DEEPAK C. BAJAJ, MUMBAI V. ITO 2(1) KALYAN, KALYAN

ITA 2938/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0107 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 147; 69; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH , MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 29 38 / MUM/ 201 6 ( / ASSESSMENT YEAR: 20 1 0 - 1 1 ) SH. DEEPAK C. BAJAJ, FLAT NO. 1105 - 1106, PLEASANT PARK, YOGI HILLS, MULUND (WEST), MUMBAI - 400080 VS. THE INCOME TAX OFFICER, 2 ND FLOOR, WARD 2(1) KALYAN, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (WEST) - 421301 ./ ./ PAN/GIR NO. : AAWPB 4802 D ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : MS. NEHA PARANJ PE (A R) / REVENUE BY : SHRI SAURABH KUMAR RAI (D R) / DATE OF HEARING : 01 / 0 8 / 201 7 / DATE OF PRONOUNCEMENT : 31 /08 /2017 / O R D E R PER RAM LAL N EGI, JM THE PRESENT APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 04/01/2016 PASSED BY THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) - 3 , THANE, PERTAINING TO THE ASSESSMENT YEAR 20 10 - 11 , WHEREBY THE LD. CIT (A) HAS PARTLY ALLOWED THE APPE AL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 30/ 10/2014 PASSED U/S 143 (3) R/W SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A PROPRIETARY CONCERN, M/S DNR CORPORATION, ENGAGED IN THE BUSINESS OF TRADING IN LUBRICATING OIL AND GRE ASE , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 DECLARING 2 ITA NO 2938 /M UM/201 6 ASSESSMENT YEAR: 20 10 - 11 THE TOTAL INCOME OF RS. 5,43,791/ - . THE SAME WAS PROCESSED U/S 143 (1). SUBSEQUENTLY , THE REVENUE RECEIVED THE INFORMATION FROM THE SALES TAX DEPARTMENT, MAHARASHTRA THAT CERTAIN DEALERS HAD PROVIDED ACCOMMODATION BILLS TO DIFFERENT PURCHASERS INCLUDING THE ASSESSEE IN THIS CASE WITHOUT ACTUALLY SUPPLYING GOODS . O N VERIFICATION , I T CAME TO THE NOTICE THAT ASSESSEE HAD PURCHASED GOO DS FROM THE SAID DEALERS TO THE TUNE OF RS. 70,66,771/ - DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. ACCORDINGLY, THE AO ISSUED NOTICE U/S 148 AFTER RECORDING REASONS. IN RESPONSE THEREOF THE ASSESSEE REQUESTED TO TREAT THE ORIGINAL R ETURN OF INCOME AS THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 148. THEREAFTER, THE AO ISSUED NOTICE US/ 143 (2) A NOTICE U/S 142 (1) ALONG WITH QUESTIONNAIRE. THE ASSESSEE FURNISHED COPIES OF BILLS AND PAYMENTS DETAILS. SINCE, THE ASSESSEE HAD NO T MAINTAINED STOCK REGISTER AND FAILED TO PRODUCE TRANSPORT CHALLANS , NOTICES U/S 143 (6) WERE ISSUED TO THE PARTIES CONCERNED, HOWEVER, THE NOTICES WERE RECEIVED BACK UN - SERVED. THE WARD INSPECTOR ALSO COULD NOT LOCATE THE PARTIES. ACCORDINGLY, THE AO DIS ALLOWED THE ENTIRE AMOUNT OF PURCHASE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. IN FIRST APPEAL, THE LD. CIT (A) RESTRICTED THE DISALLOWANCE TO 25% OF THE PURCHASES MADE FROM THE HAWALA DEALERS HOLDING THAT THERE CANNOT BE SALE WITHOUT ANY PURCHASE . 3. STILL AGGRIEVED, T HE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING E F FECTIVE GROUND : - . 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - III, THANE [HEREINAFTER REFERRED TO AS LD. CIT (A)] ERRED IN PASSING THE ORDER DATED 04 - 01 - 201 6 DISALLOWANCE @ 25% OF RS. 7066771/ - WORKS OUT @ RS. 1766692/ - ARE RETAINED & RELIEF IS PARTLY GIVEN @ RS. 5300079/ - IN PLACE OF FULL RS. 7066771/ - . THE APPELLANT PRAYS THAT ADDITIONS OF RS. 7066771 MADE U/S 69 OF I.T. ACT BY I.T.O. WARD 2(1) AT KALYAN ON A/C OF SO CALLED HAWALA PURCHASES BE DELETED. 3 ITA NO 2938 /M UM/201 6 ASSESSMENT YEAR: 20 10 - 11 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES CASE IS COVERED BY THE DECISION OF ITAT, MUMBAI RENDERED IN ASSESSES OWN CASE FOR THE A.Y. 2009 - 10 AND 2011 - 12 AND THE TRIBUN AL HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5%. THE LD. COUNSEL FURTHER SUBMITTED THAT THE PRESENT APPEAL MAY BE DECIDED ACCORDINGLY. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITT ED THAT THE IMPUGNED ORDER DOES NOT WARRANT ANY INTERFERENCE AS THE DISALLOWANCE OF 25% IS REASONABLE IN THE LIGHT OF THE FACTS OF THE CASE AND THE EVIDENCE ON RECORD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE SMC BENCH OF THE MUMBAI TRIBUNAL HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% OF THE ALLEGED BOGUS PURCHASES, IN ASSESSEES OWN APPEALS, ITA NO. 287/MUM/2017, ( A.Y. 2009 - 10 ) AND ITA NO. 284/MUM/ 2017 (A.Y. 2011 - 12) . THE OPERATIVE PART OF THE ORDER READS AS UNDER : - 5 HAVING HEARD RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE RATE OF GP OF 25% ESTIMATED BY THE ASSESSEE IS ON THE HIGHER SIDE, SINCE THE ASSESSEE IS A WHOLESALE TRADER AND IN THE WHOLESALE TRADING, GP RATE OF 25% IS UNLIKELY . I NOTICE THAT THE ADDITION IS BEING SUSTAINED BY THE TRIBUNAL IN SOME OF THE CASES @ 12.5%. ACCORDINGLY I AM OF THE VIEW THAT THE G.P RATE MAY BE ADOPTED AT THE ABOVE SAID RATE AND THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY I MODIFY THE ORDER P ASSED BY LD CIT (A) IN BOTH THE YEARS AND DIRECT THE AO TO SUSTAIN THE ADDITION TO THE EXTENT OF 12.5% OF THE ALLEGED BOGUS PURCHASES. I ORDER ACCORDINGLY. 4 ITA NO 2938 /M UM/201 6 ASSESSMENT YEAR: 20 10 - 11 7. THE FACTS OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE AND ISSUES INVOLVED IN THE ASSESSES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 AND 2011 - 12. SINCE, THE COORDINATE BENCH HAS RESTRICTED THE ADDITION TO THE EXTENT OF 12.5% VIDE ORDER DATED 04/05/2017, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE VIEW ALREADY TAKEN BY THE ITAT IN THE IDENTICAL MATTER . HENCE, RESPECTFULLY FOLLOWING THE DECISION OF THE SMC BENCH OF ITAT MUMBAI, WE RESTRICT THE ADDITION TO 12.5% OF THE TOTAL AMOUNT OF BOGUS PURCHASES MADE BY THE ASSESSEE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11. AO IS DIRECTED TO COMPUTE THE ADDITION ACCORDINGLY. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST , 2017. SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 08 / 2017 ALINDRA, PS / 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. REGISTRAR) , / ITAT, MUMBAI