DCIT 32(2), MUMBAI V. JATIN KISORE GADOYA, MUMBAI

ITA 3742/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0532 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: JITENDRA NAHAR
• Keywords: Bogus purchase
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 3742 /MUM/20 16 (ASSESSMENT YEAR 20 11 - 12 ) DCIT 32(2) ROOM NO. 308 3 RD FLOOR, C - 11 PRATAYAKSHKAR BHAVAN BANDRA KURLA COMPLEX BANDRA MU MBAI - 400 051. VS. SHRI JATIN KISHORE GADOYA A - 202, VRINDAVAN RAMBAUGH LANE OFF S.V. ROAD, POISAR BORIWALI (WEST) MUMBAI - 400 092. ( APPELLANT ) ( RESPONDENT ) PAN NO . AEQPG0751G ASSESSEE BY SHRI JITENDRA NAHAR DEPARTMENT BY S HRI M.C. OMI NINGSHEN DATE OF HEARING 2 . 8 . 201 7 DATE OF PRONOUNCEMENT 2 . 8 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 31.03.2016 PASSED BY LD CIT(A) - 44, MUMBAI IN PARTIALLY CONFIRMING THE ADDITION RELATING TO ALLEGED BOGUS PURCHASES MADE IN AY 2011 - 12. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A WHOLESALE TRADER IN PLASTIC GRANULES. CONSEQUENT TO THE INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, IT CAME TO THE NOTICE OF THE REVENUE THAT THE ASSESSEE HAS MADE PURCHASES TO THE TUNE OF RS.48,25,695/ - DURING THE YEAR UNDER CONSIDERATION FROM THE PARTIES, WHO WERE LISTED OUT BY THE SALES TAX DEPARTMENT AS HAWALA DEALERS, I.E., THEY HAVE PROVIDED ONLY ACCOMMODATION BILLS WITHOUT A CTUALLY SUPPLYING THE MATERIAL. HENCE THE AO TREATED THE ABOVE SAID AMOUNT OF RS.48,25,695/ - AS BOGUS PURCHASES AND DISALLOWED THE SAME. THE LD CIT(A) SHRI JATIN KISHORE GADOYA 2 SUSTAINED THE ADDITION TO THE EXTENT OF RS.1,33,672/ - , I.E., AT THE G.P RATE OF 2.77% DECLARED BY THE A SSESSEE. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL. 3. THE LD D.R SUBMITTED THAT THE AO HAS TAKEN THE VIEW THAT THE ENTIRE PURCHASES WERE BOGUS. HOWEVER, THE LD CIT(A) HAS TAKEN THE VIEW THAT ONLY PROFIT EMBEDDED IN THE BOGUS PURCHASES SHOULD BE ASSESSED TO TAX, SINCE THE SALES HAS BEEN ACCEPTED BY THE AO AND THE ASSESSEE HAS ALSO MADE ONE TO ONE RECONCILIATION OF PURCHASES AND SALES. HOWEVER, THE ASSESSEE HAS DECLARED THE G.P RATE OF 2.77% IN RESPECT OF RECORDED TRANSACTIONS AND HENCE THE SAME S HOULD NOT HAVE BEEN ADOPTED BY THE LD CIT(A) TO DETERMINE THE PROFIT THAT WOULD HAVE EARNED BY THE ASSESSEE IN THE BOGUS PURCHASES. 4. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS PROVED ALL THE PURCHASES BY PRODUCING INVOICES, PAYMENT DETAILS AND ALSO RE CONCILED THE PURCHASES AND SALES. HE SUBMITTED THAT THE G.P RATE OF 2.77% ADOPTED BY THE LD CIT(A) IS REASONABLE ONE. HE SUBMITTED THAT THE CO - ORDINATE BENCH OF TRIBUNAL HAS SUSTAINED THE ADDITION TO THE EXTENT OF 2% OF PURCHASES IN THE CASE OF M/S GEO LIFE ORGANICS AND OTHERS VS. ACIT (ITA NO.3699/MUM/2016 & OTHERS DATED 05 - 05 - 2017). ACCORDINGLY HE SUBMITTED THAT THE ORDER PASSED BY LD CIT(A) SHOULD BE SUSTAINED. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE FIND MERIT IN THE CONTENTION S OF THE LD D.R THAT THE RATE OF G.P DECLARED IN RESPECT OF RECORDED TRANSACTIONS MAY NOT BE APPROPRIATE TO DETERMINE THE PROFIT ELEMENT EMBEDDED ON ALLEGED BOGUS PURCHASES. SINCE THE ASSESSEE HAS RECONCILED THE ALLEGED BOGUS PURCHASES WITH THE SALES, THE PRESUMPTION IS THAT THE ASSESSEE HAS SOURCED THE PURCHASES FROM GREY MARKETS AND NOT FROM THE DEALERS AS DECLARED BY THE ASSESSEE. WE NOTICE THAT THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 133(6) OF THE ACT TO THE SUPPLIERS, BUT ALL OF THEM HAVE BEEN R ETURNED BACK UN - SHRI JATIN KISHORE GADOYA 3 SERVED. HENCE THE AO HAS ASKED THE ASSESSEE TO PRODUCE THE SUPPLIERS, BUT THE ASSESSEE DID NOT PRODUCE THEM. FURTHER THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE DID NOT PRODUCE VITAL EVIDENCES LIKE DELIVERY CHALLANS, LORRY RECEIPTS, THE MODE OF TRANSPORT OF GOODS, EVIDENCE FOR PAYMENT OF OCTROI ETC. HENCE THE LD CIT(A) HAS ALSO CONCLUDED THAT THE PURCHASES VALUE DECLARED BY THE ASSESSEE MAY NOT BE CORRECT AND THE ASSESSEE HAS ALSO ACCEPTED THE SAID VIEW OF THE LD CIT(A). 6. NOW THE QUESTION THAT ARISES IS WHETHER THE G.P RATE OF 2.77% DECLARED BY THE ASSESSEE WAS RIGHTLY ADOPTED BY THE LD CIT(A). THE LD D.R HAS DISPUTED THE SAME AND WE ALSO MERIT IN IT. FROM THE COPIES OF PURCHASES INVOICES, WE NOTICE THAT APPLICABLE RATE OF SA LES TAX IS 5%. THE PRESUMPTION IS THAT THE ASSESSEE WOULD NOT HAVE PAID THE SALES TAX AMOUNT AND FURTHER HE WOULD HAVE INCURRED SOME AMOUNT BY WAY OF COMMISSION IN PROCURING THE BILLS. CONSIDERING THESE ASPECTS, WE ARE OF THE VIEW THAT THIS ISSUE MAY BE PUT TO REST, IF WE ESTIMATE THE ADDITION AT 6% OF THE VALUE OF ALLEGED PURCHASES. THE LD A.R PLACED HIS RELIANCE ON THE DECISION RENDERED BY THE CO - ORDINATE BENCH, REFERRED SUPRA, BUT WE MAY STATE THAT THE ISSUE BEFORE IS REQUIRED TO BE DECIDED ON THE BAS IS FACTS SURROUNDING THE CASE. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO SUSTAIN THE ADDITION TO THE EXTENT OF 6% OF THE ALLEGED BOGUS PURCHASES. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILE D BY THE REVENUE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 . 8 .201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : SHRI JATIN KISHORE GADOYA 4 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI