ITO 33(2)91), MUMBAI V. M/S JASWANTILAL SHANTILAL SHAH (HUF), MUMBAI

ITA 3105/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6021 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 10-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMATHA M
• Keywords: Corroborative evidences
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F ' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3105 /MUM. /2019 ( ASSESSMENT YEAR : 20 10 1 1 ) INCOME TAX OFFICER WARD 33(2)(1), MUMBAI . APPELLANT V/S JASWANTLAL SHANTILAL SHAH (HUF) B 2202, REVINA HIRANANDANI COMPLEX NEAR POISAR DEPOT, S.V. ROAD KANDIVALI (W), MUMBAI 400 067 PAN AANHS8612R . RESPONDENT REVENUE BY : MS. SAMATHA M. ASSESSEE BY : NONE DATE OF HEARING 16 .09.2020 DATE OF ORDER 25.09.2020 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 26 TH DECEMBER 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2010 11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE ON THE COMMON ISSUE OF DISALLOWANCE MADE ON ACCOUNT OF NON GENUINE PURCHASES. 2 JASWANTLAL SHANTILAL S HAH (HUF) 3. WHEN THE APP EAL WAS CALLED FOR HEARING NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE IS A HINDU UNDIVIDED FAMILY (HUF) AND IS ENGAGED IN THE BUSINESS OF TRADING IN HARDWARE. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH SEPTEMBER 2010, DECLARING TOTAL INCOME OF ` 4,46,710. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DE PARTMENT THROUGH THE DGIT (INV.), MUMBAI, THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE DURING THE YEAR ARE NON GENUINE AS THE CONCERN ED SELLING DEALERS HAVE BEEN IDENTIFIED AS HAWALA OPERATOR S BY THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, HE CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE PURCHASES WORTH ` 1,72,62,982 , CLAIMED TO HAVE BEEN MADE FROM 21 PARTIES. AS OBSERVED BY THE ASSESSING OFFICER, IN RESPONSE TO THE QUERY RAISED, THE ASSESSEE FURNISHED ITS AUDITED 3 JASWANTLAL SHANTILAL S HAH (HUF) ACCOUNTS ALONG WITH LEDGER ACCOUNT COPY OF THE SELLING DEALERS. THE ASSESSING OFFICER OBSERVED , THE ASSESSEE COULD NOT FURNISH DELIVERY CHALLAN S TO SHOW DELIVER Y OF GOO DS, PURCHASE INVOICE, PROOF OF PAYMENT MADE TO THE PARTIES THROUGH CHEQUE. FURTHER, THE ASSESSING OFFICER ALLEGED THAT THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES ALSO RETURNED BACK UNSERVED. ACCORDINGLY, RELYING UPON THE DE CISION OF THE HON'BLE SUPREME COURT IN N.K. PROTEINS LTD. V/S DCIT, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PURCHASES OF ` 1,72,62,982, AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELL ATE AUTHORITY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS), OBSERVED , THOUGH , THE ASSESSING OFFICER HAS DISPUTED THE PURCHASE S , HOWEVER, HE HAS NOT SUSPECTED THE SALES TU RNOVER. THUS, HE WAS OF THE VIEW THAT IN ABSENCE OF SUCH PURCHASES, THE ASSESSEE COULD NOT HAVE EFFECTED THE CORRESPONDING SALES. THEREFORE, HE OBSERVED THAT THE ASSESSEE MIGHT HAVE PURCHASED THE GOODS FROM UNDECLARED SOURCES AND TO REGULARIZE SUCH PURCHAS ES HAS OBTAINED ACCOMMODATION BILLS. THEREAFTER, RELYING UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CIT V/S SIMIT P. SHETH, [2013] 356 ITR 451 (GUJ.), THE LEARNED COMMISSIONER (APPEALS) HELD THAT THE ENTIRE PURCHASES CANNOT BE 4 JASWANTLAL SHANTILAL S HAH (HUF) DISALLOWED BUT TH E PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. ACCORDINGLY, HE RESTRICTED THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD B E SEEN FROM THE FACTS ON RECORD, THE ASSESSEE IS A TRADER IN HARDWARE. THOUGH, IT MA Y BE A FACT THAT THE ASSESSEE WAS UNABLE TO PROVE THE EXACT SOURCE OF PURCHASE WITH SUPPORTING EVIDENCE, HOWEVER, IT IS EQUALLY TRUE THAT THE SA LES EFFECTED BY THE ASSESSEE HAVE NOT BEEN DISPUTED OR DOUBTED BY THE ASSESSING OFFICER. THEREFORE, THE LOGICAL CONCLUSION WOULD BE , IN ABSENCE OF THE DISPUTED PURCHASES CORRESPONDING SALES COULD NOT HAVE BEEN MADE. THAT BEING THE CASE, THE ENTIRE PURCHASES CANNOT BE DISALLOWED, BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR DISALLOWANCE . THEREFORE, IN OUR OPINION, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO THE PROFIT ELEMENT EMBEDDED IN THE NON GENUINE PURCHASES BY ESTIMA TING THE SAME @ 12.5%. AS REGARDS REVENUES RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN N.K. PROTEINS LTD. (SUPRA), WE ARE IN AGREEMENT WITH LEARNED COMMISSIONER (APPEALS) THAT THE SAID DECISION IS NOT APPLICABLE AS THE FACTS ARE TOTALLY DIFFE RENT AS DISCUSSED IN PARA 4.4 OF LEARNED COMMISSIONER (APPEALS)S ORDER. IN VIEW OF THE 5 JASWANTLAL SHANTILAL S HAH (HUF) AFORESAID, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS). GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 , ON 25.09.2020 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 25.09.2020 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 ASSISTANT REGISTRAR ITAT, MUMBAI