MEHTA EMPORIUM JEWELLERS, MUMBAI V. ITO 15(2)(3), MUMBAI

ITA 3768/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8032 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD
• Assessee Lawyers: DEVENDRA JAIN LD
• Keywords: Bogus purchase
• Section: 143(3); 133(6)

Judgement Text

ITA.NO.3768/MUM/2016 MEHTA EMPORIUM JEWELLERS ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3768/MUM/2016 ( / ASSESSMENT YEAR: 2010-11) MEHTA EMPORIUM JEWELLERS 101,HETAL ARCH S.V.ROAD,OPP. NATRAJ MARKET MALAD(WEST) MUMBAI-400 064 / VS. INCOME TAX OFFICER 15(2)(3) MUMBAI ./ ./PAN/GIR NO. AALFM-2962-N ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) A SSESSEE BY : DEVENDRA JAIN,LD. AR RE VENUE BY : RAJAT MITTAL, LD. DR / DATE OF HEARING : 06/12/2017 / DATE OF PRONOUNCEMENT : 20/12 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-41 CIT(A)], MUMBAI, APPEAL NO. CIT(A)-41[(A)26]/IT-13/13-14 ITA.NO.3768/MUM/2016 MEHTA EMPORIUM JEWELLERS ASSESSMENT YEAR-2010-11 2 DATED 08/03/2016 QUA CONFIRMATION OF CERTAIN ADDITIONS ON ACCOUNT OF ALLEGED BOGUS PURCHASES . THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER-15(2)(3), MUMBAI [AO] U/S 14 3(3) OF THE INCOME TAX ACT,1961 ON 28/03/2013. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT FIRM ENGAGED IN TRADING OF GOLD, SILVER ORNAMENTS, JEWLLERY, PRECIO US & SEMI- PRECIOUS STONES WAS ASSESSED U/S 143(3) AT RS.44,15,400/- AFTER SOL E ADDITION OF ALLEGED BOGUS PURCHASES FOR RS.33,96,725/- AS AGAINST RETURNED INCOME OF RS.10,18,680/- E-FILED BY THE AS SESSEE ON 19/09/2010. 2.2 PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM SALES TAX DEPARTMENT, MAHARASHTRA REGARDING DEALERS INDULGING IN PROVIDING BOGUS / ACCOMMODATION PURCHASE BILLS, IT WAS NOTED THAT THE ASSESSEE STOOD BENEFICIARY OF SUCH BOGUS PURCHASE BILLS TO THE TUNE OF RS.33,96,725/- FROM AN ENTITY NAMELY SAILEELA TRADING PRIVATE LIMITED. NOTICE ISSUED U/S 133(6) TO THE SAID SUPPLIER TO CONFIRM THE TRANSACT ION WAS RETURNED BACK UN-SERVED BY POSTAL AUTHORITIES WITH REMARKS NOT KNOWN. THE ASSESSEE, IN SUPPORT OF PURCHASE TRANSACTIONS, SUBMITTED PURCHASE BILLS, LEDGER EXTRACTS, BANK STATEMENTS EVIDENCING PAYMENT TO THE SUPPLIER THROUGH BANKING CHANNELS. HOWEVER, NOT CONVINCED, LD. AO RE LYING UPON SEVERAL JUDICIAL PRONOUNCEMENTS CONCLUDED THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CASTED ON HIM TO PROVE THE PURCHASES AND T HEREFORE, ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 08/03/2 016 WHERE LD. CIT(A) AFTER APPRECIATING THE FACTUAL MATRIX AND PL ACING RELIANCE ON ITA.NO.3768/MUM/2016 MEHTA EMPORIUM JEWELLERS ASSESSMENT YEAR-2010-11 3 SEVERAL JUDICIAL PRONOUNCEMENTS RESTRICTED THE ADDI TIONS TO 30% OF ALLEGED BOGUS PURCHASES. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR] DREW OUR ATTEN TION TO THE FACT THAT THE GOODS BEING DEALT BY ASSESSEE WERE SUBJECT ED TO VERY LOW VALUE ADDED TAX [VAT] RATES AND THE ADDITION WAS ON THE HIGHER SIDE. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT THE A SSESSEE WAS MAINTAINING QUANTITATIVE DETAILS AND WAS IN POSSESS ION OF PRIMARY PURCHASE DOCUMENTS AND THEREFORE, THE HIGHER ADDITI ON AS ESTIMATED BY LD.CIT(A) WAS UNSUSTAINABLE. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTENDED THAT THE ESTIMATION W AS FAIR AND REASONABLE KEEPING IN VIEW THE FACTUAL MATRIX. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE ARE OF THE CONSIDERED OPINIO N THAT THERE COULD BE NO SALE WITHOUT PURCHASE /CONSUMPTION OF MATERIAL S INCE THE ASSESSEE WAS ENGAGED IN TRADING ACTIVITIES. THE SALES TURNOVER ACHIEVED BY THE ASSESSEE HAS NOT BEEN DISPUTED BY THE REVENUE AND T HE PAYMENTS WERE THROUGH BANKING CHANNELS. THE PURCHASES WERE BACKED BY INVOICES. AT THE SAME TIME, THE ASSESSEE COULD NOT PRODUCE ANY C ONFIRMATION FROM THE IMPUGNED SUPPLIER AND NOTICE SENT U/S 133(6) RE MAINED UN-SERVED , WHICH CAST SERIOUS DOUBT ON ASSESSEES CLAIM. THERE FORE, IN SUCH A SITUATION, THE ADDITION, WHICH COULD BE MADE, WAS T O ACCOUNT FOR PROFIT ELEMENT EMBEDDED IN THESE PURCHASE TRANSACTIONS TO FACTORIZE FOR PROFIT ELEMENT EARNED BY ASSESSEE AGAINST POSSIBLE PURCHAS E OF MATERIAL IN THE GREY MARKET AND UNDUE BENEFIT OF VAT AGAINST SUCH BOGUS PURCHASES, WHICH LD. CIT(A) HAS RIGHTLY DONE. HOWEV ER, WE FIND THE ITA.NO.3768/MUM/2016 MEHTA EMPORIUM JEWELLERS ASSESSMENT YEAR-2010-11 4 ESTIMATION TO BE ON THE HIGHER SIDE KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS AND APPLICABLE VAT RATES ON THE GOODS BEING DEALT BY THE ASSESSEE. THEREFORE, WE RESTRICT THE SAME TO 10% OF ALLEGED BOGUS PURCHASES OF RS.33,96,725/- WHICH COMES TO RS.3,39,672/-. THE ORDER OF LD.CIT(A) STAND MODIFIED TO THAT EXTENT. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER,2017 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGAR WAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 20.12.2017 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