YOGESH KUMAR MALHOTRA, THANE V. DCIT, CIR- 3, THANE

ITA 3050/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9669 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Bogus purchase; Principle of natural justice; Corroborative evidences; Onus to prove
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTNAT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3050/MUM/2016 (ASSESSMENT YEAR- 2009-10) SHRI YOGESH KUMAR MALHOTRA PLOT NO.4, GOKUL DHAM, SECTOR-7, SHREE NAGAR, WAGLE ESTATE, THANE (W)-400601. PAN: ANQPM6852R VS. DCIT, CIRCLE-3 ROOM NO.2, B WING, 6 TH FLOOR, ASHAR IT PARK, ROAD NO.16Z, WAGLE ESTATE, THANE. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEVENDRA JAIN (AR) REVENUE BY : SHRI T. A. KHAN (D R) DATE OF HEARI NG : 21.09.2017 DATE OF PRONOUNCEMENT : 21.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS)-3 [LD. CIT(A)], THANE DATED 29.02.2016 FOR THE ASSESSMENT YEAR (AY) 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER ('AO') OF ADDING PURCHASES FROM NAVDEEP TRADING CORPORATION AMOUNTIN G TO RS. 32,69,963/- AS BOGUS PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF HOLDING THAT PURCHASES TO THE TUNE OF ITA NO.3050/M/2016- SHRI YOGESH KUMAR MALHOTRA 2 RS. 32,69,963/- AS BOGUS PURCHASES INSPITE OF SALES BEING ACCEPTED BY THE LD. AO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO OF DENYING THE BENEFITS OF NATURAL JUSTICE BY NOT CONFRONTING THE APPELLANT WITH THE I MPUGNED DOCUMENTS/AFFIDAVIT RELIED ON BY THE LD. AO. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED IN REJECTING THE BOOKS OF ACCOUNT OF THE APPE LLANT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 29.09.2009 DECLARING T OTAL INCOME AT RS.43,98,640/-. ON THE BASIS OF INFORMATION FROM TH E SALES TAX DEPARTMENT AND FROM INFORMATION OF DIRECTOR GENERAL INCOME TAX -CIRCLE-3(DGIT), THE ASSESSMENT WAS RE-OPENED. NOTICE UNDER SECTION 148 DATED 22.03.2013 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE VIDE HIS REP LY DATED 09.04.2013 CONTENDED THAT THE RETURN ORIGINALLY FILED MAY BE T REATED AS RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT . THE RE-ASSESSMENT WAS COMPLETED ON 26.03.2014 UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. DURING THE RE-ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS ONE OF THE BENEFICIARY WHO HAS RECEIVED BOGUS BILL FROM M/S NAVDEEP TRADING CORPORATION FOR RS. 32,69,963/-. TH E ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) TO M/S NAVDEEP T RADING CORPORATION. THE NOTICE WAS RETURNED UN-SERVED BY THE POSTAL AUT HORITIES. THE ASSESSING OFFICER DEPUTED THE INSPECTOR TO VERIFY THE PARTIES AND TO SERVE THE NOTICE. THE INSPECTOR REPORTED THAT NO SUCH CONCERN IS RUNN ING ON THE ADDRESS FROM THE SAID PREMISES. THE ASSESSING OFFICER ISSUED SHO W-CAUSE NOTICE TO THE ITA NO.3050/M/2016- SHRI YOGESH KUMAR MALHOTRA 3 ASSESSEE AS TO WHY THE PURCHASES SHOULD NOT BE TREA TED AS BOGUS PURCHASES. IN RESPONSE TO THE NOTICE OF THE ASSESSING OFFICER, THE ASSESSEE CONTENDED THAT THE PURCHASES ARE GENUINE AS PAYMENTS WERE MAD E THROUGH CHEQUES. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY ASSE SSING OFFICER HOLDING THAT ASSESSEE COULD NOT PRODUCE THE SUPPORTING EVIDENCE LIKE TRANSPORTATION ENTRY IN THE STOCK REGISTER. THUS, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PURCHASES FROM M/S NAVDEEP TRADING CORPORATION. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER WAS CONFIRM ED. FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE ARGUED THAT THE ASSESSEE HAS MADE THE GENUINE PURCHASES. THE PURCHA SES WERE MADE THROUGH THE BANKING TRANSACTION. THE ASSESSING OFFICER DISA LLOWED THE ENTIRE PURCHASES FROM NAVDEEP TRADING CORPORATION. THE ASS ESSING OFFICER MADE THE ADDITION ON THE BASIS OF THIRD PARTY INFORMATIO N. IT WAS ARGUED THAT MERE NON-PRODUCTION OF PARTIES CANNOT LEAD TO THE PRESUM PTION THAT TRANSACTION IS NOT GENUINE, WHEN TRANSACTION IS ESTABLISHED THROUG H BANKING CHANNEL. THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE PARTI ES. NO SUMMON WAS ISSUED TO THE PARTIES. ON THE OTHER HAND, THE LD. DR FOR T HE REVENUE SUPPORTED THE ITA NO.3050/M/2016- SHRI YOGESH KUMAR MALHOTRA 4 ORDERS OF AUTHORITIES BELOW. THE LD. DR FOR THE REV ENUE ARGUED THAT THE ASSESSEE HAS NOT DISCHARGED HIS PRIMARY ONUS TO SUB STANTIATE THE GENUINENESS OF PURCHASES. THE ASSESSEE FAILED TO PRODUCE THE ST OCK-REGISTER, CONSUMPTION REGISTER, EVIDENCE RELATED WITH TRANSPO RTATION OF GOODS AND DELIVERY AT THE PREMISES OF THE ASSESSEE. THE ASSES SEE IS MERELY CONTENDING THAT THE TRANSACTION WAS MADE THROUGH BANKING CHANN EL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE TRANSACTION. SINCE THE PARTIES WERE NOT AVAILABLE AT THE ADDRESS. HENCE, THERE WAS NO OCCASION FOR AS SESSING OFFICER TO SUMMON THE PARTY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE SE EN THAT WHILE PASSING ORDER THE ASSESSING OFFICER HAS NOT REJECTED THE BO OKS OF ACCOUNT OF ASSESSEE. THE ASSESSING OFFICER HAS NOT EXAMINED TH E CONSUMPTION OF MATERIAL NOR DISPUTED THE SALES OF THE ASSESSEE. TH E ASSESSING OFFICER HAS NOT EXAMINED THE BOOKS OF ACCOUNT AND THE GROSS PRO FIT EARNED BY THE ASSESSEE DURING THE RELEVANT AY. IN OUR VIEW, WHEN THE ASSESSING OFFICER HAS NOT DOUBTED THE SALE OF THE ASSESSEE, THUS, IT MAY BE AN ILLOGICAL TO CONCLUDE THAT WITHOUT CORRESPONDING PURCHASES, THE ASSESSEE COULD NOT AFFECTED THE SALES. THE ASSESSING OFFICER HAS NOT B ROUGHT ANY MATERIAL ON RECORD TO CONCLUSIVELY ESTABLISH THAT THE PURCHASES ARE BOGUS. MERELY UPON THE INFORMATION OF SALES TAX DEPARTMENT OR THE FACT THAT THE PARTY WAS NOT ITA NO.3050/M/2016- SHRI YOGESH KUMAR MALHOTRA 5 PRODUCED BEFORE THE ASSESSING OFFICER, THE ASSESSIN G OFFICER COULD NOT TREATED THE PURCHASES AS BOGUS AND MADE THE ADDITIO N OF THE ENTIRE PURCHASES IN CASE THE ASSESSING OFFICER HAS ANY DOUBT, IT WAS INCUMBENT UPON HIM TO MAKE THE FURTHER INVESTIGATION TO ASCERTAIN THE GEN UINENESS OF TRANSACTION, WHEN THE ASSESSEE HAS CATEGORICALLY CONTENDED THAT PAYMENTS WERE MADE THROUGH BANKING TRANSACTION. NO ENQUIRY WAS MADE FR OM THE BANKERS OF THE ASSESSEE. SIMILARLY, WE MAY ALSO NOTE THAT ASSESSEE HAS NOT FULLY DISCHARGED HIS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIO N AS FULL PROOF. DURING THE FIRST APPELLATE STAGE THE ASSESSEE WAS ASKED TO WOR KING OF GROSS AND NET PROFIT. THE ASSESSEE FURNISHED THE DETAILS OF GROS S PROFIT/NET PROFIT RATIO. THE FIRST APPELLATE AUTHORITY / LD. CIT(A) EXAMINE D THE GROSS PROFIT/NET PROFIT RATIO FOR THE YEAR UNDER CONSIDERATION, PREC EDING YEAR AND SUBSEQUENT YEAR. HOWEVER, THE SAME WAS NOT ACCEPTED BY LD. CIT (A). THE LD. CIT(A) UPHELD THE ENTIRE ADDITION/DISALLOWANCE. 5. WE HAVE NOTED THAT THE LOWER AUTHORITY HAS DISALLOW ED THE ENTIRE AMOUNT OF PURCHASES FROM NAVDEEP TRADING CORPORATION. WE ARE OF THE CONSIDERED VIEW THAT UNDER THE INCOME-TAX ACT, THE REVENUE IS ENTITLED TO TAX THE REAL INCOME ONLY. WE MAY FURTHER OBSERVED THAT EVEN IN C ASES WHERE THE ENTIRE TRANSACTION IS NOT VERIFIABLE DUE TO VARIOUS REASON S, THE ONLY TAXABLE IS THE TAXABLE INCOME COMPONENT AND NOT THE ENTIRE TRANSAC TION. THE HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. HARIRAM BHAMBH ANI ITA NO. 313 OF ITA NO.3050/M/2016- SHRI YOGESH KUMAR MALHOTRA 6 2013 DECIDED ON 04.02.2015 HELD THAT REVENUE IS NOT ENTITLED TO BRING THE ENTIRE SALE CONSIDERATION TO TAX, BUT THE ONLY PROF IT ATTRIBUTABLE ON THE TOTAL UNRECORDED SALE CONSIDERATION ALONG CAN BE SUBJECT TO INCOME-TAX. 6. AFTER CONSIDERING THE FACT AND SUBMISSION OF THE PA RTIES, WE ARE OF THE OPINION THAT IN ORDER TO FULFILL THE GAP OF REVENUE LEAKAGE, THE DISALLOWANCE OF REASONABLE PERCENTAGE, IMPUGNED/BOGUS PURCHASES TO 12.5% WOULD MEET THE END OF JUSTICE. HENCE, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE @ 12.5% OF PURCHASES FROM NAVDEEP TRAD ING CORPORATION (RS.32,69,963/-). HENCE, THE GROUND OF APPEAL RAISE D BY ASSESSEE IS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF SEPTEMBER 2017. SD/- SD/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 21/09/2017 S.K.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/