME IS UPHELD AND APPEA L BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON MONDAY THE 14 TH DAY OF DECEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 14/12/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. ) / THE APPELLANT , 2. *+ / THE RESPONDENT. 3. ,+ ( )/ THE CIT(A)- 4. ,+ CIT 5. -.*+% , . . . , / DR, ITAT, MUMBAI 6. ./012 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI