PRAGNA C. MEHTA, MUMBAI V. ACIT 32(2), MUMBAI

ITA 3715/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9696 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: SHASHANK K DUNDULD
• Keywords: Bogus purchase; Reassessment proceedings
• Section: 69C; 143(3); 133(6); 147; 148

Judgement Text

ITA NO.3715/M/2017 PRAGNA C.MEHTA ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3715/MUM/2017 ( / ASSESSMENT YEAR: 2011-12) PRAGNA C.MEHTA 1003 ASHOPALAV CHSL S.V.ROAD, BORIVALI(W) MUMBAI 400 092 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 19(2) PRATYAKSHKAR BHAVAN BANDRA MUMBAI 400 051 ./ ./PAN/GIR NO. AAHPM-4038-R ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : SHASHANK K DUNDU,LD.AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 07/09/2017 / DATE OF PRONOUNCEMENT : 08 /09/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX ITA NO.3715/M/2017 PRAGNA C.MEHTA ASSESSMENT YEAR 2011-12 2 (APPEALS)-44 [CIT(A)], MUMBAI DATED 07/04/2017 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF BOGUS PURCHASES. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSE E BEING RESIDENT INDIVIDUAL DEALING IN FIRE FIGHTING EQUIPMENTS WAS SUBJECTED TO AN ASSESSMENT U/S 143(3) READ WITH SECTION 147 FOR IMPUGNED AY ON 31/01/2015 AT RS.51,31,280/- AFTER ADDITION OF CERT AIN BOGUS PURCHASES U/S 69C FOR RS.4,82,675/-. THE ORIGINAL RETURN OF INCOME WA S E-FILED ON 24/09/2011 AT RS.46,48,603/- WHICH WAS PROCESSED U/ S 143(1). 2.2 THE REASSESSMENT PROCEEDINGS WERE INITIATED UPO N RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN BOGUS PURCHASE BILLS AND IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.15,40,125/- FROM AN ENTITY NAMELY DONNIES TRADING PVT. LTD. CONSEQUENTLY, NOTICE U/S 148 DATED 20/05/2013 WAS I SSUED TO THE ASSESSEE WHICH WAS FOLLOWED BY STATUTORY NOTICES U/ S 143(2) AND 142(1). 2.3 THE ASSESSEE, TO SUPPORT PURCHASE TRANSACTIONS, SUBMITTED LEDGER EXTRACTS, COPIES OF BILLS, BANK STATEMENTS REFLECTI NG PAYMENT MADE TO THE SAID PARTY AND CORRESPONDING SALES INVOICES AND CONTENDED THAT THE PURCHASES WERE GENUINE. HOWEVER, NOTICE SENT U/S 13 3(6) TO THE ALLEGED BOGUS SUPPLIER REMAINED UN-SERVED AND THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY TO CONFIRM THE TRANSACTIONS, WHICH L ED THE LD. AO TO DISBELIEVE THE SAME. FINALLY, NOT CONVINCED WITH AS SESSEES SUBMISSIONS, LD. AO MADE ESTIMATED ADDITION AGAINST THE SAID PURCHASES @31.34% WHICH CAME TO RS.4,82,675/-. ITA NO.3715/M/2017 PRAGNA C.MEHTA ASSESSMENT YEAR 2011-12 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 07/04/2 017 AND REITERATED THE SAID CONTENTIONS. HOWEVER, THE LD. CIT(A) CONFI RMED THE ADDITIONS MADE BY LD. AO. AGGRIEVED, THE ASSESSEE IS IN FURTH ER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTE NTION TO HIGH GROSS PROFIT RATE REFLECTED BY THE ASSESSEE AND CONTENDED THAT ADDITIONS WERE NOT WARRANTED SINCE THE ASSESSEE WAS IN POSSESSION OF PRIMARY PURCHASE DOCUMENTS AND THE PAYMENTS WERE TH ROUGH BANKING CHANNELS. PER CONTRA, LD. DR CONTENDED THAT NOTICE SENT U/S 133(6) WAS RETURNED BACK UN-SERVED AND THE ASSESSEE COULD NOT PRODUCE THE SAID PARTY TO CONFIRM THE TRANSACTION AND HENCE, THE ADD ITION, BEING FAIR & REASONABLE, WAS JUSTIFIED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT TH ERE COULD BE NO SALE WITHOUT PURCHASE / CONSUMPTION OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS WHICH WAS MATERIAL IN TENSIVE AND COULD NOT BE CARRIED OUT WITHOUT CONSUMPTION OF MATERIAL. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY T HE REVENUE AND THE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHAS ES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD N OT PRODUCE THE PARTY FOR CONFIRMATION AND NOTICE SENT U/S 133(6) REMAINE D UN-SERVED , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THEREFORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS TO ACCOUNT F OR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZ E FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHASE OF MAT ERIAL IN THE GREY ITA NO.3715/M/2017 PRAGNA C.MEHTA ASSESSMENT YEAR 2011-12 4 MARKET AND UNDUE BENEFIT OF VAT AGAINST BOGUS PURCHASES, WHICH LOWER AUTHORITIES HAVE RIGHTLY DONE SO. HOWEVER, ON TOTAL ITY OF FACTS, WE CONSIDER ESTIMATED ADDITION TO BE ON THE HIGHER SID E AND THEREFORE, RESTRICT THE SAME TO 8% OF ALLEGED BOGUS PURCHASES. THE LD. AO IS DIRECTED TO RE-COMPUTE THE INCOME OF THE ASSESSEE I N THE LIGHT OF ADDITION SUSTAINED BY US. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08 . 09.2017 SR.PS:- THIRUMALESH / 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 FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI