CHETAN VASANTRAY PAREKH, MUMBAI V. ITO, 27(1)(3), MUMBAI

ITA 311/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7653 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 23-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase; Opportunity of being heard; Set aside
• Section: 143(3); 133(6); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI VIKAS AWASTHY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO . 311 /MUM/2019 ASSESSMENT YEAR: 2009 - 10 CHETAN VASANTRAY PAREKH A/6, MUNISUVRAT DARSHAN NAVROJI LANE, GHATKOPAR (W) MUMBAI - 4000 86. VS. INCOME TAX OFFICER 27(1)(3) 4 TH FLOOR, TOWER 6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI 400703 PAN N O. AAAPP 6737 F APPELLANT RESPONDENT ASSESSEE BY : MR. RAJESH S. SHAH, AR REVENUE BY : MR. R. BHOOPATHI, DR DATE OF HEARING : 21 /01/2020 DATE OF PRONOUNCEMENT : 29/01/2020 ORDER PER N.K. PRADHAN, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 24 [IN SHORT CIT(A)], MUMBAI AND ARISE S OUT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961, (THE ACT). CHETAN VASANTRAY PAREKH ITA NO . 311 /M/2019 2 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN PASSING AN EX - PARTE ORDER WITHOUT PROVIDING AN OPPORTUNITY TO THE APPELLANT. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CI T(A) ERRED IN CONFIRMING THE ADDITION MADE IN RESPECT OF ALLEGED BOGUS PURCHASES AT 12.5% AS ADDITIONAL GROSS PROFIT. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE IN RESPECT OF ALLEGED BOGUS PU RCHASES AT 12.5% AS ADDITIONAL GROSS PROFIT THOUGH THE PURCHASES WERE GENUINE AND THE APPELLANT HAD PROVIDED ALL THE DETAILS IN RESPECT OF PURCHASE, SALES, BANK, STOCK REGISTER ETC. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERR ED IN CONFIRMING THE ADDITION MADE IN RESPECT OF ALLEGED BOGUS PURCHASES AT 12.5% AS ADDITIONAL GROSS PROFIT THOUGH THE APPELLANT HAS DECLARED 4.23% OF THE GROSS PROFIT IN THE BOOKS OF ACCOUNTS WHICH IS COMPARABLE IN THE MARKET. 3. BRIEFLY STATED, THE FACT S OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009 - 10 ON 25.09.2009 DECLARING TOTAL INCOME AT RS.7,29,300/ - . ON RECEIPT OF INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS FROM THE FOUR ENTRY PROVIDERS AMOUNTING TO RS. 86,93,958 / - , THE ASSESSING OFFICER (AO) RE - OPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 DATED 29.03.2014. IN RESPONSE TO IT, THE ASSESSEE VIDE LETTER DATED 29.04.2014 STATED BEFORE THE AO THAT THE RETURN FILED ON 25.09.2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICE U/S 133(6) TO THE FOUR PARTIES C ALLING FOR COPIES OF LEDGER ACCOUNT OF THE ASSESSEE IN THEIR BOOKS, NATURE OF GOODS SOLD ALONG WITH SAMPLE COPIES OF BILLS ISSUED, CHETAN VASANTRAY PAREKH ITA NO . 311 /M/2019 3 COPY OF DELIVERY CHALLAN FOR GOODS DISPATCHED ALONG WITH TRANSPORT BILLS, COPY OF BANK STATEMENT SHOWING RELEVANT RECEIPTS AN D PAYMENT OF OUTSTANDING RECEIPTS AFTER THE END OF THE YEAR AND COPY OF THEIR RETURN OF INCOME FOR THE AY 2009 - 10. HOWEVER, THOSE NOTICES WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES. IN SUCH A SCENARIO, THE AO ASKED THE ASSESSEE TO PRODUCE THE SAID P ARTIES ALONG WITH THE ABOVEMENTIONED DOCUMENTS TO VERIFY THEIR IDENTITY AND THE GENUINENESS OF THE PURCHASES. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THOSE PARTIES BEFORE THE AO FOR EXAMINATION. FURTHER, IT IS MENTIONED BY THE A O THAT THE ASSESSEE EVEN FAI LED TO FILE BEFORE HIM THE LATE ST ADDRESS OF THE ABOVE PARTIES. IN SUCH A SITUATION, THE AO CAME TO A FINDING THAT THE PROFIT EMBEDDED IN SUCH PURCHASES BE BROUGHT TO TAX. BY FOLLOWING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH (2013) 356 ITR 451 (GUJ), THE AO ESTIMATED THE PROFIT @ 12.5% ON THE DISPUTED PURCHASES OF RS.86,93,958/ - . THUS HE MADE A DISALLOWANCE OF RS.10,86,745/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIN D THAT VIDE ORDER DATED 06.11.2018, THE LD. CIT(A) AFFIRMED THE ADDITION MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN THE INSTANT CASE, THE ASSESSEE HAS DECLARED GROSS PROFIT @ 4.23% IN ITS BOOKS OF ACCOUNTS WHICH IS COMP ARABLE IN THE MARKET AND THEREFORE, THERE IS NO BASIS IN THE ORDER OF THE AO IN ESTIMATING THE PROFIT @ 12.5%, WHICH IS SUBSEQUENTLY AFFIRMED BY THE LD. CIT(A). ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). CHETAN VASANTRAY PAREKH ITA NO . 311 /M/2019 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. AS MENTIONED EARLIER, DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE NOTICES ISSUED BY THE AO U/S 133(6) C ALLING FOR COPIES OF LEDGER ACCOUNT OF THE ASSESSEE IN THEIR BOOKS, NATURE OF GOODS SOLD ALONG WITH SAMPLE COPIES OF BILLS ISSUED, COPY OF DELIVERY CHALLAN FOR GOODS DISPATCHED ALONG WITH TRANSPORT BILLS, COPY OF BANK STATEMENT SHOWING RELEVANT RECEIPTS AN D PAYMENT OF OUTSTANDING RECEIPTS AFTER THE END OF THE YEAR AND COPY OF THEIR RETURN OF INCOME FOR THE AY 2009 - 10, WERE RETURNED UN - SERVED BY THE POSTAL AUTHORITIES. THEREAFTER, THE AO ASKED THE ASSESSEE TO PRODUCE THE SAID PARTIES BEFORE HIM TO VERIFY THE IDENTITY AND GENUINENESS OF THE PURCHASES. HOWEVER, THE ASSESSEE FAILED TO DO SO. EVEN THE ASSESSEE FAILED TO FILE BEFORE THE AO THE LATEST ADDRESS OF THE SAID PARTIES. AS RECORDED BY THE LD. CIT(A), DESPITE NUMBER OF NOTICES SENT IN THE LAST AVAILABLE AD DRESS AS PER FORM 35, THERE IS NO COMPLIANCE BY THE ASSESSEE. HOWEVER, WE FIND THAT THE LD. CIT(A) HAS NOT MENTIONED WHETHER THE NOTICES WERE ACKNOWLEDGED BY THE ASSESSEE. IN THIS RESPECT, THE ORDER OF THE LD. CIT(A) IS SILENT. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIM TO DECIDE THE APPEAL AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD. WE DIRECT THE ASSESSEE TO APPEAR BEFORE THE LD. CIT(A) AND FILE THE RELEVANT DOCUMENTS/EVIDENCE. CHETAN VASANTRAY PAREKH ITA NO . 311 /M/2019 5 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2020. SD/ - SD/ - ( VIKAS AWASTHY ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 29/01/2020 RAHUL SHARMA, SR. P.S. 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) ITAT, MUMBAI