KIRTI K DOSHI, MUMBAI V. ITO 25(2)(5), MUMBAI

ITA 3532/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8981 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: RAHUL K HAKANI
• Keywords: Bogus purchase
• Section: 143(3); 133(6); 147; 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. 3532 /MUM/20 17 ( / ASSESSMENT YEAR : 20 09 - 10 ) SHRI KIR TI K DOSHI, 302, SH ANTI SADAN, DADABHAI ROAD, VILE PARLE (W), MUMBAI - 400056 / VS. INCOME TAX OFFICER - 25(2)(5), PRATYAKSHA KAR BHAVAN, C - 12, BKC, BANDRA (E), MUMBAI - 400051 ./ PAN : AABPD1906B ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : SHRI RAHUL K HAKANI / RE VENUE BY : SHRI RAJAT MITTAL / DATE OF HEARING : 6 .9.2017 / DATE OF PRONOUNCEMENT : 27 . 10 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED IS APPEAL BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 20 09 - 10 AND IT IS DIRECTED AGAINST THE ORDER DATED 3.3. 2017 PASSED BY THE LD. CIT(A) - 37, MUMBAI . 2. THE SOLE ISSUE RAISED IN ALL THE GROUNDS OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITI ON OF RS.29,90,155 / - BEING 12.5% OF ALLEGED BOGUS PURCHASES BY CIT(A) AS AGAINST THE 100% ADDITION MADE BY THE AO . 2 I.T.A. NO. 3532 /MUM/201 7 3. FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN OF INCOME ON 2 9 .9.20 09 DECLARING A TOTAL INCOME OF RS. 20,87,167/ - . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT . THEREAFTER AO RECEIVED THE INFORMATION FROM THE DGIT(INV) , MUMBAI AND SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA THAT THE ASSESSEE IS A BENEFICIARY OF BOGUS PURCHASE BILLS WITHOUT TAKING PHYSICAL DELIVERY OF GOODS T O THE TUNE OF RS.2,39,21,243/ - FROM 43 PARTIES. IN VIEW OF THIS , THE AO REOPENED THE ASSESSMENT ISSUING NOTICE U/S 148 OF THE ACT ON 27.2.2014 ON THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. THEREAFTE R THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND PROCESS UNDER SECTION 143(2) AND 142 (1) WAS FOLLOWED. THE AO OBSERVED THAT THE ASSESSEE DECLARED GP OF 10.78% AND ACCORDINGLY, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF PURCHASES AND PROVE THE G ENUINENESS OF THE PURCHASES WITH SUPPORTING BANK STATEMENT, PURCHASES BILLS, STOCK REGISTER, QUANTITY WISE DETAILS, DELIVERY CHA LLANS , LORRY RECEIPTS AND OCTROI RECEIPTS, MODE OF TRANSPORT ETC. THE AO ALSO TRIED TO VERIFY THE PURCHASES ISSU ING NOTICES TO THE PARTIES U/S 133(6) OF THE ACT BUT THE SAME WERE RETURNED UNSERVED . THE ASSESSEE REPLIED VARIOUS QUERIES RAISED BY THE AO BUT COULD NOT FURNISH THE ADDRESSES AND WHE REA BOUT OF THE PARTIES NOR WERE THESE PRODUCED BEFORE THE AO. ULTIMATELY, THE AO REJ ECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND APPLIED GP AT THE RATE OF 12.5% OF BOGUS PURCHASES WHICH WORKED OUT TO RS.29,90,155/ - AND 3 I.T.A. NO. 3532 /MUM/201 7 ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE AND FRAMED ASSESSMENT AT RS.50,77,322/ - UNDER SECTION 143(3) R. W.S.147 OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) SUSTAINED THE ADDITION MADE BY THE AO BY OBSERVING AND HOLDING AS UNDER : 5.9 THE A.O. HAS DISALLOWED THE AMOUNT OF RS.29,90,155/ - ON ACCOUNT OF BOGUS PURCHASES. THE TOTAL PURCHASE DEBITE D TO THE TRADING ACCOUNT FROM THESE PARTIES ARE RS.2,39,21,243/ - . THE A.O. HAS DISALLOWED 12.5% OF ALLEGED. PURCHASES OF RS.2,39,21,243/ - . ESTIMATION OF PROFIT RANGING FROM 12.5% TO 15% HAS BEEN UPHELD BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. SIMIT P. SHETH 356 ITR 451 (GUJ.). CONSIDERING THE TOTALITY OF THE FACTS BEFORE ME, AS WELL AS THE JUDICIAL OPINION AVAILABLE, I AM INCLINED TO AGREE WITH THE WITH THE A.O. THE A.O. HAS DISALLOWED 12.5% 'OF ALLEGED PURCHASE ONLY ON ACCOUNT OF BOGUS PURC HASES. I AM OF THE VIEW THAT ESTIMATION OF PROFIT AT 12.5% IS JUSTIFIED. THEREFORE, ADDITION MADE BY THE A.O. IS UPHELD AND CONFIRMED. 4 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE IMPUGNED ORDERS. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS AVAILED BOGUS PURCHASES BILLS FROM HAWALA DEALERS TO THE TUNE OF RS.2,39,21,243/ - WHICH COULD NOT BE PROVED IN THE ASSESSMENT PROCEEDINGS AND AS A RESULT OF WHICH THE AO APPLIED GP OF 12.5% OF THE BOGUS PURCHASES AND ADDED THE S A ME TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) UPHOLD THE ORDER OF THE AO BY APPLYING THE PRECEDENT LAID DOWN IN THE CASE OF CIT VS. SIMIT P. SHETH 356 ITR 451 (GUJ.). HAVING CONSIDERED THE FACTS ON RECORD, WE ARE OF THE OPINION THAT SOME PERCENTAGES OF GP SHOULD BE ADDED TO BRING THE SAVINGS WHICH THE ASSESSEE MIGHT HAVE MADE BY PURCHASING THE GOODS FROM GRAY MARKET THROUGH NON 4 I.T.A. NO. 3532 /MUM/201 7 PAYMENT OF VAT AND OTHER INCIDENTAL LEVY OF TAXES. WE, THEREFORE, ARE IN AGREEMENT WITH CONCLUSION OF THE LD. CIT(A) WHO HAS PASSED A VERY REASONABLE ORDER . ACCORDINGLY, THE SAME IS UPHELD. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH OCT , 2017 . SD DS ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 27 . 10 .2017 SR.PS:SRL: / 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, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI