UNIQUE EXPORTS, MUMBAI V. ITO 25(3)(4), MUMBAI

ITA 3620/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8515 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 17-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Bogus purchase; Unexplained expenditure; Corroborative evidences
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3620 / MUM . /2017 ( ASSESSMENT YEAR : 20 10 11 ) UNIQUE EXPORTS B/3, 102, KAMLA NAGAR M.G. ROAD, KANDIVALI (W) MUMBAI 400 067 PAN AAAFU0255F . APPELLANT V/S INCOME TAX OFFICER WARD 25(3)(4), MUMBAI . RESPONDENT ITA NO. 3621 / MUM./2017 ( ASSESSMENT YEAR : 20 12 13 ) UNIQUE EXPORTS B/3, 102, KAMLA NAGAR M.G. ROAD, KANDIVALI (W) MUMBAI 400 067 PAN AAAFU0255F . APPELLANT V/S INCOME TAX OFFICER WARD 25(3)(4), MUMBAI . RESPONDENT ASSESSEE BY : SHRI SANJAY PARIKH REVENUE BY : SHRI RAJEEV GUBGOTRA DATE OF HEARING 06 . 12 .2018 DATE OF ORDER 31.12.2018 2 UNIQUE EXPORTS O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 45, MUMBAI, PERTAINING TO ASSESSMENT YEARS 2010 - 11 AND 2012 - 13. 2 . THERE IS A DELAY OF ONE - DAY IN FILING BOTH THE APPEALS BY THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE WE CONDONE THE DELAY AND ADMIT THE APPEALS FOR HEARING ON MERITS. ITA NO. 3620/MUM/2017. 3 . GROUND NO.7 BEING GENERAL IN NATURE DOES NOT REQUIRE ADJUDICATION. GROUND S NO.3, 4, 5 AND 6 ARE NOT PRESSED, HENCE, DISMISSED. IN GROUND NUMBER 1 AND 2 THE ASSESSEE HAS CHALLENGED THE ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. 4 . BRIEFLY THE FACTS ARE, THE ASSESSEE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSI NESS OF EXPORTER OF IMITATION JEWELLERY. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 06.10.2010 DECLARING TOTAL INCOME OF ` 12,02,980. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON THE BASIS OF INFORMATION OBT AINED FROM THE SALES TAX DEPARTMENT, GOVERNMENT OF 3 UNIQUE EXPORTS MAHARASHTRA FOUND THAT PURCHASES WORTH ` 42,47,656 CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE FROM SEVEN PARTIES ARE NOT GENUINE AS THOSE PARTIES HAVE BEEN IDENTIFIED AS HAWALA OPERATORS PROVIDING ACCOMMODA TION BILLS WITHOUT SELLING ANY GOODS. ON THE BASIS OF SUCH INFORMATION AVAILABLE ON RECORD, THE ASSESSING OFFICER CONDUCTED ENQUIRY INDEPENDENTLY BY ISSUING NOTICES UNDER SECTION 133 (6) OF THE INCOME TAX ACT, 1961 ( FOR SHORT THE ACT ) TO THE SELLING DEA LERS SEEKING INFORMATION ABOUT THE SALE TRANSACTIONS WITH THE ASSESSEE. AS OBSERVED BY THE ASSESSING OFFICER, ALL SUCH NOTICES RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK NOT KNOWN . IN VIEW OF THE ABOVE, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE CALLING UPON HIM TO EXPLAIN WHY THE PURCHASES TO THE TUNE OF ` 42,47,656 SHOULD NOT BE CONSIDERED AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. AS OBSERVED BY THE ASSESSING OFFICER, IN RESPONSE TO THE SAID SHO W CAUSE NOTICE THE ASSESSEE SIMPLY REITERATED THE EARLIER SUBMISSIONS WITHOUT FURNISHING ANY SUPPORTING EVIDENCE TO PROVE THE GENUINENESS OF PURCHASES. THUS, ULTIMATELY THE ASSESSING OFFICER TREATED THE PURCHASES OF ` 42,47,656 AS NON GENUINE, HENCE, UNEXP LAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. ACCORDINGLY, HE ADDED BACK THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE, LEARNED 4 UNIQUE EXPORTS COMMISSIONER (APPEALS), THOUGH, AGREED WITH THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO PROVE THE PURCHASES TO BE GENUINE, HOWEVER, RELYING UPON CERTAIN JUDICIAL PRECEDENTS HE HELD THAT SINCE THE ASSESSING OFFICER HA S NOT DOUBTED THE SALES EFFECTED BY THE ASSESSEE, ADDITION OF ENTIRE PURCHASES WILL NOT BE PROPER. ACCORDINGLY, HE RESTRICTED THE ADDITION TO 30% OF THE NON GENUINE PURCHASES WHICH WORKED OUT TO ` 12,74,497. 5 . WE HAVE HEARD THE PARTIES AND PERUSED MATERIALS ON RECORD. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, ESTIMATION OF PROFIT @ 30% OF THE ALLEGED NON GENUINE PURCHASES IS HIGH AND EXCESSIVE. HE SUBMITTED, CONSISTENT WITH THE VIEW EXPRESSED BY THE TRIBU NAL IN SIMILAR NATURE OF CASES, PROFIT RATE SHOULD BE REDUCED TO 12.5% OF THE NON GENUINE PURCHASES. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS). HAVING CONSIDERED RIVAL SUBMISSIONS AND LOOKING AT THE NATURE OF DISPUTE, WE ARE OF THE VIEW THAT ESTIMATION OF PROFIT AT THE RATE OF 30% OF THE NON GENUINE PURCHASES IS ON A MUCH HIGHER SIDE. KEEPING IN VIEW THE DECISIONS OF THE TRIBUNAL IN SIMILAR NATURE OF APPEALS, WE ARE INCLINED TO RESTRICT THE ADDITI ON TO 12.5% OF THE NON GENUINE PURCHASES. GROUNDS RAISED ARE PARTLY. 6 . IN THE RESULT, A SSESSEE'S APPEAL IS PARTLY ALLOWED. 5 UNIQUE EXPORTS ITA NO. 3621/MUM/2017 7 . GROUND NO. 5 IS GENERAL IN NATURE, HENCE, DOES NOT REQUIRE ADJUDICATION. GROUND NOS. 3 AND 4 ARE NOT PRESSED, HENCE, DISMISSED. IN GROUND NOS. 1 AND 2 THE ASSESSEE HAS CHALLENGED THE ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 8 . FACTS RELATING TO TH E AFORESAID ISSUE ARE MORE OR LESS COMMON WITH THE FACTS INVOLVED IN ITA NO. 3620/MUM . /2017 EXCEPT FOR THE FACT THAT THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 29.09.2012 DECLARING TOTAL INCOME OF ` 47,18,657 AND THE QUANTU M OF BOGUS PURCHASE IS ` 21,79,803. KEEPING IN VIEW OUR DECISION ON IDENTICAL ISSUE IN ITA N O. 3620/MUM . /2017, HEREINABOVE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO 12.5% OF THE NON GENUINE PURCHASES. GROUNDS ARE PARTLY ALLOWED. 9 . IN THE RESULT, A SSESSEE'S APPEAL IS PARTLY ALLOWED. 10 . TO SUM UP, BOTH THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 31.12. 2 018 6 UNIQUE EXPORTS 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 (SR. PRIVATE SECRETARY) ITAT, MUMBAI