DINESH BACHUBHAI JHALA, MUMBAI V. ITO 15(1)(4), MUMBAI

ITA 3394/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0667 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 09-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 13-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHAN
• Keywords: Bogus purchase; Reasonable cause; Condonation of delay

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 3394 / MUM/ 20 1 6 ( / ASSESSMENT YEAR: 20 11 - 12 ) SHRI DINESH BACHUBHAI JHALA , B - 102, SHIVDHAM , SHIVKRUPA CHS LTD OFF S V ROAD, BORIVALI,(W), MUMBAI - 400092 / VS. INCOME TAX OFFICER - 15 ( 1 )( 4 ), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : ADHPJ9345F ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : MS.RUTUJA N PAWAR /R EVENUE BY : SHRI M C OMI NINGSHAN / DATE OF HEARING : 9.5. 2017 / DATE OF PRONOUNCEMENT : 12. 5 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: BY WAY OF THIS APPEAL THE ASSESSEE IS CHALLENGING THE ORDER OF LD.CIT(A) - 4 4 , MUMBAI DATED 27.1.2016 FOR THE ASSESSMENT YEAR 201 1 - 12 . 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL WHEREIN TH E ONLY ISSUE IS AGAINST THE CONFIRMATION OF ADDITION OF RS.34,82,851/ - BY THE LD.CIT(A) AS MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASE S FROM THREE 2 ITA NO. 3394 /MUM/201 6 PARTIES NAMELY HERMITAGE TRADING CO. RS.10,57,455/ - , SEJAL ENTERPRISES, RS.14,83,283/ - AND RS.SUNRIE ENTERP RISES RS.9,42,113/ - . 3. WE FIND FROM THE RECORD THAT THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 33 DAYS . THE LD. AR SUBMITTED BEFORE US THAT DUE TO SOME RENOVATION WORK AND SHIFTING OF RECORDS AT THE OFFICE OF THE ASSESSEE , THE PAPERS REGARDING THE FILING OF APPEAL WERE MISPLACED AND WERE NOT TRACEABLE. THE RELEVANT PAPERS FOUND ONLY AFTER THE WORK WAS COMPLETED WHICH TOOK ALMOST 2 MONTHS TIME. THE LD. AR TRIED TO EXPLAIN THE DELAY IN FILING OF THE APPEAL BY FILING AFFIDAVIT DATED 12.5.2016. 4. T HE LD. DR, ON THE OTHER HAND, OBJECTED TO THE ADMISSION OF THE APPEAL BY STATING THAT THE REASONS STATED FOR CONDONATION OF DELAY IN FILING THE APPEAL WERE COGENT, CONVINCING AND REASONABLE TO JUSTIFY THE CONDONATION . 5. WE HAVE CAREFULLY CONSIDERED THE R IVAL CONTENTIONS ON THE POINT OF DELAY IN FILING OF THE APPEAL AND AFTER PERUSING THE AFFIDAVIT AND CONTENTION OF THE ASSESSEE, WE FIND THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FOR FILING THE APPEAL BEFORE THIS TRIBUNAL. IN OUR OPINION, THE P URPOSE OF ADJUDICATING THE APPEAL IS TO IMPART THE JUSTICE TO THE AGGRIEVED PARTY AND NOT TO DENY JUSTICE ON FLIMSY, FRIVOLOUS AND ON TECHNICAL GROUND WHICH IS ALSO NOT THE SPIRIT OF CONSTITUTION AND THEREFORE IT WOULD BE JUSTIFIED AND FAIR IF THE PERIOD OF DELAY IN FILING THE APPEAL IS 3 ITA NO. 3394 /MUM/201 6 CONDONED. ACCORDINGLY, WE CONDONE THE DELAY AND ADMIT THE APPEAL OF THE ASSESSEE FOR ADJUDICATION. 6. THE LD.AR SUBMITTED BEFORE US THAT THE ISSUE RAISED IN THIS APPEAL IS IDENTICAL TO THAT OF THE ASSESSEES APPEAL DEC IDED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.3108/MUM/2015(AY - 2010 - 11) DATED 8.7.2016 WHEREIN THE APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE . THEREFORE, THE LD.AR PRAYED THAT THE APPEAL OF THE ASSESSEE SHOULD BE DECIDED BY FOLLOWING THE RATIO LAID DOWN BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. 7. THE LD. DR, ON THE OTHER HAND, STRONGLY OBJECTED TO THE SUBMISSIONS OF THE LD.AR BY SUBMITTING THAT ALL THE PURCHASES MADE BY THE ASSESSEE WERE IN CASH AND THERE WERE LOT OF DISCREPANCIES IN THE BOOKS OF ACCOUNT AS POINTED OUT BY THE AO WHICH WAS THE BASIS FOR UPHOLDING THE ADDITION MADE BY THE AO BY THE FAA . THE LD.DR SUBMI TT ED THAT THERE WERE NO LORRY RECEIPTS FOR TRANSPORTING THE GOODS PURCHASED BY THE ASSESSEE BESIDES OTH ER DISCREPANCIES AND THEREFORE FULL AMOUNT OF ADDITION SHOULD BE CONFIRMED IN THE HANDS OF THE ASSESSEE BY UPHOLDING THE ORDER OF CIT(A) . 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS AND C ASE LAW RELIED UPON BY THE ASSESSEE. WE FIND THAT THE SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN A S SESSEES OWN CASE (SUPRA) BY APPLYING GP RATE ON THE AMOUNT OF BOGUS PURCHASES. FOR 4 ITA NO. 3394 /MUM/201 6 THE SAK E OF CONVENIENCE, WE REPRODUCE THE OPERATIVE PART OF THE TRIBUNAL DECISION AS UNDER : 4. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT MERELY ON THE BASIS OF INFORMATION FROM SALES TAX DEPARTMENT, THE AO HAS TREATED THE PURCHASES AS BOGUS WITHOUT MAK ING ANY INDEPENDENT ENQUIRY. I ALSO FOUND THAT ASSESSEE HAD SHOWN NET PROFIT OF RS.13,85,827/ - ON THE SALES OF RS.5.29 CRORES. HOWEVER, THE AO HAS DECLINED THE CORRESPONDING SALES MADE BY THE ASSESSEE, NOR REJECTED ASSESSEES BOOKS OF ACCOUNS. KEEPING VIEW VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED BY THE AR IN THE CASE OF GANPATRAJ A SANGHVI, ITA NO.2826/MUM/2013, ORDER DATED 5 - 11 - 2014 AND JM TEXTILES, ITA NO.7537&7538/M/2013, ORDER DATED 4 - 11 - 2015 AND ALSO CONSIDERING THE NET PROFIT RATE SHOWN BY THE ASSES SEE, I RESTRICT THE DISALLOWANCE/ADDITION TO THE EXTENT OF 5% OF THE BOGUS PURCHASES SO MADE BY ASSESSEE. I DIRECT ACCORDINGLY. IT IS CLEAR FROM THE ABOVE DECISION THAT THE ADDITION WAS RESTRICTED TO 5% OF THE BOGUS PURCHASES. HOWEVER, IN THE PRESENT AP PEAL, AFTER HEARING THE ARGUMENTS OF BOTH SIDES, WE FIND THAT IT WOULD BE REASONABLE AND PROPER IF THE ADDITION IS SUSTAINED TO THE EXTENT OF 10% OF THE BOGUS PURCHASE AS THE P URCHASES WERE MADE IN CASH TOTALLY AND THE THERE WERE LOT DISCREPANCIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE, IN THE PRESENT CASE IT WOULD BE FAIR AND REASONABLE IF THE ADDITION IS RESTRICTED AND SUSTAINED TO 10% OF THE TOTAL PURCHASES IN ORDER TO COVER THE LE A KAGES OF REVENUE. 9 . IN THE RESULT, THE APPEAL OF THE AS SESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH MAY , 2017. S D SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12. 5 .2017 SRL,SR.PS 5 ITA NO. 3394 /MUM/201 6 / 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 F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI