ITO WD 3(4), KALYAN V. HARESH M VALIYA, DOMBIVALI

ITA 3514/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8973 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Bogus purchase; Rejection of books of accounts; Accommodation entries
• Section: 44AD; 143(3); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 3514 /MUM/20 1 7 ( / ASSESSMENT YEAR : 20 1 0 - 11 ) INCOME TAX OFFICER - WARD 3(4 ), KALYAN 2 ND FLOOR, RANI MANSION, KALYAN - MURBAD ROAD, NR.SBI, KALYAN (W) - 421301 / VS. SHRI HAR ESH M VALIYA, PROP OF M/S AKSHAR ENTERPRIES, FLAT NO.104, KARTKEY CO - OP HSG SOC, PLOT NO.05, MIDC, PIERI ZONE, DOMBIVILI (E) - 421201 ./ P AN : AFBPV5151P ( / APPELLANT) : ( / RESPONDENT ) / REVENUE BY : SHRI RAJAT MITTAL / ASSESSEE BY : NONE / DATE OF HEARING : 6 .9.2017 / DATE OF PRONOUNCEMENT : 26 . 10 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS A PPEAL BY THE REVENUE PERTAINING TO ASSESSMENT YEAR 20 10 - 11 AND IT IS DIRECTED AGAINST THE ORDER DATED 20.2.2017 PASSED BY THE LD. CIT(A) - 1, THANE . AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE N OR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE 2 I.T.A. NO. 3514 /MUM/201 7 APPEAL WAS CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS R ECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEALS OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD. DR. 2 . GROUND RAISED BY THE REVENUE IS AGAINST THE RESTRICTION OF DISALLOWANCE FROM RS.53,36,903/ - TO RS.9,03,771/ - BY ESTIMATING THE PROFIT @8% OF THE TOTAL TURNOVER. 3. FACTS OF THE CASE ARE THE ASSESSEE FILED RETURN OF INCOME ON 26 . 9.20 10 DECLARING A TOTAL INCOME OF RS. 2,84,000 / - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT . THEREAFTER AO RECEIV ED THE INFORMATION FROM THE DGIT(I NV) MUMBAI WHO IN TURN GOT AN INFORMATION FROM SALES TAX DEPARTMENT, PUNE, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES OF PURCHASES AMOUNTING TO RS.30,25,627/ - DURING FY 2009 - 10 FROM SEVENTEEN PARTIES WHOSE NAMES AS STATED IN THE ASSESSMENT ORDER AT PAGES 2 AND 3. IN VIEW OF THIS DEVELOPMENT, THE AO WAS OF THE OPINION THAT INCOME HAS ESCAPED ASSESSMENT FOR THE AY 20 10 - 11 . ACCORDINGLY HE ISSUED NOTICE U/S 148 OF THE ACT . IN REPLY TO THE NOTICE U/S 148 OF THE ACT THE AS SESSEE SUBMITTED TO TREAT THE I.T RETURN FILED ORIGINALLY AS RETURN IN RESPONSE OF NOTICE U/S 148 OF THE ACT. DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS, T HE ASSESSEE DENIED ALL THE ALLEGATIONS MADE BY THE 3 I.T.A. NO. 3514 /MUM/201 7 AO IN NOTICE BY S UBMITT ING THAT ALL THE PURC HASES WE RE GENUINE AND PAYMENTS WERE MADE BY BANKING CHANNELS. IT WA S ALSO SUBMITTED BY THE ASSESSEE THAT ALL THE ENTRIES HAVE BEEN ACCOUNTED FOR AND MATERIAL PURCHASED FROM THESE WAS RECEIVED AND SOLD TO THE CUSTOMERS THEREBY ACCOUNTING FOR DULY ALL THE PURCHASES AND SALES. T HE AO ALSO CALLED FOR THE PARTY - WISE DETAILS OF PURCHASES FROM THE ASSESSEE BESIDE OTHER DETAILS . T HE AO OBSERVED THAT THE ASSESSEE PURCHASED MATERIAL FROM THESE PARTIES WHOSE NAMES WERE LISTED IN THE WEBSITE OF SALES TAX DEPARTMENT, GOM AS A SUSPICIOUS DEALERS , SUPPLYING BOGUS BILLS TO THE PARTIES WITHOUT PROVIDING ACTUAL AND PHYSICAL DELIVERY OF THE MATERIAL. ACCORDING TO THE AO DESPITE SUFFICIENT OPPORTUNITIES TO THE ASSESSEE, THE ASSESSEE FAILED TO FILE ANY OF THE INFORMATION AS CA LLED FOR BY THE AO AND FRAMED OPINION THAT THE ASSESSEE HAS NO EXPLANATION TO OFFER IN THIS REGARD. THE ASSESSEE, VIDE LETTER DATED 5.1.2015 WAS ALSO GRANTED ONE MORE OPPORTUNITY TO SHOW CAUSE AS TO WHY THE ADDITION OF RS. 30,25,,627/ - SHOULD NOT BE DISALL OWED AND ADDED BACK TO THE TOTAL INCOME. ULTIMATELY THE AO NOT CONVINCED AS TO THE GENUINENESS OF THE PURCHASES ADDED RS. 30,25,627/ - TO THE TOTAL INCOME OF THE ASSESSEE. 4. WITH REGARD TO THE ADDITION OF RS.23,11,276/ - , THE AO OBSERVED THAT THE ASSESSEE HAS CREDITED GROSS RECEIPT OF RS.1,48,67,648/ - AGAINST WHICH THE ASSESSEE DEBITED AN EXPENDITURE OF RS.1,45,82,008/ - ,WHICH WE RE NOT SUPPORT ED BY ANY DOCUMENTARY EVIDENCES AND COULD NOT BE UNVERIFI ED . THE 4 I.T.A. NO. 3514 /MUM/201 7 AO IN ORDER TO ARRIVE AT CORRECT PROFIT , DISALL OWED EXPENSES AT THE RATE OF 20% EXPENSES OF RS.1,15,56,381/ - WHICH WAS CALCULATED BY SUBTRACTING THE ADDITION FOR THE BOGUS PURCHASES FROM THE TOTAL EXPENDITURE .I.E (145 , 82 ,008 - 30,25,627 / - ) AND ACCORDINGLY ADDED RS.23,11,276/ - TO THE TOTAL INCOME . THUS THE AO DISALLOWED AND ADDED TOTAL AMOUNT OF RS.53,36,903/ - ASSESSING THE TOTAL INCOME AT RS.56,20,900/ - IN THE ASSESSMENT FRAMED U/S 143(3) R.W.S. 147 OF THE ACT . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE FAA. 5. THE L D. CIT(A) ALSO OBSERVED THAT ADDITION OF UNPROVED PURCHASE S AMOUNTING TO RS.30,25,627/ - AND DISALLOWANCE OF EXPENSES AMOUNTING TO RS.23,11,276/ - HAVE RESULTED INTO THE NET PROFIT OF THE ASSESSEE BEING RS.56,22,543/ - I.E. 37% WHICH IS UNREALISTICALLY HIG H . THE LD.CIT(A) AFTER REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) , INVOKED THE PROVISIONS OF SECTION 44AD OF THE ACT AND ESTIMATED THE ADDITION AT THE RATE OF 8% OF THE TOTAL TURNOVER . THE LD.CIT(A) ALSO OBSERVED THAT IN ASSESSMENT YEAR 2011 - 12 ALSO THE BOOKS OF ACCOUNT S W ERE REJECTED U/S 145(3) OF THE ACT AND APPLIED NET PROFIT RATE AT 8% IN THE APPELLATE ORDER . ACCORDINGLY, THE LD.CIT(A) CALCULATED NET PROFIT OF RS.11,89,411/ - ON THE TURNOVER OF RS.1,48,67,648/ - . SINCE THE ASSESSEE HAS ALREADY DE CLARED PROFIT OF RS.2,85,640/ - AND BALANCE AMOUNT OF RS.9,03,771/ - WAS DIRECTED TO BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. HENCE BY TAKING A CONSISTENT VIEW TO THAT OF ASSESSMENT YEAR 2011 - 12 PARTLY 5 I.T.A. NO. 3514 /MUM/201 7 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6 . AFTER HEARING THE LD.DR AND ON PERUSAL OF THE RECORD WE FIND THAT THE ASSESSEE UNDOUBTEDLY HAS AVAILED HAWALA ENTRIES FROM THE 17 PARTIES MENTIONED HEREIN ABOVE AND IS A BENEFICIARY OF BOGUS PURCHASES. THE FIRST APPELLATE AUTHORITY REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND ESTIMATED THE INCOME AT 8% OF THE TOTAL TURNOVER BY CITING THAT THE IN ASSESSMENT YEAR 2011 - 12 UNDER SIMILAR FACTS THE BOOKS OF THE ASSESSEE WERE REJECTED AN D INCOME WAS ESTIMATED AT 8% OF THE TURNOVER. HAVING CONSIDERED ALL THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE LD CIT(A) HAS TAKEN A VERY REASONABLE VIEW CONSISTENT WITH THAT OF ASSESSMENT YEAR 2011 - 12. THEREFORE, WE ARE INCLINED TO UPHOLD THE SAME AND THE APPEAL OF THE REVENUE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 26TH OCT , 2017 . SD SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 26 TH OCT 2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 6 I.T.A. NO. 3514 /MUM/201 7 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI