AMIT BABULAL HARSORA, MUMBAI V. ITO 20(1)(1), MUMBAI

ITA 3288/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8780 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALH BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.3288/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) SHRI AMIT BABULAL HARSORA 10, NEW INDIA INDL. ESTATE, 33, MAHAKALI CAVES RD., MUMBAI - 400093 / VS. ITO 20(1)(1) MUMBAI ./ ./ PAN/GIR NO. AAAPH1395R ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 05.01.2017 /DATE OF PRONOUNCEMENT:20.01.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 17.03.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-36, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2011- 12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED IN LAW AND IN FACTS TO CONFIRM ADDITION OF RS.9,00,296/- BEING 15% OF GROSS PROFIT ON PURCHASES. ASSESSEE BY: SHRI SURJI D. CHHEDA DEPARTMENT BY: SHRI M. C. OMI NINGSHEN ITA NO.3288.M.16 A.Y. 2011-12 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT FOLLOWING BINDING PRECEDENTS IN THE CASE OF CIT VS. NIKUNJ EXIMP ENTERPRISES (P) LTD. (2013) 216 TAXMAN 171 (MAG.)(BOM)(HC) & BOMBAY TRIBUNAL JUDGEMENTS QUOTED IN THE ORDER OF CIT(A). 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS TO TREAT PURCHASE PARTIES AS NON-GENUINE JUST FOR NON- PRODUCTION OF PURCHASE PARTIES. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS THAT WHEN THE BOOKS BEING NOT REJECTED & ACCEPTED AS TRUE, THE BOOK RESULTS CAN NOT BE DISTURBED BY MAKING ADDITION FOR BOGUS PURCHASES. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS TO APPRECIATE THAT ADDITION HAS RESULTED IN EXORBITANT G.P. WHICH IS IMPOSSIBLE IN HIS BUSINESS AND HENCE MAKING THE ADDITION BAD AND ILLEGAL. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS TO MAKE ADDITION PURELY ON THE BASIS OF SUSPICION. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS TO NOTE THAT THE PURCHASE PARTIES WERE VAT CANCELLED DEALERS AND NOT HAWALA PARTIES AND THE PARTIES ARE TREATED BY THE VAT DEPARTMENT BEFORE CANCELLATION. 8. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE MAINTENANCE OF STOCK REGISTER IS DULLY CONFIRMED BY LETTER DATED 19.03.2014 SUBMITTED TO A.O. AND STATEMENT OF FACTS WHICH HAS BEEN ACCEPTED BY A.O. 9. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS TO HELD THAT PURCHASE PRICE PAID IS HIGH WITHOUT ANY CORROBORATIVE EVIDENCE AND ONLY ON THE BASIS OF SUSPICION AND SPECIALLY WHEN TURNOVER AND GROSS PROFIT IN PERCENTAGE TERMS IS HIGHER THAN EARLIER PREVIOUS YEAR. 10. THE LEARNED CIT(A) ERRED IN LAW AND IN FACTS TO APPLY THE RATE OF G.P. RATHER THAN THE RATE OF N.P. ITA NO.3288.M.16 A.Y. 2011-12 3 11. THE APPELLANT LEAVES THE RIGHT TO AMEND ADD, OR ALTER THE GROUNDS AT THE TIME OF REGULAR HEARING AND THE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 15.02.2012 DECLARING TOTAL INCOME TO THE TUNE OF RS.5,09,810/- THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). LATER ON THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT UNDER CASS. NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 03.08.2012 AND DULY SERVED UPON THE ASSESSEE. THEREAFTER, NOTICE U/S.142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED AND WAS DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT AN INFORMATION WAS RECEIVED FROM DGIT (INV), MUMBAI VIDE LETTER NO.CORR.FIELD/DGIT(INV)/2013-14/1767, DT. 20.01.2014 AND AS PER THE LIST RECEIVED FROM SALES TAX DEPARTMENT, WHEREIN CERTAIN NAMES OF THE PARTIES WERE REFLECTED, WHO WERE ENGAGED IN PROVIDING HAWALA TRANSACTIONS / BOGUS PURCHASE SALES BILLS TO OTHERS. AS PER THE LIST THE ASSESSEE DID THE PURCHASE TRANSACTIONS WITH THE FOLLOWING PARTIES. HOWEVER, ON VERIFICATION, IT WAS NOTICED THAT THE TIN STATUS OF THE FOLLOWING PARTY WAS FOUND TO BE CANCELLED. SR. NO. NAME OF THE PARTY AMOUNT 1 SWASTIK ENTERPRIES 1448325 2 VARUN ENTERPRISES 54003 3 S.M.TRADING CO. 495660 4 CHOKSI BROTHERS 607661 5 SHREE TRADING CORPORATION 51618 6 ALANKAR STEELS 119849 7 COMEX TRADING CO. 228826 8 OM TRADERS 381683 9 RIDDHI SIDDHI CORPORATION 849189 ITA NO.3288.M.16 A.Y. 2011-12 4 10 RUSHABH ENTERPRISES 1765158 60,01,972 THEREFORE, SHOW-CAUSE NOTICE DATED 07.03.2014 WAS ISSUED ASKING THE ASSESSEE TO PRODUCE THE SAID PARTIES. THE ASSESSEE ALSO FILED REPLY DATED 19.03.2014. TO VERIFY THE GENUINENESS OF THE PURCHASE MADE BY THE ASSESSEE FROM ALL THE PARTIES THE RANGE INSPECTOR WAS DEPUTED TO SERVE THE NOTICES U/S.133(6) OF THE ACT DATED 10.03.2014. THE RANGE INSPECTOR HAS SUBMITTED HIS REPORT STATING THEREIN THAT SUCH PARTIES WERE NOT IN EXISTANCE AT THE GIVEN ADDRESS AND NO BUSINESS ACTIVITY WAS FOUND TO BE CARRIED OUT THERE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS UNDER OBLIGATION TO PROVE THE GENUINENESS OF THE CLAIM BUT THE CLAIM WAS NOT PROVED. THEREFORE, THE BOGUS PURCHASE TO THE TUNE OF RS.60,01,972/- WAS DECLINED AND WAS ADDED TO THE INCOME OF THE ASSESSEE. FEELING AGGRIEVED THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE ADDITION TO THE EXTENT OF 15%. SINCE THE ASSESSEE WAS NOT SATISFIED THEREFORE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 TO 11:- 4. ALL THE ISSUES ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES THE ASSESSEE RAISED ONLY ONE POINT IN WHICH THE ASSESSEE HAS ASSERTED THAT THE ADDITION OF 15%OF PURCHASES OF RS.60,01,972/- I.E. 9,00,296/- IS WRONG AGAINST LAW AND FACTS AND WITHOUT ANY BASIS, THEREFORE, THE SAME IS LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. AT THE TIME OF ARGUMENT THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS AGREED TO RESTRICT THE ADDITION TO THE EXTENT OF GROSS PROFIT OF THE LAST PRECEDING YEAR. ITA NO.3288.M.16 A.Y. 2011-12 5 ON APPRAISAL OF THE ORDER OF THE CIT(A), IT CAME INTO THE NOTICE THAT THE CIT(A) RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 15% OF THE BOGUS PURCHASES TO THE TUNE OF RS.60,01,972/- WHICH WAS ON ESTIMATED BASIS. THERE IS NO PROPER BASE AND REASONS TO RESTRICT THE DISALLOWANCE. ANYHOW, ON APPRAISAL OF THE ORDER WE ALSO FOUND THAT THE ASSESSEE HAS FAILED TO PROVE THE SAID PURCHASES. THE REPRESENTATIVE OF THE ASSESSEE DID NOT PRESS TO DECIDE THE CASE ON THE MERITS, HOWEVER, REQUESTED TO ADOPT THE GROSS PROFIT OF THE FIRM OF THE LAST PRECEDING YEARS. IN VIEW OF THE SAID CIRCUMSTANCES, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO CONSIDER THE AVERAGE GROSS PROFIT OF THE ASSESSEE OF THE LAST PRECEDING THREE YEARS TO ASSESS THE ADDITION ON ACCOUNT OF BOGUS PURCHASE AND DELETE THE BALANCE ADDITION. IN THESE SPECIFIC FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS POINT AND DIRECT THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH ACCORDINGLY IN VIEW OF THE DIRECTIONS MADE ABOVE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS HEREBY ACCEPTED. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2017 . SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 20 TH JANUARY, 2017 MP ITA NO.3288.M.16 A.Y. 2011-12 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI