ITO 29(2)(4), MUMBAI V. SHRI NILESH NATWARLAL, MUMBAI

ITA 3338/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9134 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Keywords: Bogus purchase
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT DB - I), SMC BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI RAM LAL NEGI , JM ITA NO. 3338 /MUM/ 2019 & 3339/MUM/2019 ( ASSESSMENT YEAR : 2009 - 10 & 2010 - 11 ) ITO 29(2)(4) MUMBAI VS. SHRI NILESH NATWARLAL DOSHI D - 101, SHRINATH DHAM CHS OPP. DREAM MALL, LBS MARG, BHANDUP(W) MUMBAI 400 708 PAN/GIR NO. AAAPD8477A (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI R. BHOOPATHI ASSESSEE BY SHRI BHADRESH DOSHI DATE OF HEARING 30 / 07 /2020 DATE OF PRONOUNCEMENT 07 / 08 /2020 / O R D E R PER M. BALAGANESH (A.M) : TH ESE APPEAL S IN ITA NO S . 3338/MUM/2019 & 3339/MUM/2019 FOR A.Y. 2009 - 10 & 2010 - 11 RESPECTIVELY ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 40 , MUMBAI IN APPEAL NO. CIT(A) - 40/605/2014 - 15 DATED 08/02/2019 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 13/11/2014 BY THE LD. INCOME TAX OFFICER 23(1)(3) ,MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO S . 3338/MUM/2019 & 3339/MUM/2019 SHRI NILESH NATWARLAL DOSHI 2 2. BOTH THE APPEALS OF THE REVENUE INVOLVE THE COMMON ISSUE OF DISALLOWANCE MADE ON ACCOUNT OF BOGUS PURCHASES. HENCE, BOTH THE APPEALS ARE TAKEN UP AND DISPOSED OF BY THIS COMMON ORDER FOR TH E SAKE OF CONVENIENCE. THE FACTS OF ASST YEAR 200 9 - 10 ARE TAKEN UP FOR ADJUDICATION AND THE DECISION RENDERED THEREON WOULD APPLY WITH EQUAL FORCE FOR ASST YEAR 2010 - 11 ALSO EXCEPT WITH VARIANCE IN FIGURES. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN HARDWARE ITEMS, PIPES, FITTINGS, IRON AND STEEL AND ELECTRIC GOODS. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED DETAILS OF PURCHAS ES AND SALES AS CALLED FOR BY THE LD. AO. WE FIND THAT ASSESSEE HAD MADE CERTAIN PURCHASES FROM CERTAIN PARTIES AS LISTED OUT IN PAGES 1 & 2 OF THE ASSESSMENT ORDER TO THE EXTENT OF RS.26,97,416/ - . THESE PARTIES NAMES APPEARED IN THE TAINTED LIST OF HAWAL A DEALERS IN THE WEBSITE OF SALES TAX DEPARTMENT OF GOVERNMENT OF MAHARASHTRA AND THAT INFORMATION WAS PASSED ON BY DGIT (INVESTIGATION) TO THE LD. AO FOR WHICH THE CASE OF THE ASSESSEE WAS REOPENED. THE LD.AO OBSERVED THAT SINCE THE SUPPLIERS NAMES APPEAR IN THE TAINTED LIST OF HAWALA DEALERS , HE PROCEEDED TO MAKE ADDITION U/S. 69C OF THE ACT IN RESPECT OF THE AFORESAID PURCHASE @100% VALUE OF THE PURCHASES. ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT HE HAD SUBMITTED BEFORE THE LD. AO PARTY - WISE DETAILS OF PURCHASES EXCEEDING RS.25,000/ - ; LEDGER ACCOUNTS OF ALL THE PARTIES ALLEGED AS BOGUS; EXTRACT OF BANK STATEMENTS HIGHLIGHTING THE PAYMENTS MADE TO THOSE PARTIES; WORKING OF ONE TO ONE CORRELATION OF PURCHASES FROM THE PARTIES WITH THE CORRESPONDING SAL ES OUT OF THE SAID PURCHASES, CORRESPONDING SALE INVOICES ALONGWITH LORRY RECEIPTS ITA NO S . 3338/MUM/2019 & 3339/MUM/2019 SHRI NILESH NATWARLAL DOSHI 3 / FREIGHT CHALLANS OF THE PARTIES TO WHOM GOODS WERE SOLD BY THE ASSESSEE OUT OF THE PURCHASES ALLEGED TO BE BOGUS AND VAT AUDIT REPORT IN FORM 704. THE LD. CIT(A) OBSERVED THAT SINCE THE SALES OF THE ASSESSEE HAS NOT BEEN DISPUTED BY THE LD. AO, HE RESTRICTED THE ADDITION TO BE MADE ON ACCOUNT OF BOGUS PURCHASES TO THE EXTENT OF 12.5% AS AGAINST 100% MADE BY THE LD. AO. THE LD CIT(A) FURTHER REDUCED THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE FROM THE ESTIMATED 12.5%. AGAINST THIS ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. WE FIND THAT THE CASE LAW RELIED UPON BY THE REVENUE IN THE CASE OF NK P ROTEINS LIMITED HAD ALREADY BEEN CONSIDERED BY THE LD. CIT( A) IN HIS APPELLATE ORDER. WE FIND THAT THE SALES MADE BY THE ASSESSEE OUT OF THE PURCHASES FROM THE ALLEGED SUPPLIERS ARE NOT DISPUTED BY THE REVENUE. HENCE, THE LAW IS NOW WELL SETTLED THAT THE PROFIT PERCENTAGE THEREON NEEDS TO BE BROUGHT TO TAX IN RESP ECT OF PURCHASES MADE BY THE ASSESSEE FROM THE GREY MARKET. WE FIND THAT THIS TRIBUNAL IN NUMBER OF DECISIONS H ELD THAT THE ESTIMATION OF PROFIT @12.5% WOULD BE REASONABLE. WE ALSO FURTHER FIND THAT THIS TRIBUNAL IN THE CASE OF ITO VS. BABULAL JETHARAMJI VISHNOI IN ITA NO.6974/MUM/2018 FOR A.Y.2010 - 11 DATED 15/01/2020 IN SIMILAR FACTS AND CIRCUMSTANCES HELD THAT PROFIT PERCENTAGE @12.5% ESTIMATED SHOULD BE FURTHER REDUCED BY GROSS PROFIT PERCENTAGE ALREADY DECLARED BY THE ASSESSEE. HENCE, WE FIND THAT THIS CASE LAW RELIED UPON BY THE LD. AR IS WELL FOUNDED. WE DIRECT THE LD. AO ACCORDINGLY. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) GRANTING THIS RELIEF TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. ITA NO S . 3338/MUM/2019 & 3339/MUM/2019 SHRI NILESH NATWARLAL DOSHI 4 4. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 07 / 08 /2020 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( RAM LAL NEGI ) SD/ - (M.BALAGANESH) JUDICIAL MEMB ER ACCOUNTANT MEMBER MUMBAI ; DATED 07 / 08 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// ITA NO S . 3338/MUM/2019 & 3339/MUM/2019 SHRI NILESH NATWARLAL DOSHI 5