LABDHI ENTERPRISES, MUMBAI V. ITO-WD-13(2)(2), MUMBAI

ITA 2966/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4521 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Bogus purchase; Accommodation entries; Assessment record
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 2966 / MUM . /2018 ( ASSESSMENT YEAR : 20 09 10 ) LABDHI ENTERPRISES 45, LATIF HOUSE 3 RD FLOOR, CARNAC BUNDER MASJID, MUMBAI 400 009 PAN AACFL2346N . APPELLANT V/S INCOME TAX OFFICER WARD 13(2)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI MEHUL SHAH REVENUE BY : SHRI AJAY PRATAP SINGH DATE OF HEARING 26 . 0 2 .20 19 DATE OF ORDER 22.03.2019 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 2 3 RD FEBRUARY 2018 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 57 , MUMBAI , FOR THE ASSESSMENT YEAR 20 09 10 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF ` 11,86,293, ON ACCOUNT OF NON GENUINE PURCHASES. 3 . B RIEF FACTS ARE, THE ASSESSEE IS A PARTNERSHIP FIRM TRADING IN IRON AND STEEL, HARDWARE, TOOLS, PIPES & FITTINGS, ETC. ON THE BASIS OF 2 LABDHI ENTERPRISES INFORMATION RECEIVED FROM DGIT (INV.), MUMBAI, THAT THE ASSESSEE HAS AVAILED ACCOMMODATION ENTRIES BY WAY OF BOGUS PURCHASES OF ` 94,90,344, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). IN THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES, AS OBSERVED BY THE ASSESSING OFFICER, THE ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THE SELLING PARTIES AND AGREED FOR DISALLOWANCE OF 12.5% OF THE NON GENUINE PURCHASES. THUS, ULTIMATELY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY MAKING ADDITION OF 12.5% OF THE BOGUS PURCHASES, WHICH WORKED OUT TO ` 11,86,299. THE ASSESSEE UNSUCC ESSFULLY CHALLENGED THE AFORESAID ADDITION BEFORE LEARNED COMMISSIONER (APPEALS). 4 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ASSESSEE NEVER AGREED FOR THE ADDITION @ 12.5% OF BOGUS PURCHASES BEFORE THE ASSESSING OFFICER. HE SUBMITTED , THE PROFIT MARGIN ON IRON AND STEEL GOODS TRADED BY THE ASSESSEE IS VERY LOW. THEREFORE, ESTIMATION OF PROFIT @ 12.5% ON THE ALLEGED NON GENUINE PURCHASES IS HIGH AND EXCESSIVE. HE SUBMITTED , IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011 12, UNDER IDENTICAL FACTS AND CIRCUMSTANCES, LEARNED COMMISSIONER (APPEALS) REDUCED THE DISALLOWANCE FROM 12.5% TO 5%. 3 LABDHI ENTERPRISES THEREFORE, HE SUBMITTED , THE ADDITION SHOULD BE RESTRICTED TO 5% OF THE ALLEGED NON GENUINE PURCHASES. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING UPON THE OB SERVATIONS OF THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT SINCE THE ASSESSEE AGREED FOR ADDITION @ 12.5% OF THE PURCHASES, IT SHOULD BE UPHELD. 6 . I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS EVIDENT, THE ASSESSING OFFICER HAS MADE AD DITION @ 12.5% OF THE NON GENUINE PURCHASES PRIMARILY ON THE GROUND THAT THE ASSESSEE HAD AGREED FOR SUCH ADDITION. THE LEARNED COMMISSIONER (APPEALS) HAS ALSO SUSTAINED THE ADDITION FOR THE VERY SAME REASON. HOWEVER, BEFORE ME, THE LEARNED AUTHORISED REPR ESENTATIVE HAS VEHEMENTLY CONTESTED THE AFORESAID FINDING OF THE DEPARTMENTAL AUTHORITIES AND HAS SUBMITTED THAT THE ASSESSEE NEVER MADE SUCH CONCESSION. HE ALSO SOUGHT A DIRECTION TO THE ASSESSING OFFICER TO PRODUCE THE ASSESSMENT RECORDS FOR VERIFYING TH E AFORESAID FACT. LOOKING AT THE NATURE OF DISPUTE, I DO NOT FIND IT NECESSARY TO DELVE DEEP INTO THE ISSUE AS TO WHETHER THE ASSESSEE HAS AGREED FOR ADDITION OF 12.5% OF THE NON GENUINE PURCHASES OR NOT. I FIND FROM THE MATERIAL ON RECORD, IN ASSESSEES O WN CASE FOR THE ASSESSMENT YEAR 2011 12, UNDER IDENTICAL FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAD MADE ADDITION OF 12.5% OF THE NON GENUINE PURCHASES. HOWEVER, WHILE DECIDING 4 LABDHI ENTERPRISES ASSESSEES APPEAL ON THE ISSUE LEARNED COMMISSIONER (APPEALS) REDUCED T HE ADDITION TO 5% OF THE NON GENUINE PURCHASES. IN VIEW OF THE AFORESAID, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 5% OF THE NON GENUINE PURCHASES IN THE IMPUGNED ASSESSMENT YEAR AS WELL. GROUNDS ARE PARTLY ALLOWED. 7 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2019 SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 22 .03.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI