ITO - 19(2)(5), MUMBAI V. SHRI POONAMRAM K. PRAJAPATI, MUMBAI

ITA 32/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5578 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHREEKALA
• Keywords: Bogus purchase; Corroborative evidences; Accommodation entries
• Section: 133(6); 147; 69; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I TA NO. 32 /MUM. /2020 ( ASSESSMENT YEAR : 20 09 1 0 ) INCOME TAX OFFICER WARD 19(2)(5), MUMBAI . APPELLANT V/S SHRI POONAMRAM K. PRAJAPATI 85/83, ROOM NO.14, 1 ST PALTAN STREET MUMBAI 400 004 PAN AGMPP5641C . RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS. SHREEKALA DATE OF HEARING 15 . 0 7 .20 2 1 DATE OF ORDER 14.9.21 O R D E R PER S. RIFAUR RAHMAN, A.M. TH E PRESENT APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 25 TH OCTOBER 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 21 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 20 09 10 . 2. DURING THE COURSE OF HEARING, WHEN THE CASE WAS CALLED FOR HEARING, NEITHER THE ASSESSEE NOR ANY OF HIS AUTHORIZED REPRESENTATIVES APPEARED BEFORE US TO REPRESENT THE CASE. THERE IS NO APPLICATION FOR ADJOURNMENT OF HEARING EITHER. THEREFORE, THIS BENCH WAS OF THE 2 SHRI POONAMRAM K. PRAJAPATI OPINION TO 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. 3. THE REVENUE HAS FILED THE PRESENT APPEAL ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @ 25% OF TOTAL BOGUS PURCHASES AND COMPUTING THE PROFIT FOR THE PURPOSE OF SECTION 28 OF THE I.T. ACT, 1961 TAKING IN TO CO NSIDERATION THE BOGUS BILLS AGAINST WHICH NO GOODS HAVE BEEN RECEIVED? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @ 25% OF TOTAL BOGUS PURCHASES IN PRESUMING THAT THE PURCHASE HAVE BEEN MADE FROM UNKNOWN PARTIES WHEREAS BILLS HAVE BEEN RECEIVED FROM HAWALA DEALER? 3. LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO @ 25% OF TOTAL BOGUS PURCHASES THAT PURCHASES HAVE BEEN MADE FROM UNKNOWN PARTIES WITHOUT CLARIFICATION HOW THE PAYMENT WAS MADE AND WHETHER SECTION 69 OF THE I.T. ACT, 1961, WILL BE APPLICABLE OR NOT? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN NOT CONSIDERING THE ORDER OF THE HON'BLE SUPREME COURT IN THE CA SE OF M/S. N.K. PROTEIN LTD. VS. DCIT (SLA - CC NOS. 769 OF 2017 DT. 16.01.20 17), WHICH IS ON THE SIMILAR ISSUE OF BOGUS PURCHASES AND WHEN THE APEX COURT WAS ALREADY THE LAW OF THE LAND WHEN THE LD. CIT(A) HAS PRONOUNCED ITS ORDER ON 25.10.2019? 5. WHETHE R ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED BY NOT FOLLOWING THE HON'BLE GUJRAT HIGH COURT DECISION IN THE CASE OF CIT VS. N.K. INDUSTRIES (IN TAX APPEAL NO. 240 OF 2009 VIDE ORDER DATED 26.02.2016) WHEREIN 100% OF THE BOGUS PURCHASE WAS HELD LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE REVE RSING THE ORDER PASSED BY THE H ON'BLE ITAT RESTRICTING ADDITION TO 25%. 3 SHRI POONAMRAM K. PRAJAPATI 4. THE ONLY ISSUE WHICH AROSE OUT OF THE AFORESAID GROUNDS OF APPEAL IS, WHETHER OR NOT THE LEARNED CIT(A) W AS JUSTIFIED IN RESTRICTING THE TOTAL BOGUS PURCHASES @ 25% OF ` 63,52,693. 5. BRIEF FACTS ARE, THE ASSESSEE BEING AN INDIVIDUAL IS ALSO A PROPRIETOR OF HINDUSTAN METAL AND ALLOYS . THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH AUGUST 2009, DECLARING TOTAL INCOME OF ` 1 , 99 , 890 . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES THROUGH THE DGIT (INV.) OF THE SALES TAX DEPARTMENT , GOVERNMENT OF MAHARASHTRA, INDICATING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY HAWALA OPERATORS THROUGH BOGUS PURCHASE BILLS WITHOUT SUPPLYING ANY GOODS , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 6 3 ,52, 693 , CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM SIX PARTIES . FURTHER, TO INDEPENDENTLY VERIFY THE G ENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO ALL THE SIX SELLING PARTIES CALLING FOR CERTAIN INFORMATION. H OWEVER, ALL SUCH NOTI CES RETURNED BACK UN SERVED. FURTHER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE TO ESTABLISH THE GENUINENESS OF PURCHASES. THUS, ULTIMATELY, THE ASSESSING OFFICER HELD THAT THE 4 SHRI POONAMRAM K. PRAJAPATI PURCHASES AGGREGATING TO ` 63 , 52 , 693 , FROM SIX PARTIES WERE MERELY ACCOMM ODATION ENTRIES AND SUCH PURCHASES WERE MADE TO INFLATE THE PURCHASES / EXPENSES AND HENCE DISALLOWED ` 63,52,693 . THE ASSESSEE BEING AGGRIEVED BY THE ORDER SO PASSED BY THE ASSESSING OFFICER, FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY TO CONTEST TH E ISSUE. 6. THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 25% OF THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER BY RELYING UPON A NUMBER OF TRIBUNALS DECISIONS AS WELL DECISIONS OF VARIOUS HONBLE HIGH COURT S AND ON THE ISSUE. 7. CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT THAT THE DOUBT REGARDING THE GENUINENESS OF THE DISPUTED PURCHASES WAS ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT (INV.), SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. HOWEVER, THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS PRODUCED SOME SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. THE ONLY REASON FOR WHICH THE ASSESSING OFFICER DID NOT ACCEPT THE PURCHASES TO BE GENUINE IS, THE ASSESSEE NEITHER COULD PRODUCE THE CONCERNED PARTIES NOR COULD FURNISH TRANSPORTATION BILLS, WEIGHMENT BILLS, ETC. HOWEVER, THE VERY FACT THAT THE ASSESSING OFFICER DISALLOWED THE ENTIRE PURCHASE OF THE ALLEGED NON GENUINE PURCHASES INDI CATES THAT THE 5 SHRI POONAMRAM K. PRAJAPATI ASSESSING OFFICER ALSO BELIEVES THAT THE ASSESSEE HAD PURCHASED THE GOODS, THOUGH, MAY NOT BE FROM THE DECLARED SOURCE. THEREFORE, T HE ASSESSING OFFICER PROCEEDED TO ADD ENTIRE AMOUNT OF BOGUS PURCHASE. ON APPEAL, T HE LEARNED CIT(A) HAS REST RICTED IT TO 25% OF THE TOTAL BOGUS PURCHASE BASED ON THE FACT THAT CORRESPONDING SALES WERE ACCEPTED BY THE DEPARTMENT. ACCORDINGLY, HE DISALLOW ED ONLY THE PROFIT ELEMENT ON THE PURCHASES. . CONSEQUENTLY, IN VIEW OF THE AFORESAID OBSERVATIONS, WE SEE NO LE GAL INFIRMITY IN THE IMPUGNED DECISION OF THE LEARNED CIT(A) WARRANTING INTERFERENCE AT THE INSTANCE OF THE REVENUE . EVEN OTHERWISE ALSO, THE ASSESSEE HAS ACCEPTED THE ORDER OF THE LEARNED CIT(A) NEITHER FILED ANY CROSS OBJECTION ON THE I SSUE NOR APPEARED BEFORE US TO CONTEST THE ISSUE . ACCORDINGLY, THE ORDER OF THE LEARNED CIT(A) IS HEREBY UPHELD BY DISMISSING THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.9.21 SD/ - MAHAVIR SINGH VICE PRESIDENT SD/ - S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 14.9.21 6 SHRI POONAMRAM K. PRAJAPATI COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE C I T(A); (4) THE C I T, 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