DCIT 25(1), MUMBAI V. NIPUN I THAKKAR, MUMBAI

ITA 3076/MUM/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7571 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Bogus purchase
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3076/M/2014 ASSESSMENT YEAR: 2010-11 ACIT 25(1), O/O DY. COMMISSIONER OF INCOME TAX 25(1), PRATYAKSHA KAR BHAVAN, ROOM NO.202, 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051 VS. SHRI NIPUN I. THAKKAR, 11, KRISHNA KRUPA, OPP. RAILWAY CROSSING, DAHISAR (EAST), MUMBAI- 400 068 PAN: AACPT2538C (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MAHAVEER JAIN, A.R. REVENUE BY : SHRI SUMAN KUMAR, D.R. DATE OF HEARING : 24.01.2018 DATE OF PRONOUNCEMENT : 16.04.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 10.02.2014 OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN VARIOUS GROUNDS OF APPEAL IS AGAINST THE RESTRICTION OF ADDITION BY THE LD. CIT(A) TO RS.44,92,600/- AS AGAINST RS.2,99,50,670/- AS MADE BY THE AO UNDER SECTION 69C OF THE ACT TOWARDS THE BOGUS PURCHASES. ITA NO.3076/M/2014 SHRI NIPUN I. THAKKAR 2 3. THE ASSESSEE ALSO FILED APPLICATION UNDER RULE 2 7 OF INCOME TAX APPELLATE TRIBUNAL RULES, 1963 DATED 15. 02.17 RAISING THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS ON ACCOUNT OF PUR CHASES MADE BY THE APPELLANT (ASSESSEE) TO THE EXTENT OF 15%, I.E., RS . 44,92,600/- U/S 69C OF THE ACT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN IGNORING THE SUBMISSION OF THE APPE LLANT, AS WAS HELD BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. LEADERS VALVES (P.) LTD [(2007) 295 ITR 273], THAT WHERE CONSUMPTION IS NOT DOUBTED ADDITION ON ACCOUNT OF PURCHASES CANNOT BE MADE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION U/S 69C OF THE ACT IN IGNORING THE LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN T HE CASE OF CIT VS. NIKUNJ EXIMP ENTERPRISES (P.) LTD [(2013) 216 TAXMAN 171 ( BOM)], THAT PURCHASES CANNOT BE DISALLOWED MERELY BECAUSE THE APPELLANT F AILED TO PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, TO DELETE FROM OR SUBSTANTIATE THE ABOVE GROUND OF APPEAL. WE WILL FIRST DECIDE THE ADMISSION OF THE SAID APPL ICATION AND ISSUE RAISED THEREIN. 4. THE LD. A.R. SUBMITTED THAT ASSESSEE IS WITHIN IT S RIGHT TO MOVE THE APPLICATION UNDER RULE 27 OF THE ITAT RULE S, 1963 BEFORE THE TRIBUNAL TO SUPPORT THE ORDER APPEALED A GAINST ON ANY GROUND WHICH IS DECIDED AGAINST HIM AND THE SAM E MAY BE ADMITTED AND THE ASSESSEE MAY BE ALLOWED TO AGIT ATE THE ISSUE RAISED IN THE SAID APPLICATION. THE LD. A.R. SUBMITTED THAT THE ISSUE RAISED IN THE APPLICATION UNDER RULE 27 IS ARISING OUT OF THE ORDER OF LD. CIT(A) WHICH IS AGAINST THE ASSESSEE. 5. THE LD. D.R., ON THE OTHER HAND, STRONGLY OPPOSED TH E ITA NO.3076/M/2014 SHRI NIPUN I. THAKKAR 3 ADMISSION OF APPLICATION UNDER RULE 27 BY SUBMITTIN G THAT THE REVENUE CANNOT BE PUT IN A WORST POSITION THAN WHAT IT WAS BEFORE THE LD. CIT(A). THE LD. D.R. ARGUED THAT THE P OWER OF TRIBUNAL IS CONFINED TO SECTION 254 OF THE ACT ON T HE SUBJECT MATTER OF THE ISSUE PLACED BEFORE IT AND THE TRIBUN AL CANNOT GO BEYOND IT OR PASS ORDER OR GIVE DIRECTION WHICH WOULD NOT FALL WITHIN THE SUBJECT MATTER OF THE APPEAL. 6. HAVING HEARD BOTH THE PARTIES AND PERUSING THE RE LEVANT MATERIALS PLACED BEFORE US, WE FIND THAT THE RESPOND ENT MAY SUPPORT AN ORDER ON THE GROUND DECIDED AGAINST HIM EVEN THOUGH HE HAS NOT APPEALED AN ORDER OF CIT(A) DECID ING THE GROUND PARTIALLY AGAINST THE ASSESSEE. THE HONBL E SUPREME COURT IN THE CASE OF CIT VS. MANICK SONS [1969] 74 ITR 1 (SC) HAS INTERPRETED THE PROVISION OF SECTION 254 OF THE ACT WHEREIN THE RESPONDENT HAS BEEN ALLOWED TO SUPPORT THE ORDER APPEALED AGAINST ON ANY OTHER GROUND DECIDED AGAINS T HIM EVEN THOUGH HE MAY NOT HAVE APPEALED AGAINST THE SA ID ORDER. IT WAS EXPLAINED BY THE HONBLE SUPREME COUR T THAT POWER CONFERRED BY SECTION 33(4) OF THE INDIAN INCO ME-TAX ACT, 1922, IS WIDE, BUT IT IS STILL A JUDICIAL POWER W HICH MUST BE EXERCISED IN RESPECT OF MATTERS THAT ARISE IN TH E APPEAL AND ACCORDING TO LAW. THE TRIBUNAL IN DECIDING AN APPEAL BEFORE IT MUST DEAL WITH QUESTIONS OF LAW AND FACT WHICH ARIS E OUT OF THE ORDER OF ASSESSMENT MADE BY THE INCOME-TAX OFFI CER AND THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER. IT CANNOT ASSUME POWERS WHICH ARE INCONSISTENT WITH THE EXPRE SS PROVISIONS OF THE ACT OR ITS SCHEME. IN THIS CASE, THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED BY LD. CIT(A) BY ITA NO.3076/M/2014 SHRI NIPUN I. THAKKAR 4 SUSTAINING THE ADDITION IN RESPECT OF BOGUS PURCHAS ES AT 15% AND THE ASSESSEE WITHOUT FILING THE APPEAL AGAINST THE ORDER OF THE LD. CIT(A) SUPPORTED THE ORDER OF THE LD. CIT(A) IN AN APPEAL FILED BY THE REVENUE. IN VIEW OF THE ABOVE, I SSUE RAISED BY THE ASSESSEE UNDER RULE 27 DESERVED TO AD MITTED AND IS ADMITTED AND ADJUDICATED AS UNDER: 7. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASS ESSEE HAS MADE PURCHASES TO THE TUNE OF 2,99,50,670/- FROM VARIOUS PARTIES WHICH WERE DECLARED AS HAWALA DEALE RS BY THE VAT DEPARTMENT, GOVERNMENT OF MAHARASHTRA AND THE N OTICE SENT BY THE AO TO THE ASSESSEE WAS RETURNED BACK AN D EVEN THE REPORT OF THE INSPECTOR OF INCOME TAX CONFIRMED THAT NO SUCH PERSON EXISTED ON THE ADDRESSES GIVEN BY THE A SSESSEE. THE LD. CIT(A), AFTER CONSIDERING THE VARIOUS DECISI ONS RELIED UPON BY THE ASSESSEE VIZ. IN THE CASE OF CIT VS. NIKU NJ EXIMP ENTERPRISES PVT. LTD. AND ALSO THE DECISION OF APEX COURT IN THE CASE OF SARASWATHI OIL TRADERS VS. CIT (2002) 25 4 ITR 259 (SC), REACHED TO A VERY REASONED FINDING THAT E NTIRE PURCHASES CANNOT BE BROUGHT TO TAX AND IT IS ONLY T HE GROSS PROFIT WHICH THE ASSESSEE HAS MADE ON SUCH BOGUS PU RCHASES WHICH IS TO BE BROUGHT TO TAX AND ACCORDINGLY PARTL Y SUSTAINED THE ADDITION TO THE EXTENT OF 15% WHICH WORKED OUT TO RS.44,92,600/-. HOWEVER, WE FIND THAT THE PERCENTAG E OF ADDITION APPLIED BY THE LD. CIT(A) IS ON THE HIGHER SIDE WHEREAS THE CO-ORDINATE BENCHES OF THE TRIBUNAL HAV E BEEN TAKING A CONSISTENT VIEW IN THE MATTER OF BOGUS PUR CHASES APPLYING GP OF 2% TO 12.5% OF THE AMOUNT INVOLVED. IN OUR OPINION, IT WOULD BE REASONABLE IN THE FACTS AND CIR CUMSTANCES ITA NO.3076/M/2014 SHRI NIPUN I. THAKKAR 5 OF THE CASE TO APPLY A GP OF 10% TO BRING THE INCOM E ON SUCH PURCHASES TO TAX AND WE DIRECT THE AO ACCORDINGLY. THE ORDER OF LD. CIT(A) STANDS MODIFIED TO THIS EXTENT. ACCO RDINGLY, THE ISSUE RAISED BY THE ASSESSEE UNDER RULE 27 IS PARTL Y ALLOWED. IN VIEW OF OUR DECISION PARTLY ALLOWING APPLICATION FILED UNDER RULE 27 OF THE ITAT RULES, THE APPEAL OF THE REVENU E IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND I SSUE RAISED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2018. SD/- SD/- (JOGINDER SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 16. 04.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.