DCIT 33(3) , MUMBAI V. SHRI. UTPALKUMAR R CHAUDHARI , MUMBAI

ITA 3110/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6022 (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: 2009-2010
• Appeal Filed On: 10-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAMATHA M
• Keywords: Bogus purchase; Unexplained expenditure; Gift; 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. 3110 /MUM. /2019 ( ASSESSMENT YEAR : 20 09 10 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 33(3), MUMBAI . APPELLANT V/S SHRI UTPAL KUMAR R. CHAUDHARI A 202, SYMPHONY NEW LINK ROAD KANDIVALI (WEST), MUMBAI 400 067 PAN ADAPC4058K . 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. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 10 TH JANUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN THE MATTER OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 2 SHRI UTPAL KUMAR R. CHAUDHARI 3. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE RESPONDEN T 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 O F MATERIAL AVAILABLE ON RECORD. 4. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN TRADING OF BUSINESS PROMOTIONAL GIFT ITEMS THROUGH H IS PROPRIET ARY CONCERN WESTERN SALES CORPORATION. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 2 ND JUNE 2009, DECLARING TOTAL INCOME OF ` 14,06,960. THE RETURN OF INCOME WAS INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQ UENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT THROUGH DGIT (INV.), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION BILLS ISSUED BY CERTAIN ENTITIES IDENTIFIED AS HAWALA OPERATOR S BY THE SALES TAX DEPARTMENT, GOVERNM ENT OF MAHARASHTRA, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 8,57,867, CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM TWO PARTIES. AS ALLEGED BY THE ASSESSING OFFICER, THE ASSESSEE WAS UNABLE TO PROVE THE 3 SHRI UTPAL KUMAR R. CHAUDHARI GENUINENESS OF PURCHASES BY FURNISHING ANY TRANSPORTATION BILL OR STOCK REGISTER. FURTHER, HE OBSERVED , B EFORE THE SALES TAX AUTHORITIES THE CO NCERNED PARTIES HAVE ADMITTED THAT THEY WERE PROVIDING ACCOMMODATION BILLS. IN ADDITION, THE ASSESSING OFFICER OBSERVED THAT THE NOTICE S ISSUED UNDER SECTION 133(6) OF THE ACT TO THE CONCERNED PARTIES SEEKING INFORMATION REGARDING THE PURCHASES RETURNED BA CK UNSERVED. THUS, ON THE BASIS OF THE AFORESAID OBSERVATIONS, THE ASSESSING OFFICER CONCLUDED THAT PURCHASES WORTH ` 8,57,867, HAS TO BE DISALLOWED AS UNEXPLAINED EXPENDITURE. PROCEEDING FURTHER, THE ASSESSING OFFICER ALSO WENT ON TO EXAMINE THE GENUINENE SS OF OTHER PURCHASES CLAIMED TO HAVE BEEN MADE DURING THE YEAR UNDER CONSIDERATION WHERE THE SELLING DEALERS HAVE NOT BEEN IDENTIFIED AS HAWALA OPERATOR S . ALLEGING THAT THE ASSESSEE WAS UNABLE TO PROVE THE GENUINENESS OF SUCH PURCHASES THROUGH PROPER DOCU MENTARY EVIDENCES AND FURTHER , THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT WERE NOT RESPONDED TO, THE ASSESSING OFFICER ALSO DISALLOWED PURCHASES WORTH ` 67,22,680. BEING AGGRIEVED WITH SUCH DISALLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES. 4 SHRI UTPAL KUMAR R. CHAUDHARI HOWEVER, HE EXCLUDED AN AMOUNT OF ` 39,88,556, BEING PURCHASE S MADE FROM SHARP PRINT , FROM BEING TREATED AS BOGUS PURCHASE SINCE THE CONCERNED PARTY IN RESPONSE TO NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT HAS NOT ONLY CONFIRMED THE SALES MADE, BUT HAD FURNISHED ALL THE DOCUMENTARY EVIDENCES. THUS, ESSENTIALLY, LEARNED COMMISSIONER (AP PEALS) RESTRICTED THE DISALLOWANCE TO 12.5% OF THE ALLEGED BOGUS PURCHASE OF ` 35,91,991. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER , INSOFAR AS PURCHASES WORTH ` 8,57,867 IDENTIFIED AS BOGUS PURCHASE ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT , IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER THE ASSESSEE HAD FURNISHED PURCHASE BILL S , DELIVER Y CHALLAN S , LEDGER ACCOUNT COPY, BANK STATEMENT SHOWING PAYMENT ETC. THE ONLY REASON FOR WHICH THE ASSESSING OFFICER DISALLOWED SUCH PURCHASES IS , SUCH PARTIES HAVE ADMITTED BEFORE THE SALES TAX AUTHORITIES THAT THEY WERE PROVIDING ACCOMMODATION BILLS AND SECONDLY, THE ASSESSEE COULD NOT FURNISH THE TRANSPORTATION BILLS. AS REGARDS PURCHASES MADE FROM OTHER PARTIES WHO WERE NOT APPEARING AS HAWALA OPERATOR S IN THE LIST MAINTAINED BY THE SALES TAX DEPARTMENT, ONLY BECAUSE THE NOTICES ISSUED UNDER 5 SHRI UTPAL KUMAR R. CHAUDHARI SECTION 133 (6) OF THE ACT RETURNED BACK UN SERVED AND SOME DOCUMENTARY EVIDENCES COULD NOT BE FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS TREATED THEM AS BOGUS. HOWEVER, IT IS NOT DISPUTED THAT THE SALES EFFECTED BY THE ASSESSEE HAVE NOT BEEN DOUBTED OR DISP UTED BY THE ASSESSING OFFICER. FURTHER, AS RECORDED BY LEARNED COMMISSIONER (APPEALS), ONE OF THE SELLING DEALERS , SHARP PRINT IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT, HAS NOT ONLY CONFIRMED THE SALES EFFECTED BUT HAS ALSO FURNISHE D SUPPORTING DOCUMENTARY EVIDENCES. KEEPING IN VIEW THE AFORESAID FACTS, WE FULLY AGREE WITH LEARNED COMMISSIONER (APPEALS) THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES, THE ENTIRE PURCHASES MADE BY THE ASSESSEE COULD NOT BE DISALLOWED BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, WE HAVE NO HESITATION IN UPHOLDING THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN RESTRICTING THE DISALLOWANCE TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES. AS RIGHTLY OB SERVED BY THE LEARNED COMMISSIONER (APPEALS), THE PURCHASES WORTH ` 39,88,556, MADE FROM SHARP PRINT HAVING BEEN PROVED THROUGH CONFIRMATION AND SUPPORTING EVIDENCES , CANNOT BE TREATED AS BOGUS. ACCORDINGLY, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER ( APPEALS) BY DISMISSING THE GROUNDS RAISED BY THE REVENUE. 6 SHRI UTPAL KUMAR R. CHAUDHARI 7. I N 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