ITO 19(2)(5), MUMBAI V. PRATAPRAM G CHOUDHARY, MUMBAI

ITA 3253/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6843 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDEY
• Assessee Lawyers: GAUTAM SALECHAN
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 147; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI N. K. PRADHAN, AM ./ I.T.A. NO S . 3413 /MUM/2017 ( / ASSESSMENT YEAR: 2010 - 11 ) PRATAPRAM CHOUDHARY ROOM NO. 103/55, 60 SHREE SWAMI SAMARTH, 2 ND KUMBHARWADA LANE, MUMBAI 400 004 / VS. ITO - 19(2)(5), ROOM NO. 210, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 ./ ./ PAN/GIR NO. AGSPC 8984 F ( ASSESSEE ) : ( RE VENUE ) & ./ I.T.A. NO S . 3253/MUM/2017 ( / ASSESSMENT YEAR: 2010 - 11 ) ITO - 19(2)(5), ROOM NO. 210, MATRU MANDIR, TARDEO ROAD, MUMBAI - 400 007 / VS. PRATAPRAM CHOUDHARY ROOM NO. 103/55, 60 SHREE SWAMI SAMARTH, 2 ND KUMBHARWADA LANE, MUMBAI 400 004 ./ ./ PAN/GIR NO. AGSPC 8984 F ( RE VENUE ) : ( ASSESSEE ) / APPELLANT BY : SHRI SAURABH DESH PANDEY / RESPONDENT BY : SHRI GAUTAM SALECHAN / DATE OF HEARING : 08.05.2018 / DATE OF PRONOUNCEMENT : 01.06 .2018 / O R D E R PER SAKTIJIT DEY, J. M.: THE AFORESAID CROSS APPEALS BY THE DEPARTMENT AND THE ASSESSEE ARISE OUT OF THE ORDER DATED 09.02.2017 OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 29, MUMBAI FOR THE ASSESSMENT YEAR 2010 - 11. 2 ITA NOS.3413 & 3253/MUM/2017 PRATAPRAM CHOUDHARY 2. THE ONLY DISPUTE BETWEEN THE PARTIES IS WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE AN INDIVIDUAL IS ENGAG ED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERROUS METAL S THROUGH HIS PROPRIETARY CONCERN M/S. GODAVARI METAL LTD. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 13.09.2010 DECLARING TOTAL INCOME OF RS.5,22,580/ - . T HE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S. 14 3(1) OF THE ACT . SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIV ED FROM THE DGIT, INVESTIGATION THAT AS COMMUNICATED BY THE SALES TAX DEPARTMENT, THE ASSESSEE DURING THE YEAR HAS PURCHASED GOODS WORTH OF RS.3,87,68,532/ - FROM NINE PARTIES WHO ARE IDENTIFIED AS HAWALA OPERATORS AND ACCOMMODATION ENTR Y PROVIDER S, T HE ASSESSING OFFICER REOPENED THE ASSESSMENT U/S. 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER CALLED U PON THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE S TO PROVE THE GENUINENESS OF THE PURCHASES. A S OBSERVED BY THE ASSESSING OFFICER, THE ASSESSEE FAILED TO PRODUCE ACCOUNTS AND STOCK REGISTER. FURTHER, FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE PURCHASE S AND SALES WERE FOUND TO BE NOT MATCHING. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE DELIVERY CHALLAN, LORRY RECEIPT, TRANSPORTATION BILLS ETC. TO VERIFY THE GENUINENESS OF THE PURCHASES, THOUGH THE ASSESSING OFFICER ISSUED NOTICES U/S. 133(6) OF THE ACT TO THE CONCERNED PARTIES, ALL SUCH NOTICES RETURNED UNSERVED. THUS, ON THE BASIS OF THE AFORESAID FACTS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE 3 ITA NOS.3413 & 3253/MUM/2017 PRATAPRAM CHOUDHARY PURCHASES FROM THE CONCERNED PARTI ES. HOWEVER, SINCE THE ASSESSEE HAS E FFECTED SALES OF THE CORRESPONDING GOODS , THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS ACTUALLY IN THE POSSESSION OF THE GOODS WHICH THE ASSESS EE MIGHT HAVE PURCHASED FROM GREY MARKET. THUS, ON THE AFORESAID OBSERVATION, THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF RS.3,87,68,532/ - REPRESENTING THE PURCHASES MADE FROM ALLEGED HAWALA OPERATORS. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). 6. THE LD. CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, UPHELD THE REJECTION OF BO OKS OF ACCOUNT OF THE ASSESSEE , S INCE THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE SOURCE OF PURCHASE. HOWEVER, CONSIDERING THE FACT THAT TH E ASSESSING OFFICER HAS NOT DISPUTED THE SALES AND IN THE ABSENCE OF CORRESPONDING PURCHASES, THE ASSESSEE COULD NOT HAVE E FFECTED THE SALES, H E HELD THAT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE. ACCORD INGLY, HE DIRECTED THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 12.5% OF THE ALLEGED BOGUS PURCHASES. 7. BEING AGGRIEVED OF THE AFORESAID DECISION OF THE LD. CIT(A), BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. 8. WE HAVE CONSIDERED R IVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE SALES TAX AUTHORITIES HAVE IDENTIFIED CERTAIN DEALERS/ENTITIES AS HAWALA OPERATORS AS THEY WERE ONLY PROVIDING 4 ITA NOS.3413 & 3253/MUM/2017 PRATAPRAM CHOUDHARY ACCOMMODATION ENTRIES /BILLS WITHOU T ENTERING INTO ACTUAL SALE TRANSACTIONS WITH PHYSICAL DELIVERY OF GOODS. THE ASSESSEE IS FOUND TO BE ONE OF THE BENEFICIARIES OF SUCH TRANSACTIONS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ASSESSING OFFICER WANTED TO VERIFY THE GENUINENESS OF THE PURCHASES BY ISSUING NOTICES U/S. 133(6) OF THE ACT, ALL SUCH NOTICES RETURNED UNSERVED. EVEN , THE ASSESSEE FAILED TO PRODUCE DELIVERY CHALLAN, TRANSPORTATION BILLS, AND CONFIRMATION OF THE CONCERNED PARTIES AND ALSO FAILED TO PRODUCE THE CONCERNED PARTIE S TO PROVE THE SOURCE OF SUCH PURCHASES. IN THE AFORESAID CIRCUMSTANCES, THE CLAIM OF THE ASSESSEE THAT HE HAS PURCHASED THE GOODS FROM THE DECLARED SOURCE S IS UNACCEPTABLE. HENCE, THE ASSESSING OFFICER WAS CORRECT IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HOWEVER, AT THE SAME TIME, IT CANNOT BE IGNORED THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE SALES EFFECT ED BY THE ASSESSEE AND H AS OBSERVED THAT IN THE ABSENCE OF CORRESPONDING PURCHASES, THE ASSESSEE COULD NOT HAVE E FFECTED THE SALES. HE HA S ALSO COME TO A CONCLUSION THAT THE GOODS ARE ACTUALLY IN THE POSSESSION OF THE ASSESSEE WHICH INDICATES THAT THE ASSESSEE MUST HAVE PURCHASED THEM FROM GREY MARKET. 9. IN THE AFORESAID FACTS AND CIRCUMSTANCES, THE VIEW TAKEN BY THE LD. CIT(A) THAT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH SALES CAN BE ADDED AS INCOME, APPEARS TO BE THE MOST REASONABLE VIEW WHICH COULD BE TAKEN IN THE GIVEN FACTS AND CIRCUMSTANCES. AS REGARDS THE RATE OF PROFIT ADOPTED AT 12.5% BY THE LD. CIT(A), WE FIND IT TO BE MOST REASONABLE AND APPR OPRIATE. HENCE, WE DO NOT INTEND TO INTERFERE WITH THE DECISION OF THE LD. CIT(A) ON THE ISSUE. 5 ITA NOS.3413 & 3253/MUM/2017 PRATAPRAM CHOUDHARY 10. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF THE LD. CIT(A) WHILE DISMISSING THE GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE DE PARTMENT. 11. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 1 . 0 6 . 2 0 1 8 S D / - S D / - ( N. K. PRADHAN ) (SAKTIJIT DEY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 1 . 0 6 . 2 0 1 8 . . ./ ROSHANI , SR. PS / 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