ITO 22 (1)(5), MUMBAI V. SHRI. HITESH KUMAR S JAIN, MUMBAI

ITA 364/MUM/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Keywords: Bogus purchase; Gift; Accommodation entries
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 364 //20 20 (. . 2009-10 ) ITA NO.364/MUM/2020 (A.Y.2009-10) ITO-22(1)(5), 323, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012. ...... ' / APPELLANT VS. SHRI HITESH KUMAR S. JAIN 1, KANTA BUILDING, PHOROZSHAH MEHTA ROAD, SANTACRUZ (WEST), MUMBAI-400054. PAN: AAIPJ9096P . .... (*/ RESPONDENT ' +/ APPELLANT BY : SH. SANJAY J. SETHI (* +/ RESPONDENT BY : NONE , / DATE OF HEARING : 23/06/2021 , / DATE OF PRONOUNCEMENT : 01/07/2021 / ORDER PER VIKAS AWASTHY, J.M: THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI [HEREINAFTER REFERR ED TO AS THE CIT(A)] DATED 25.11.2019 FOR THE ASSESSMENT YEAR (AY) 2009- 10. 2 . 364 //20 20 (. .2009-10 ) ITA NO.364/MUM/2020 (A.Y.2009-10) 2. THE ASSESSEE IS ENGAGED IN TRADING AND MANUFACTU RING OF GIFT ITEMS. THE ASSESSMENT FOR AY 2009-10 IN THE CASE OF ASSESSEE W AS RE-OPENED ON THE GROUND THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES AGGREGATING TO RS. 12,32,830/- FROM VARIOUS (SIX) DEALERS, DECLARE D AS HAWALA OPERATORS BY THE SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA. DU RING ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NEITHER PRODUCE THE DEALERS NOR COULD FURNISH CONFIRMATIONS FROM THEM. EVEN THE NOTICES ISSUED TO THE DEALERS UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REF ERRED TO AS THE ACT] WERE RECEIVED BACK UNSERVED FROM POSTAL AUTHORITIES WITH REMARKS LEFT OR UNKNOWN. THE TWO PARTIES ON WHOM NOTICES WERE SER VED DENIED HAVING ANY TRANSACTION WITH THE ASSESSEE DURING RELEVANT PERIO D. FURTHER, THE ASSESSEE COULD NOT FURNISH RELEVANT DOCUMENTS VIZ. DELIVERY CHALLANS, LORRY RECEIPT, STOCK REGISTER, ETC. TO PROVE TRAIL OF GOODS. IN OTHER WO RDS, HE ASSESSEE COULD NEITHER PROVE GENUINENESS OF THE TRANSACTIONS NOR THE AUTHE NTICITY OF DEALERS. AT THE SAME TIME, THE AO DID NOT RAISE DOUBT OVER THE SALE S TURNOVER/STOCK DECLARED BY THE ASSESSEE. THE AO DISALLOWED ENTIRE ALLEGED P URCHASES FROM TWO DEALERS I.E. M/S CHIRAG CORPORATION AND M/S SHREE YAMUNA IM PEX AGGREGATING TO RS. 4,72,688/- AS AFORESAID DEALERS HAD DENIED ANY TRAN SACTION WITH THE ASSESSEE DURING RELEVANT PERIOD. IN RESPECT OF REMAINING PUR CHASES, THE AO MADE ADDITION BY APPLYING GROSS PROFIT (GP) RATE OF 18.1 2% I.E. THE GP RATE DECLARED BY THE ASSESSEE ON REGULAR PURCHASE AND MADE ADDITI ON OF RS. 1,37,738/-. THUS, IN TOTAL, THE AO MADE ADDITION OF RS. 6,10,426/- ON ACCOUNT OF SUPPRESSION OF PROFITS ON NON-GENUINE PURCHASES. 3 . 364 //20 20 (. .2009-10 ) ITA NO.364/MUM/2020 (A.Y.2009-10) 3. IN FIRST APPELLANT PROCEEDINGS, THE CIT(A) RESTR ICTED THE DISALLOWANCE ON ALLEGED BOGUS PURCHASES TO 12.5% AND REDUCED THE AD DITION TO RS. 1,54,104/-. AGAINST THE RELIEF GRANTED, THE REVENUE IS IN APPEA L BEFORE THE TRIBUNAL. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE (DR) HEARD, ORDERS OF THE AUTHORITIES BELOW EXAMINED. SINCE THE AO ACCEPTED THE SALES TURNOVER AND THE CLOSING STOCK DECLARED BY ASSESSEE , ENTIRE BOGUS PURCHASES COULD NOT HAVE BEEN ADDED. IT IS ONLY THE PROFIT EL EMENT EMBEDDED IN SUCH PURCHASES THAT CAN BE BROUGHT TO TAX. THE ASSESSEE HAS DECLARED GP OF 18.12% DURING THE RELEVANT PERIOD. THE CIT(A) HAS RESTRICT ED THE ADDITION ON ENTIRE ALLEGED PURCHASES TO 12.5%. THIS MARGIN ON BOGUS PU RCHASE IS OVER AND ABOVE THE GP DECLARED BY THE ASSESSEE. I FIND NO REASON T O INTERFERE WITH THE IMPUGNED ORDER. THE FINDINGS OF THE CIT(A) ON THIS ISSUE ARE UPHELD AND THE APPEAL OF REVENUE IS DISMISSED, SANS MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 1 ST DAY OF JULY, 2021. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 1/ DATED: 01/07/2021 SK, PS ( 2 ( 2 ( 2 ( 2 COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. (* / THE RESPONDENT. 3. 3 ( )/ THE CIT(A)- 4. 3 CIT 4 . 364 //20 20 (. .2009-10 ) ITA NO.364/MUM/2020 (A.Y.2009-10) 5. ( , . . . , / DR, ITAT, MUMBAI 6. 7 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI