SURESH MANEKLAL SHETH, MUMBAI V. ITO 25 (3)(4), MUMBAI

ITA 3580/MUM/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7319 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘G‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA No.3580/Mum/2018 (Assessment Year :2007-08) Shri Suresh Maneklal Sheth 7, Kusum Niwas S.V.Road, Irla Vile Parle (W) Mumbai – 400 056 Vs. ITO-25(3)(4) C-10-606, Pratyakshakar Bhavan, Bandra Kurla Complex, Mumbai – 400 051 PAN/GIR No.AJMPS0119H (Appellant) .. (Respondent) ITA No.3506/Mum/2018 (Assessment Year :2007-08) ITO-25(3)(4) C-10-606, Pratyakshakar Bhavan, Bandra Kurla Complex, Mumbai – 400 051 Vs. Shri Suresh Maneklal Sheth 7, Kusum Niwas S.V.Road, Irla Vile Parle (W) Mumbai – 400 056 PAN/GIR No.AJMPS0119H (Appellant) .. (Respondent) Assessee by Shri Prateek Jain Revenue by Shri Rajesh Ojha Date of Hearing 28/10/2021 Date of Pronouncement 29/11/2021 आदेश / O R D E R PER M. BALAGANESH (A.M): These cross appeals in ITA Nos.3580/Mum/2018 & 3506/Mum/2018 for A.Y.2007-08 arise out of the order by the ld. ITA Nos.3580/Mum/2018 & 3506/Mum/2018 Shri Suresh Maneklal Sheth 2 Commissioner of Income Tax (Appeals)-37, Mumbai in appeal No.CIT(A)- 37/IT-215/ITO-25(3)(4)/2015-16 dated 15/03/2018 (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 27/03/2015 by the ld. Income Tax Officer – 25(3)(4), Mumbai (hereinafter referred to as ld. AO). Identical issues are involved in both the appeals, hence, they are taken up together and disposed of by this common order for the sake of convenience. 2. The ground No.1 raised by the assessee challenging the validity and re-assessment was stated to be not pressed at the time of hearing. The same is reckoned as a statement made from the Bar and accordingly, the ground No.1 raised by the assessee is dismissed as not pressed. 3. The ground No.2 raised by the assessee and the entire grounds raised by the Revenue are in respect of disallowance on account of bogus purchases. 4. We have heard rival submissions and perused the materials available on record. We find that assessee is a proprietor of Namrata Paper Agencies engaged in the business of trading in paper. The return of income for the A.Y.2007-08 was filed by the assessee on 21/04/2014 declaring total income of Rs. 6,63,520/-. It is not in dispute that assessee had made purchases from two parties totaling to Rs.53,56,525/- whose names appear to be tainted dealers in the website of sales tax department of Government of Maharashtra. This information was passed on by Sales Tax department of Government of Maharashtra to the ITA Nos.3580/Mum/2018 & 3506/Mum/2018 Shri Suresh Maneklal Sheth 3 Assessing Officer through the DGIT (Investigation Wing) of Income Tax department, which triggered the reopening of assessment in the case of the assessee. The ld. AO sought to examine the veracity of the purchases made from two suppliers in the course of re-assessment proceedings. Notice u/s.133(6) of the Act sent to the aforesaid two parties were returned unserved with the remark “left” by the Postal authorities. Accordingly, the ld. AO concluded that assessee could not prove the genuineness of the purchases by producing the relevant documents and confirmation from the concerned suppliers. With these observations, he proceeded to add the entire value of purchases treating the same as bogus while completing the re-assessment. 4.1. The ld. CIT(A) observed that the corresponding sales made by the assessee out of the disputed purchases were not doubted by the ld. AO and since there cannot be no sales without the purchases, only the profit element embedded there on could be brought to tax which was estimated by the ld. CIT(A) @12.5% by placing reliance on various decisions of the Tribunal and of various High Courts. Aggrieved by this order, both the assessee as well as the Revenue are in appeal before us. 4.2. It is not in dispute that assessee had made purchases from tainted dealers whose names appear in the website of sales tax department, Government of Maharashtra. It is not in dispute that the corresponding sales made by the assessee out of such disputed purchases from two parties were not doubted by the ld. AO. It is not in dispute that assessee had submitted the details of purchases, invoice bills alongwith bank statements evidencing the fact that payments have been made to those suppliers only by account payee cheques. Since the corresponding sales made by the assessee out of the disputed purchases has not been ITA Nos.3580/Mum/2018 & 3506/Mum/2018 Shri Suresh Maneklal Sheth 4 doubted by the Revenue, we find that the ld. CIT(A) had rightly held that only the profit element needs to be brought to tax and not the entire value of the purchases. We find that this Tribunal in series of decisions, depending upon the nature of industry in which assessee’s are engaged in, had estimated the profit element to be at 12.5%. The same percentage has been estimated by the ld. CIT(A) also on which, we do not find any infirmity. Accordingly, the order of the ld. CIT(A) does not warrant any interference. 5. In the result, appeal of the assessee is allowed and appeal of the Revenue is dismissed. Order pronounced on 29/11/2021 by way of proper mentioning in the notice board. Sd/- (AMARJIT SINGH) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 29/11/2021 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//