B. VIJAYKUMAR JEWELLERS, MUMBAI V. DCIT CC 3(2), MUMBAI

ITA 3199/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6395 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Bogus purchase; Accommodation entries
• Section: 143(3); 153A; 143(1); 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 3199/MUM/2019 (ASSESSMENT YEAR 2008-09 ) M/S. B. VIJAYKUMAR JEWELLERS 11 TH FLLOR, THE PLAZA, 55 GAMDEVI, MUMBAI-400 007. PAN : AACFB8561H VS . DCIT, CC-3(3) MUMBAI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SHASHI TULSIYAN DEPARTMENT BY SHRI AKHTAR H. ANSARI DATE OF HEARING 16.09 . 20 20 DATE OF PRONOUNCEMENT 17.09.2020 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A) DATED 30.4.2019 AND PERTAINS TO A.Y. 2008-09 . 2. THE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 9,46, 374/- OUT OF THE ADDITION OF RS. 14,19,56 1/- DONE BY THE ASSESSING OFFICER. 3. BRIEF FACTS OF THE CASE ARE AS UNDER :- THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F IRM IS CARRYING ON THE BUSINESS OF MANUFACTURING AND EXPORT OF JEWELLERY. THE ASSESSEE FILED ITS RETURN OF INCOME ORIGINALLY ON 30.09.2008 DECLARING THE TO TAL RS 2,64,876/-. THE SAID RETURN WAS PROCESSED U/S 143(1) AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 30.12.2010 BY ACCEPTING THE INCOME RETURNED BY THE ASSESSEE. SUBSEQUENT TO THIS, A SEARCH ACTION U/S. 132 WAS CARRIED OUT ON B HARAT SHAH GROUP (ASSESSEE GROUP) ON 03.03.2014 AND THE ASSESSEE BEI NG ITS FLAGSHIP CONCERN, WAS ALSO COVERED. DURING THE COURSE OF SEARCH ACTIO N, STATEMENT ON OATH OF SHRI BHARAT SHAH (MAIN PERSON OF THE ASSESSEE GROUP ) WAS RECORDED U/S 132(4) ON 04.03.2014. IN THE SAID STATEMENT RECORDE D ON OATH, SHRI BHARAT M/S. B. VIJAYKUMAR JEWELLERS 2 SHAH ADMITTED THAT DURING THE RELEVANT YEAR, THE AS SESSEE HAS BOOKED PURCHASES OF DIAMONDS FROM KRISHNA DIAMS OF RS 1,57 ,72,904/-, WHICH IS CONCERN OF SHRI GAUTAM JAIN, ENTRY OPERATOR. PRIOR TO THE SEARCH ON THE ASSESSEE GROUP, THE INVESTIGATION WING HAD CARRIED OUT SEARCH ON 03.10.2013 ON SHRI GAUTAM JAIN WHO HAD ADMITTED THAT THROUGH T HE CONCERNS DIRECTLY/ INDIRECTLY CONTROLLED BY HIM, HE IS ENGAGED IN THE DUBIOUS BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO THE INTERESTED B ENEFICIARIES. CONSEQUENTLY, NOTICE U/S 153A WAS ISSUED TO THE ASSESSEE. IN RESP ONSE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 01.12.2014 DECLARING TOTAL INCO ME OF RS 2,64,876/-. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH EVIDENCES IN RESPECT OF ITS CLAIM OF PURCHASES FROM M/S KRISHNA DIAM. FROM THE EVIDENCES SUBMITTED BY THE ASSESSEE, IT WAS NOTED BY THE AO T HAT THE DOCUMENTS IN RESPECT OF TRANSPORTATION OF GOODS IN THE FORM OF D ELIVERY CHALLAN, OCTROI RECEIPTS, ETC ARE NOT AVAILABLE WITH THE ASSESSEE. IT WAS ALSO NOTED BY THE AO THAT THE ASSESSEE HAS NOT BEEN IN A POSITION TO EVE N PROVIDE THE LATEST ADDRESS OR THE WHEREABOUTS OF THE SAID PURCHASE PARTY. THE AO ALSO NOTED THAT IN THE STATEMENT ON OATH RECORDED OF SHRI BHARAT SHAH DURI NG THE SEARCH ACTION, HE HAD ADMITTED THAT HE DOES NOT KNOW THE SAID CONCERN S AND HAS NEVER COME IN CONTACT WITH THEM. THE AO, THEREAFTER PROCEEDED TO REJECT THE BOOKS OF THE ASSESSEE AND MAKE AN ADDITION OF RS 14,19,561/- BEI NG THE ADDITIONAL PROFIT @ 9% OF THE AMOUNT OF THE BOGUS PURCHASES OF RS 1,57, 72, 904/-. 4. AGAINST THE ABOVE ORDER ASSESSEE APPEALED BEFORE LEARNED CIT(A). LEARNED CIT(A) RESTRICTED THE ADDITION TO 6% OF THE IMPUGNED PURCHASE. 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BE FORE THE ITAT. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORD. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS SQUAREL Y COVERED BY THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2007-08, WHERE IN THE ITAT ON IDENTICAL FACTS HAS RESTRICTED THE ADDITION TO 3%. M/S. B. VIJAYKUMAR JEWELLERS 3 7. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF LEARNED CIT(A). 8. I HAVE CAREFULLY CONSIDERED THE SUBMISSION AND P ERUSED THE RECORD. UPON CAREFUL CONSIDERATION, I FIND THAT ON IDENTICA L FACTS THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 VIDE ORDER DAT ED 22.8.2017 IN ITA NO. 2835/MUM/2017 HAS CONCLUDED AS UNDER :- I NOTICE THAT THE ASSESSEE COULD NOT CONCLUSIVELY PROV E THAT THE DIAMONDS WERE PURCHASED ONLY FROM THE CONCERNS STATED ABOVE, SINCE THE ASSESSEE DID NOT PRODUCE THOSE PARTIES BEFORE THE AO. HENCE ONE O F THE POSSIBLE VIEWS IS THAT THE ASSESSEE COULD HAVE PURCHASED THE DIAMONDS FRO M SOME OTHER PERSON AND COULD HAVE OBTAINED ONLY THE BILLS FROM T HE ABOVE SAID CONCERNS. THERE IS ALSO A POSSIBILITY; IN THAT CASE, THE ASSESS EE COULD HAVE PURCHASED GOODS AT A PRICE LOWER THAN THE APPARENT CONSIDERATION . THE TASK OF THE TAX OFFICIALS WAS TO DETERMINE THE PROFIT ELEMENT EMBEDDED IN THE SAID PURCHASE. THE AO HAS ESTIMATED THE SAME AT 8% AND THE LD CIT(A) H AS ESTIMATED THE SAME AT 6%. ACCORDING TO LD A.R, THESE DIAMONDS HAV E BEEN EXPORTED AND HENCE THERE WILL NOT BE MUCH VARIATION IN THE PRICE AS THE PRICES OF DIAMONDS WOULD DEPEND UPON THE QUALITY. THERE IS MERIT IN THI S SUBMISSION ALSO. THE LD A.R, IN THE ALTERNATIVE, SUBMITTED THAT THE PROFIT ELE MENT MAY BE ESTIMATED AT A REASONABLE RATE. I HAVE NOTICED EARLIE R THAT THE ASSESSEE HAS DECLARED TRANSACTIONAL MARGIN OF 5.61% ON THE SALES. HENCE, CONSIDERING THESE ASPECTS, I AM OF THE VIEW THAT THE PROFIT ESTIMATE D BY LD CIT(A) AT 6% IS ON THE HIGHER SIDE. ACCORDINGLY I MODIFY THE ORDE R PASSED BY LD CIT(A) AND DIRECT THE AO TO SUSTAIN THE ADDITION TO 3% OF THE VALUE OF ALLEGED BOGUS PURCHASES AND IN MY VIEW, THE SAME WOULD MEET THE END S OF JUSTICE. I ORDER ACCORDINGLY. 9. SINCE THE FACTS ARE IDENTICAL, FOLLOWING THE PRE CEDENT, I DIRECT THAT THE DISALLOWANCE IN THIS CASE BE RESTRICTED TO 3% OF TH E ALLEGED BOGUS PURCHASES. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCE ON 17.9.2020 UNDER RULE 34(4) OF T HE ITAT RULES. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 17/09/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT M/S. B. VIJAYKUMAR JEWELLERS 4 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI