JETHMAL BANSRAJ JAIN, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 3313/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4897 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Bogus purchase; Accommodation entries; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3313/MUM/2018 ASSESSMENT YEAR: 2010 - 11 & ITA NO. 3314/MUM/2018 ASSESSMENT YEAR: 2011 - 12 SHRI JETHMAL BANSRAJ JAIN, SHOP NO. 1, R.K. WADI, V.P. ROAD, 2 ND PARSIWADA LANE, MUMBAI - 400004. VS. ITO - 19(2)(1), MATRUMANDIR, 2 ND FLOOR, MUMBAI - 400007. PAN NO. AAAPJ8298D APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : MR. CHAITANYA ANJARIA, DR DATE OF HEARING : 14/05/2019 DATE OF PRONOUNCEMENT: 27/05/2019 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143 R.W.S. 147 OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMO N ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. AS THERE IS NO COMPLIANCE BY THE APPELLANT TO THE NOTICE ISSUED BY THE REGISTRY FIXING THE CASE FOR HEARING SHRI JETHMAL BANSRAJ JAIN ITA NOS. 3313 & 3314/MUM/2018 2 ON 14.05.2019, WE DISPOSE OFF THIS APPEAL BY HEARING THE LD. DR AND EXAMINING THE MATERIALS AVAILABLE ON RECORD. FACTS BEING IDENTICAL, WE BEGIN WI TH THE ASSESSMENT YEAR (AY) 2010 - 1 1. 2. THE GROUND OF APPEAL FILED BY THE ASSESSEE READS AS UNDER: THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO AND DISALLOWING THE PURCHASE TO THE EXTENT OF 12.5% OF RS.42,85,811/ - AMOUNTING TO RS.5,35,726/ - ON ACCOUNT OF PURCHASE FROM NON GENUINE PURCHASE PARTIES. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOM E FOR THE ASSESSMENT YEAR (AY) 2010 - 11 ON 17.09.2010 DECLARING TOTAL INCOME OF RS.3,09,029/ - . ON RECEIPT OF INFORMATION FROM THE DIRECTOR GENERAL OF INCOME TAX (INV.), MUMBAI THAT AS PER THE INVESTIGATION OF THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASH TRA, THE ASSESSEE WAS INVOLVED IN OBTAINING ACCOMMODATION ENTRIES OF BOGUS PURCHASES OF RS.42,85,811/ - FROM GAURAV STEEL INDIA DURING THE FINANCIAL YEAR 2009 - 10, THE AO ISSUED NOTICE U/S 148 AND REOPENED THE ASSESSMENT. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO NOTICED THAT BARRING THE LEDGER ACCOUNT AND CHEQUE PAYMENT, NO OTHER DOCUMENT SUCH AS DELIVERY CHALLANS, LORRY RECEIPTS, TRANSPORTATION DETAILS WERE PRODUCED BY THE APPELLANT. FURTHER OBSERVING THAT SINCE THE ASSESSEE HAD PROVIDED STOCK STATEMENT AND ENTRIES OF THE SAID PURCHASES, THE AO CAME TO A FINDING THAT THE ASSESSEE MUST HAVE PURCHASED FROM OPEN MARKET FROM SOME PARTIES BEST KNOWN TO HIM. THEREAFTER RELYING ON THE DECISION IN THE CASE OF CIT V. SIMIT P. SHETH 356 ITR 451 (GUJ) AND M/S BHOLANATH POLY FAB P. LTD . 355 ITR 290, THE AO ESTIMATED THE PROFIT @ SHRI JETHMAL BANSRAJ JAIN ITA NOS. 3313 & 3314/MUM/2018 3 12.5% ON THE SAID AMOUNT OF RS.42,85,811/ - AND THUS MADE A DISALLOWANCE OF RS.5,35,726/ - . 4. IN APPEAL, THE LD. CIT(A) AGREED WITH THE REASONS GIVEN BY THE AO AND CONFIRMED THE DISA LLOWANCE OF RS.5,35,726/ - . 5. THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND NON - FERR OUS METALS UNDER THE NAME AN D STYLE OF M/S J.P. STEEL. THE ESTIMATION @ 12.5% DONE BY THE AO ON TOTAL DISPUTED PURCHASES OF RS.42,85,811/ - , WHICH LATER ON HAS BEEN CONFIRMED BY THE LD. CIT(A) IS ON THE HIGHER SIDE. CONSIDERING THE NATURE OF THE BUSINESS OF THE APPELLANT, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 5% OF THE SAID PURCHASES OF RS.42,85,811/ - IN AY 2010 - 11. FACTS BEING ID ENTICAL OUR DECISION FOR AY 2010 - 11 APPLIES MUTATIS MUTANDIS TO AY 2011 - 12. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE 5% OF THE DISPUTED PURCHASES OF RS.1,28,39,477/ - IN AY 2011 - 12. 7. IN THE RESULT, THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/05/2019. SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 27/05/2019 RAHUL SHARMA, SR. P.S. SHRI JETHMAL BANSRAJ JAIN ITA NOS. 3313 & 3314/MUM/2018 4 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI