KANAKRAJ JEWELLERS P.LTD, MUMBAI V. DCIT 10(1)(2), MUMBAI

ITA 3051/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9604 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Bogus purchase; Business expenditure

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 3051 /MUM/ 2017 (ASSESSMENT YEAR 20 1 0 - 11 ) KANAKRAJ JEW E LLERS PVT. LTD. C/O. D.C. BOTHRA & CO. LLP(CA)(FORMERLY KNOWN AS DC BOTHRA & CO.) 297, TARDEO ROAD WIL LE MANSION, 1 ST FLOOR OPP BANK OF INDIA NANA CHOWK MUMBAI - 400 007. PAN : AACCK8393D VS. DCIT 10(1)(2) 2 ND FLOOR ROOM NO. 209 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020 ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI RAJKUMAR SINGH DEPARTMENT BY SHRI S .K. BEPARI DATE OF HEARING 1 3 .9. 201 7 DATE OF PRONOUNCEMENT 13 . 9 . 201 7 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28.02.2017 PASSED BY LD CIT(A) - 17, MUMBAI CONFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES MADE IN AY 2010 - 11. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A TRADER IN GOLD AND DIAMOND JEWELLERY. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, IT CAME TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.5,77,570/ - DURING THE YEAR UNDER CONSIDERATION FROM THE PARTIES, WHO WERE LISTED OUT BY THE SALES TAX DEPARTMENT AS HAWALA DEALERS, I.E., THEY HAVE PROVIDED ONLY ACCOMMODATION BILLS WITHOUT ACTUALLY SUPPLYING THE MATERI AL. HENCE THE AO TREATED THE ABOVE SAID AMOUNT OF RS.5,77,570/ - AS BOGUS PURCHASES AND DISALLOWED THE SAME. THE LD CIT(A) ALSO SUSTAINED THE ADDITION. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. KANAKRAJ JEWLLERS PVT. LTD. 2 3. THE LD A.R SUBMITTED THAT THE ASSESSEE IS A DEALER IN GOLD AND DIAMOND JEWELLERIES DISCLOSING TURNOVER OF MORE THAN 10.00 CRORES. HE SUBMITTED THAT THE ASSESSEE HAS PURCHASED CERTAIN COMPLIMENTARY ITEMS AS IT IS CUSTOMARY TO OFFER COMPLIMENTARY ITEMS TO THE CUSTOMERS IN ORDER TO PROMOTE THE BUSINESS. TH E ASSESSEE HAS CLAIMED THE ABOVE SAID AMOUNT OF RS.5,77,570/ - AS BUSINESS EXPENDITURE AS THE COMPLIMENTARY ITEMS ARE CONSUMABLES. SINCE THEY ARE LOW VALUE ITEMS, THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER. HE SUBMITTED THAT THE ASSESSEE HAS ACTUALLY PU RCHASED THESE ITEMS AND HAVE FURNISHED NECESSARY PROOF TO ESTABLISH THE GENUINENESS. THE LD A.R FURTHER SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS SUSTAINED THE DISALLOWANCE TO THE EXTENT OF 25% OF THE PURCHASE VALUE IN AY 2009 - 10 AND 2011 - 12. THE L D D.R, ON THE CONTRARY, SUPPORTED THE ORDER PASSED BY LD CIT(A). 4. I NOTICE THAT THE ALLEGED BOGUS PURCHASES ARE RELATED TO COMPLIMENTARY ITEMS, WHICH HAVE BEEN CLAIMED AS EXPENDITURE BY THE ASSESSEE. THE LD A.R SUBMITTED THAT THOSE PURCHASES HAVE B EEN FULLY CONSUMED IN DAY TO DAY BUSINESS BY GIVING THE SAME TO ITS CUSTOMERS. SINCE THEY ARE OF LOW VALUE ITEMS, THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER TO PROVE THE RECEIPT AND CONSUMPTION OF THE GOODS. IN ANY CASE, I NOTICE THAT THE AO HIMSELF HA S SUSTAINED ADDITION TO THE EXTENT OF 25% ONLY IN AY 2009 - 10 AND 2011 - 12. CONSISTENT WITH THE VIEW TAKEN BY THE AO IN THE ABOVE SAID YEARS, I AM OF THE VIEW THAT THIS ISSUE WOULD MEET THE ENDS OF JUSTICE, IF THE ADDITION IS SUSTAINED TO THE EXTENT OF 25% OF THE VALUE OF ALLEGED BOGUS PURCHASES. WHEN IT WAS PUT TO LD A.R, HE ALSO AGREED FOR THE ADDITION OF 25% OF THE VALUE OF PURCHASES. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO SUSTAIN ADDITION TO THE EXTENT OF 25% OF THE VALUE OF ALLEGED BOGUS PURCHASES. KANAKRAJ JEWLLERS PVT. LTD. 3 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 3 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCO UNTANT MEMBER MUMBAI ; DATED : 1 3 / 9 / 20 1 7 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) PS ITAT, MUMBAI