ITO 20(1)(4), MUMBAI V. DILIP SUKHRAJ GOWANI, MUMBAI

ITA 3254/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8494 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 04-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: DILIP S GOWANI INPERSON
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148

Judgement Text

ITA NO.3254/M/2017 DILIP SUKHRAJ GOWANI ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3254/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER 20(1)(4) ROOM NO.112 PIRAMAL CHAMBER 1 ST FLOOR, PAREL MUMBAI 400 012 / VS. DILIP SUKHRAJ GOWANI ROOM NO.3/4, GROUND FLOOR BULDING NO.15, JAYABHAI NIWAS S.P.ROAD, 7 TH LANE, KAMATHIPURA MUMBAI 400 008 ./ ./PAN/GIR NO. AKHPG-6430-D ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : DILIP S. GOWANI (ASSESSEE-IN-PERSON) RE VENUE BY : SUMAN KUMAR, LD.DR / DATE OF HEARING : 04/10/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2009- 10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF IN COME-TAX (APPEALS)- 32 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-32/IT-214/20(1)(4)/2015-16 ITA NO.3254/M/2017 DILIP SUKHRAJ GOWANI ASSESSMENT YEAR 2009-10 2 DATED 20/02/2017 QUA RELIEF PROVIDED TO THE ASSESSEE AGAINST CERTAIN ALLEGED BOGUS PURCHASES MADE BY THE ASSESSEE. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL ENGAGED AS DEALER OF FERROUS AND NON-FERROUS METAL UNDER PROPRIETORSHIP CONCERN NAMELY DHWANI METALS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 18/03/2015 WHERE THE INCOME OF THE ASSESSEE WAS DET ERMINED AT RS.2,74,01,900/- AFTER CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES FOR RS.2,71,71,538/-. THE ORIGINAL RETURN WAS FILED ON 30/09/2009 AT RS.1,68,780/- WHICH WAS PROCESSED U/S 143(1). THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION O F CERTAIN BOGUS PURCHASES . 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.2,71,71,538/- FROM SEVENTEEN PARTIES. CONSEQUENT LY, NOTICE U/S 148 DATED 28/02/2014 WAS ISSUED TO THE ASSESSEE WHICH W AS FOLLOWED BY STATUTORY NOTICES U/S 143(2) AND 142(1). 2.3 NOTICES SENT U/S 133(6) TO THESE PARTIES TO CON FIRM THE TRANSACTIONS REMAINED UN-SERVED WHICH WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE DID NOT FILE ANY COGENT MATERIAL TO SUBSTA NTIATE THE PURCHASES AND THEREFORE, LD. AO DISALLOWED THE ENTIRE PURCHAS ES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ITA NO.3254/M/2017 DILIP SUKHRAJ GOWANI ASSESSMENT YEAR 2009-10 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 20/02/2 017 WHERE THE ASSESSEE PRODUCED AUDITED BALANCE SHEET, COPIES OF PURCHASE & SALE INVOICES, BANK STATEMENT EVIDENCING PAYMENT TO IMPU GNED SUPPLIERS, LEDGER EXTRACTS ETC. AND CONTENDED THAT THE PURCHASES WERE GENUINE. THE LD. CIT(A), AFTER CONSIDERING ASSESSEES SUBMIS SION, PROFIT MARGIN IN ASSESSEES BUSINESS AND AFTER PLACING RELIANCE O N SEVERAL JUDICIAL PRONOUNCEMENTS RESTRICTED THE SAME TO 1% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEND ED THAT THE ASSESSEE MISERABLY FAILED TO PROVE THE PURCHASE TRA NSACTIONS AND THEREFORE, LD. CIT(A) ERRED IN GRANTING SUBSTANTIAL RELIEF TO THE ASSESSEE. PER CONTRA, THE ASSESSEE-IN-PERSON PLEADED FOR A REASONABLE STAND IN THE MATTER. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE OF MATERIAL SINCE THE ASSE SSEE WAS A TRADER. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND THE PAYMENTS WERE THROUGH BANKING C HANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME , THE ASSESSEE COULD NOT PRODUCE ANY CONFIRMATION FROM THE IMPUGNE D SUPPLIERS AND ALL NOTICES SENT U/S 133(6) REMAINED UN-SERVED , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, T HE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT FOR PROFIT ELEMENT EM BEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEME NT EARNED BY ASSESSEE ITA NO.3254/M/2017 DILIP SUKHRAJ GOWANI ASSESSMENT YEAR 2009-10 4 AGAINST POSSIBLE PURCHASE OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEVER, KEEPING IN VIEW THE OVERALL CIRCUMSTANCES & NATURE OF ASSESSEES BUSINESS, WE FIND THAT THE SAM E TO BE ON LOWER SIDE AND THEREFORE, ESTIMATE THE ADDITIONS @5% OF ALLEGED BOGUS PURCHASES OF RS.2,71,71,538/- WHICH COMES TO RS.13,58,577/-. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSESSEE I N TERMS OF OUR ORDER. 6. RESULTANTLY, THE REVENUES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11 .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