ITO - 22(2)(1), MUMBAI V. SHRI KAMLESH P DESAI, MUMBAI

ITA 3613/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3444 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 133(6); 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3613 /MUM./2019 ( ASSESSMENT YEAR : 2 0 09 10 ) ITA NO. 3614/MUM./2019 ( ASSESSMENT YEAR : 2 010 11 ) INCOME TAX OFFICER WARD 22(2)(1), MUMBAI . APPELLANT V/S SHRI KAMLESH DESAI 602, KALPANA, BESANT STREET SANTACRUZ (WEST), MUMBAI 400 054 PAN AABPD6487D . RESPONDENT REVENUE BY : SHRI SUSHIL KUMAR MISHRA ASSESSEE BY : NONE DATE OF HEARING 03 . 1 1 .2020 DATE OF ORDER 06.11.2020 O R D E R PER SAKTIJIT DEY, J.M. THESE APPEALS BY THE REVENU E ARISE OUT OF A COMMON ORDER DATED 5 TH FEBRUARY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 34, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2009 10 AND 2010 11. 2. THE ONLY COMMON DISPUTE ARISING IN THE PRESENT APPEAL S RELATE TO PARTIAL RELIEF GRANTED BY THE LEARNED COMMISSIONER (APPEALS) WITH 2 SHRI KAMLESH DESAI REGARD TO THE ADDITION S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON GENUINE PURCHASES. 3. BRIEF FACTS, WHICH ARE COMMON IN BOTH THE ASSESSMENT YEARS ARE, THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING IN PAPER AND BOARDS. FOR THE ASSESSMENT YEAR 2009 10, THE ASSESSEE FILED HI S RETURN OF INCOME ON 29 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 1,68,190. SIMILARLY, FOR THE ASSESSMENT YEAR 2010 11, THE ASSESSEE FILED HIS RETURN OF INCOME ON 24 TH JANUARY 2011, DECLARING TOTAL INCOME OF ` 1,45,038. THE RETURNS OF INCOME FILED BY THE ASSESSEE WERE INITIALLY PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA, THAT PURCHASES WORTH ` 2,45,96,981, IN THE ASSESSMENT YEAR 2009 10 AND ` 1,17,24,387, IN THE ASSESSMENT YEAR 2010 11, ARE NON GENUINE AS THE PERSONS/ ENTITIES FROM WHOM THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED THE GOODS ARE MERELY ENTRY PROVIDERS. ON THE BASIS OF SUCH INFORMATION THE ASSESSING OFFICER REOPENED THE ASSESSMEN TS UNDER SECTION 147 OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO FURNISH EVIDENCES TO PROVE THE GENUINENESS OF SUCH PURCHASES. FURTHER, TO INDEPENDENTLY V ERIFY THE AUTHENTICITY OF SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT TO THE SELLING DEALERS. HOWEVER, AS ALLEGED BY THE 3 SHRI KAMLESH DESAI ASSESSING OFFICER, NO RESPONSE WAS RECEIVED FROM THE PARTIES AGAINST SUCH NOTICES. THUS, THE A SSESSING OFFICER ULTIMATELY CONCLUDED THAT THE PURCHASES MADE ARE NON GENUINE. HOWEVER, RELYING UPON THE RATIO LA ID DOWN IN A JUDICIAL PRECEDENT , THE ASSESSING OFFICER DISALLOWED 25% OUT OF THE ALLEGED NON GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE S BY FILING APPEALS BEFORE THE FIRST APPELLATE AUTHORITY. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF THE FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) REDUCED THE DI SALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASES IN BOTH THE ASSESSMENT YEARS. 5. WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER. CONS IDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE RESPONDENT ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSING OFFICER HAD RECEIVED INFORMATION FROM THE SALES TAX DEPARTMENT THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR S WERE NON GENUINE AS THE CONCERNED SELLING DEALERS 4 SHRI KAMLESH DESAI WERE FOUND TO BE PROVIDING ACCOMMODATION BILLS ONLY. THOUGH, THE ASSESSING OFFICER ON THE BASIS OF SUCH INFORMATION HAS TREATED THE PURCHASES AS NON GENUINE, HOWEVER, ULTIMATELY, HE HAS NOT DISALLOWED THE ENTIRE PURCHASES BUT HAS RESTRICTED THE DISALLOWANCE TO 25% OF SUCH PURCHASES WHICH HAS BEEN REDUCED TO 12.5% BY THE LEARNED COMMISSIONER (APPEALS). THE VERY FACT THAT THE ASSESSING OFFICER HAS DISALLOWED 25% OF THE ALLEGED NON GENUINE PURCHASES WOULD SUGGEST THAT THE ASSE SSING OFFICER BELIEVES THAT THE PURCHASES HAVE BEEN EFFECTED FROM UNVERIFIED SOURCES. THEREFORE, WHAT THE ASSESSEE MIGHT HAVE SUPPRESSED IS THE PROFIT ELEMENT. THEREFORE, HE HAS RESTRICTED DISALLOWANCE TO 25%. THUS, THE DISPUTE BEFORE US , PRECISELY , IS WIT H REGARD TO THE REASONABLE RATE OF DISALLOWANCE , WHETHER 25% OR 12.5%. KEEPING IN VIEW THE CONSISTENT VIEW OF THE TRIBUNAL IN SIMILAR NATURE OF CASES, WE ARE OF THE CONSIDERED OPINION THAT THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN RESTRICTING DISAL LOWANCE TO 12.5% IS FAIR AND REASONABLE, HENCE, DESERVES TO BE UPHELD. ACCORDINGLY, WE DO SO. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.11.2020 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 06.11.2020 5 SHRI KAMLESH DESAI COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI