SUNIL B DOSHI, MUMBAI V. ITO 21(2)(4), MUMBAI

ITA 3183/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0335 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: VIMAL PUNMIYA LD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.3182-3183/MUM/2016 SUNIL B.DOSHI ASSESSMENT YEARS-2009-2010 & 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3182-3183/MUM/2016 ( / ASSESSMENT YEARS: 2009-10 & 2010-11) SUNIL B.DOSHI 10, HARI VIJAY SOCIETY BHAGAT SINGH ROAD VILE PARLE (E) MUMBAI-400 056 / VS. INCOME TAX OFFICER 21(2)(4) MUMBAI ! ./ ./PAN/GIR NO. AGGPD-4879-C ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : VIMAL PUNMIYA, LD. AR RE VENUE BY : T.A.KHAN, LD. DR / DATE OF HEARING : 02/08/2017 / DATE OF PRONOUNCEMENT : 04 /08/2017 ITA NO.3182-3183/MUM/2016 SUNIL B.DOSHI ASSESSMENT YEARS-2009-2010 & 2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THESE ARE TWO APPEALS BY ASSESSEE FOR ASSESSMEN T YEARS [AY] 2009-10 & 2010-11 CONTESTING SEPARATE ORDER OF LD. FIRST APPELLATE AUTHORITY. SINCE, THE ISSUE IN BOTH THE APPEALS IS IDENTICAL, WE DISPOSE- OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE AND BREVITY. FIRST, WE TAKE UP ITA NO. 3182/MUM/201 6 FOR AY 2009-10 WHICH CONTEST THE ORDER OF LD. COMMISSIONER OF INCO ME TAX (APPEALS)- 37 [CIT(A)], MUMBAI DATED 10/03/2016 ON ACCOUNT OF QUANTUM ADDITION AGAINST CERTAIN BOGUS PURCHASES. 2.1 BRIEFLY STATED, THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS RESELLER OF IRON & STEEL UNDER PROPRIETORSHIP CONCERN NAMELY INTERNATIONAL STEELS, WAS ASSESSED U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 21/03/2014 AT RS.53,35,660/- AS AGAINST RETURNED INCOME OF RS.2,39,620/- FILED BY THE ASSESSEE ON 17/09/2009. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) BUT SUBJECTED TO REA SSESSMENT PROCEEDINGS PURSUANT TO RECEIPT OF CERTAIN INFORMAT ION FROM SALES TAX DEPARTMENT THAT THE ASSESSEE STOOD BENEFICIARY OF C ERTAIN BOGUS PURCHASE BILLS. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED TO TH E ASSESSEE ON 05/02/2013 AND REASSESSMENT PROCEEDINGS U/S 147 WERE COMPLETED AFTER CERTAIN ADDITION ON ACCOUNT OF BOGUS PURCHASES AND THE SAME ARE THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT, IT WAS NOTICED THAT THE ASSE SSEE MADE AGGREGATE PURCHASES OF RS.50.96 LACS FROM EIGHT SUS PICIOUS DEALERS. IN ITA NO.3182-3183/MUM/2016 SUNIL B.DOSHI ASSESSMENT YEARS-2009-2010 & 2010-11 3 SUPPORT OF PURCHASES, THE ASSESSEE FURNISHED PURCHA SE INVOICES, SALES INVOICES AND BANK STATEMENT TO ASSERT THAT THE PURC HASES WERE GENUINE. HOWEVER, THE NOTICES U/S 133(6) ISSUED TO THE ALLEG ED BOGUS SUPPLIERS WERE EITHER UN-RESPONDED OR REMAINED UN-SERVED WHICH LED THE LD. AO TO MAKE FULL DISALLOWANCE OF THESE PURCHASES IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT (A) VIDE IMPUGNED ORDER DATED 10/03/ 2016 WHERE THE ASSESSEE ASSAILED THE ADDITIONS FROM VARIOUS ANGLES AND ASSERTED THAT WITHOUT PURCHASES THERE COULD NOT BE ANY SALES AND THEREFORE, FULL DISALLOWANCE WAS NOT JUSTIFIED. THE LD. CIT(A) AFTE R APPRECIATING THE VARIOUS JUDICIAL PRONOUNCEMENTS AND ASSESSEES CONT ENTIONS, RESTRICTED THE SAID DISALLOWANCE TO 12.5% OF SUCH BOGUS PURCHASES . STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. REPRESENTATIVE FOR ASSESSEE [AR] DREW OU R ATTENTION TO THE FACT THAT THE ASSESSEE WAS DEALING IN IRON & STEEL AND HAS ALREADY REFLECTED GP RATE OF 5.86% IN THE IMPUGNED AY WHICH WILL SHOOT UP TO 39.86% BY FULL DISALLOWANCE OF PURCHASES AS DONE BY LD. AO. THE ASSESSEE GOT CERTAIN RELIEF FROM LD. CIT(A) BUT ADD ITION WAS STILL EXCESSIVE KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTENDED THAT MERE PAYMENT THROUGH BANKING CHANNELS WAS NOT SUFFI CIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASES AND THE ASSESSEE C OULD NOT PROVE ACTUAL DELIVERY OF GOODS. MOREOVER, NONE OF THE SUP PLIER WAS FOUND AT THE GIVEN ADDRESS AND THE ONUS TO SUBSTANTIATE THE PURCHASES SQUARELY LIE ON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHAR GE AND THEREFORE, FULL ITA NO.3182-3183/MUM/2016 SUNIL B.DOSHI ASSESSMENT YEARS-2009-2010 & 2010-11 4 DISALLOWANCE THEREOF WAS JUSTIFIED. SINCE THE ASSES SEE HAS ALREADY GOT ADEQUATE RELIEF FROM LD. CIT(A) AND THEREFORE, NO F URTHER RELIEF COULD BE GRANTED TO HIM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE ARE CONVINCED WITH THE ARGUM ENTS OF THE REVENUE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMA RY ONUS OF PROVING THE PURCHASES AS IT COULD NOT PRODUCE SUFFICIENT EVIDEN CES TO SHOW ACTUAL DELIVERY OF MATERIAL AND ALSO COULD NOT PRODUCE CON FIRMATORY LETTERS FROM THE ALLEGED BOGUS SUPPLIERS AND THUS FAILED TO SUBS TANTIATE THE PURCHASES. HOWEVER, AT THE SAME TIME, THE ASSESSEE IS A TRADER AND THERE COULD BE NO SALES WITHOUT PURCHASES. THEREFOR E, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE PROFIT EARNED BY ASSESSEE AGAINST PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, WE FIND THAT KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS, NET ADDITION OF 12.5% IS ON TH E HIGHER SIDE. SINCE, THE ASSESSEE HAS ALREADY DECLARED GP RATE OF 5.86% AS PER BOOKS OF ACCOUNTS, THE ASSESSEE DESERVES BENEFIT OF THE SAME . THEREFORE, WHILE RETAINING THE IMPUGNED ADDITION @12.5% OF BOGUS PURCHASE, WE ALLOW BENEFIT OF ALREADY DECLARED GP OF 5.86% AND RESULTA NTLY, CONFIRM THE ADDITION TO THE EXTENT OF 4.61% OF BOGUS PURCHASE O F RS.50,96,036/- WHICH COMES TO RS.2,34,972/-. RESULTANTLY, THE ASSE SSEES APPEAL STANDS PARTLY ALLOWED. 7. NOW WE TAKE UP ASSESSEES APPEAL ITA NO. 3183/MU M/2016 FOR AY 2010-11 WHICH IS DIRECTED AGAINST THE ORDER OF L D. CIT(A) ORDER DATED ITA NO.3182-3183/MUM/2016 SUNIL B.DOSHI ASSESSMENT YEARS-2009-2010 & 2010-11 5 10/03/2016. THE ASSESSEE HAS SUFFERED SIMILAR ADDIT ION OF RS.2,87,29,976/- ON ACCOUNT OF BOGUS PURCHASES IN REASSESSMENT PROCEEDINGS. THE SAME HAS BEEN RESTRICTED TO 12.5% BY LD. CIT(A) AGAINST WHICH THE ASSESSEE IS IN SECOND APPEAL BEFO RE US. SINCE, THE ISSUE IS IDENTICAL IN ALL RESPECT EXCEPT FOR FIGURE S AND MINOR VARIATIONS, TAKING THE SAME STAND, THE ADDITION IS CONFIRMED TO THE EXTENT OF 5.82% [12.5%-6.86%] OF BOGUS PURCHASES OF RS.2,87,29,976/- WHICH COMES TO RS.16,72,084/-. THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. 8. IN NUTSHELL, BOTH THE APPEALS FILED BY THE ASSES SEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.08.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI