MADHU BANWARILAL AGARWAL, MUMBAI V. ITO WD 32(2)(3), MUMBAI

ITA 2936/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1888 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAYKUMAR OZJA
• Assessee Lawyers: C A DHARMIL JHAVERI
• Keywords: Bogus purchase

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM ITA NO. 2936/ MUM/20 1 7 ( ASSESSMENT YEAR : 2011 - 12 ) SMT. MADHU BANWARILAL AGARWAL, PROP. M.S.HINDUSTAN METAL FORGE, 502, 5 TH FLOOR, B - WING SHE ETAL CHS., SAPTARSHI SANKAL, DAHISAR (E) MUMBAI 400 068 VS. ITO, WARD 32(2)(3) MUMBAI PAN/GIR NO. ADWPD7778D ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI C.A. DHARMIL JHAVERI REVENUE BY SHRI AJAY KUMAR OZJA DATE OF HEARING 12 / 11 /201 8 D ATE OF PRONOUNCEMENT 16 / 11 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 44, MUMBAI DATED 08/02/2017 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 147 OF T HE IT ACT. 2. IN THIS APPEAL, ASSESSEE IS AGGRIEVED FOR UPHOLDING ADDITION OF 12.5% IN RESPECT OF PURCHASES FOUND TO BE BOGUS. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF M/S H INDUSTAN METAL FORGE ENGAGED IN THE BUSINESS OF TRADING IN FERROUS & ITA NO. 2936/MUM/2017 SMT. MADHU BANWARILAL AGARWAL 2 NON - FERROUS METALS. THESE GROUNDS RELATE TO DISALLOWANCE OF RS 33,32,180/ - AS BOGUS PURCHASES AND CONSEQUENT ADDITION OF THE SAME AMOUNT. THE AO HAS RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT THE ASSESSEE HAS SHOWN PURCHASES FROM 14 BOGUS CONCERNS. THE NAMES OF THESE CONCERNS ARE MENTIONED IN PARA 4 OF THE ASSESSMENT ORDER. THE TOTAL PURCHASES FROM THESE 14 PARTIES COMES TO RS.2,66,57,435/ - . DURING THE COURSE OF ASSESS MENT, THE A.O. ISSUED NOTICES U/S.133(6) TO THE SAID PARTIES. ALL THE NOTICES .WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES. IT IS THE CONTENTION OF THE A.O. THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF PURCHASES. SINCE THE A.O. DID NOT DOU BT THE GENUINENESS OF SALES HE CAME TO THE CONCLUSION THAT THE ASSESSEE MUST HAVE MADE PURCHASES FROM GREY MARKET AND THEREFORE THE PURCHASE RATE MENTIONED IN THE ALLEGED BILLS CANNOT BE ACCEPTED. AFTER CONSIDERING THE TOTALITY OF FACTS, THE A.O. STATED TH AT THE ASSESSEE HAS ARRANGED BILLS WORTH RS, 2,66,57,435/ - TO SUPPRESS HER TRUE PROFIT. THE AO THEREAFTER , ESTIMATED HER TRUE PROFIT BY TAKING 12.5% OF THE BOGUS PURCHASE AS FAIR PROFIT. THE AO ACCORDINGLY MADE AN ADDITION OF RS.33,32,180/ - . 4. BY THE IMPU GNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT AO HAS GIVEN FULL OPPORTUNITY TO THE ASSESSEE BY ISSUING NOTICE U/S.133(6) C ALLING THE SUPPLIERS. HOWEVER, ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF ITA NO. 2936/MUM/2017 SMT. MADHU BANWARILAL AGARWAL 3 PURCHASES, ACCORDINGLY, HE COMPUTED PROFIT ELEMENT IN SUCH PURCHASES AT 12.5% AND ADDED THE SAME IN ASSESSEES INCOME. THE CIT(A) CONFIRMED THE FINDING OF THE AO. IT WAS CONTENT ION OF LEARNED AR THAT ASSESSEE HAS ALREADY DISCLOSED GP OF 2.5% OF SUCH PURCHASES. SINCE THE CORRESPONDING SALES HA VE BEEN DISPUTED BY THE DEPARTMENT, THE ADDITION IS WARRANTED ONLY TO THE EXTENT OF PROFIT WHICH IS EMBEDDED IN SUCH ALLEGED BOGUS PURCHASES . WE OBSERVE THAT ASSESSEE HIMSELF HAS OFFERED PROFIT G.P. OF 2.5% OF SUCH PURCHASES, ACCORDINGLY, WE DIRECT THE AO TO ALLOW CREDIT OF 2.5% OUT OF THE ADDITION OF 12.5% SO MADE BY THE AO AFTER DUE VERIFICATION OF G.P. DISCLOSED BY ASSESSEE . WE DIRECT ACCOR DINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 / 11 /201 8 SD/ - ( AMARJIT SINGH SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNT ANT MEMBER MUMBAI ; DATED 16 / 11 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//