MODY INTERIORS P.LTD, MUMBAI V. ITO WD 16(3)(1), MUMBAI

ITA 3354/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4524 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Bogus purchase
• Section: 143(3); 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.3354/M/2017 ASSESSMENT YEAR: 2009-10 M/S. MODY INTERIORS PVT. LTD., 201, LVISHAKA ARCADE, OFF VEERA DESAI ROAD, NEAR MVM SCHOOL, ANDHERI (W), MUMBAI 400 053 PAN: AAECM 7620H VS. INCOME TAX OFFICER, WARD 16(3)(1), ROOM NO.439, AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ABHISHEK JHUNJHUNWALA, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 21.02.2019 DATE OF PRONOUNCEMENT : 22.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 23.02.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE ONLY ISSUE PRESSED AT THE TIME OF HEARING IS WITH RESPECT TO THE SUSTENANCE OF ADDITION TO THE EXTENT OF RS.3,80,427/- BY LD CIT(A) BY DIRECTING THE AO TO APPLY 12.50% OF THE TOTAL ALLEGED BOGUS PURCHASES. ACCORDINGLY O THER GROUNDS ARE DISMISSED AS NOT PRESSED. ITA NO.3354/M/2017 M/S. MODY INTERIORS PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME ON 30.9.2009 DECLARING AN INCOME OF RS.16,5 4,161/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFT ER, THE CASE WAS RE-OPENED BY THE AO AFTER RECEIVING INFORMATION FROM DGIT(INV) MUMBAI THAT ASSESSEE HAS OBTAINED THE BOG US PURCHASE ACCOMMODATION BILLS FROM M/S NIDDHISH IMP EX PVT LTD. TO THE TUNE OF RS. 15,35,504/-. THEREAFTER, AF TER RECORDING THE REASONS TO BELIEVE THAT THE ASSESSEES INCOME H AS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 15,35,504/- ISSUED NOTICE U/S 148 OF THE ACT DATED 21.2.2014.DURING THE ASSESSME NT PROCEEDINGS THE AO FOUND ON THE BASIS OF INFORMATIO N/DETAILS FILED BY THE ASSESSEE THAT ASSESSEE HAS AVAILED ACC OMMODATION BILLS FROM TWO PARTIES TO THE TUNE OF RS. 30,43,417 /- WHOSE TIN MATCH WITH THE TINS OF THE HAWALA OPERATORS PUBLISH ED BY THE SALES TAX DEPTT., GOVT OF MAHARASHTRA. UPON ASSESSE E FAILING TO FILE THE NECESSARY DETAILS BEFORE THE AO, HE TREATE D THE ENTIRE PURCHASES AS BOGUS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE VIDE ASSESSMENT FRAMED VIDE ORDER DATED 30 .3.2015 PASSED U/S 143(3) R.W.S 147 OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) PART LY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON AT 12.50% OF THE BOGUS PURCHASES BY OBSERVING THAT THE AO HAS NOT DISPUTED THE SALES OF THE ASSESSEE BY FOLLOWING THE DECISION OF GURARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P SHE TH 38 TAXMANN.COM 385 (GUJ). 5. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIALS ON RECORDS AS PLACED BEFORE US. WE NOTE THAT THE AD DITION MADE BY THE AO EQUAL TO 100% BY THE AO WERE REDUCED TO 1 2.50% BY ITA NO.3354/M/2017 M/S. MODY INTERIORS PVT. LTD. 3 CIT(A) ON THE GROUND THAT THE SALES WERE NOT DISPUT ED. IN THIS WE FURTHER FIND THAT THE G.P. RATES IN THE THREE YEARS IN JUXTAPOSITION ARE 13.90%, 14.67% AND 19.05% FOR AY 2007-08, 2008-09 AND 2009-10 RESPECTIVELY. THE MOTIVE BEHIND THE APPLICATION OF GP RATE TO THE BOGUS PURCHASES IS TO ASSESS THE PROFIT EMBEDDED IN THE SAID PURCHASES WHICH MAY BE DUE TO THE REASONS THAT ASSESSEE MIGHT HAVE MADE SOME SAVINGS BY PURCHASING THE GOODS FROM GREY MARKETS WHILE THE NO RMAL PROFITS ON THE SAID PURCHASES STOOD DISCLOSED AS THESE ARE DULY ACCOUNTED FOR. IT WAS ALSO CONTENDED BEFORE US THAT ONLY PURCHASES FROM NIDDHISH IMPEX PVT. LTD ARE ONLY BOG US WHEREAS THE OTHER PARTY IS NOT BOGUS PARTY. MOREOVER THE GP SHOWN BY THE ASSESSEE DURING THE YEAR IS 19.05% WHICH IS HIG HER THAN THE EARLIER TWO YEARS. UNDER THESE CIRCUMSTANCES, WE AR E OF THE OPINION THAT A REASONABLE DISALLOWANCE KEEPING IN V IEW THE GP ALREADY SHOWN BY THE ASSESSEE SHOULD BE MADE. ACCO RDINGLY WE DIRECT THE AO TO APPLY A GP RATE OF 6% TO THE BOGUS PURCHASES AS AGAINST 12.50 % . 6. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22.03.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 22.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.3354/M/2017 M/S. MODY INTERIORS PVT. LTD. 4 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.