GOOLAMALLY HASANJEE, MUMBAI V. ITO WD 13(1)(3), MUMBAI

ITA 3740/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79040 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-06-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Keywords: Bogus purchase; Retraction
• Section: 142(1); 133A; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI . , !'# $ $ $ $ , %& '()* , %+ ,- % # BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ I.T.A. NO.3740 & 3741/MUM/2012 ( . . . . / ASSESSMENT YEARS :2006-07 & 2008-09 SHRI GOOLAMALLY HASANJEE, 76/78 SHERIFF DEVJI STREET, MUMBAI-400 003 / VS. THE ITO WARD-13 (1)(3), AAYAKAR BHAVAN, MUMBAI-400 020 -/ %+ ./ 0 ./ PAN/GIR NO. : AAAFG 5062A ( /1 / APPELLANT ) .. ( 23/1 / RESPONDENT ) /1 4 % / APPELLANT BY: SHRI DEEPAK TRALSHAWALA 23/1 5 4 % / RESPONDENT BY: SHRI SHRIKANT NAMDEO 5 6+ / DATE OF HEARING :10.06.2014 7. 5 6+ / DATE OF PRONOUNCEMENT :10.06.2014 ,%8 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS BY THE ASSESSEE FOR TWO DIFFERENT ASSESSMENT YEARS I.E. 2006-07 AND 2008-09 ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A)-24, MUMBAI DT.12.03.2012. IN BOTH TH ESE APPEALS THE ASSESSEE HAS RAISED ONE COMMON ISSUE THOUGH QUANTUM MAY DEFER, BOTH THESE APPEALS WERE HEARD TOGETHER AND DISPOSE OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NOS. 3740 & 3741/M/12 2 ITA NO. 3740/MUM/2012 A.Y. 2006-07 2. THE ASSESSEE IS A TRADER IN COTTON AND MAN-MADE FABRICS ON RETAIL AS WELL AS WHOLESALE. THE ASSESSEE FILED RETURN OF IN COME ON 27.10.2006 DECLARING TOTAL INCOME AT RS. 4,68,089/-. THE SAID RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THEREAFTER IT WAS REOPEN ED AND NOTICE U/S. 148 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE NOTIC ES U/S. 143(2) AND 142(1) WERE ALSO ISSUED AND SERVED UPON THE ASSESSE E. 2. THE SURVEY OPERATION U/S. 133A WAS CONDUCTED ON THE PREMISES OF SHRI RAKESHKUMAR M. GUPTA, PROPRIETOR OF M/S. MANOJ MILLS, SHRI MOHIT R. GUPTA PROP. OF M/S. ASTHA SILK INDUSTRIES AND SM T. HEMA R. GUPTA, PROP. OF M/S. SHREE RAM SALES & SYNTHETICS. IN TH E COURSE OF THE SURVEY OPERATION, IT CAME TO THE NOTICE OF THE SURVEY PART Y THAT THE AFORESTATED PERSONS WERE ENGAGED EXCLUSIVELY IN THE ACTIVITY OF ISSUING ACCOMMODATION BILLS ON WHICH THEY RECEIVED COMMISSI ON AT THE RATE OF 1%. IT WAS ALSO NOTICED THAT ASSESSEE IS ALSO ONE OF THE PERSONS WHO HAD MADE PURCHASES FROM THE AFOREMENTIONED PARTIES. TH E ASSESSEE WAS ASKED TO JUSTIFY HIS PURCHASES FROM THE AFOREMENTIO NED PARTIES. 2.1. THE ASSESSEE SUBMITTED BILLS WITH DELIVERY CHA LLAN, THE EVIDENCE OF MAKING PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. THE A SSESSEE ALSO FILED MONTHLY QUANTITATIVE STOCK RECONCILIATION. THE ASSE SSEE WAS FURTHER ASKED TO EXPLAIN WHY THE BOGUS PURCHASES MADE FROM THE AF OREMENTIONED PARTIES BE NOT ADDED TO THE INCOME. IT WAS EXPLAIN ED BY THE ASSESSEE THAT THE STATEMENTS GIVEN BY SHRI RAKESHKUMAR M. GUPTA A ND HIS FAMILY MEMBERS ARE NOT CORRECT. IT WAS FURTHER EXPLAINED THAT PURCHASES AND SALES ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS ALSO BROUGHT TO THE NOTICE OF THE AO THAT THE AFFID AVIT OF SHRI ITA NOS. 3740 & 3741/M/12 3 RAKESHKUMAR M. GUPTA AND HIS FAMILY MEMBERS WHO HA VE DENIED IN THE SAID AFFIDAVIT ABOUT THE ACTIVITY OF ISSUANCE OF BO GUS BILLS. THE EXPLANATION OF THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO WAS OF THE OPINION THAT THE ASSESSEE HAS AVAILED BOGUS BILLS AMOUNTING TO RS. 10,59,265/-. THE AO WENT ON TO TREAT THE PURCHASES AMOUNTING TO RS. 10,59,265 FROM THE SAID SHRI RAKESHKUMAR M. GUPTA A ND HIS FAMILY MEMBERS AS BOGUS AND ACCORDINGLY ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE AND COMPLETED THE ASSESSMENT . 3. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE REITER ATED HIS SUBMISSIONS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS MAD E BY THE ASSESSEE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT AN ADHOC ADD ITION OF RS. 1,35,000/- WHICH IS ABOUT 12.5% OF THE PURCHASE IN QUESTION WOULD MEET THE ENDS OF JUSTICE. THE LD. CIT(A) RESTRICTED THE ADDITION TO RS. 1,35,000/-. 4. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT THE AO HAS GROSSLY ERRED IN TREATING THE PURCHASES AS BOGUS PURCHASE. IT IS THE SAY OF THE LD. COUNSEL THAT THE LD. CIT(A) FURTHER ERRED IN MAKING AN ADHOC DISALLOWANCE WHICH HAS NO BASIS. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE AO. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE FIND THAT THE ENTIRE ADDITION HAS BEEN MADE ON THE STATEMENT OF ONE SHRI RAKESHKUMAR M. GUPTA AND HIS FAMILY MEMBERS. IT IS THE ALLEGATION OF ITA NOS. 3740 & 3741/M/12 4 THE REVENUE THAT THE SAID FAMILY MEMBERS WERE ISSUI NG ACCOMMODATION BILLS TO THE ASSESSEE. THE AO ACCORDINGLY WENT ON TO TREAT THE ENTIRE PURCHASES AS BOGUS PURCHASES. HOWEVER, WE FIND THA T THE SALES MADE BY THE ASSESSEE HAVE BEEN ACCEPTED. IT IS AN ELEMENTA RY RULE OF ACCOUNTANCY AS WELL AS TAXATION LAWS THAT PROFIT FROM BUSINESS CANNOT BE ASCERTAINED WITHOUT DEDUCTING COST OF PURCHASE FROM SALES, OTHE RWISE IT COULD AMOUNT TO LEVY OF INCOME-TAX ON GROSS RECEIPTS OR ON SALES . WE FURTHER FIND THAT THE AO HAS NOT COMMENTED UPON THE RETRACTION MADE B Y SHRI RAKESHKUMAR M. GUPTA AND HIS FAMILY MEMBERS. WE NO TICED THAT THE SAID RETRACTION WAS MADE BY FILING AN AFFIDAVIT. N OTHING HAS BEEN BROUGHT ON RECORD EXCEPT FOR THE STATEMENT OF SHRI RAKESHKU MAR M. GUPTA WHICH COULD SUGGEST THAT THE PURCHASES MADE BY THE ASSESS EE ARE BOGUS. 7.1. CONSIDERING THE ENTIRE FACTS IN TOTALITY AND K EEPING IN MIND THAT NO ADVERSE INFERENCE HAS BEEN DRAWN SO FAR AS SALES AR E CONCERNED, WE DO NOT FIND ANY REASON FOR MAKING ANY DISALLOWANCE ON THIS ACCOUNT. THE ADHOC ADDITION SUSTAINED BY THE LD. CIT(A) IS ALSO WITHOU T ANY BASIS AND THE SAME IS DELETED. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 10.6.2014. . ,%8 5 . +% 9 :, ; 10.6.2014 5 < SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) !'# /VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; :, DATED 10 TH JUNE, 2014 . . ./ RJ , SR. PS ITA NOS. 3740 & 3741/M/12 5 ,%8 ,%8 ,%8 ,%8 5 55 5 26' 26' 26' 26' =%'.6 =%'.6 =%'.6 =%'.6 / COPY OF THE ORDER FORWARDED TO : 1. /1 / THE APPELLANT 2. 23/1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. '?< 26 , , / DR, ITAT, MUMBAI 6. < @ / GUARD FILE. ,%8 ,%8 ,%8 ,%8 / BY ORDER, 3'6 26 //TRUE COPY// ! !! ! / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI