ITO-28(1)(4), MUMBAI V. ISHWARLAL H MISTRY, NAVI MUMBAI

ITA 2984/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1943 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 2984 / / 2019 (%. .2009-10 ) ITA NO. 2984/MUM/2019 (A.Y.2009-10) ITO-28(1)(4), ROOM NO.330, 3 RD FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI 400 703 / VS. : / APPELLANT ISHWARLAL H. MISTRY, SHOP NO.24, OM RACHANA CHS, SECTOR -17, VASHI, NAVI MUMBAI 400705 PAN:AJDPM 2964R : / RESPONDENT REVENUE BY : MS. SMITA VERMA ASSESSEE BY : NONE / DATE OF HEARING : 03/11/2020 / DATE OF PRONOUNCEMENT : 23/11/2020 / ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI ( IN SHORT THE CIT (A)) DATED 28/02/2019 FOR THE ASSESSMENT YEAR 2009-10. 2 ITA NO. 2984/MUM/2019 (A.Y.2009-10) 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS AN INTERIOR CONTRACTOR AND ARCHITECTURE. THE ASS ESSMENT FOR ASSESSMENT YEAR 2009- 10 WAS REOPENED IN THE CASE OF ASSESSEE ON THE BASI S OF INFORMATION RECEIVED FROM SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THA T THE ASSESSEE HAS INDULGED IN OBTAINING BOGUS PURCHASES AGGREGATING TO RS.19,82,6 06/- FROM DECLARED HAWALA OPERATORS. THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES MADE DURING THE PERIOD RELEVANT TO ASSE SSMENT YEAR UNDER APPEAL. FURTHER, THE ASSESSING OFFICER MADE ADHOC DISALLO WANCE OF RS.2,05,544/- IN RESPECT OF CERTAIN EXPENDITURE VIZ. CONVEYANCE EXPENSES ,O FFICE EXPENSES, LABOUR CHARGES, PAINTING EXPENSES, PETROL EXPENSES, STAFF WELFARE, TELEPHONE, ETC., AS THESE EXPENSES WERE NOT FULLY SUPPORTED BY PROPER BILLS/VOUCHERS OR WERE MADE BY WAY OF SELF MADE VOUCHERS FOR CASH. AGGRIEVED BY THE ASSESSME NT ORDER DATED 28/03/2015 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 ( IN SHORT THE ACT), THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) IN PRINCIPLE UPHELD THE FINDINGS OF ASSESSING OFFICER IN RESPECT OF ASSESSE ES INVOLVEMENT IN OBTAINING BOGUS PURCHASE BILLS. HOWEVER, THE CIT(A) RESTRICTED THE ADDITION TO 12.5% OF SUCH BOGUS PURCHASES. IN RESPECT OF ADHOC DISALLOWANCE OF EXP ENSES, THE CIT(A) OBSERVED THAT DISALLOWANCE MADE IS ON HIGHER SIDE. THE CIT(A) GRANTED PART RELIEF TO THE ASSESSEE BY RESTRICTING THE DISALLOWANCE ON OFFICE EXPENSES TO 10%. AGAINST THE RELIEF ALLOWED BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. MS. SMITA VERMA, REPRESENTING THE DEPARTMENT VEH EMENTLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDI NGS OF CIT(A). THE LD.DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE A SSESSEE HAS FAILED TO PROVE GENUINENESS OF THE PURCHASES. NEITHER THE PARTIES FROM WHOM PURCHASES WERE MADE WERE PRODUCED BEFORE THE ASSESSING OFFICER NOR THE ASSESSEE COULD SHOW ANY DOCUMENTARY EVIDENCE IN THE FORM OF OCTROI RECEIPTS , TRANSPORTATION CHARGES, ETC. TO PROVE TRAIL OF GOODS. THE ASSESSING OFFICER HAD ISSUED NOTICES TO THE SUPPLIERS 3 ITA NO. 2984/MUM/2019 (A.Y.2009-10) UNDER SECTION 133(6) ON THE ADDRESSES FURNISHED BY THE ASSESSEE. HOWEVER, THE SAME WERE RETURNED BACK UNSERVED WITH REMARK LEFT OR UNKNOWN. THE LD.DEPARTMENTAL REPRESENTATIVE POINTED THAT IN SO F AR AS DISALLOWANCE OF EXPENDITURE IS CONCERNED THE ASSESSEE HAD NOT FURNISHED ORIGINA L BILLS IN RESPECT OF CERTAIN EXPENSES, HENCE, THE ASSESSING OFFICER DISALLOWED 2 0% OF SUCH EXPENDITURE. 4. SUBMISSIONS MADE BY LD.DEPARTMENTAL REPRESENTATI VE HEARD AND ORDERS OF AUTHORITIES BELOW EXAMINED. THE REVENUE IS IN APPE AL AGAINST THE PART RELIEF GRANTED BY THE FIRST APPELLATE AUTHORITY IN RESPECT OF BOGU S PURCHASES AND ADHOC DISALLOWANCE OF EXPENDITURE. 5. THE ASSESSEE HAS PURPORTEDLY OBTAINED BOGUS PU RCHASE BILLS AMOUNTING TO RS.19,82,606/-. THE ASSESSING OFFICER HAS NOT QUEST IONED THE TURNOVER/SALES DECLARED BY THE ASSESSEE. WITHOUT PURCHASES, THERE CANNOT BE SALES/EXECUTION OF WORK. SINCE THE SALES/TURNOVER DECLARED BY THE ASSESSEE HAS BEE N ACCEPTED BY THE ASSESSING OFFICER THERE CANNOT BE ADDITION OF ENTIRE ALLEGE D BOGUS PURCHASES. THE CIT(A) IN IMPUGNED ORDER HAS OBSERVED THAT OSTENSIBLY THE ASS ESSEE HAS MADE PURCHASES FROM GREY MARKET AT LOWER RATES AND HAS OBTAINED BOGUS BILLS FROM ENTRY PROVIDERS TO MATCH SUCH PURCHASES. IN SUCH LIKE TRANSACTIONS IT IS ONLY PROFIT ELEMENT EMBEDDED IN THE BOGUS PURCHASE BILLS THAT HAS TO BE BROUGHT TO TAX. THE CIT(A) HAS ESTIMATED G.P @ 12.5% OF THE BOGUS PURCHASES. I FIND THAT THE OR DER OF CIT(A) IS REASONABLE AND JUSTIFIED, HENCE, NO INTERFERENCE IS WARRANTED. GR OUND NO.1 OF THE APPEAL BY THE REVENUE IS DISMISSED SANS-MERIT. 6. IN GROUND NO.2 OF APPEAL, THE REVENUE HAS ASS AILED THE ORDER OF CIT(A) IN RESTRICTING ADHOC DISALLOWANCE IN RESPECT OF OFFI CE EXPENSES TO 10%. THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE OF 20% IN RESPE CT OF EXPENSES SUCH AS CONVEYANCE EXPENSES, PETROL EXPENSES, STAFF WELFARE EXPENSES, TELEPHONE EXPENSES, ETC. ON THE GROUND THAT THESE EXPENSES WERE NOT FUL LY SUPPORTED BY BILLS/VOUCHERS AND IN RESPECT OF CERTAIN EXPENDITURE THERE WERE SE LF MADE VOUCHERS AGAINST CASH. I 4 ITA NO. 2984/MUM/2019 (A.Y.2009-10) FIND THAT THE ADHOC DISALLOWANCE MADE BY ASSESSING OFFICER IN RESPECT OF OFFICE EXPENSES IS ON THE HIGHER SIDE. THE CIT(A) RESTRIC TED THE DISALLOWANCE TO 10%. THE SAME IS REASONABLE AND I CONCUR WITH REASONS FOR RE DUCING THE RATE OF ADHOC DISALLOWANCE. NO INTERFERE WITH THE FINDINGS OF C IT(A) IS WARRANTED. THE IMPUGNED ORDER IS UPHELD AND GROUND NO.2 OF THE APPEAL BY REVENUE IS DISMISSED. 7. GROUND NO.3 AND 4 OF THE APPEAL ARE GENERAL IN NATURE, HENCE, REQUIRE NO ADJUDICATION. 8. NO APPEAL/CROSS OBJECTIONS BY THE ASSESSEE AGAINS T THE ORDER OF CIT(A) HAS BEEN BROUGHT TO THE NOTICE OF BENCH. IN CASE AT LATER POINT OF TIME ANY APPEAL/CROSS OBJECTIONS BY THE ASSESSEE AGAINST IMP UGNED ORDER OF CIT(A) IS FOUND, THEN THIS ORDER MAY BE RECALLED AND THE CROSS APPE ALS MAY BE LISTED TOGETHER FOR DISPOSAL BY A COMMON ORDER. 9. IN THE RESULT, APPEAL BY THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON MONDAY THE 23 RD DAY OF NOVEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, (%/ DATED: 23/11/2020 VM , SR. PS(O/S) 5 ITA NO. 2984/MUM/2019 (A.Y.2009-10) 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